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HRA 07/01/1999 - 6312HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, JULY 11 1999 WORK SESSION 6:30 P.M.; MEETING 7:30 P.M. PUBLIC COPY (Please return to Community Development Department) CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING JULY 1, 1999, MEETING, 7:30 P.M. AGENDA BUDGET WORKSESSION BEGINNING AT 6:30 P.M. CONFERENCE ROOM A LOCATION: City Council Chambers CALL TO ORDER 7:30 P.M. ROLL CALL: APPROVAL OF MINUTES: June 3, 1999 CONSENT AGENDA: Claims and Expenses ............. ............................... 1 ACTION ITEMS: Appointment of HRA Remodeling Advisor ............................. 2 Public Hearing regarding the Sale of 5857 Main Street to the Center for Energy and Environment ............................. 3 Consider Development Contract with Center for Energy and Environment ... ............................... 4 INFORMATION ITEMS: Update on Architectural Designs for Scattered Site Program ............... 5 Draft Budget 1999 -2000 ........... ............................... 6 OTHER BUSINESS ADJOURNMENT a, CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING JUNE 3,1999 CALL TO ORDER: Chairperson Commers called the June 3, 1999, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Lary Commers, Virginia Schnabel, Jim McFarland, John Meyer Members Absent: Pat Gabel Others Present: Barb Dacy, Community Development Director Julie Vogel, Accountant APPROVAL OF THE APRIL 28, 1999. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Ms. Schnabel, seconded by Mr. Meyers, to approve the April 28, 1999, Housing and Redevelopment Authority minutes as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF THE MAY 20. 1999. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: Mr. Commers stated that page 9, paragraph 2, should read as follows: "Ms. Dacy stated the HRA's representation stated that the HRA is cooperating with the City stating the site is suitable for 1_6 million square feet of development." MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the May 20, 1999, Housing and Redevelopment Authority minutes as amended. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. AMEND BY -LAWS TO ESTABLISH 1ST THURSDAY AS REGULAR MEETING DATE 2. ANNUAL ELECTION OF OFFICERS HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 2 .4 3. CLAIMS AND EXPENSES Mr. Commers stated approval of the check register and additional expenses presented by Ms. Vogel is with the understanding that the levy return to Independent School Districts #13 and #14 is only contained on the listing once. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the Consent Agenda and additional expenses. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC HEARING: 4. PUBLIC HEARING TO AUTHORIZE SALE OF LAND TO MEDTRONIC, INC. MOTION by Mr. Schnabel, seconded by Mr. McFarland, to open the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING OPEN AT 7:40 P.M. Ms. Dacy stated the public hearing is the last step in the process to redevelop 27.5 acres of the Lake Pointe site at the northwest comer of 1 -694 and Highway 65. State law requires a public hearing before conveying land. As was approved at the May HRA meeting, the HRA will be conveying the eastern portion of the site and a strip of land extending west to 7t' along the northerly portion of the site. Staff recommends the HRA approve the sale of the property in accordance with the development agreement. Mr. Commers asked what is going to happen to the homes along the northerly portion? Are they going to be moved or demolished? If so, when will this happen? Ms. Dacy stated the current plan is to try to find a site to move them. They would like to work with either Habitat for Humanity or the Project for Pride in Living group from Minneapolis to find alternate locations for the seven homes. This is a very nice undertaking because they would have to bring the homes up to current codes. The time frame for removal is between July 15 and September 1. Some of the owners have negotiated different dates. That schedule still needs to be firmed up in more detail. Mr. Commers asked what the status is of the HRA's vacant lots. Mr. Dacy stated only one lot remains in the inventory at this time. The other lots have been sold. No acquisitions have been completed in the last six months or so. The remaining lot is on the north side of Mississippi Street, and staff will be coming back in July with a proposal for that lot. Mr. Commers asked if they could work something out with Medtronic to use those homes in any of the existing programs as a replacement residence for the affordable living program. HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 3 Ms. Dacy stated there is nothing in the inventory. However, Medtronic is investigating a piece of land in Fridley to subdivide for these homes. She did not know if those negotiations had been firmed up or if they had decided to pursue that option. MOTION by Mr. McFarland, seconded by Ms. Schnabel, to close the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING CLOSED AT 7:43 P.M. MOTION by Mr. Meyer, seconded by Mr. McFarland, to authorize the sale of land to Medtronic, Inc., pursuant to the development agreement approved at the May 20, 1999, Housing and Redevelopment Authority meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 5. TH 65 PROJECT UPDATE Ms. Dacy stated staff is asking the HRA to authorize a consultant contract. In order to have a successful application for Federal funding for improving Highway 65, the City needs the support of the Minnesota Department of Transportation (MnDOT). To this point in time, the MnDOT staff has been very supportive of the project to add an additional through -lane northbound and southbound from the intersection at the south part of Moore Lake to about 100 feet beyond the intersection at Moore Lake Drive. Staff has been recommending a sheet pile wall construction. MnDOT recommended a feasibility study of how the sheet pile wall would work. The HRA has completed soil borings. The initial results were favorable so they can go to the next step. Ms. Dacy stated that there are two sources of funds that would reimburse the HRA. They have received a $500,000 one -time appropriation from the state for design work for the project. The second source is tax increment. The legislature, when it approved the tax increment extension for the Lake Pointe site, authorized the use of tax increment for Highway 65 improvements and related expenses. Ms. Dacy stated staff has asked MnDOT for a letter of support. Since preparing the memo for the HRA, she talked to an engineer at SEH who suggested that the summary of the feasibility study would do. They would have to meet with the reviewing agencies to agree on what the typical road section would be and create a preliminary profile. Then they would complete additional soil borings along the causeway. Once that profile is in place, then they would know where the sheet pile walls would be going in on either side of the causeway. They would conduct additional soil borings and determine how to anchor the system of walls. They are thinking of tying the two walls together. They should also identify solutions if there is some type of settling of the soil that occurs between the walls and existing road bed. Finally, they would determine how the walls would be tied in at each end of the project. The preliminary estimates to accomplish HOUSING $ REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 4 -- this portion of the work would cost at least $20,000 and more typically $30,000 to $35,000. Ms. Dacy stated the second part of the feasibility study would determine the proposed drainage system requirements and determine a solution for stormwater treatment. In order to design the wall, they need to know a little bit about the drainage system. Ms. Dacy stated staff is asking the HRA to authorize the execution of a contract for no more than $60,000. The contract would be phased such that staff would pay the consultant to complete the feasibility study for the sheet pile wall first prior to getting to some of the final analysis. Mr. Commers asked who recommended the idea of a sheet pile wall rather than using a standard procedure. Ms. Dacy stated the idea came from a consulting engineer for Medtronic. When they started the environmental analysis and determined the need for the additional through - lane, several options were identified. One alternative was to use the existing shoulders that are there right now. MnDOT would not accept that because it would not meet safety standards. The second alternative was to do the sheet pile wall. The third would be to fill in the lake, which creates another set of issues. It was determined that the sheet pile wall would be the best approach given the width of causeway and what they are trying to accomplish. Staff reviewed those issues with MnDOT, the watershed groups, and the Department of Natural Resources (DNR), and they seemed to recommend it. Mr. Commers asked who would cover the costs. Ms. Dacy stated this would come from this Federal funding application. The sheet pile wall can be constructed with minimal impact on the lake and take advantage of the slope as much as possible. Mr. Commers asked what the estimated cost would be using that approach. Ms. Dacy stated the sheet pile wall and additional lanes without any of the associated drainage and intersections improvements are estimated to cost $5 to $6 million. With design and inspection costs, that total would increase to $6.5 to $7.5 million. Mr. Commers stated they are then asking the Federal government to approve a total overall project of $7.5 million. Ms. Dacy stated that is correct. The application will be submitted in August. Staff expects to have a response at the end of the year or early next year. Funds would become available for construction in the year 2003. Mr. Commers asked what is proposed at the intersection of Hackmann and Highway 65. HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 5 Ms. Dacy stated that side of the intersection is being reconstructed. There will be no additional costs associated with Hackmann Drive. There will be some intersection modifications at East Moore Lake and West Moore Lake Drive. Mr. Commers asked if the plan approved for Highway 65 and Hackmann has any bearing with what is happening with the gas station and whether or not there is any additional traffic in that area. Ms. Dacy stated the plan the HRA approved is essentially the traffic plan approved in 1986. The traffic design did not change substantially from what the City had planned for that intersection. The only other alternative would have been to move the connection further up Central Avenue and create a direct connection from Polk Street. That would mean removing 5 or 6 homes. That was not an option. Mr. Commers asked what happens if they do not get the funding. Ms. Dacy stated there are two options. One option is to apply again. There may be additional Federal funds available in the future. The second option is to pay for improvements from the tax increment funds. They have preserved the ability to use tax increment funds from the extension. Part of the reason staff is moving so fast is that they know there are Federal funds available now. By the time the funds become available in 2003 to 2004, there will be 500,000 square feet of development at the Lake Pointe site. Medtronic could, by that time, be in Phase 2, which would mean an additional 150,000 to 300,000 square feet of development. This would be perfect timing to handle the additional growth. The highway can function until there is approximately 800,000 to 1 million square feet of development. The timing at the intersections will be slow at peak hours. Mr. Commers asked staff to put together a projection on how to pay for that improvement if, in fact, there is no Federal funding. Ms. Dacy stated this is a state highway. There is a lot of concern about why the City and /or the developer should foot the bill for a highway that is maintained by the state. The third option is to contact the Legislature to expand the amount of funds to be used for "maintenance projects ". Mr. Commers stated they need to get the Federal application in and to get the consultants to do the study. It seems they have no options at this point. Mr. Meyer agreed. He also requested that there be a preliminary cost estimate required of the consultant for the sheet pile wall. Also, have the engineer project an alternate cost for a non -sheet pile wall. He personally felt the sheet pile wall would be cheaper by far. Ask the consultant to provide a base expression of cost plus an alternative would be appropriate. The big thing is that the initial soil borings have been made. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve retain a consultant at a cost not to exceed $60,000 to assist in meeting the application deadline for federal funding. HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 6 Mr. Meyer asked if SEH was the consultant they were hiring. Ms. Dacy stated Mr. Flora sent out proposals to SEH and to Braun Intertech. They have not heard from Braun Intertech yet. Mr. Meyer stated Braun Intertech is not a consulting engineering firm. They do not do the same work that SEH does. Braun Intertech does primarily testing. Ms. Dacy stated she believed it was because they had a prior project using the sheet pile wall. She will talk with Mr. Flora. Perhaps they should get another estimate. Mr. Commers asked who was Benshoof and Associates. Ms. Dacy stated Benshoof and Associates has been hired to make sure we are matching the right traffic issues with the right part of the Federal transportation application. There is a specific niche of the project that they are going to use to go to MnDOT and get a letter of support. Mr. Commers stated this is really to put together the study that we are taking to the state to get them to support the Federal application. Ms. Dacy stated this is correct. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS: 6. GATEWAY EAST UPDATE Ms. Dacy stated that while she has not had a direct conversation with the Holiday staff, she thought it was to the HRA's benefit to cooperate, and they could acquire the property after the tenant has left at the end of October. 7. 57TH AVENUE REDEVELOPMENT Ms. Dacy stated the developer of the 57th Avenue site has signed a lease with Cash N Pawn to- lease about 5,000 square feet of space. He has also leased the remaining 3,000 square feet to a nail salon and a beauty supply store. o rTtkie1U91_AIh Ms. Dacy stated she wanted to inform the HRA of the types of information staff is going to be putting together. The City Council wants to meet jointly to discuss some of these issues as well as what the redevelopment priorities are from here on out now that they have a significant accomplishment on the Lake Pointe site. HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 7 Mr. Commers asked what Ms. Dacy thought was the logical way to approach this. It seemed to him that the HRA needed an overall analysis of its financial position before moving forward. Ms. Dacy stated that as of today, staff feels that they have a good handle on it. Ehlers and Associates have completed an analysis of the tax increment funds. Staff would be able to distribute that information before the joint meeting and review the information at that meeting. The issue of where they go next would be fairly straightforward. There are adequate funds to continue the housing programs. Some of the existing priorities are now coming to the top of the list. Mr. Commers asked when the HRA would receive the budget. Ms. Dacy stated the goal is to get the budget to the HRA prior to the joint meeting. She has not yet had a chance to identify the date for the meeting with the City Council. It may be mid to late July when the joint meeting is held. The next HRA meeting is July 1 and she should have a date at that time. Mr. Commers requested staff to give the HRA the analysis so they can look at it at the next meeting. OTHER BUSINESS: Mr. Meyer stated he liked everything in the memo regarding the Medtronic project and the goals that go with it. Is there a conflict with what is being proposed and item 33 of the Council /Commission survey? Ms. Dacy stated, yes. That is one of the issues that the City Council wants to discuss with the HRA. TREE TRANSPLANTING COSTS Ms. Dacy referred to her memo of June 3, 1999, to Mr. Bums regarding tree transplanting costs and the use of HRA property by Medtronic, Inc. These are two issues that have come up recently with Medtronic. Ms. Dacy stated that as part of the construction process, there are 86 trees affected by the road construction that would have to be destroyed or demolished. She asked them to prepare an estimate of what it would cost to transplant some of those trees. They determined that there are approximately 28 trees that would be eligible for transplanting. These trees would probably be re- located to the southern portion of the site. Because McGough's contractor is there and ready to be mobilized, relocating 28 trees would cost approximately $3,300. The trees are fairly good size. The deciduous trees are 6 to 8 inches in caliper width and about 15 feet tall. She felt it would be worth the effort to try to keep those trees. She recommended the HRA authorize staff to spend up to $3,300 to transplant trees. HOUSING & REDEVELOPMENT AUTHORITY MINUTES, JUNE 3, 1999 PAGE 8 Ms. Schnabel stated she did not think they could replace the trees for that amount of money. She thought it would be a good expenditure. Ms. Dacy stated the second issue is that the contractor is requesting to use a portion of the HRA's property for the construction trailers, to stockpile topsoil, and to construct a fence. Based on the grading plan, almost the entire eastern half of the site will be worked on. Staff is suggesting that HRA grant permission to do that with the understanding that we get a certificate of insurance for the appropriate amounts. Ms. Schnabel asked, at the completion of construction, if the property would then be cleared. If for some reason that portion of the property would not be developed, she would like to insure that it is returned to its present state. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to authorize the expenditure of $3,300 for the transplanting of 28 trees identified on the Medtronic site. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Mr. Schnabel, seconded by Mr. McFarland, to permit the fence to be erected to protect the construction trailers and materials and to permit the storage of topsoil to be stockpiled on the western portion of the site with the proviso that, once construction is completed, the vacant land be returned to its present state. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: MOTION by Ms. Gabel, seconded by Ms. Schnabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE JUNE 3, 1999, MEETING OF THE HOUSING & REDEVELOPMENT AUTHORITY ADJOURNED AT 8:29 P.M. 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After our first search produced only a handful of applicants, we re- advertised the position and received about a dozen applications. Four candidates were selected for interviews and from this field we have selected Virginia Harrington- Sweeney as the finalist. Virginia has over twenty years of experience in the residential construction industry, including thirteen years as a journey -level carpenter, seven years as a general contractor and one year as a construction site supervisor with Twin Cities Habitat for Humanity. She is also a registered home inspector. We are very impressed with her credentials and enthusiasm for the position. Although we have not established a schedule, she will work 24 hours per week beginning on July 8t'. RECOMMENDATION Staff recommends that the HRA approve the appointment of Virginia Harrington - Sweeney to the Remodeling Advisor position. HOUSING & REDEVELOPMENT AUTHORITY Memorandum DATE: June 25, 1999 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Public Hearing Regarding the Sale of 5857 Main Street to the Center for Energy and Environment The HRA is required by State law to conduct a public hearing before it sells or leases any real property. The subject property is located in the Hyde Park neighborhood. The Authority acquired the parcel in 1996 through the scattered site program and demolished the home. The site has been for sale since that time. One builder proposed to construct a home in 1998, but the project fell through because he could not find a buyer. Background The Center for Energy and Environment (CEE) is a non - profit organization based in Minneapolis. CEE provides a variety of services to non - profits, government agencies and utilities regarding energy conservation, research and housing related programs. Since 1996, CEE has worked in partnership with the Authority to administer its housing rehabilitation programs. For a number of years CEE has also managed the sound insulation program for the Metropolitan Airports Commission and several rehabilitation programs for the Minneapolis Community Development Agency. Project Summary This demonstration project is part of CEE's expansion into the development of high performance, energy efficient housing that is affordable to moderate - income families (80% of metro median income or $48,650). 5857 Main St. Public Hearing June 25, 1999 Page 2 These high performance standards focus on improved indoor air quality and greater energy efficiency through construction of a tighter building envelope, mechanical ventilation, sealed ductwork, and advanced wall framing. Generally, these kinds of upgrades are included in more expensive housing. Few builders incorporate these standards in the starter home market due to the $5,500 average cost per home. House Desi4n The proposed home to be built by CEE will be a two -story design (see attached plan), with two bedrooms and a bathroom on the upper level; a master bedroom with a bath, a kitchen, dining room and a living room on the main level; and an unfinished lower level. The home also includes a two -car, attached garage. The home has approximately 1,400 square feet of finished floor space. The project is being funded through a combination of public and private sources, including the Minnesota Housing Finance Agency (construction and gap financing), US Bank (permanent financing) and the Fridley HRA (land). The Authority will hold a deferred mortgage equal to the cost of the land. The homebuyer will have to repay the deferred mortgage when they sell- the house. Additional information on the project will be provided in a separate memo regarding the development contract. The projected value of the home upon completion will be $130,000. RECOMMENDATION Staff recommends that the HRA conduct the public hearing regarding the sale of 5857 Main St. NE to the Center for Energy and Environment. Note that separate action approving the sale of the land and authorizing the execution of a development contract will occur later in the meeting. gf M -99 -158 Location Map 5857 Main St. NE Fridley, MN 55432 It - •e =• u :c =v 20 A .a iQ ��a O 10 o- c o•- u a. i� i s -J 2 O .v a �3 z y n � � ILI J O 9 a J n e Ir ci ° 7 X ' s t J i N Z n a x 'i Cd i Z 0 Q W J W Q� W cr 14 1 a5, VA6LF-Ys, 9106F_--6 - U10 FIZAMjW& 140TE4. T �O -C CaMP• 14*411461.ES RIGHT ELEVATION 1f� ttt* Ix TiLim (.-rYP) a 20.0 LEFT ELEVATION 405co. 32M. 1,21 i A -191 Z Z_ I 1r LL o q HOUSING & REDEVELOPMENT AUTHORITY Memorandum MOM DATE: June 25, 1999 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Consider Sale of 5857 Main Street to the Center for Energy and Environment and Authorize Execution of a Development Contract. As mentioned in a previous memo, CEE is proposing to construct a single family home on the vacant lot at 5857 Main St. NE. This memo will provide an overview of the land sale transaction and the development contract. Land Sale To keep the project affordable to a moderate - income family, the Authority will defer payment on the land (valued at $22,000), by issuing a loan note and placing a second mortgage on the property. This approach makes the home affordable because the family only has to qualify for financing on the construction cost of the home rather than the entire amount. The Authority's loan note will have a zero - percent interest rate. Initially, the Authority will issue the-note and second mortgage to CEE so that they can be in title at the start of construction. Once the home is completed and CEE has found an income - qualified buyer, the note and second mortgage will be assigned to the new homeowner. The second mortgage must be repaid when the home is sold is no longer the family's principal residence. Development Contract The Authority will enter into a standard scattered site development contract with CEE. A copy of the draft agreement is attached. The agreement spells the responsibilities of both parties. Provisions of the agreement include: im CEE Development Contract Memo June 25, 1999 Page 2 1. The Redeveloper (CEE) must construct home with a minimum value of $125,000 (land and buildings). 2. CEE shall pay $22,000 for the land, however payment will be deferred. The Authority will issue a loan note and second mortgage to CEE, which in turn will be re- assigned to eventual homebuyer. However, CEE may not re- assign the note or mortgage without the prior written approval of the Authority. 3. The home must meet the Authority's design criteria as outlined in Schedule D. The plans prepared CEE meet these requirements. 4. The dates for closing, the start of construction and completion of the project still need to be negotiated. An update will be provided at the July 1st HRA meeting. 5. The HRA will provide a commitment for title insurance to the Authority. Closing costs will be shared following customary real estate practice. 6. In the event, CEE defaults on the agreement, the Authority may terminate contract, withhold the Certificate of Completion and /or take other appropriate legal action. RECOMMENDATION Staff recommends the HRA approve the attached resolution authorizing the execution and delivery of a Contract for Private Redevelopment with the Center for Energy and Environment. M -99 -160 4 HRA 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 OF FRIDLEY, MINNESOTA AND CENTER FOR ENERGY AND ENVIRONMENT FOR PROPERTY LOCATED AT 5857 MAIN STREET NORTHEAST. 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 Center for Energy and Environment (the "Redeveloper ") and to approve construction plans (the "Construction Plans ") as provided for in the Contract. 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 it has approved and adopted a Housing Replacement District Plan (the "Plan") and created Housing Replacement District No. 1, pursuant to and in accordance with Laws of Minnesota 1995, Chapter 264, Article 5, Sections 44 through 47, inclusive, as amended and supplemented from time to time. 2.03. The Authority hereby finds that it has performed all actions required by Minnesota Statutes and approved the sale of property that -is subject to the terms of the Contract. 2.04. The Authority hereby finds that the Contract promotes the objectives as outlined in its Redevelopment Program and the Plan. Section 3. Authorization for Execution and Delivery of the Contract. 3.01. The Chairman and the Executive Director of the Authority (the "Officers ") are hereby authorized to execute and deliver the Contract with such additions and modifications as the Officers may deem desirable or necessary as evidenced by their execution. Section 4. Approval of the Construction Plans. 4.01. The Construction Plans are hereby approved. PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA, THIS DAY OF , 199 LAWRENCE R. COMMERS - CHAIRMAN ATTEST: WILLIAM W. BURNS - EXECUTIVE DIRECTOR G:\ WPDATA \F\FPMLEY\25\CEE%MLLMON.DOC II"Ivr_rw17c "sir CONTRACT FOR PRIVATE REDEVELOPMENT By and Between HOUSING AND REDEVELOPMENT AUTHORITY In and For THE CITY OF FRIDLEY, MINNESOTA And CENTER FOR ENERGY AND ENVIRONMENT FOR PROPERTY LOCATED AT 5857 MAIN STREET NORTHEAST This document was drafted by: James M Casserly, Esq. Krass Monroe, P.A. Suite 1100 Southpoint Office Center 1650 West 82nd Street Minneapolis, MN 55431 "1 CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made as of the day of , 1999 by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority "), a public body corporate and politic organized under the laws of the State of Minnesota and Center for Energy and Environment, a nonprofit corporation organized and existing under the laws of the State of Minnesota (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 seq. (the "Act "), the redevelopment plan known as the Modified Redevelopment Plan for its Redevelopment Project No. 1 (the "Project Area ") which plan, as amended, and as it may be amended, is hereinafter referred to as the "Redevelopment Plan" 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, in order to achieve the objectives of the Redevelopment Plan and particularly to make specified land in the Project Area and in the Authority's area of operation available for development by private enterprise for and in accordance with the Redevelopment Plan, the Authority has determined to provide substantial aid and assistance to finance public development costs in the Project Area and in the Authority's area of operation; and WHEREAS, the Authority believes that the development and redevelopment of the Project Area 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, Sections 469.001, et seq. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota. "Authority Mortgage" means a mortgage to the Authority from the Redeveloper which is secured by the Redevelopment Property and may be assigned by the Redeveloper to the Homeowner, in the form of which is attached hereto as Schedule F. "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, or its successors or assigns. "Construction Plans" means the plans, specifications, drawings and related documents for the construction of the Minimum Improvements which are required by the City for the issuance of its building permit and conform to the Housing Design and Site Development Criteria. "County" means the County of Anoka, Minnesota. "Date of Closing" means the date or dates set forth in Section 3.1(b). "Event of Default" means an action by the Redeveloper described in Section 7.1 of this Agreement. "Homeowner" means a person(s) who purchases the Project from the Redeveloper. "Housing Design and Site Development Criteria" mean the criteria and standards described in Schedule D attached to and made a part of this Agreement. 2 "Minimum Improvements" means the improvements to be constructed by the Redeveloper on the Redevelopment Property as specified in the Construction Plans approved by the Authority. "Mortgage" means any mortgage or security agreement in which the Redeveloper has granted a security interest in the Redevelopment Property, or any portion thereof, or any improvements constructed thereon, and which is a permitted encumbrance pursuant to the provisions of Article VIII. "Note" means the note from the Redeveloper to the Authority in the principal amount of Twenty -two Thousand Dollars ($22,000), in accordance with the terms of this Agreement and substantially in the form of Schedule E attached hereto. "Party" means a party to the Agreement. "Permitted Encumbrances" means those encumbrances as defined in Section 8.7 of this Agreement. "Project" means the Redevelopment Property and the Minimum Improvements. "Purchase Price" means the sum of $22,000, payable pursuant to the terms of the Note. "Redeveloper" means Center for Energy and Environment, a Minnesota non -profit corporation, its successors or assigns. "Redevelopment Plan" means the Modified Redevelopment Plan adopted by the Authority in connection with its Redevelopment Project No. 1. "Redevelopment Property" means the real property upon which the Minimum Improvements are to be constructed, which real property is described on 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. "Sales Price" means an amount equal to or greater than $125,000 and which is to be used on the certificate of real estate value when the Project is conveyed to the Homeowner. "State" means the State of Minnesota. "Unavoidable Delays" means delays which are the direct result of strikes or shortages of material; delays which are the direct result of casualties to the Minimum Improvements, the 3 Redevelopment Property or the equipment used to construct the Minimum Improvements or; delays which are the direct result of governmental actions (except that the City may not create an Unavoidable Delay by virtue of its own action); delays which are the direct result of judicial action commenced by third parties; delays which are the direct result of citizen opposition or action affecting this Agreement or adverse weather conditions or acts of God. ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority represents and warrants that: (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 will, in a timely manner, subject to all notification requirements, review and act upon all submittals and applications of the Redeveloper and will cooperate with the efforts of Developer to secure the granting of any permit, license, or other approval required to allow the construction of the Improvements; provided, however, that nothing contained in this Section 2.1(b) shall be construed to limit in any way the reasonable and legitimate exercise of the Authority's discretion considering any submittal or application. (c) The Authority makes no representation, guarantee, or warranty, either express or implied, and hereby assumes no responsibility or liability as to the Redevelopment Property or its condition (regarding soils, pollutants, hazardous wastes or otherwise). Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper will purchase the Redevelopment Property from the Authority pursuant to Article III hereof and in the -event the Redevelopment Property is conveyed to the Redeveloper, then the Redeveloper will construct the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Program and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (b) The Redeveloper is a non -profit corporation organized under the laws of the State 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. [1 (c) The financing arrangements which the Redeveloper has obtained or will obtain to finance construction of the Minimum Improvements will be sufficient to enable the Redeveloper to successfully complete the Minimum Improvements as contemplated in this Agreement. (d) The Redeveloper shall prepare the Construction Plans and construct the Minimum Improvements in accordance with the Housing Design and Site Development Criteria. (e) The Redeveloper shall have the Construction Plans prepared by an architectural designer or an architect. (f) The Redeveloper shall sell the Project to the Homeowner for the Sales Price. ARTICLE III Conveyance of Property Section 3.1. Convevance of the Redevelopment Property. (a) Title. The Authority shall convey marketable title to and possession of the Redevelopment Property to the Redeveloper under a quit claim deed in the form of the Redevelopment Property Deed contained in Schedule B of this Agreement. The conveyance of title to the Redevelopment Property pursuant to the Redevelopment Property Deed and the Redeveloper's use of the Redevelopment Property shall be subject to all of the conditions, covenants, restrictions and limitations imposed by this Agreement and the Redevelopment Property Deed. The Authority agrees to obtain and shall deliver to the Redeveloper a commitment for an owner's title insurance policy (ALTA Form B -1970) issued by a title insurance company acceptable to the Authority and Redeveloper, naming Redeveloper as the proposed .owner - insured of the Redevelopment Property in the amount of the Purchase Price (the "Commitment "). The Commitment shall have a current date as its effective date and shall commit to insure marketable title in Redeveloper, free and clear of all mechanics' lien claims, questions of survey, unrecorded interests, rights of parties in possession or other exceptions. The Commitment shall set forth all levied real estate and special assessments. Said commitment shall have attached copies of all instruments of record which create any easements or restrictions which are referred to in Schedule B of the title commitment. Redeveloper will be allowed 20 days after receipt of the Commitment to make an examination thereof and to make any objections to the marketability of the title to Redevelopment Property, said objections to be made by written notice or to be deemed waived. If the title to the Redevelopment Property, as evidenced by the Commitment, together with any appropriate endorsements, is not good and marketable of record in the City and is not made so by the Date of Closing, Redeveloper may either: (i) Terminate this Agreement by giving written notice to the Authority in which event this Agreement shall become null and void and neither party shall have any further rights or obligations hereunder; or (ii) Elect to accept the title in its marketable condition by giving written notice to the Authority, in which event the Redeveloper shall hold back adequate funds from the portion of the Purchase Price payable at the closing to cure the defects and apply said holdback funds of the cost of curing such defects, including attorneys' fees, and pay the unexpected balance to the Authority. (If the amount of said holdback cannot be mutually agreed to by the Authority and the Redeveloper, the issuer of the Commitment shall determine the amount of said holdback) (b) Time of Conveyance. The Authority shall execute and deliver to the Redeveloper the Redevelopment Property Deed for the Redevelopment Property on 1999 or on such date as the Authority and the Redeveloper shall mutually agree in writing (the "Date of Closing "). The Redeveloper shall take possession of the Redevelopment Property on the Date of Closing. (c) Price and Payment. The Authority agrees to sell and the Redeveloper agrees to purchase the Redevelopment Property for the Purchase Price. Unless otherwise mutually agreed by the Authority and the Redeveloper, the execution and delivery of all deeds and the payment of the Purchase Price shall be made at the principal offices of the Authority. The Purchase Price to be paid by the Redeveloper for the conveyance of the Redevelopment Property from the Authority to the Redeveloper shall be paid through the delivery of the Note and the Authority Mortgage by the Redeveloper to the Authority. The Redevelopment Property Deed shall be in recordable form and shall be promptly recorded. The Redeveloper shall pay all costs for such recording. (d) Taxes and Special Assessments. Real estate taxes due and payable prior to the year of closing shall be paid by the Authority. Real estate taxes due and payable in the year of closing shall be prorated as of the Date -of Closing based upon the parties' respective period of ownership in the year of closing. Real estate taxes due and payable in the years subsequent to the closing shall be paid by the Redeveloper. On or prior to the Date of Closing, the Authority shall pay all pending or levied special assessments. (e) Survey. The Authority will not provide a survey. (f) Inspection. At Redevelopers expense, Redeveloper, its agents and designees, are hereby granted the right at any time or times after the date hereof to inspect, analyze, and test the Redevelopment Property. Redeveloper shall hold the Authority and the City harmless 6 from any liability resulting solely from the entering upon the Redevelopment Property or the performing of any of the tests or inspections referred to in this Section by Redeveloper, its agents or designees. Section 3.2. Conditions Precedent to Conveyance. The obligations of the Authority to convey the Redevelopment Property to the Redeveloper shall be subject to the following conditions precedent: (a) On the Date of Closing, the Redeveloper shall be in material compliance with all of the terms and provisions of this Agreement; (b) The Redeveloper shall have provided evidence satisfactory to the Authority that it is capable of financing or has obtained financing or a commitment for financing sufficient to finance the construction of the Minimum Improvements for the Redevelopment Property. The Redeveloper will be deemed to have provided adequate evidence of such financial commitment and ability if the Redeveloper provides evidence satisfactory to the Authority of a mortgage commitment; (c) The Authority and the City shall have approved the Construction Plans. (d) The Redeveloper shall have received the appropriate permits for the construction of the Minimum Improvements; (e) The Redeveloper shall have paid the Purchase Price through the execution of the Note and the Authority Mortgage. (f) The Redeveloper shall provide documents showing that it has a binding legal commitment for the resale of the Project to the Homeowner for the Sales Price. Section 3.3. The Note and Authority Mortgage. The Note shall be in the principal amount of the Purchase Price and shall bear simple interest from the Closing Date at the rate of percent C _ %o) per annum Upon approval of the Authority, the Homeowner may assume the liability of the Redeveloper with respect to payment on the Note upon acquisition of the Project by -the Homeowner. In the event the Note is assumed by the Homeowner, the Sales Price shall be reduced by the principal amount of the Note and the Note shall be payable as to principal and interest in one payment on the earlier of (i) the date the Homeowner conveys the Project to another party, or (ii) the date the Project is no longer used by the Homeowner as its principal place of residence. In the event the Note is not assumed by the Homeowner but retained by the Redeveloper, the Note shall be payable upon transfer of the Project from the Redeveloper to the Homeowner. Payment on the Note shall be secured by the Authority Mortgage. In the event payment is not made on the Note as provided therein, the Authority may exercise its rights 7 under the Authority Mortgage. It is understood that the Authority Mortgage shall be subordinate to any Mortgage granted to the Redeveloper to construct the Minimum Improvements or to any mortgage granted to the Homeowner to acquire the Project from the Redeveloper. The Authority Mortgage may be assumed by the Homeowner upon the assumption by the Homeowner of the Note. ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of 1VIinimum Improvements. The Redeveloper agrees that it will construct the Minimum Improvements on the Redevelopment Property in accordance with this Agreement, the Housing Design and Site Development Criteria and the Construction Plans approved by the City and the Authority and will maintain, preserve and keep the Minimum Improvements or cause the Minimum in good repair and condition until sale of the Project to the Homeowner. Subject to Unavoidable Delays, the Redeveloper shall commence construction of the Minimum Improvements on or before '1999. Section 4.2. Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper shall have substantially completed the construction of the Minimum Improvements by , 1999. 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 as submitted by the Redeveloper and approved by the City and Authority. (b) The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, and the Redevelopment Property Deed shall reference the covenants contained in this Section 4.2 and Section 7.3 of this Agreement, that the Redeveloper, and its successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be completed within the period specified in this Section 4.2. Section 4.3. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements in accordance with the provisions of this Agreement relating to the obligations of the Redeveloper to construct such improvements (including the date for completion thereof), the Authority will furnish the Redeveloper with a Certificate of Completion. The Certificate of Completion shall be a conclusive determination and conclusive evidence of the satisfaction and termination of the 8 agreements and covenants in this Agreement and in the Redevelopment Property Deed 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 the Certificate of Completion in accordance with the provisions of this Section 4.3 the Authority shall, within twenty (20) 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 this Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the Authority, for the Redeveloper to take or perform in order to obtain a Certificate of Completion. (c) The construction of the Minimum Improvements shall be deemed to be completed when the City has issued its Certificate of Occupancy. ARTICLE V Real Property Taxes and Insurance Section 5.1. Real Property Taxes. Prior to the Authority issuing its Certificate of Completion, the Redeveloper shall pay when due, prior to the attachment of penalty, all real property taxes payable with respect to the Redevelopment Property in the years subsequent to the delivery of the Redevelopment Property Deed. Section 5.2. 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. 6 (b) 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. ARTICLE VI Prohibitions Against Assignment and Transfer: Indemnification Section 6.1. 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; (b) the substantial financing and other public aids that have been made available by the Authority for the purpose of making such redevelopment possible; and (c) the fact that any act or transaction involving or resulting in a significant change in the identity of the parties in control of the Redeveloper or the degree of their control is for practical purposes a transfer or disposition of the property then owned by the Redeveloper, 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. Section 6.2. Prohibition Against Transfer of Property and Assignment of Agreement. Also, for the foregoing reasons the Redeveloper represents and agrees that prior to the earlier of the issuance of the Certificate of Completion or the Termination Date: 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 constructing 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. Notwithstanding the foregoing, the Redeveloper may transfer the Redevelopment Property to a Homeowner. 10 Section 63. 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, and provided that the claim therefore is based upon the acts of Redeveloper or of others acting on the behalf or under the direction or control of Redeveloper. (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, 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, except for the use of eminent domain if exercised by the Authority to acquire the Redevelopment Property, and provided that the claim therefore is based upon the acts of Redeveloper or of others acting on the behalf or under the direction or control of Redeveloper. (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 or Authority employees or those employed or engaged by the City or Authority. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. (e) Nothing in this section or this Agreement is intended to waive any municipal liability limitations contained in Minnesota Statutes, particularly Chapter 466. 11 ARTICLE VII Events of Default Section 7.1. Events of Default Defined. Subject to Unavoidable Delays, 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 all real property taxes assessed against the Redevelopment Property. (b) Failure by the Redeveloper to commence or complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement. (c) Failure by the Redeveloper to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder. (d) 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 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 7.2. Remedies on Default. Whenever any Event of Default referred to in Section 7.1. 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, 12 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. (d) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to the Authority, including any actions to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Redeveloper under this Agreement. Section 73. Revesting Title in Authority Upon Happening of Event Subsequent to Conveyance to Redeveloper. In the event that subsequent to conveyance of the Redevelopment Property to the Redeveloper and prior to the receipt by the Redeveloper of the Certificate of Completion: (a) subject to Unavoidable Delays, the Redeveloper fails to carry out its obligations with respect to the construction of the Minimum Improvements (including the nature and the date for the commencement and completion thereof), or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension shall not be cured, ended, remedied or assurances reasonably satisfactory to the Authority made within thirty (30) days after written demand from the Authority to the Redeveloper to do so; or (b) the Redeveloper fails to pay real estate taxes or assessments on the Redevelopment Property or any part thereof when due, or creates, suffers, assumes, or agrees to any encumbrance or lien on the Redevelopment Property which is unauthorized by this Agreement or shall suffer any levy or attachment to be made, or any materialmen's or mechanics' lien, or any other unauthorized encumbrance or lien to attach, and such taxes or assessments shall not have been paid, or the encumbrance or lien removed or discharged or provision reasonably satisfactory to the Authority made for such payment, removal, or discharge, within thirty (30) days after written demand by the Authority to do so; provided, that if the Redeveloper shall first notify the Authority of its intention to do so, it may in good faith contest any mechanics' or other lien filed or established and in such event the Authority shall permit such mechanics' or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but only if the Redeveloper provides the Authority with a bank letter of credit or other security in the amount of the lien, in a form satisfactory to the Authority pursuant to which the bank or other obligor will pay to the Authority 13 6 the amount of any lien in the event that the lien is finally determined to be valid. During the course of such contest the Redeveloper shall keep the Authority informed respecting the status of such defense; or (c) there is, in violation of this Agreement, any transfer of the Redevelopment Property or any part thereof, or any change in the ownership or distribution thereof of the Redeveloper, or with respect to the identity of the parties in control of the Redeveloper or the degree thereof, and such violation shall not be cured within thirty (30) days after written demand by the Authority to the Redeveloper; Then the Authority shall have the right to re -enter and take possession of the Redevelopment Property and to terminate (and revest in the Authority) the estate conveyed by the Redevelopment Property Deed to the Redeveloper, it being the intent of this provision, together with other provisions of the Agreement, that the conveyance of the Redevelopment Property to the Redeveloper shall be made upon, and that the Redevelopment Property Deed shall contain a condition subsequent to the effect that in the event of any default on the part of the Redeveloper and failure on the part of the Redeveloper to remedy, end, or abrogate such default within the period and in the manner stated in such subdivisions, the Authority at its option may declare a termination in favor of the Authority of the title, and of all the rights and interests in and to the Redevelopment Property conveyed to the Redeveloper, and that such title and all rights and interests of the Redeveloper, and any assigns or successors in interest to and in the Redevelopment Property, shall revert to the Authority, but only if the events stated in Section 7.3(a) -(c) have not been cured within the time periods provided above. Notwithstanding anything to the contrary contained in this Section 7.3 of this Agreement, the Authority shall have no right to re -enter or retake title to and possession of any part of the Redevelopment Property for which a Certificate of Completion has been issued. Section 7.4. Resale of Reacquired Property; Disposition of Proceeds. Upon the reverting in the Authority of title to any parcel of the Redevelopment Property or any part thereof as provided in Section 7.3, the Authority shall have no further responsibility to the Redeveloper hereunder with respect to that or any subsequent parcel and may sell or otherwise devote said parcels to such other uses as the Authority shall in its sole discretion determine, without reimbursement of any sums paid by the - Redeveloper to the Authority under this Agreement. Section 7.5. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or Redeveloper is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the 14 I 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 VII. Section 7.6. 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 7.7. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City 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 by the Authority, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. ARTICLE VIII Mortgage Financing Section 8.1. Limitation Upon Encumbrances of Property. Prior to the substantial completion of the Minimum Improvements, as certified by the Authority, neither the Redeveloper nor any successor in interest to the Redevelopment Property or any part thereof shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Redevelopment Property, other than Permitted Encumbrances, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Redevelopment Property, other than Permitted Encumbrances, except: (a) For the purposes of obtaining funds only to the extent necessary for financing of the Minimum Improvements including, but not limited to, labor and materials, equipment, professional fees, real estate taxes, construction interest, organizational and other indirect costs of development, costs of constructing the Minimum Improvements, an allowance for contingencies, acquisition cost of the- Redevelopment Property, costs of originating the Mortgage and customary financing costs. (b) Only upon the prior written approval of the Authority in accordance with Sections 8.1 and 8.2. The Authority shall not approve any Mortgage which does not contain terms that conform to the terms of Section 8.5, except as provided in Section 8.6 of this Agreement. 15 Section 8.2 Approval of Mortgage. The Authority shall approve a Mortgage if- (a) The Authority first receives a copy of all Mortgage documents. (b) The Mortgage loans, together with other funds available to the Redeveloper, will, in the reasonable judgment of the Authority, be sufficient to acquire the Redevelopment Property, to pay for the Site Improvements and construct the Minimum Improvements. (c) The Authority is not entitled under Section 7.2 to exercise any of the remedies set forth therein as a result of an Event of Default. (d) The Authority determines that the terms of the Mortgage conform to the terms of Section 8.5. However, the approval of a Mortgage by the Authority shall not be unreasonably withheld. Any Mortgage which is subordinated to the rights of the Authority under this Agreement may be granted in all or any part of the Redevelopment Property without the approval of the Authority. Section 83 Notice of Default; Copy to Mortgagee. Whenever the Authority shall deliver any notice or demand to the Redeveloper with respect to any breach or default by the Redeveloper in its obligations or covenants under this Agreement, the Authority shall at the same time forward a copy of such notice or demand to each Holder of any Mortgage authorized by this Agreement at the last address of such Holder shown in the records of the Authority. - Section 8.4 Mortgagee's Option to Cure Defaults. After any breach or default referred to in Section 8.3, each such Holder shall (insofar as the rights of the Authority are concerned) have the right, at its option, to cure or remedy such breach or default (or such breach or default to the extent that it relates to the part of the Redevelopment Property covered by its Mortgage) and to add the cost thereof to the Mortgage debt and the lien of its Mortgage; provided, however, that if the breach or default is with respect to construction of the Minimum Improvements, nothing contained in this Section or any other Section of this Agreement shall be deemed to require such Holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Minimum Improvements, provided that any such Holder shall not devote the Redevelopment Property to a use inconsistent with the Redevelopment Plan or this Agreement without the agreement of the Authority. Section 8.5 Authority's Option to Cure Default on Mortgage. Any Mortgage, unless such requirement is- waived by the Authority, executed by the Redeveloper with respect to the Redevelopment Property or any improvements thereon shall provide that, in the event that the Redeveloper is in default under any Mortgage authorized pursuant to this Article VIII, the Holder shall notify the Authority in writing of: 16 (a) The fact of the default. (b) The elements of the default. (c) The actions required to cure the default. If the default is an "Event of Default" under such Mortgage, which shall entitle such Holder to foreclose upon the Redevelopment Property, the Minimum Improvements or any portion thereof, and any applicable grace periods have expired, the Authority shall have, and each Mortgage executed by the Redeveloper with respect to the Redevelopment Property or any improvements thereon shall provide that the Authority shall have such an opportunity to cure the "Event of Default" within such reasonable time period as the Holder shall deem appropriate. Section 8.6 Subordination and Modification for the Benefit of Mortgagees. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the Authority agrees that it shall agree to any reasonable modification of this Article VIII or waiver of its rights hereunder to accommodate the interests of the Holder of a Mortgage, provided, however, that the Authority determines, in its reasonable judgment, that any such modification(s) will adequately protect the legitimate interest and security of the Authority with respect to the Redevelopment Property. Section 8.7 Permitted Encumbrances. The following shall be permitted encumbrances on the title to the Redevelopment Property: (a) Such encumbrances as are mutually agreed to in writing by the Authority and the Redeveloper. (b) Governmental regulations, if any affecting the use and occupancy of the Redevelopment Property and Minimum Improvements. (c) Zoning laws of the City, County and State. (d) All rights in public highways upon the land. (e) Reservations to the State, in trust for the tax districts concerned, of minerals and mineral rights in those portions of the Redevelopment Property the title to which may have at any time heretofore been forfeited to the State for nonpayment of real estate taxes. (f) The lien of unpaid special assessments, if any, not presently payable but to be paid as a part of the annual taxes to become due. IVA (g) The lien of unpaid real estate taxes, if any not presently payable but to be paid as a part of the annual taxes to become due. (h) A Mortgage as permitted under Section 8.2 ARTICLE IX Additional Provisions Section 9.1. Conflict of Interest: Authority Representatives Not Individually Liable. No member, official, or employee of the Authority shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the Authority or for any amount which may become due to the Redeveloper or successor or on any obligations under the terms of this Agreement, except in the case of willful misconduct. Section 9.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement that it will comply with all applicable equal employment opportunity and non - discrimination laws, ordinances and regulations. Section 93. 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 this 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 this 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 courier or delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper at 211 North Second Street, Suite 455, Minneapolis, Minnesota 55401, Attention: ; 18 (b) in the case of the Authority, is addressed to or delivered personally to the Housing and Redevelopment Authority in and for the City of Fridley at 6431 University Avenue Northeast, Fridley, Minnesota, 55432, Attention: City Manager; or at such other address with respect to either party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. . Section 9.6. Counterparts. This agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.7 Termination. This Agreement shall terminate upon the Authority issuing its Certificate of Completion or in accordance with the provisions of Article VIII and the discharge of all of the Authority's and Redeveloper's other respective obligations hereunder, but no such termination shall terminate any indemnification or other rights or remedies arising hereunder due to any Event of Default which occurred and was continuing prior to such termination. 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. 19 Dated: 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. 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 public body corporate and politic organized under the laws of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public My Commission Expires: Authority Signature Page -- Redevelopment Contract 20 Dated: CENTER FOR ENERGY AND ENVIRONMENT By Its STATE OF MINNESOTA ) ss. COUNTY OF ) On this day of , 199 before me, a notary public within and for County, personally appeared , the Center for Energy and Environment, a Minnesota non -profit corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public - _ My Commission Expires: Redeveloper Signature Page -- Contract for Private Redevelopment G:\ WPDATA \F \FRIDLEY \25 \CEE \CONTRACT.DOC 21 SCHEDULE A DESCRIPTION OF REDEVELOPMENT PROPERTY Lots Twenty -eight (28) and Twenty -nine (29), Block Twenty -four (24), Hyde Park, according to the plat thereof on file and of record in the office of the Register of Deeds of and for said County of Anoka, Minnesota. Commonly referred to as: 5857 Main Street, Northeast Fridley, Minnesota 22 SCHEDULE B REDEVELOPMENT PROPERTY DEED STATE DEED TAX DUE HEREUNDER $ THIS INDENTURE, made this day of , 199_, between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a body corporate and politic under the laws of the State of Minnesota (the "Grantor "), and , a Minnesota organized under the laws of the State of Minnesota (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: Lots Twenty -eight (28) and Twenty -nine (29), Block Twenty -four (24), Hyde Park, according to the plat thereof on file and of record in the office of the Register of Deeds of and for said County of Anoka, Minnesota. together with all hereditament and appurtenances belonging thereto, Grantor covenants and represents that: Grantee has committed to construct certain improvements and Grantor has a right of re- entry in accordance with Sections 4.2 and 7.3 respectively of the Contract for Private Redevelopment By and Between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota and Center for Energy and Environment dated June 15, 1999. The completion of the improvements and the release of the right of re -entry shall be evidenced by the recording of the Certificate of Completion and Release of Forfeiture attached as Exhibit 1 to this deed. The Grantor certifies that the Grantor does not know of any wells on described real property. IN WITNESS WHEREOF, the Grantor has caused this deed to be duly executed in its behalf by its Chairman and its Executive Director the day an year written above. 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 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 body corporate and politic under the laws of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. This instrument was drafted by: James R. Casserly, Esq. Krass Monroe, P.A. Suite 1100 Southpoint Office Center 1650 West 82`d Street Bloomington, MN 55431 (612) 885 -1296 Notary Public My Commission Expires: Property Tax Statements should be sent to: SCHEDULE C CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE WHEREAS, the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a body corporate and politic under the laws of the State of Minnesota (the "Grantor "), by a Deed recorded in the Office of the County Recorder or the Registrar of Titles in and for the County of Anoka and State of Minnesota, as Deed Document Number(s) and , respectively, has conveyed to Center for Energy and Environment, a Minnesota non -profit corporation organized under the laws of the State of Minnesota (the "Grantee "), the following described land in County of Anoka and State of Minnesota, to -wit: Lots Twenty -eight (28) and Twenty -nine (29), Block Twenty-four (24), Hyde Park, according to the plat thereof on file and of record in the office of the Register of Deeds of and for said County of Anoka, Minnesota. WHEREAS, said Deed contained certain covenants and restrictions, the breach of which by Grantee, its successors and assigns, would result in a forfeiture and right of re -entry by Grantor, its successors and assigns, said covenants and restrictions being set forth in said Deed; and WHEREAS, said Grantee has performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that all building construction and other physical improvements specified to be done and made by the Grantee have been completed and the above covenants and conditions in said Deed have been performed by the Grantee therein and that the provisions for forfeiture of title -and right to re -entry for breach of condition subsequent by the Grantor therein is hereby released absolutely and forever insofar is it applies to the land described herein, and the County Recorder or the Registrar of Titles in and for the County of Anoka and State of Minnesota is hereby authorized to accept for recording and to record this instrument, and the filing of this instrument shall be a conclusive determination of the satisfactory termination of the covenants and conditions of the contract referred to in said Deed, the breach of which would result in a forfeiture and right of re -entry. Dated: '199 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 County, personally appeared and to me personally known who by me duly swom, 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- body corporate and politic under the laws of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public My Commission Expires: SCHEDULE D HOUSING DESIGN AND DEVELOPMENT CRITERIA Minimum standards. 2. New construction program. Homes must be conventional, on -site, stick -built construction. 3. Single- family, detached dwellings. 4. A minimum of two bedrooms is required. Three and four bedroom homes are desirable. 5. A minimum of one full bath and one -half bath is required. 6. Two (2) car attached garage is required. A hard surfaced driveway (asphalt or concrete) is also required. 7. Exterior materials should be low maintenance, such as steel, vinyl or aluminum siding. Cedar siding is also acceptable. Brick facing and other architectural ornamentation is desirable. Hardboard siding is not acceptable. 8. The house building lines, roof lines, door and window placement shall be used to minimize blank wall mass, and orientation to the street must present a balanced and pleasing view from all sides. 9. All sites be fully landscaped upon completion of the project and should include both sod installation and placement of plants and shrubs. 10. Utility meters shall be screened from street view locations must be specified on plans. All air conditioning units must be located in the rear yard or screened in the side -yard. 11. Designs that emphasize front porches, covered entries, brick facing, architectural ornamentation or unique garage orientation are strongly encouraged. 12. Upon completion, the property must have a minimum value. SCHEDULE E FORM OF NOTE NOTE US $22,000.00 FOR VALUE RECEIVED, the undersigned (the "Borrower ") promises to pay to the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority ") the principal sum of Twenty -two Thousand Dollars ($22,000.00) with interest from , 1999 on the unpaid principal balance until paid, at the rate of percent( _ %) per annum, as provided herein. Upon approval of the Authority, the Homeowner (as defined in the certain Contract for Private Redevelopment by and between the Authority and the Borrower) may assume the liability of the Borrower with respect to payment on this Note upon acquisition of the Project by the Homeowner. In the event this Note is assumed by the Homeowner, this Note shall be payable in full as to principal and interest on the earlier of (i) the date the Homeowner conveys the Project to another party, or (ii) the date the Project is no longer used by the Homeowner as its principal place of residence. In the event this Note is not assumed by the Homeowner but retained by the Borrower, this Note shall be payable upon transfer of the Project from the Borrower to the Homeowner. Principal and interest on this Note shall be payable at the office of the Authority located at: 6431 University Avenue Northeast, Fridley, Minnesota, 55432, Attention: City Manager. If payment on this Note is not paid when due and remains unpaid after a date specified by a notice to Borrower, which date shall not be less than thirty (30) days after the date such notice is mailed, the Authority may exercise its option to bring suit to collect this Note. If suit is brought to collect this Note, the Authority shall be entitled to collect all reasonable costs and expenses of such suit, including, but not limited to, reasonable attorneys fees. - The Borrower may prepay the principal amount outstanding on this Note in whole or in part. Any partial prepayment shall be applied first to interest on and then to the principal amount outstanding. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties and endorsers, and shall be binding upon them and their successors and assigns. Any notice to Borrower provided for in this Note shall be given by mailing such notice by certified mail addressed to the Borrower at: Center for Energy and Environment 211 N. Second Street, Suite 455 Minneapolis, Minnesota 55401 or to such other address as the Borrower may designate by notice to the Authority. Any notice to the Authority shall be given by mailing such notice by certified mail, return receipt requested, to the Authority at the address stated in the first paragraph of this Note, or at such other address as may have been designated by notice to the Borrower. The indebtedness evidenced by this Note is secured by a Mortgage, dated the day of , 1999, and reference is made to the Mortgage for rights as to acceleration of the indebtedness evidenced by this Note. Dated: '1999. CENTER FOR ENERGY AND ENVIRONMENT By Its SCHEDULE F FORM OF AUTHORITY MORTGAGE MORTGAGE FRIDLEY HOUSING REPLACEMENT PROGRAM (SINGLE FAMILY) THIS MORTGAGE is made this day of , 1999 between the Mortgagor, Center for Energy and Environment (herein "Borrower ") and the Mortgagee, the Housing and Redevelopment Authority In and For the City of Fridley, Minnesota, a body corporate and politic organized and existing under the laws of the State of Minnesota, whose address is 6431 University Avenue N.E., Fridley, Minnesota 55432 (herein "Lender "). WHEREAS, Borrower is indebted to Lender in the Principal sum of U.S. S 22,000 which indebtedness is evidenced by Borrower's note dated , 1999 (herein "Note "), providing for principal and interest, if not sooner paid, due and payable as provided in the Note ( "Due Date "). TO SECURE to Lender the repayment of the indebtedness evidenced by the Note, with interest, thereon and all renewals, extensions and modifications; the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Mortgage; and the performance by Borrower of the covenants by borrower and agreements contained herein, and in the Note contained. Borrower does hereby mortgage, grant and convey to Lender, with power of sale, the property located in the County of Anoka, State of Minnesota legally described as: Lots Twenty-eight (28) and Twenty -nine (29), Block Twenty-four (24), Hyde Park, according to the plat thereof on file and of record in the office of the Register of Deeds of and for said County of Anoka, Minnesota. (herein the "Property") which has the address of 5857 Main Street Northeast, Fridley, Minnesota 55432 (herein "Property Address "). TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances and rents, all of which shall be deemed to be and remain a part of the property covered by this Mortgage; and all of the foregoing, together with said property (or the leasehold estate if this Mortgage is on a leasehold) are hereinafter referred to as the "Property". BORROWER COVENANTS that Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property, and that the Property is unencumbered, except for encumbrances of record. Borrower covenants that Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to encumbrances of record. PROVIDED, NEVERTHELESS, that if Borrower shall pay Lender the sums evidenced by the Note according to the terms of the Note, and shall repay to Lender, at the times and with interest as specified, all sums advanced in protecting the lien of this Mortgage, in payment of taxes on the Property and assessments payable therewith, insurance premiums covering buildings thereon, principal or interest on any prior liens, expenses and attorney's fees herein provided for and sums advanced for any other purpose authorized herein, and shall keep and perform all the covenants and agreements herein contained, then this Mortgage shall be null and void, and shall be released at Borrower's expense. UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal and Interest. Borrower shall promptly pay when due the principal and interest indebtedness evidenced by the Note and late charges, if any, as provided in the Note, and keep and perform all covenants contained in the Note. 2. Application of Payments. Unless applicable law provides otherwise, all payments received by Lender under the Note and paragraph 1 hereof shall be applied by Lender first to interest payable on the Note, and then to the principal of the Note. 3. Prior Mortgages and Deeds of Trust; Charges; Liens. Borrower shall perform all of Borrower's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Mortgage, including Borrower's covenants to make payments when due. Borrower shall pay or cause to be paid all taxes, assessments and other charges, fines and impositions attributable to the Property which may attain a priority over this Mortgage, leasehold payments or ground rents, if any. 4. Hazard Insurance. Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage." 5. Preservation and Maintenance of Property; Leaseholds; Condominiums.; Planned Unit Developments. Borrower shall keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property and shall comply with the provisions of any lease if this Mortgage is on a leasehold. If this Mortgage is on a unit in a condominium or a planned unit development, Borrower shall perform all of Borrower's obligations under the declaration or covenants creating or governing the condominium or planned unit development, the by -laws and regulations of the condominium or planned unit development and constituent documents. 6. Protection of Lender's Security. If Borrower fails to perform the covenants and agreements contained in this Mortgage, the Note or in any other document executed in connection with this Mortgage, or if any action or proceeding is commenced which materially affects Lender's interest in the Property, then Lender, at Lender's option, upon notice to Borrower, may make such appearances, disburse such sums, including reasonable attorneys' fees, and take such action as is necessary to protect Lender's interest. Any amounts disbursed by Lender pursuant to this paragraph 6, with interest thereon, at the Note rate, shall become additional indebtedness of Borrower secured by this Mortgage. Unless Borrower and Lender agree to other terms of payment, such amounts shall be payable upon notice from Lender to Borrower requesting payment thereof. Nothing contained in this paragraph 6 shall require Lender to incur any expense or take any action hereunder. 7. Inspection. Lender may make or cause to be made reasonable entries upon and inspections of the Property, provided that Lender shall give Borrower notice prior to any such inspection specifying reasonable cause therefor related to Lender's interest in the Property. 8. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender, subject to the terms of any mortgage, deed of trust or other security agreement with a lien which has priority over this Mortgage. 9. Borrower Not Released; Forbearance by Lender Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Mortgage granted by Lender to any successor in interest of Borrower shall not operate to release, in any manner, the liability of the original Borrower and Borrower's successors in interest. Lender shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Mortgage by reason of any demand made by the original Borrower and Borrower's successors in interest. Any forbearance by Lender in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any such right or remedy. 10. Successors and Assigns Bound: Joint and Several Liability Co- signers. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of Lender and Borrower, subject to the provisions of paragraph 14 hereof. All covenants and agreements of Borrower shall be joint and several. Any.Borrower who co -signs this Mortgage, but does not execute the Note, (a) is co- signing this Mortgage only to mortgage, grant and convey that Borrower's interest in the Property to Lender under the terms of this Mortgage, (b) is not personally liable on the Note or under this Mortgage and (c) agrees that Lender and any other Borrower hereunder may agree to extend, modify, forbear, or make any other accommodations with regard to the terms of this Mortgage or the Note without that Borrower's consent and without releasing that Borrower or modifying this Mortgage as to that Borrower's interest in the Property. 11. Notice. Except for any notice required under applicable law to be given in another manner, (a) any notice to Borrower provided for in this Mortgage shall be given by delivering it or by mailing such notice by certified mail addressed to Borrower at the Property Address or at such other address as Borrower may designate by notice to Lender as provided herein, and (b) any notice to Lender shall be given by certified mail to Lender's address stated herein or to such other address as Lender may designate by notice to Borrower as provided herein. Any notice provided for in this Mortgage shall be deemed to have been given to Borrower or Lender when given in the manner designated herein. 12. Governing Law; Severabilitv. The state and local laws applicable to this Mortgage shall be the laws of the jurisdiction in which the Property is located. The foregoing sentence shall not limit the applicability of Federal law to this Mortgage. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision, and to this end the provisions of this Mortgage and the Note are declared to be severable. As used herein, "costs, "expenses" and "attorneys' fees" include all sums to the extent not prohibited by applicable law or limited herein. 13. Borrower's COD V. Borrower shall be furnished a conformed copy of the Note and of this Mortgage at the time of execution or after recordation hereof. 14. Transfer of the Property or a Beneficial Interest in Borrower. If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person) without Lender's prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Mortgage. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Mortgage. W If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is delivered or mailed within which Borrower must pay all sums secured by this Mortgage. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Mortgage without further notice or demand on Borrower. Borrower may transfer and assign its obligations under this Mortgage to the Homeowner, as defined in that certain Contract for Private Redevelopment, dated as of 1999, by and between the Borrower and the Lender. 15. Statutory Covenants. Borrower makes and includes in this Mortgage the Statutory Covenants and other provisions set forth in Minnesota Statutes Section 507.15 and the Borrower covenants with the following statutory covenants: (a) to warrant title to the Project, (b) to pay all other mortgages, liens, charges or encumbrances against the Project as and when they become due, (c) to pay the indebtedness of the Note as herein provided, (d) to pay all real estate taxes on the Project (e) that the Project shall be kept in repair and no waste shall be committed, (f) Borrower shall keep any buildings on the Residence insured against loss by fire and other hazards for at least the sum of the full insurable value of the Residence for the protection of the Lender and (g) that the whole of the principal sum shall become due after default, in the payment of any installment of principal or interest, or of any tax, or in the performance of any other covenant, at the option of the Lender. NON - UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows: 16. Acceleration: Remedies. Upon Borrower's breach of any covenant or agreement of Borrower in this Mortgage, including the covenants to pay when due any sums secured by this Mortgage, Lender prior to acceleration shall give notice to Borrower as provided in paragraph 11 hereof specifying (1) the breach; (2) the action required to cure such breach; (3) a date, not less than 30 days from the date the notice is mailed to Borrower, by which such breach must be cured; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Lender, at Lender's option, may declare all of the sums secured by this Mortgage to be immediately due and payable without further demand and may invoke the power of sale hereby granted and any other remedies permitted by applicable law. Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph 16, including, but not limited to, reasonable attomeys' fees. If Lender invokes the power of sale, Lender shall cause a copy of a notice of sale to be served upon the person, if any, in possession of the Property. Lender shall publish a notice of sale and the Property shall be sold at public auction in the manner prescribed by applicable law. Lender or Lender's designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all sums secured by this Mortgage; (b) to all reasonable costs and expenses of the sales, including, but not limited to, reasonable attorneys' fees and costs of title evidence; and (c) the excess, if any, to the person or persons legally entitled thereto. 17. Borrower's Right to Reinstate. Notwithstanding Lender's acceleration of the sums secured by this Mortgage due to Borrower's breach, if Borrower meets certain conditions, Borrower shall have the right to have any proceedings begun by Lender to enforce this Mortgage discontinued at any time prior to the earlier to occur of (i) sale of the Property pursuant to the power of sale contained in this Mortgage or (ii) entry of a judgment enforcing this Mortgage if: (a) Borrower pays Lender all sums constituting the default actually existing under this Mortgage and the Note at the commencement of foreclosure proceedings under this Mortgage; (b) Borrower cures all breaches of any other covenants or agreements of Borrower contained in this Mortgagee; (c) Borrower pays all reasonable expenses incurred by Lender in enforcing the covenants and agreements of Borrower contained in this Mortgage, and in enforcing Lender's remedies as provided in this Mortgage including, but not limited to reasonable attorneys' fees; and (d) Borrower takes such action as Lender may reasonably require to assure that the lien of this Mortgage, Lender's interest in the Property and Borrower's obligation to pay the sums secured by this Mortgage shall continue unimpaired. Upon such payment and cure by Borrower, this Mortgage and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. However this right to reinstate shall not apply in the case of acceleration under paragraph 14 hereof. 18. Release. Upon payment of all sums secured by this Mortgage, Lender shall discharge this Mortgage without charge to Borrower. Borrower shall pay all costs of recordation, if any. 19. Acceleration: Additional Provisions. Lender may declare all amounts secured by this Mortgage due and payable if ( -a)- Borrower fails to occupy the Property as his or her principal residence; or (b) Borrower omits or misrepresents a material fact in any document executed in connection with this Mortgage; or (c) any prior Mortgage is paid in full; or (d) any prior Mortgage is in default or foreclosure; or (e) as otherwise provided in this Mortgage. REQUEST FOR NOTICE OF DEFAULT AND FORECLOSURE UNDER SUPERIOR MORTGAGES OR DEEDS OR TRUST Borrower and Lender request the holder of any mortgage, deed or trust or other encumbrance with a lien which has priority over this Mortgage to give Notice to Lender, at Lender's address set forth on page one of this Mortgage, or any default under the superior encumbrance and of any sale or other foreclosure action. This Mortgage and Note shall be construed according to the laws of the State of Minnesota. MORTGAGOR HEREBY EXPRESSLY CONSENTS TO THE FORECLOSURE AND SALE OF THE MORTGAGED PROPERTY BY ACTION PURSUANT TO MINNESOTA STATUTES CHAPTER 581 OR, AT OPTION OF MORTGAGEE, BY ADVERTISEMENT PURSUANT TO MINNESOTA STATUTES CHAPTER 580, WHICH PROVIDES FOR SALE AFTER SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE MORTGAGED RESIDENCE AND PUBLICATION OF SAID NOTICE OF SIX WEEKS IN THE COUNTY IN MINNESOTA WHERE THE MORTGAGED RESIDENCE IS SITUATED AND ACKNOWLEDGES THAT SERVICE NEED NOT BE MADE UPON MORTGAGOR PERSONALLY UNLESS MORTGAGOR IS AN OCCUPANT AND THAT NO HEARING OF ANY TYPE IS REQUIRED IN CONNECTION WITH THE SALE AND EXCEPT AS MAY BE PROVIDED IN SAID STATUTES, EXPRESSLY WAIVES ANY AND ALL RIGHT TO PRIOR NOTICE OF SALE OF THE MORTGAGED RESIDENCE. IN WITNESS WHEREOF, Borrower has executed this Mortgage. CENTER FOR ENERGY AND ENVIRONMENT STATE OF MINNESOTA) ) ss COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this day of , 1999 by Sheldon Strom, the of Center for Energy and Environment, a Minnesota non - profit corporation, on behalf of such corporation. Notary Public My commission expires This instrument was prepared by: The Housing and Redevelopment Authority In and For the City of Fridley, Minnesota 6431 University Avenue N.E. Fridley, Minnesota Sent Tax Statement to: G:\ WPDATA \F \FRIDLEY \25 \CEE \CONTRACT.DOC HOUSING & REDEVELOPMENT AUTHORITY Memorandum �1 DATE: June 25, 1999 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on Architectural Design Concepts Robert Gerloff has completed his initial draft of the plans for the Mississippi St. lot and the preliminary work on the pattern book. This is an update on the status of his efforts. House Plans As you may recall, we hired Gerloff to draft house plans for a move -up style home to built on the vacant lot owned by the Authority at 1015 Mississippi St. There are a number of features about the site that make it attractive for a higher valued home, including its size, number of mature trees and location. Among the challenges facing Gerloff was creating a design that was sensitive to surrounding properties (1950's style one level ramblers), yet incorporated modem amenities demanded by today's move -up buyers. Gerloff has drafted three created -three concept plans, some of which may look familiar to homes found in Fridley: Split En This plan features a large covered entry that opens into a 22' x 16' great room with adjoining kitchen and center island. The great room has a fairly large bank of windows in front corner and a sliding glass door looking out into the backyard. A master bedroom with a bathroom is located on the upper level and two bedrooms are located in the lower level with a small bathroom. A large 22'x 32' garage is attached to house via small mud room. The plan has a very 60 House Design Memo June 25, 1999 Page 2 "horizontal" appearance, with a low- pitched roof, wide eaves, and a 3 car garage. The house has 1,568 square feet of finished floor space. Rambler This plan is very reminiscent of the typical Fridley rambler. It features a covered entry that is recessed from the front fagade which opens into a front room with a large fire place. This space transitions into a back room with adjoining island kitchen, fireplace and mud room. This plan also incorporates large banks of windows, both front and rear, to create an open look and sense of space. A master bedroom suite and two bedrooms are located at the east end of the house. The plan will also include a mix of exterior materials such as brick and horizontal siding. A two car garage is attached at the west end of the house. The house has 1,783 square feet of finished floor space. Two Story This plan has elements of the Craftsman -style bungalow, with a large eaves, a low horizontal appearance and detached garage. It includes a cover entry, large front room with fireplace that transitions into a backroom featuring large bay window. The kitchen adjoins the backroom and is attached to a mud room which in turns opens onto a covered walkway to a detached garage. A master suite is located at the other end of the home. Two bedrooms and a bathroom are located on the second level. The detached garage and walkway create a small courtyard feel at the back of the home. This is the largest of the three plans with 2,008 square feet of finished floor space. At this point, staff is evaluating a number of different options to utilize the plans and solicit proposals from developers. One option would be to select one of the plans and ask builders to submit bids on the project. Another approach might be to allow the builders to pick the plan they think would be most marketable to prospective buyers. Gerloff has not generated any cost estimates, not have we established a price for the land. Similar lots in the area sell for $45,000 to $50,000. Pattern Book The second project Gerloff has been working on is a "pattern" book which will provide visual examples of the design issues we are trying encourage in the housing replacement program. House Design Memo June 25, 1999 Page 3 Topics that will be covered include: 1. Zoning issues - Setbacks, minimum floor areas, accessory structures and lot coverage. 2. Streetscape - The curb appeal and layout of the building in relation to the lot and surrounding properties. 3. Garage issues - Placement of the garage on the site, door dominance and relationship to the house. 4. Massing Rules of Thumb- Focuses on the basic elements of design such as building size, roof pitch, eaves and overhangs. 5. Architectural Rules of Thumb - Examines window placement and sizing, use of exterior materials, use of color and entrance issues. The intent of the book is to guide the buyer /builder team through the issues by providing examples. The book will not provide specific house designs, but will focus on the elements of good design. Summary Gerloff will continue to make revisions to both the Mississippi St. plans and the pattern book. Staff is still evaluating options on how to develop the Mississippi St. lot and which of the three plans to select. We plan to have a recommendation for the HRA at their August meeting. No action is needed by the HRA at this time. 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Bums, Executive Director FROM: Barbara Dacy, Community Development Director DATE: June 25, 1999 SUBJECT: 1999 Draft Budget 161T =k,, The challenge for this year's budget process is to simplify a very complicated morass of numbers, restrictions, and fund accounts. I hope this memo will help to meet that challenge and provide the "bottom line ". This is a historic year for the City. In addition to the City's fiftieth anniversary, the Medtronic project represents the "jewel in the crown" of the City's redevelopment program. Since the first Tax Increment District was created in 1979, several redevelopment and economic projects have been completed creating substantial amounts of new market value and creating thousands of jobs. The Medtronic project is a fitting conclusion to the program originally established by the City and the Housing and Redevelopment Authority 20 years ago. There is much to celebrate! New opportunities and challenges, however, loom on the horizon. Back to the budget. In short, the Authority has enough funds to continue housing programs and proceed with current redevelopment projects for at least the next five to six years. Recent legislative changes however will make it more difficult to create substantial sources of long term revenue. For example, after January 1, 2000, increment from the gap year districts ( #2 and #3) must be used only to pay debt service obligations. Further, more than ever before, the Authority will have to be very aggressive with grant applications to Regional and State resources. Partnerships with other first ring communities should also be pursued to create cost sharing opportunities or simply to have a stronger voice at the Legislature or the Met Council. The following will describe these and other issues that will be discussed with the Authority Thursday night. FUTURE REVENUES The challenge for the future will be to find as many revenue sources as possible. As of December 31, 1998, the Authority has approximately $7.7 million of non -tax increment revenues available for programs. This amount will constitute a new "General Fund" for the Authority. After January 1, 2000, the pooling restrictions will limit the use of tax increment from the gap year districts to debt service payments. The Authority will have to rely on the General Fund and Tax Increment District #9 (Onan) for its programs until alternative sources are determined. Substantial amounts of increment will be generated in Tax Increment District #6, especially after rm •O 1999 Draft Budget June 25, 1999 Page 2 2011. Staff is preparing a proposal for Medtronic to create an "installment land sale" in conjunction with Phases II and III that would create a stream of revenue for the General Fund. FUTURE EXPENDITURES Here is the staff thinking on how the Authority should proceed with its programs in the next five years: Housin 1. Continue Scattered Site Acquisition program for six years to complete the original goal of 50 lots in the Housing Replacement District ($355,000/year or a total of $2.3 million). 2. Continue Revolving Loan Program to make it self supporting. This program has been very effective, as the recent study by our Intern proved. Based on the current balance in the Revolving Loan fund ($479,000) and the projected annual loan repayments ($250,000), we will need to reserve approximately $1.4 million out of the General fund. A portion of this amount will be drawn down over time to fund up to 52 loans per year, assuming an average loan of #$13,000 with a 13 -year term. 3. Continue remaining rehab programs at a smaller amount of $200,000 /year for the next five years. This amount would include apartment rehab, the Last Resort Program, and the targeted neighborhood matching deferred loan program. Redevelopment Programs 1. Finish Gateway East in 1999 and 2000. Expenditures would initially be made from the General Fund, but a new Tax Increment District would be established. Staff also hopes to apply for Livable Community Act funds to compensate for the net deficit of the district ($400,000 to $500,000). 2. Initiate salvage yard redevelopment project immediately. About $1.4 million is TIF #3 is available for use by the end of this year only (or until the City receives a non - compliance letter from the State Auditor regarding TIF #2 and #3). The Onan project will create substantial amounts of revenue to recover expenses (this district is also permitted to pool its increment that would create funds for eligible expenses). 3. Initiate the planning process in 2001 for the Frank's Used Car site and initiate the project in 2002. Planning Issues 1. The City and the Authority should undertake a land use study immediately to determine how the City wants the land uses around Medtronic to be developed, with a careful eye as to the goals and objectives of the City as a whole (the Comp Plan is underway and a draft will be prepared by the end of this year). This issue will be discussed in more detail at the Joint meeting in July. -- MEDTRONIC (See Attachment #1) Phase 1 construction is underway, and we were recently advised that it would likely exceed 500,000 square feet. The increment and expenditures from the project (assuming 1,000,000 square feet) up to the year 2011 have been included in the Cash Flow analysis that is discussed later in this memo. It is best to begin the discussion Thursday night with a summary of the financial implications of the Medtronic project, and then, move on to how it relates to the remainder of the City's redevelopment program. To summarize: • Prior to 2011, the Authority will receive $6.5 million in tax increment or $3.8 million in present value. 1999 Draft Budget June 25, 1999 Page 3 • After 2011, the Authority will receive $22.3 million in tax increment or $6.0 million in present value. • Beginning in 2002, administrative fees will be generated (beginning at approximately $180,000 /year) and will increase over the life of the district to a total of $11.1 million (this is not a present value number). • About $1.7 million of increment will be available from 2009 through 2011 to finish debt service obligations (TIF #2 and 3 will pay debt service through 2008). • About $15.8 million will remain for eligible expenditures (further explanation will be given at the meeting). Also to be discussed at Thursday's meeting is the fiscal disparity and Local Government Aid issues. As a point of information, all of the Tax Increment Plans with the exception of TIF #3 state that the fiscal disparity contributions are taken outside the district. TIF #3 did require fiscal disparities to be taken within the district, probably because it was known that a majority of the land area was vacant, and the new development within that district would compensate for the contribution. The special legislation for extension of TIF #6 requires a projected local government aid penalty of approximately $250,000 /year beginning in the year 2012 and ending in 2025. There are a number of options to evaluate that will reduce the impact. The City will be receiving about $24,000 /year in taxes on the land beginning in 2002, and in 2012, 200,000 square feet of the development will become taxable. About $183,000 in taxes will be created per year. DEBT SERVICE The increment from TIF Districts #2 and #3 will be used to pay the debt service obligations on two bonds, the 1997A Refunding Bond and the 1998B Bond. The 1998B issue was the permanent financing for rolling over the Lake Pointe temporary bond issue. The total payments, including principal and interest, are $13,022,906 and $6,470,715 respectively. Bond Counsel will be providing the City an analysis indicating that the new legislation does in fact enable the City to use increment from these districts to pay the debt based on the pledge agreements which were passed by the City. The recent state law change regarding the use of tax increment for gap year districts ( #2 and #3) will require that beginning in the year 2000, all increment from those districts must be used for debt service and pre - existing obligations (revenue notes). TIF #6 will supply the increment to pay the debt service on the bonds from 2009 through 2011. REVENUE AND EXPENDITURE PROJECTION (See Attachment #2) Remember that this spreadsheet is full of assumptions. It assumes no new growth or development and a 0% inflation rate on tax increment revenues. The Medtronic project's revenues and expenditures have been included in the cash flow up to the year 2011. In fact, staff has drawn a line after this year across the spreadsheet. Projections beyond this year are just too far out to predict with any significant accuracy. The many other projects which have been initiated including Banfill Crossing, 57 h Avenue (Steve Linn), Onan/Murphy Warehouse, and a handful of smaller projects have been included both on the revenue and the expenditure side of the spreadsheet. This will be the last year that staff will use this format for the projection spreadsheet. Because there are a variety of restrictions and issues that pertain to certain TIF districts and tax increment revenues, it is more appropriate to develop another means of projecting revenues and expenditures. A new model will be developed showing all of the new funds that are 1999 Draft Budget June 25, 1999 Page 4 described in more detail below. For the purposes of this meeting, however, the spreadsheet will be reviewed in detail on Thursday night. The spreadsheet contains the recommendations identified above. In general, there are significant positive cumulative balances. NEW BUDGETING SYSTEM The accounting system for the Authority's budget has changed. Instead of having two funds, HRA Operating and the Housing Fund, there will now be a General Fund, three housing funds, and 17 funds for each Tax Increment District, for a total of 21 funds. Four TIF Districts have either expired or have been terminated (#4, #5, #8, and #10), but a fund has been created for each of those to maintain a historical record of expenditures and revenues. The purpose of the General Fund is to track revenues and expenditures that are related to the Authority's programs. These expenditures could occur within and outside of existing TIF Districts. For example, general fund revenues would include non -tax increment monies including the tax levy amounts, land sale revenue, lease payments, or grant funds. Examples of expenditures would be operating and capital outlays for any housing or authorized expenses. The three housing funds have been developed to properly track the activity for these programs: Fund 267 is the Revolving Loan Fund and will track the loans and repayments as a result of the 5% loan program. Fund 265 is the Housing Program Fund which will track all other housing rehab programs (excludes scattered sitelhousing replacement program). The fund includes the target neighborhood matching deferred loans, HOME program grants, apartment rehab loans, and the administrative expenses for the Center for Energy and the Environment (now known as Community Revitalization Resources!). Fund 262 is the Housing Operations Fund. It tracks the administrative expenses for the housing programs including the Housing Coordinator and Remodeling Advisor salaries and associated operating expenses. Funds for the Tax Increment Districts have been established as well (Funds 450 through 467). The Housing Replacement Program is Fund 501. Every year, staff will budget for expenditures within each of these districts. OPERATING BUDGETS (Attachment #3 and #4) The Authority's former operating fund (460) is now called the General Fund. Different than previous years are that some of the expenditures that are specific to a tax increment district will now be budgeted for that district. The General Fund will not contain those types of expenditures. The best example is the maintenance charges for the Lake Pointe site. In previous years, those expenses were included in the operating budget, now any expenses related to Lake Pointe will be budgeted in the Lake Pointe District Fund. Enclosed is a spreadsheet comparing the 1998 budget with 1999 and a projected year 2000 budget. In general, the expenditures are decreasing. The major expenses for 1999 in the General Fund are the Cash n Pawn acquisition, other Gateway East acquisitions, and the grant amounts for the Onan/Murphy project (which will be reimbursed by the Met Council and DTED). 1999 Draft Budget June 25, 1999 Page 5 HOUSING PROGRAMS The operating budget for the Housing (Fund 262) has increased by $13,950 or roughly 12% from 1998. The increase is due to the cost of hiring an architect to draft plans for the scattered site program. As explained earlier, $1.4 million for the General Fund should be set aside to help fund the Revolving Loan. Fund. In 1999, we are projecting to draw down $157,000 from the General fund for transfer into the Revolving Loan Fund. This analysis was based on the assumption that 52 loans per year at an average of $13,000 would be made. No more than 52 loans should be made each year. The reason we need to set aside $1.4 million is that we have been more aggressive in making loans than originally anticipated. When we created the Revolving Loan Fund in 1996, we planned to make 32 loans per year through 2002. By 2013, we could make 60 loans per year. In reality, we have doubled our production meaning we have used more money than expected. Our current proposal would to cap the Revolving Loan fund at $636,480 per year. The source of funds for this expenditure will be the Authority's General Fund. In addition, it is proposed that the Housing Rehab Fund be allocated about $200,000 a year for the next five years to fund the Last Resort program, targeted neighborhood matching deferred loans, and apartment rehab. Finally, the Housing Replacement Fund should be allocated about $355,000 for the next six years to complete the original acquisition goal of 50 lots in the Housing Replacement program. The Authority has 15 lots in the program now, and the additional $2.1 million will complete that program. These two program areas combine for a total of $3.1 million. An alternative expenditure option to evaluate is using these funds to develop an aggressive apartment rehab program where the Authority would be take an equity position in owning an existing apartment project. Apartment rehab, in general, in an expensive undertaking, and staff has not, because of other priorities, had time to develop a proposal for a rehabilitation program. ISSUES FOR JOINT MEETING Here are the issues that will need to be discussed at the joint meeting: • Resolve issues /questions regarding Medtronic project. • How aggressive should the City be in planning for the likely impact from the Medtronic project? • About $1.4 million is available in TIF #3 for expenditure prior to December 31, 1999. Should we use it to initiate the salvage yard redevelopment project in District #9? • What are the City's redevelopment priorities? ISSUES FOR THURSDAY NIGHT, JULY 1 The goal for Thursday night is to review the Revenue and Expenditure cash flow projection as compared with the staff recommendations for expenditures. The Authority should make comments on these recommendations. The operating budgets for 1999 are also included. Approval is not required until the accounting system can be prepared which will better reflect the current and future status of the Authority' funds. M- 99-161 City of Fridley, Minnesota MEDTRONIC, INC. DEBT COVERAGE - FULL DEVELOPMENT - 3 PHASES - 1,050,000 SG. FT. (a) (b) (c) (d) (e) (t) (g) (h) Total Tax Less: Debt Interest Current Available Increment Admin Fees Available Service Eamings/(Exp) Period Cumulative for From TIF Total Tax for Debt for Lake on Prior Years Increase Balance Date Authority Districts 2 & 3 Increment Service Pointe Cumulative (Decrease) (Shortfall) (from Cash x (b) + (c) - (d) TIF #6 Balance @ (e) - (f) + (g) Total of (h) Flow Analysis) 10.00% 5.00% 06/01199 0 298,982 0 298,982 (298,982) 0 0 12101/99 0 196,113 0 196,113 (196,113) 0 0 0 06/01/00 0 222,033 0 222,033 (222,033) 0 0 0 12/01100 0 195,510 0 195,510 (195,510) 0 0 0 06101/01 0 497,910 0 497,910 (497,910) 0 0 0 12/01/01 0 263,403 0 263,403 (263,403) 0 0 0 06/01/02 184,942 506,171 (92,471 598,642 (506,171) 0 92,471 92,471 12/01/02 184,942 258,819 (92,471 351,290 (258,819) 2,312 94,783 187,254 06/01/03 189,002 505,079 (94,501 599,580 (505,079) 4,681 99,182 286,436 12101/03 189,002 348,715 (94,501 443,216 (348,715) 7,161 101,662 388,098 06101/04 193,143 509,635 (96,571 606,207 (509,635) 9,702 106,273 494,371 12101/04 193,143 345,568 (96,571 442,139 (345,568) 12,359 108,930 603,301 06/01105 340,973 513,461 (170,486 683,947 (513,461) 15,083 185,569 788,871 12/01105 340,973 571,509 (170,486 741,995 (571,509) 19,722 190,208 979,079 06101/06 348,153 510,274 (174,076 684,350 (510,274) 24,477 198,553 1,177,632 12/01/06 348,153 580,610 (174,076 754,686 (580,610) 29,441 203,517 1,381,150 06101/07 355,477 505,630 (177,738 683,368 (505,630) 34,529 212,267 1,593,417 12101/07 355,477 588,055 (177,738 765,793 (588,055) 39,835 217,573 1,810,990 06101108 515,343 499,300 (257,672 756,972 (499,300) 45,275 302,947 2,113,937 12/01/08 515,343 594,005 (257,672 851,676 (594,005) 52,848 310,520 2,424,457 06/01/09 526,011 (263,006 263,006 (465,785) 60,611 (142,168 2,282,289 12/01/09 526,011 (263,006 263,006 (599,299) 57,057 (279,236 2,003,053 06101/10 536,892 (268,446 268,446 (34,036) 50,076 284,486 2,287,538 12101110 536,892 (268,446 268,446 (619,036) 57,188 (293,402 1,994,136 06/01/11 68,499 (273,995 (205,497 (17,656) 49,853 (173,300 1,820,836 12/01/11 68,499 273,995 205,497 642,656 45,521 802,632 1018,205 06/01/12 674,009 (224,670 449,339 0 449,339 1,467,544 12101/12 674,009 (224,670 449,339 0 449,339 1,916,883 06101/13 691,329 (230,443 460,886 0 460,886 2,377,769 12101/13 691,329 (230,443 460,886 0 460,886 2,838,656 06/01/14 708,997 (236,332 472,664 0 472,664 3,311,320 12/01/14 708,997 (236,332 472,664 0 472,664 3,783,984 06/01/15 727,017 (242,339 484,678 0 484,678 4,268,662 12101/15 727,017 (242,339 484,678 0 484,678 4,753,340 06/01/16 745,398 (248,466 496,932 0 496,932 5,250,272 12101/16 745,398 (248,466 496,932 0 496,932 5,747,204 06/01/17 764,146 (254,715 509,431 0 509,431 6,256,634 12101/17 764,146 (254,715 509,431 0 509,431 6,766,065 06101/18 783,270 (261,090 522,180 0 522,180 7,288,245 12101/18 783,270 (261,090 __ _522,180 0 522,180 7,810,425 06/01/19 802,775 (267,592 535,184 0 535,184 8,345,608 12/01/19 802,775 (267,592 535,184 0 535,184 8,880,792 06/01/20 822,671 (274,224 548,448 0 548,448 9,429,239 12101/20 822,671 (274,224 548,448 0 548,448 9,977,687 06/01/21 842,965 (280,988 561,977 0 561,977 10,539,664 12101/21 842,965 (280,988 561,977 0 561,977 11,101,640 06/01/22 863,665 (287,888 575,777 0 575,777 11,677,417 12101/22 863,665 (287,888 575,777 0 575,777 12,253,194 06101/23 884,779 (294,926 589,852 0 589,852 12,843,046 12101/23 884,779 (294,926 589,852 0 589,852 13,432,899 06/01/24 906,315 (302,105 604,210 0 604,210 14,037,109 12101/24 906,315 (302,105 604,210 0 604,210 14,641,318 06/01/25 928,282 (309,427 618,854 0 618,854 15,260,173 12/01/25 928,282 (309,427 618,854 0 618,854 15,879,027 28 808102 8 510 781 11 168 337 26150 546 (10.889250) 617,731 15,879,027 1 15 879 027 8.00% area N" 8,288,918 MedtronicFD15e.WK4 5,669,558 (3,523,872) 10,434,604 (6,658,609) 296,415 4,072,410 Prepared by Kress Mc ATTACHMENT # 1 010,99 `Q�Q`� QpQp tpppp�! ppN AApp QggQ O pN_ 1p7 pO .pO tpO pA_ m om Qa A eW OpON la�yyO mma NlO��lmpO l� ��p�m J O17 l�)l7 of OOl7NO/7 =zct . . . m.00c U st Pi o R 01 J ymj OA��pp tD Y] �Vy l'A/_pt A O O ^ b Z � po^ m N A m 3 A F IOf l7 h d ti 1A w A A m m w In zo OY C NOOf mfD Ol �fCO F V RO1tL11�0i0L .:999: PO m A A A m o 0 0 0 A aAD J aU O Q6 pG pC , • • • • • • 8 F LL G O O a9 O C yy fAO W AO,AA.° -� `O �cm LLy vioS07OVo W $ C4 tvvvvvv = 6 O N�m A m pAp �O�ppl m ��NOm 7��Al+f M G J W A O m m A m l0 C p A < Np Amy O mmmp� N N m 17 c o 0 O t600m CA m C O N P! OmfLI OD �:Am ODArr-: I.- N N N N m O vo��i a'3 O � PO7 � V'Iq 1A� � fAOAA �m i m 1(/aN OmOmO- �0 BOA F, NNOD NNN N --i -- wi m mLd QQQ N N N V' O< 1 O Vi 1 q Of �O iD fO(O {D fD �fO miO N N N N N N N N N N OOD^ W CIAmNO 6 9 1I A�- p" M 1�0 N ci a vi Vf 'i -i - ,VCUP pi EOp 20N pig N N m AAA 0 0'1 N1ON NymO�omm �pnp tO V � P �LD LQ OaD aD aD pNm O l+l m N 07 l9 l�l l+l Cl t7 y� l"1 r D��m�p��p�pmma p�pg� o V NNN a0D 01007N N < V go rR ��Op yOy��f mmN Of N f0 NO, to C6.6 d �tO tO tAONNNNOI 'a D OD 00 tl00D 00000 m CO O b d ONE&! V Ol W N JODOOfOA • • • ro S R N - N AA AI�AA 07 ��- 0 N N 07 m A O N Q N m A m m O A A B v7 fi�CW LL 7 o CI Fo `off b N N F� N W Q Comparison of HRA Operating Budgets 1998 -2000 ADMINISTRATIVE CHARGES OTHER SERVICES AND CHARGES 4330 1998 Actual 1999 2000 165 Budget Expend. Budget Budget Total Admin. Servic 258,139 258,139 166,127 171,109 SUPPLIES Printing and binding 3534 4336 Insurance, non -pers. 4220 Office Supplies 250 177 250 250 4221 Operating Supplies 400 1057 400 400 Total Supplies 650 1234 650 650 OTHER SERVICES AND CHARGES 4330 Professional Servies 212100 4331 Dues and Subscript. 165 4332 Communication 675 4333 Transportation 600 4334 Advertising 17000 4335 Printing and binding 3534 4336 Insurance, non -pers. 10419 4337 Conferences 1600 4338 Utility Services 3500 4340 Services Contracted 33150 4341 Rentals 0 4346 Miscellaneous 128120 4350 Payments to Others 322915 Total Other Srvc/Ch 733778 CAPITAL OUTLAY 4510 Land 651000 4520 Building 0 4530 Imps. Other than Bid 281000 4540 Machinery 0 4560 Furniture and Fixture 0 Total Capital Outlay 932000 GRAND TOTALS 1924567 278 165 165 399 811 811 46 600 600 0 17000 2000 1383 1650 1650 10899 8449 8702 2043 1600 1600 4038 0 0 29342 15750 1250 0 0 0 128120 103550 103550 178000 300000 200000 480158 639175 509928 409865 871000 420000 325000 0 0 0 1196000 420000 2001952 1101687 ATTACHMENT #3 1999 -2000 Operating Budget Line Item ADMINISTRATIVE CHARGES 1999 2000 Budget Budget Administrative Services 159,887 164683 Administrative Overhead 3,616 3724 Micro Computer Charge 791 814 Mini Computer Charge 1,833 1888 Total Admin. Service 166,127 171,109 SUPPLIES 4220 Office Supplies 250 250 4221 Operating Supplies 400 400 Total Supplies 650 650 OTHER SERVICES AND CHARGES 4330 Professional Servies Audit fees 2500 2500 Legal 5000 5000 TIF District Analysis 5000 5000 School District Agreements 500 500 Nonprogrammed Studies 75000 75000 Nonprogrammed Appraisals 15000 15000 Nonprogrammed Env. Audits 10000 10000 Nonprogrammed Relocation 10000 10000 Tax Increment Admin Charge from County 12100 12100 Casserly/Krass Monroe 50000 50000 Total Professional services 189600 189600 4331 Dues and Subscript. Corporate Report 25 25 City Business 20 20 TWn Cities Business 25 25 NAHRO Dues 15 15 Builder Magazine 80 80 Total Dues 165 165 4332 Communication Postage 500 Phone 311 Total Communication 811 811 4333 Transportation 2 APA or NAHRO Conf 600 600 Total 600 600 4334 Advertising Fridley Video? 15000 Legal Ads 2000 2000 Total Advertising 17000 2000 4335 Printing and binding Copier Allocation 150 150 Annual Report in Newsletter 1500 1500 Total Printing 1650 1650 4336 Insurance, non -pers. 8449 8702 4337 Conferences Lunch and Meeting Reimbursements 500 500 Confemece Lunches 100 100 APA or NAHRO Conf 500 500 Miscellaneous 500 500 Total Conferences 1600 1600 4338 Utility Services 0 0 4340 Services Contracted Courier Service 250 250 Lake Pointe Maintenance 15000 Frank's Lawn maintenance 500 500 Total Service Contracted 1750 750 4341 Rentals 0 0 4346 Misc/Pay as you go payments 103550 103550 4350 Payments to Others/School District 300000 200000 Total Other Services and Charges 847851 701293 CAPITAL OUTLAY 4510 Land Onan/Murphy warehouse payment 871000 Gateway East(Duplex/ReVDemo /Imps.) 420000 Total Land 871000 420000 4520 Building Gateway East(Pawn, vacant lots) 325000 Total Building 325000 4530 Imps. Other than Bid 4540 Machinery 4550 Furniture and Fixture Total Capital Outlay 1196000 420000 GRAND TOTALS 2001952 1101687 Fridley HRA 1999 Housing Program Budget Fridley HRA 1999 Housing Program Budget Introduction Prior to 1999, all activity for the housing program was tracked under Fund 262 (Housing Fund). This year, new funds have been created to keep the housing program financial records separate by type of activity. The change was largely in response to new reporting requirements mandated by the State Auditor's office. Description of Funds Fund 262 Housing Operations) This fund encompasses only personal services, supplies and other services and charges related to the housing programs. All activity related to the loan program and scattered site acquisitions have been moved to separate funds. Fund 265 (Other Housing Programs) This fund includes most of the rehab loans (except 5% revolving loans), loan repayments, fees paid to CEE for loan originations and inspections, and matching funds for the HOME program. Fund 267 (Revolving Loan Fund) This fund was set up to track the 5% Revolving Loan Program. It includes loans originated, loan repayments, and fees paid to CEE for administering the program. For 1999 and beyond, we are capping the program at $636,480. This would allow up to 52 loans per year, assuming an average loan of $13,000 with a 13 year term. Fund 501 (Housing Replacement Fund) This is the fund for the scattered sit acquisition program. 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Eli t9 t9 N N O ~ Z V U) a w z J J E E ~ O C 3 � CL CD H C > y y N O m N N N 1 .. W N C1 (O 1999 Budget Fund 262 Housing Operations PERSONAL SERVICES 4101 Full -Time Employee 4104 Temp Employee -Reg. 4112 Annual Leave 4120 Medicare Contributions 4122 Social Security 4125 ICMA Contribution 4131 Health Insurance 4132 Dental Insurance 4133 Life Insurance 4150 Worker's Compensation SUPPLIES 4220 Supplies 4221 Operating Supplies OTHER SERVICES AND CHARGES 4330 Professional Services • Wellness Testing 4331 Dues & Subscription Hsg. Remod. 2,500 Coord. Advisor Total 47,105 - 47,105 - 20,705 20,705 5,888 - 5,888 768 30 798 3286 128 3,414 2,374 - 2,374 2,544 - 2,544 180 - 180 42 - 42 1,582 672 2,254 Sub -Total 63,769 21,335 85,304 250 250 500 250 250 500 Sub -Total 500 500 1,000 65 - 65 65 - 65 • NAHB Publications 230 - • American Family Handiman - 50 • NAHRO Membership 100 - 330 50 4332 Communications • Postage for housing programs. 4333 Transportation 4334 Advertising • Rehab Fair • Housing Program 4337 Conferences & Schools • Computer Training • Misc. seminars 4340 Non - Professional Services • Computer maintenance • Printer maintenance WSW 500 250 150 350 230 50 100 380 750 500 2,500 - 2,500 2,500 1,500 4,000 5,000 1,500 6,500 500 - 500 350 150 500 850 150 1,000 250 150 400 250 100 350 500 250 750 Sub Total 7,395 2,550 9,945 Total 71,664 24,585 96,249 1999 Budget Fund 265 Other Housing Programs OTHER SERVICES AND CHARGES Total 4340 CEE origination fees (30 loans @ $350 ea.) 10,500 CEE inspection fees (45 inspections @ $50 ea.) 2,250 12,750 4350 Payments to Other Govt's Match requirement for 1996 HOME program. 15,000 Match requirement for 1998 HOME program. 16,250 31,250 Sub -Total 44,000 MORTGAGES RECEIVABLE 2613 -2614 Last Resort Loans (5 loans @ $5,000 avg. ea.) 50,000 2623 -2626 Hyde Park Loans (25 loans @ $4,000 avg. ea.) 100,000 150,000 Sub -Total 150,000 Total 194,000 6/25/99 s t 1999 Budget Fund 267 Revolving Loan Fund OTHER SERVICES AND CHARGES 4340 Non- Professional Services • CEE origination fees (50 loans @ $350 ea.) • CEE inspection fees (65 inspections @ $50 ea.) MORTGAGES RECEIVABLE 2612 Revolving Loan Capital 6/25/99 Sub -Total Sub -Total Total Total 17,500 3,250 20,750 20,750 636,480 636,480 657,230 1999 Budget Fund 501 Housing Replacement Program OTHER SERVICES AND CHARGES Total 4330 • Gerloff architectural contract 12,700 • Attorney for scattered site acq. program 5,000 • Casserly consulting fees 5,000 22,700 4334 Advertising Public hearing notices, builders exchange, etc. 5,000 4335 Printing _& Binding • Pattern book 2,500 4330 Non- Nrotesslonaf 5ervlces • Lawn mowing for vacant lots 500 • Demolition of 5 homes ($5,000 ea.) 25,000 25,500 Sub -Total 55,950 CAPITAL OUTLAY 4510 Lmd Acquire five homes (avg. $60,000 ea.) 300,000 Sub Total 300,000 Total 355,950 6/25/99 F-oM ./NAM To. Bid Bums Date: 5/25/99 Time: 3:22:22 PM AMM FAX HEWS May 24 -28, 1999 Page 2 of 3 Association of Metropolitan Municipalities Amendments to the TIF Act: Q & A Ttihe ollowing are some ques on's and answers regarding the amendments made to the TI F Act this session: Question #1 Housing districts can chose to make a local contribution equal to 10% of the increment. Was the percentage rate changed? Was the definition of a housing district changed? Answer #1 The amendments to the TI F Act are found in Article X of H F 2420 (1999 Omnibus Tax Act). The local contribution rate for housing dis- tricts was reduced from 10 to 5 percent. The change is effective for districts or 'geographic additions to AMM Fax News is faxed periodically to all AMM city managers and administrators The information is in- tended to be shared with mayors, councibnembers and staff in order to keep officials abreast of important metro city issues OCopyright 1999 AMM 145 University Avenue West St. Paul, MN 55103 -2044 Phone: (651) 21 5-4000 Fax (01) 281 -1299 E -mail: amm@amml45. org districts for which the request for certification was made after June 30, 1999. Although the definition of a .qualified" housing district was proposed in the Senate Tax Bill, it was not included in the Omnibus Bill. The definition of a housing district was not changed. Question #2 The Office of State Auditor (OSA) has concluded that TIF districts for which the request for certification was requested be- tween Aug. 1, 1979 and June 30, 1982 are not permitted to expend or pool increments outside the district. The OSA has identified the presence of 73 such districts in approximately 50 cities. While it has not completed audits on all cities the OSA has issued non- compliance letters to at least three cities and has referred the issue to the county attorney. During the 1999 Session there were special law proposals and general law amendments regarding the "1979 to 1982 ". What did the 1999 Legislature do related to this issue? Answer #2 The final Tax Bill ratifies all expenditures made outside the district but requires district decertifi- cation u on the payment of all outstanding bonds and contracts for preexisting in- district obligations and preexisting._ outside district obliga -, tions. Preexisting outside district obliga- tions means (1) b ds that were issued and the pledge of TIF was made befog: ier of a final notice of non compliance from the OSA or n : 2) bonds issued to refund bonds discussed under clause 1 prove ed the refund- ing bonds do not increase the amount of TIF needed to pay the refunded bonds, and (3) bin in written agreements secured bv_ IF and entered into by May 1, 1999. In- district obligations have the same meaning as the outside district obligations except t ielast date for entering into a binding written agreement is June 30, 1999. After Dec. 31, 1999, the district (If A pooled increments) must use increments to only pay preexisting in- district and preexisting outside district obligations and administra- tive expenses. Question #3 Are there any exemptions or special rules related to the 1979 to TIFAmendments ♦ See Page 2 From-MM To Bi0 Bums Date: 525199 Time: 3:22:22 PM File 3 of 3 May 24-28,1999 # AMM Fax News # Page 2 of 2 TIF Amendments/Pooling provisions are modified Condnued from Page 1 1982 districts? Answer #3 Yes, there are some exemptions and permitted expenditures. The 1979 to 1982 legislation does not apply to districts that (1) were decertified before the enactment date of the Tax Bill and all incre- ments pooled for expenditures outside the district have been repaid and distributed as excess increments and (2) increments were pooled to pay only for debt service on revenue bonds under section 469.129, subdivision 2 and to refund the bonds issued. In addition to the preexisting outside district obligations, incre- ments can be spent for expendi- tures outside the district before the earlier of notification by the state auditor or Dec. 31, 1999. Question #4 During the session there was proposed legislation to prohibit the use of increment for a commons area used as a public park or a facility used for social, recreational or conference center. Was the legislation enacted? Answer #4 Section 2 of Article X prohibits the use of increment for the identi- fied purposes for all districts present and new but it does not apply to (1) expenditures made before Jan. 1, 2000 (2) expendi- tures made under a binding agree- ment entered before Jan. 1, 2000 or (3) expenditures made under a binding contract entered pursuant to a letter of intent with a developer if the letter of intent was entered before Jan. 1, 2000. The amendment prohibits public and private facilities but it does permit increment to be used for a privately owned conference facility. The prohibition does not apply to the Mills Ruin Park and Milwaukee Road districts, as well as a future district that includes the former Federal Reserve Bank Building. Question #5 Can increment be used outside a district for public improvements, equipment or other items? Answer #5 Increments cannot be used outside a district for such purposes if the improvements, equipment or other items will primarily serve (1) an aesthetic or decorative purpose or (2) a functional purpose but their cost is increased by 100 percent as a result of the selection of materi- als, design or type as compared to more commonly used materials and designs. The prohibition does not apply to the rehabilitation of historic struc- tures that are on the National Register of Historic Places or are a contributing element to historic district listed on the National Regis- ter of Historic Places. Question #6 Can a district including a 1979 to 1982 district pool increments to cover deficits in making debt ser- vice caused by changes in property tax class rates? Answer #6 Yes, the 1999 Tax Bill amended the current pooling provisions relating to deficits to include changes made by the 1998 and 1999 legislatures. The amendment also allows a city council to authorize a city development agency to transfer tax increments to assist another city development agency in covering deficits in debt service caused by the changes. In addition, the law permits a city located within more than one county to pool increments for this purpose regardless of its location within the city. Question #7 Has the grant program that provides state funding for TIF deficits been amended? Answer #7 Yes, the grant program has been amended to include tax rate com- pression changes in 1998 and 1999. Other amendments include changing the application deadline date to Aug. 1, increasing the amount of the program from $2.0 million to $6.0 million and extending the sunset date from Jan. 1, 2001 to 2002. Question #8 The House made changes to the enforcement provisions of the TIF Act to include the Department of Revenue. Were any changes made to this section of the act? Answer #8 Yes, the act was amended to provide that the attorney general will review the case if the county attorney does not act. If the attorney general finds that there is non - compliance and it is substantial, he may attempt to _ resolve it through dispute resolution or take the case o tax court. If tax court finds that there is non- compliance and it is substantial, the court can suspend an authority's ability to do TIF for up to five years.