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Preliminary Term Sheet
This Term Sheet, dated as of __________, 2021, is intended to set forth the general terms upon
which the Developer (as defined below) and the Economic Development Authority of Brooklyn
Center, Minnesota (the “EDA”) may be willing to enter into a Development Agreement (the
“Development Agreement”).
1. Developer: JO Companies, LLC, a Minnesota limited liability company (or a limited
partnership or other entity to be formed thereby or affiliated therewith)
2. Property: Four parcels comprising approximately 1.8 acres of land at the northwest
intersection of Brooklyn Boulevard and 61st Avenue N in Brooklyn Center, Minnesota
identified as property numbers (1) 34-119-21-43-0049, (2) 34-119-21-43-0050, (3) 34-
119-21-43-0051, and (4) 34-119-21-43-0052, subject to a final plat of the Property.
3. Developer Conditions, as determined to date:
a. Execution of Development Agreement
b. Secure necessary financing for the construction of the Minimum Improvements
c. Site Control
d. Satisfaction of all Buyer’s Contingencies under the Option Agreement
4. EDA Conditions, as determined to date:
a. EDA approval of the sale of the Property after all proceedings required by law
b. EDA approval of Construction Plans
c. City Council approval of Planning Application
d. Execution of a Development Agreement
e. Satisfaction of all Seller’s Contingencies under the Option Agreement
5. Minimum Improvements: Improvements to the Property will include the construction and
equipping of a multi-story, approximately 54-unit apartment with at least 40% of the units
occupied or held for occupancy by persons and families whose incomes do not exceed
60% of area median income, and underground and surface parking stalls.
6. Construction Schedule: Commence construction on the Minimum Improvements within
30 days after the closing date on the Property under the Option Agreement and
substantially complete construction by December 31, 2025. For the purpose hereof,
“Commence” shall mean beginning of physical improvement to the Property, including
grading, excavation, or other physical site preparation work; and “Complete” shall mean
that the Minimum Improvements are sufficiently complete for the issuance of a Certificate
of Occupancy. Upon Completion the EDA will issue, if requested by the Developer, a
“Certificate of Completion” in recordable form.
7. Public Assistance: Subject to all terms and conditions of the Development Agreement
and satisfaction of the requirements of applicable law including a final “but for” analysis,
the EDA will reimburse the Developer for costs of construction of the Minimum
Improvements as follows:
a. in the form of a pay-as-you-go (PAYGO) note in the amount of up to $790,000,
bearing simple, non-compounding interest at a rate per annum of up to the lesser
of 4.625% or the rate of interest on the first lien mortgage financing for the Minimum
Improvements. The PAYGO note will be payable from 90% of the tax increment
generated from the Minimum Improvements for a period of up to 15 years; and
b. in the form of a reduction of the cash payment of the purchase price of the Property
by an amount equal to 1.1% of the total project costs for the Minimum
Improvements as set forth in the Buyer’s HTC-1 Workbook submitted to Minnesota
Housing (currently estimated to be $214,000.00) in exchange for the delivery of a
promissory Note by the Developer in favor of the EDA, payable, together with
interest at the rate of 4% per annum, solely from the tax increments from the
housing tax increment financing district generated by the Minimum Improvements
after the final payment of the PAYGO note.
The PAYGO note will be issued upon completion of the Minimum Improvements and proof
of expenditures related to the construction of affordable housing.
8. Fees: Within two (2) weeks of approval of this Term Sheet by the EDA, Developer shall
deposit to the EDA the sum of Ten Thousand Dollars ($10,000.00) to pay for the
reasonable out-of-pocket legal, financial consultant and administrative fees associated
with this transaction. Unexpended funds will be returned to the Developer and if, additional
funds are needed to pay such expenses, the Developer will deposit such additional funds
upon request by the EDA.
9. Minimum Assessment Agreement: the Developer will execute and record against the
Property a Minimum Assessment Agreement pursuant to which the Property and Minimum
Improvements will be assessed based on a minimum market value of
a. $2,430,000 as of January 2, 2024; and
b. $7,290,000 as of January 2, 2025; and
c. $9,720,000 as of January 2, 2026:
The Developer acknowledges that except for Section 8 above which shall be binding upon the
Developer, this Term Sheet shall not be deemed conclusive or legally binding upon either the
Developer or the EDA, and neither the Developer nor the EDA shall have any obligations
regarding the Property, the Minimum Improvements or the Public Assistance described herein,
unless and until a definitive Development Agreement is approved by the EDA board and executed
by both the Developer and the EDA.
JO COMPANIES, LLC, A MINNESOTA LIMITED
LIABILITY COMPANY
By: _________________________
Its: _________________________
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BR305-163-725043.v3
OPTION AGREEMENT
THIS OPTION AGREEMENT (this “Agreement”) is made and entered into as of this ____
day of ____________, 2022 (the “Effective Date”), by and between the Economic Development
Authority of Brooklyn Center, Minnesota, a public body corporate and politic under the laws of
Minnesota (the “Seller”) and JO Companies, LLC, a Minnesota limited liability company (the
“Buyer”)(together with the Seller and the Buyer referred to herein as the “Parties” or individually as
a “Party”).
RECITALS
A. The Buyer intends to purchase the parcels legally described on Exhibit A attached
hereto and hereby made a part hereof (the “Option Property”) from the Seller and to develop the
Option Property into a multi-story, approximately 54-unit apartment building with at least 40 percent
of the units occupied or held for occupancy by persons and families whose incomes do not exceed 60
percent of the area median income, and underground and surface parking stalls (the “Development”);
and
B. The Seller wishes to grant the Buyer an option to acquire the Option Property, under
the terms and conditions hereunder; and
C. The Seller believes that the development of the Option Property is vital and is in the
best interests of the Seller and City of Brooklyn Center, Minnesota (the “City”), will result in
preservation and enhancement of their tax base, provide additional affordable housing options in the
City, and is in accordance with the public purpose and provisions of the applicable state and local
laws and requirements under which the Development will be undertaken.
NOW, THEREFORE, in consideration of mutual covenants set forth in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Seller and the Buyer agree as follows:
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BR305-163-725043.v3
Terms of the Agreement
1. Recitals. The recitals as set forth above are hereby incorporated into this
Agreement.
2. The Option. The Seller hereby grants to the Buyer the exclusive right and option
to purchase the Option Property, during the Option Period defined below, subject to the conditions
set forth below (the “Option”).
3. Option Payment. Within five business days after the date hereof, the Buyer shall
pay and deliver to Commercial Partners Title, located at 200 S. Sixth Street, Suite 1300,
Minneapolis, MN 55402 (the “Title Company”), the sum of Two Thousand Five Hundred and
No/100 dollars ($2,500), which shall constitute the option payment (the “Option Payment”)
hereunder. The Option Payment shall be refundable if, at the end of the Option Period (as defined
below), the contingencies set forth in either Section 13(c)(ii) or 13(c)(iii) are not satisfied. In the
event that the Buyer purchases the Option Property pursuant to this Agreement, the Option
Payment shall be credited against the Purchase Price payable for the Option Property as set forth
in Section 6 herein. In the event the Buyer does not exercise the Option or Closing (as defined
below) does not occur for any reason whatsoever other than the Seller’s default hereunder or failure
of the contingencies set forth in Sections 13(c)(ii) or 13(c)(iii) to be satisfied, the Option Payment
shall be retained by the Seller as consideration for granting the Option.
4. Option Period.
a. The period during which the Option may be exercised by the Buyer (the
“Option Period”) shall commence upon the Effective Date of this Agreement
and shall expire on the earlier of 60 days after the Buyer receives an allocation
of tax credits for the Development the Minnesota Housing Finance Agency
from (“MHFA”) or January 1, 2024 (the “Expiration Date”). During the
Option Period, the Seller agrees it will not advertise, list, negotiate for the sale
of or sell the Option Property to a third party.
b. If the Buyer does not timely exercise the Option, the Option shall lapse, and the
Option Payment shall be applied as provided in Section 3 herein and the Buyer
shall have no further rights with respect to the Option Property.
5. Exercise of Option. This Option shall be deemed exercised if, within the Option
Period, the Buyer gives written notice to the Seller of the Buyer’s intent to exercise the Option and
the Buyer will deposit with the Title Company for the benefit of the Seller the sum of Ten
Thousand and No/100 dollars ($10,000.00), as earnest money (“Earnest Money”). The Earnest
Money shall become nonrefundable at the end of the Due Diligence Period (defined below). In the
event that Seller breaches the terms of this Agreement, the Seller shall refund the Earnest Money
to the Buyer. Nothing in this Agreement shall entitle the Buyer to make any claim against the
Seller or the City for any damages whatsoever and the Buyer’s remedies are strictly limited to the
foregoing. Nothing in this Agreement shall be construed as a limitation of or waiver by the Seller
of any immunities, defenses, or other limitations on liability to which the Seller is entitled by law.
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BR305-163-725043.v3
6. Previous Option Agreement. The Parties agree and acknowledge that the previous
option agreement dated __________, 2021 by and between the Parties and related term sheet are
terminated and superseded in their entirety by this Agreement and the Preliminary Term Sheet
dated as of the date hereof.
7. Purchase Price. The total purchase price for the Option Property shall be $975,000,
less a land write-down in the amount of $750,000 as set forth in the Buyer’s HTC-1 Workbook
submitted to MHFA (the “Purchase Price”). The Purchase Price less the Earnest Money and the
Option Payment shall be paid to the Seller from the Buyer on the Closing Date.
8. Closing. Subject to the terms of this Agreement, the closing of the purchase and
sale of the Option Property contemplated by this Agreement (the “Closing”) shall occur at the
office of the Title Company, or at another location mutually agreed upon by the Parties, on the
date 30 days after the expiration of the Due Diligence Period or such other date as agreed to by the
Parties in writing (the “Closing Date”).
9. Due Diligence Investigation. Commencing on the date that the Buyer exercises this
Option, the Buyer, at its sole cost and expense, shall have a due diligence period of 180 days (“Due
Diligence Period”) to make all such investigations as the Buyer, in its sole and absolute discretion,
deems reasonable and necessary in determining the suitability of the Option Property for the
Buyer’s needs including:
a. To examine and inspect the Option Property, to review the Due Diligence
Documents, to conduct feasibility studies with regard to the ownership and
operation of the Option Property, including, but not limited to, environmental
reviews, soil condition testing, surveying, engineering studies, appraisals and
any other physical inspections of the Option Property as determined by the
Buyer, and to investigate all physical aspects of the Option Property, and to
review all other due diligence matters related to the Option Property. The Buyer
may enter upon the Option Property to inspect the same, and may conduct tests
and examinations with regard thereto, provided that the Buyer’s activities do
not unreasonably interfere with the ongoing operation of the Option Property.
The Buyer shall promptly restore the Option Property to substantially the same
condition in which it existed immediately prior to any physical tests conducted
by or on behalf of the Buyer.
b. To investigate all zoning, code and governmental regulations or requirements
in place at the Option Property, and to obtain all land use and rezoning
approvals and permits determined necessary by the Buyer for the Buyer’s
intended development and use of the Option Property, including but not limited
to all Development Approvals defined herein.
c. To secure funding for the purchase and development of the Option Property on
terms acceptable to the Buyer, in the Buyer’s sole discretion. The Parties
contemplate that such funding may include, without limitation, one or more of
the following:
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BR305-163-725043.v3
i. MHFA Affordable Housing Tax Credits;
ii. Tax Increment Financing assistance from the Seller;
iii. Commercial loans for the purchase and/or development of the Option
Property.
d. To obtain, at the Buyer’s sole cost, an appraisal of the Option Property that is
satisfactory to the Buyer and all of the Buyer’s funding sources.
e. The Buyer shall have until the last day of the Due Diligence Period to provide
written notice to the Seller of the Buyer’s intention to terminate this Agreement
for any reason. If the Buyer terminates this Agreement within the Due
Diligence Period, the transactions contemplated herein shall be considered
terminated and the Earnest Money will be returned immediately to the Buyer.
10. Right of Entry. During the Due Diligence Period, the Buyer shall have the right to
enter upon the Option Property for the purpose of taking soil tests and borings, making surveys
and maps, and performing investigative work, including environmental testing and assessment, as
the Buyer may deem necessary; provided, however, the Buyer shall indemnify, defend, and hold
the Seller harmless from any mechanics’ liens or claims arising out of such investigative work by
the Buyer. The Buyer may assign this right to its agents, employees, or contractors at its sole
discretion. Nothing in this Agreement shall be deemed a waiver of defenses or limitations
available to the Seller under Minnesota Statutes Chapter 466.
a. In consideration for such right of entry, the Buyer agrees to:
i. Notify the Seller at least 48 hours in advance of the date and time that
the Buyer, its agents, employees, or contractors, will enter the Option
Property for the purpose for the entry, in order to permit the Seller to be
present during the time any work is being done by the Buyer, its agents,
employees, or contractors;
ii. Provide to the Seller a copy of all test results and reports prepared by
the Buyer or its consultants evaluating the conditions present on the
Option Property, as soon as reasonably possible following final
completion thereof;
iii. Dispose of all solid waste generated during the course of the Buyer’s
sampling activities and other work on the Option Property in accordance
with applicable federal, state and local laws, rules and regulations;
iv. Coordinate activities with the Seller so as to avoid unnecessary
disruption to or interference with the Seller’s use of the Option Property;
v. Do no unnecessary damage to the Option Property and restore the
Option Property to substantially the same condition as the condition in
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BR305-163-725043.v3
which it was found by the Buyer at the time of entry by the Buyer, its
agents, employees, or contractors; and
vi. Hold the Seller harmless from and indemnify and defend the Seller from
any and all claims, damages, judgments or obligations, including the
cost of defense of suit, arising out of damage to the Option Property or
arising out of injury to anyone incurred or alleged to have been incurred
in connection with or as a result of any work done pursuant to this right
of entry, or as a result of the intentional torts or negligence of the Buyer,
its agents, employees, or contractors.
11. Title Review and Objections. Within 15 days after exercising the Option, the Seller
shall obtain and provide a copy to the Buyer a commitment for an ALTA owner’s title insurance
policy which shall be periodically updated in accordance with the Development Documents as
subsequently defined herein. Within 30 days after receipt of the title commitment, the Buyer shall
notify the Seller in writing of any objections to title, or the objections shall be deemed waived. If
any objections are so made, the Seller may be allowed until the Closing Date to cure such
objections and make the title to the Option Property good and marketable of record in the Seller.
Notwithstanding the foregoing, the Seller shall have no obligation to cure any title objections. If a
timely objection has been made by the Buyer pursuant to this Section and title to the Option
Property remains unmarketable on the Closing Date, the Buyer, as its sole and exclusive remedy,
may either: (A) terminate this Agreement by giving written notice to the Seller; or (B) elect to
accept the title in its unmarketable condition and without reduction of the Purchase Price by giving
written notice to the Seller.
12. Preliminary Plat & Final Plat. The Buyer, at the Buyer’s expense, shall obtain
within 60 days of exercising the Option, a preliminary plat of the Option Property prepared by a
licensed land surveyor (the “Preliminary Plat”). The Buyer, at the Buyer’s sole expense, shall
comply with all subdivision processes as required by the City Code of the City in order to
accomplish the platting of the Option Property.
13. Conveyance Subject to Right of Re-entry. The Seller’s conveyance of the Option
Property to the Buyer pursuant to this Agreement shall be made in the form of a quit claim deed
(the “Deed”). The Deed shall include a right of re-entry for breach of a condition subsequent in
favor of the Seller (the “Right of Re-entry”). The condition subsequent shall be determined by
the Seller in accordance with Minnesota Statutes Section 469.105 and set forth in the Deed
conveying the Option Property to the Buyer in the form attached to the Development Agreement
(as defined below). If the Buyer breaches such condition subsequent, the Buyer shall re-convey
the Option Property back to the Seller. If the Buyer fails to re-convey the Option Property to the
Seller, the Seller may elect to exercise its right of reentry by commencing an action in Hennepin
County District Court to establish the breach of the condition subsequent. If the Seller establishes
a breach of the condition subsequent, title to and the right to possession of the Option Property and
title to all improvements located thereon reverts to the Seller, and the Buyer is not entitled to any
compensation from the Seller for the Option Property or the value of any improvements the Buyer
has made to the Option Property. The Buyer must record any certificate of completion or
certificate of release of the Right of Re-entry in the proper County land records at its expense.
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BR305-163-725043.v3
14. Contingencies.
a. Buyer’s Contingencies. If the Buyer exercises the Option, the Buyer’s
obligation to purchase the Option Property shall be contingent on the following:
i. By the end of the Due Diligence Period, the Buyer shall have
determined, in its sole and absolute discretion, that it is satisfied with
the results and matters disclosed by the Buyer’s investigation of the
Option Property pursuant to Section 9 of this Agreement.
ii. By the Closing Date, the Buyer shall have obtained, or caused to be
obtained, in a timely manner, all required permits, licenses and
approvals, including without limitation zoning and land use approvals,
final plat approval, and all other approvals which must be obtained for
the Development.
iii. By the Closing Date, the Buyer shall have obtained approvals from the
Seller and the City, following a duly noticed public hearing and the
satisfaction of all other conditions required by Minnesota law, of the
creation of a housing tax increment financing district that includes the
Option Property within its boundaries.
iv. By the Closing Date, the Buyer shall have obtained all necessary
financing for the Development.
v. By the Closing Date, the condition of title shall be satisfactory to the
Buyer following the Buyer’s examination of title as provided herein.
b. The contingencies set forth above are for the benefit of the Buyer and may be
waived by the Buyer in the Buyer’s sole discretion. Notwithstanding any other
provision in this Agreement, a waiver of a contingency must be in writing to be
effective. At the end of the Due Diligence Period, the Buyer will give written
notice to the Seller of the contingencies that have been waived, satisfied, or
neither waived nor satisfied.
c. Seller’s Contingencies. If the Buyer exercises the Option, the Seller’s
obligation to convey the Option Property shall be contingent on the following:
i. By the Closing Date, the Buyer shall have obtained, or cause to be
obtained, in a timely manner and at its sole and absolute expense, all
required permits, licenses and approvals, and shall have met, in a timely
manner, all requirements of all applicable local, state, and federal laws
and regulations which must be obtained or met for the Development
including without limitation a building permit, any needed variances,
final plat or subdivision approval, and zoning and land use approvals;
ii. The Buyer shall have obtained approval from the Seller of the sale of
the Option Property pursuant to this Agreement following a duly noticed
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BR305-163-725043.v3
public hearing and the satisfaction of all other conditions required by
Minnesota law;
iii. By the Closing Date, the Buyer shall have obtained approvals from the
Seller and the City, following a duly noticed public hearing and the
satisfaction of all other conditions required by Minnesota law, of the
creation of a housing tax increment financing district that includes the
Option Property within its boundaries;
iv. The Buyer and the Seller shall have negotiated and mutually agreed to,
the Board of Commissioners of the EDA shall have approved following
the satisfaction of all conditions required by Minnesota law, and the
Seller and the Buyer shall have executed, effective not later than the
Closing Date, a Development Agreement (the “Development
Agreement”), providing, among other things, for (i) the platting of the
Option Property including, but not limited to, the preliminary plat, final
plat, and site plan; (ii) the construction of the Development by the Buyer
in accordance with plans, specifications and a timeline approved by the
Seller, (iii) the use of up to 90% of the tax increment from the housing
tax increment financing district generated from the minimum
improvements for the Development for a period of up to 15 years to
reimburse the Buyer for a portion of the costs of constructing the
Development on the Option Property pursuant to a pay-as-you-go tax
increment revenue note, bearing simple, non-compounding interest at a
rate per annum of up to the lesser of 6.125 percent or the rate of interest
on the first lien mortgage financing for the minimum improvements for
the Development (the “PAYGO Note”) in the amount of up to $482,000
subject to a final determination in accordance with applicable law, and
(iv) the terms and conditions of the Right of Re-entry in accordance with
Section 12 and the form of the Deed to be executed and delivered by the
Seller at closing and containing the terms of the Right of Re-entry; and
any documents ancillary thereto (collectively, the “Development
Documents”);
v. The Buyer shall have performed all of the obligations required to be
performed by the Buyer under this Agreement or the Development
Documents as of the Closing Date and any further contingencies to
Closing set forth in such Development Documents shall have been
satisfied as provided therein;
vi. The Buyer shall have delivered to the Seller all of the Buyer’s
Documents described in Section 19.
vii. The Buyer shall have submitted the construction plans for the
Development to the Seller and the City, and the Seller and the City shall
have approved the construction plans pursuant to the Development
Documents;
8
BR305-163-725043.v3
viii. By the Closing Date, the Buyer shall have obtained and provided to the
Seller evidence of all necessary financing for the Development; and
ix. The Seller shall have determined that the Development to be undertaken
by the Buyer on the Option Property is in conformance with this
Agreement and the development objectives set forth in resolutions of
the City and the Seller authorizing the housing tax increment financing
district and the Development Documents.
d. The contingencies set forth in Section 13(c) are for the benefit of the Seller and
may be waived only by the Seller in its sole and absolute discretion.
Notwithstanding any other provision in this Agreement, a waiver of a
contingency must be in writing to be effective. At the end of the Due Diligence
Period, the Seller will give written notice to the Buyer of the contingencies that
have been waived, satisfied, or neither waived nor satisfied.
e. Seller’s and Buyer’s Options. In the event that any of the foregoing
contingencies fail to be satisfied on or before the Closing Date:
i. the applicable party may terminate this Agreement, and the Buyer and
the Seller shall execute and deliver to each other documentation
effecting the termination of this Agreement and the Seller shall return
the Earnest Money to the Buyer; or
ii. the applicable party may waive such failure and proceed to Closing;
provided that the contingencies in Section 13(a) are solely for the benefit
of the Buyer and may be waived only by the Buyer as provided in
Section 13 (b) and the contingencies in Section 13(c) are solely for the
benefit of the Seller and may be waived only by the Seller as provided
in Section 13(d); or
iii. The Buyer and the Seller may mutually agree to extend the Closing
Date.
f. If Closing does not occur due to the failure of any of the above contingencies
which is not waived by the applicable party, the Seller shall be entitled to retain
the Option Payment, except as otherwise provided in Section 3 of this
Agreement.
g. If the above contingencies are satisfied at the end of the Due Diligence Period
or the applicable party elects to waive any unsatisfied contingencies and
proceed to Closing, then the Earnest Money shall become non-refundable to the
Buyer except in the event of the Seller’s default.
15. Real Estate Taxes and Special Assessments. The Seller shall not be responsible for
the payment of any real estate taxes due or special assessments due with respect to the Option
Property. The Buyer shall be responsible for all real estate taxes special assessments due with
respect to the Option Property which have not been paid prior to Closing.
9
BR305-163-725043.v3
16. Representations and Warranties of the Seller. The Option Property is sold AS-IS.
Except as provided herein, the Seller makes no representations or warranties regarding the
condition of the Option Property, its use, or the marketability of its title. The Buyer shall be
satisfied solely on the basis of its own investigation. Notwithstanding the foregoing, the Seller
represents and warrants to the Buyer:
a. Unrecorded Agreements. To the Seller’s knowledge, there are no unrecorded
agreements, undertakings or restrictions which affect the Option Property.
b. Leases. There are no leases or possessory rights of others regarding the Option
Property.
c. No Default Notice. The Seller has not received notice of a default or breach of
any agreement related to the Option Property and is not aware of any facts that
would result in the Seller being in default or breach of any such agreement.
d. Due Diligence Documents. The Due Diligence Documents delivered or to be
delivered to the Buyer hereunder are to the Seller’s actual knowledge correct
and complete and, to the Seller’s actual knowledge, do not contain any false
information.
e. Operations. The Seller has not received any notice of any violation of any laws,
ordinances, or regulations relating to the Option Property.
f. Condition. To Seller’s actual knowledge, the Option Property complies with
all applicable laws, ordinances, regulations, permits, and any applicable
restrictive covenants.
g. FIRPTA. The Seller is not a “foreign person,” “foreign partnership,” “foreign
trust,” or “foreign estate,” as those terms are defined in Internal Revenue Code
Section 1445 and the regulations promulgated thereunder.
h. No Proceedings. No legal or administrative proceeding is pending or, to the
Seller’s actual knowledge, threatened (i) which would adversely affect the
Seller’s right to convey the Option Property to the Buyer as contemplated in
this Agreement, or (ii) affecting the Option Property. There are no
condemnation or eminent domain proceedings pending or, to the Seller’s
knowledge, threatened with respect to the Option Property.
i. Private Sewage Systems; Wells. There are no private sewage systems or wells
of any kind located on the Option Property. Sewage generated at the Option
Property goes to a facility permitted by the Minnesota Pollution Control
Agency.
j. Use of Property. To the Seller’s actual knowledge, no methamphetamine
production has occurred on the Option Property.
10
BR305-163-725043.v3
k. Unpaid Labor and Materials. The Seller is not indebted for labor or material
that might give rise to the filing of notice of mechanic’s lien against any portion
of the Option Property.
l. The obligations of the Buyer under this Agreement are contingent upon the
representations and warranties of the Seller contained in this Agreement being
true as of the Effective Date and on the Closing Date as if made on the Closing
Date. Each of the foregoing representations and warranties shall be deemed
remade as of the Closing Date and, as so remade, shall survive the Closing.
17. Due Diligence Documents. Within 10 days after the Effective Date, the Seller shall
deliver to the Buyer copies of the documents set forth on Exhibit B attached hereto and
incorporated herein (the “Due Diligence Documents”).
18. Closing Costs.
a. The Buyer shall pay all costs of the preparation of a title commitment, including
the abstracting fees, if required by the title company and all recording fees and
charges related to the filing of any instrument required to make title marketable.
The Buyer shall also pay the cost of obtaining any title evidence desired by
Buyer, including a title commitment, the fees for standard searches with respect
to the Seller and the Property, all premiums required for issuance of a title
insurance policy any survey costs and all Closing fees charged by the title
company and any escrow fees charged by any escrow agent engaged by the
parties in connection with this Agreement.
b. Buyer shall also pay the following costs: (1) all costs for obtaining government
approvals that may be required in order to close on the Property or as required
for the Buyer’s intended use of the Property; (2) the cost of preparation of any
necessary platting or other subdivision documents, (3) the filing fee to record
the deed, (4) the premium for any owner’s or lender’s title insurance policies
obtained by or for the benefit of Buyer, (5) Mortgage Registration Tax, (6) any
state deed tax, conservation fee or other federal, state or local documentary or
revenue stamps or transfer tax with respect to the Deed to be delivered by the
Sellers; recording fees and charges related to the filing of the Deed; (7) Buyer’s
attorney’s fees; (8) the Seller’s legal, accounting fees and other out of pocket
costs incurred in connection with this Agreement and the Development
Documents as further provided in Section 25 hereof and in the Development
Documents; and (9) all other costs as outlined in the Development Documents
entered into between the Parties.
19. Seller’s Closing Documents. At Closing, the Seller shall execute and deliver to the
Buyer the following documents (collectively, the “Seller’s Closing Documents”):
a. A Quit Claim Deed conveying the Option Property to the Buyer.
11
BR305-163-725043.v3
b. A closing statement prepared by the Title Company to be executed by the Seller,
Buyer, and the Title Company at the Closing that accurately describes the
economic terms of the transaction described this Agreement.
c. An Assignment of any Due Diligence Documents that are consented to and
approved by the Buyer, and miscellaneous documents conveying the Seller’s
interest to the Buyer together with the consent of all parties having a right to
consent to such assignment.
d. A non-foreign affidavit, properly executed, containing such information as is
required by Code Section 1445(b)(2) and the regulations promulgated
thereunder.
e. A Designation Agreement designating the “reporting person” for purposes of
completing Internal Revenue Service (“IRS”) Form 1099 and, if applicable, IRS
Form 8594.
20. Documents to be Delivered by the Buyer. The Buyer agrees to deliver to the Seller
the following documents (the “Buyer’s Documents”), duly executed as appropriate, at Closing:
a. The Purchase Price.
b. Such affidavits of Buyer, Certificates of Value or other documents as may be
reasonably required in order to complete the transaction contemplated by this
Agreement.
c. The final plat of the Option Property as approved by the Seller and the City, to
be recorded contemporaneously with Closing contemplated herein.
d. Any documentary evidence required to satisfy the contingencies set forth
herein.
e. The Development Agreement and any documents required pursuant to the terms
of the Development Documents.
f. A minimum assessment agreement pursuant to which the Option Property and
the minimum improvements as defined by the Development Agreement will be
assessed based on a minimum market value of:
i. $2,632,500 as of January 2, 2024; and
ii. $7,897,500 as of January 2, 2025; and
iii. $10,530,000 as of January 2, 2026.
g. Such other documents as shall be required to carry out the intent of this
Agreement.
21. Casualty or Condemnation. If before the recording of the Deed any substantial
part of the Option Property is taken by condemnation (including a deed given in lieu thereof), the
12
BR305-163-725043.v3
Buyer shall have the option of (i) enforcing this Agreement (and in such event the insurance
proceeds or condemnation award shall belong to the Buyer) or (ii) canceling the Agreement by
written notice given within 30 days after the Buyer receives notice of such casualty or
condemnation from the Seller. If this Agreement is canceled under this Section, the Earnest Money
shall be returned to the Buyer, this Agreement shall be null and void, and the Parties’ obligations
hereunder shall be of no further force and effect.
22. Remedies. If either Party defaults under this Agreement, the non-defaulting party
shall have the right to terminate this Agreement by giving written notice to the defaulting party. If
the defaulting party fails to cure such default within 14 days of the date of such written notice, this
Agreement will terminate. The termination of this Agreement shall be the sole and absolute remedy
available to the non-defaulting Party for such default.
23. Commissions. Each party represents that it has not engaged any broker in
connection with the transactions contemplated by this Agreement and agrees to indemnify and
hold the other harmless from anyone claiming a commission/fee through them.
24. Notices. Any notices required herein shall be deemed given when sent in the U.S.
Mail, either registered or certified, return receipt requested, or by Federal Express or other
overnight delivery service requiring a signature upon receipt, to the parties at the following
addresses:
SELLER: Economic Development Authority of Brooklyn Center, Minnesota
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Attn: Executive Director
With a copy to: Sarah Sonsalla
Kennedy and Graven, Chartered
Fifth Street Towers
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
BUYER JO Companies
250 East 6th Street #636
St. Paul, M 55101
Attn: ___________________
With a copy to:
___________________________
___________________________
___________________________
13
BR305-163-725043.v3
25. Reimbursement of Costs. Upon execution of this Agreement by both parties, the
Buyer shall deposit with the Seller the sum of Ten Thousand Dollars ($10,000.00) to pay for the
Seller’s reasonable out-of-pocket legal, financial consultant, and administrative fees associated
with this transaction. Unexpended funds will be returned by the Seller to the Buyer and if,
additional funds are needed by the Seller to pay such expenses, the Buyer will deposit such
additional funds upon request by the Seller.
26. Survival. All representations, warranties, and indemnities set forth herein shall
survive the Closing, except as otherwise provided herein.
27. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
28. Assignment. The Buyer shall have the right to assign its interest to this Agreement
to an entity in which the Buyer has an ownership interest, is a member or is otherwise affiliated
with. The consent of the Seller shall be required if the Buyer assigns this Agreement to any third
party with which the Buyer has no connection.
29. Binding Effect. This Agreement is binding upon the Parties and their respective
permitted successors and assigns.
30. Construction. This Agreement shall not be construed more strictly against one
Party than the other, merely by virtue of the fact that it may have been prepared primarily by
counsel for one of the Parties, it being recognized that both the Buyer and the Seller have
contributed substantially and materially to the preparation of this Agreement.
31. Headings. The headings preceding the text of the sections and subsections hereof
are inserted solely for convenience of reference and shall not constitute a part of this Agreement,
nor shall they affect its meaning, construction, or effect.
32. Severability. The invalidity or unenforceability of any term or terms of this
Agreement shall not invalidate, make unenforceable or otherwise affect any other term of this
Agreement, and this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted, and in such event, the remaining terms of this Agreement
shall remain in full force and effect.
33. Computation of Time. In computing any period of time pursuant to this Agreement,
the day of the act or event from which the designated period of time begins to run will not be
included. The last day of the period so computed will be included, unless it is a Saturday, Sunday,
or federal holiday, in which event the period runs until the end of the next day which is not a
Saturday, Sunday, or federal holiday.
34. Time of the Essence. All times, wherever specified herein for the performance by
the Seller or the Buyer of their respective obligations hereunder, are of the essence of this
Agreement.
14
BR305-163-725043.v3
35. Complete Agreement. This instrument and any exhibits, schedules or addendums
attached hereto contain the entire Agreement of the Parties regarding the subject matter hereof,
and supersedes all prior negotiations, agreements, or understandings, whether oral or in writing.
This Agreement may not be changed orally but only by an Agreement in writing signed by the
Parties.
36. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall constitute an original but all of which, taken together, shall constitute but one
and the same instrument.
15
BR305-163-725043.v3
IN WITNESS WHEREOF, the undersigned have signed this Option Agreement as of the day and
year first written above.
SELLER:
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF BROOKLYN CENTER
By: ______________________________
Mike Elliott
Its: President
By: ______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledgment before me this ____ day of _____________,
2022, by Mike Elliott and ______________, the President and Executive Director, respectively
of the Economic Development Authority of Brooklyn Center, Minnesota, a public body
corporate and politic in the State of Minnesota on behalf of the Authority.
________________________________
Notary Public
16
BR305-163-725043.v3
BUYER:
JO COMPANIES, LLC
By:
Its: ______________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledgment before me this ____ day of _____________,
2022, by ___________________, the ________________ of JO Companies, LLC, a Minnesota
limited liability company on behalf of the company.
________________________________
Notary Public
This document was drafted by:
Kennedy & Graven, Chartered (SJS)
150 South 5th Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
BR305-163-725043.v3
EXHIBIT A
LEGAL DESCRIPTIONS OF THE OPTION PROPERTY
Parcel 1
6017 Brooklyn Boulevard
Lot 1, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of
Hennepin, State of Minnesota.
PID 34-119-21-43-0049
Parcel 2
6101 Brooklyn Boulevard
Lot 2, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of
Hennepin, State of Minnesota.
PID 34-119-21-43-0050
Parcel 3
3600 61st Avenue N.
Lot 3, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of
Hennepin, State of Minnesota.
PID 34-119-21-43-0051
Parcel 4
3606 61st Avenue N.
Lot 4, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of
Hennepin, State of Minnesota.
PID 34-119-21-43-0052
BR305-163-725043.v3
EXHIBIT B
Due Diligence Documents
Copies of the following in the Seller’s possession and related to the Option Property:
1. Copies of real estate tax bills and special assessments (if any), and payment status for the
preceding three full calendar years;
2. Statements of any and all expenses related to the Option Property for the preceding three
full calendar years;
3. Copies of all agreements affecting the Option Property;
4. All studies and reports in the possession of the Seller relating to environmental status,
soil tests, and any other information regarding the environmental and soil conditions;
5. Copies of any written citations from any governmental entities pertaining to the Option
Property including those pertaining to any uncured violations of any applicable laws and
codes or compliance with the same;
6. All site plans, construction documents, engineer reports, and property assessments
performed to date for the Option Property;
7. Any existing surveys of the Option Property; and
8. All certificates of insurance relating to the Option Property and claims made in the last
three years.
3/28/2023
1
Wangstad Commons Project Update
October 8, 2018
Review
BrooklynCenterCityCouncilMarch27,2023
JesseAnderson,InterimCommunityDevelopmentDirectorandJasonAarsvold,Ehlers
Presentation Purpose
•RevisittermsapprovedinJuneof2022for publicassistancetothe
Wangstad housingproject
•Reviewupdatedstatusandincreasedfinancialgap
•Consideroptiontohelpsolvetheproject’sgap
•GOAL:getdirectionfromcouncilaboutproceedingunderrevisedterms
•Nextsteps
2
3/28/2023
2
June 2022 Action
•City/EDAapprovedaTerm Sheetandpurchaseagreementoption
•Landwouldbesoldfor$225,000
•TIFcommitmentfortheprojecttotaled$482,000
•TIFassistancewaspayͲasͲyouͲgo,meaningthedeveloperfinances100%ofTIF
portionandisreimbursedwithincrementgeneratedbytheprojectONLY
•City/EDAsupportwasnecessaryforthedevelopertosuccessfullyobtain
taxcreditsthroughMNHousing’scompetitiveprocess
•Wangstad Commonsreceivedanallocationoftaxcreditsattheendof
2022aftermultipleattempts.
3
Current Project Status
•Likeotherprojects,Wangstad is challengedwithinflationinprojectsand
increasinginterestrateenvironment.
•Thedeveloperisworkingtosolveforthisandhasmanageddealwithmost
ofthesechallenges,butisstillcomingupshortoffullfinancing
•ThedeveloperapproachedtheCitytorequestassistancetoclosethe
remaininggapinexcessof$600,000
•CitystaffandEhlersworkedwiththedevelopertoconsideroptiontoassist
withtheremaininggap
4
3/28/2023
3
Solving for the Project’s Gap
•Thedeveloperworkedtosolvemuchofthegap
•AssumptionofadditionaltaxcreditsfromMNHousing
•StillrequiresapprovalfromMNHousing
•Increasingfirstmortgageproceedsbasedonupdatedfinancials
•Basedonareviewofupdatedfinancials,staffandEhlersconcludedthat
theprojectdoeshaveafinancialgapandthatadditionalassistancefor the
projectiswarranted
5
Solving for the Project’s Gap
•ProposedCitycontributiontosolvethegapincludeswritingdownthecost
ofthelandto$1
•Providesa$225,000benefittotheproject
•AnylandsaleproceedswouldhavetobeputbackintoTIF#3andusedforaproject
likethisanyway– viewedasmostefficientandleastimpactful(tocity)strategy
•Helpssolvesome,butnotallthegap
•KeepsnewTIFassistanceatpreviouslyagreeduponlevel
•IncreasingtheTIFamountfromtheNEWdistrictmeanstheprojectwouldhavetostayinthe
districtlonger–goalwastobesuretheprojectcouldcomeoutASAPtohelptaxbase
6
3/28/2023
4
Solving for the Project’s Gap
7
SOURCES
Amount Pct. Per Unit Amount Pct. Per Unit
First Mortgage 2,689,000 13.8% 49,796 3,174,000 16.3% 58,778
TIF Mortgage 482,000 2.5% 8,926 482,180 2.5% 8,929
Low Income Housing Tax Credits 14,749,525 75.9% 273,139 17,464,526 89.8% 323,417
Energy Rebate 15,000 0.1% 278 15,000 0.1% 278
Developer Cash 50,100 0.3% 928 50,100 0.3% 928
Hennepin County HOME 550,000 2.8% 10,185 550,000 2.8% 10,185
Hennepin County ARPA 569,463 2.9% 10,546 569,463 2.9% 10,546
45L Credits 0 0.0% - 118,800 0.6% 2,200
Deferred Developer Fee (14% of Total Fee) 339,120 1.7% 6,280 394,126 2.0% 7,299
TOTAL SOURCES 19,444,208 100% 360,078 22,818,195 117% 422,559
USES
Amount Pct. Per Unit Amount Pct. Per Unit
Acquisition Costs 225,000 1.2% 4,167 1 0.0% 0
Construction Costs 14,388,990 74.0% 266,463 17,416,220 89.6% 322,523
Professional Services 833,643 4.3% 15,438 1,114,750 5.7% 20,644
Financing Costs 1,124,575 5.8% 20,825 1,436,224 7.4% 26,597
Developer Fee 2,470,000 12.7% 45,741 2,470,000 12.7% 45,741
Cash Accounts/Escrows/Reserves 402,000 2.1% 7,444 381,000 2.0% 7,056
TOTAL USES 19,444,208 100% 360,078 22,818,195 117% 422,559
MARCH 2023
MARCH 2023JUNE 2022
JUNE 2022
Next Steps
•IfCouncilwishestocontinuebasedonrevisedterms,staffwillcontinue
withthefollowingsteps
•Finallanduseapprovalsfortheproject
•PlanningCommissiononApril13,2023
•CityCouncilconsiderationonMay8,2023
•CreationofanewTIFdistrictfortheproject
•Initialnoticessentforthisdistricttokeepschedule
•TIFdistrictwouldneedapprovalbyEDAandCityCouncil–currentlyscheduledforMay8,2023
•Draftafinalpurchaseanddevelopmentagreementtosellpropertyandoutlinethe
specificsofCity/EDAassistance
•RequiresEDAapproval– plannedforMay8,2023
8
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BR291-386-822302.v5
Term Sheet
This Term Sheet as of this 26th day of September, 2022 by and between Alatus Brooklyn Center MD LLC,
(the “Developer”) and the Economic Development Authority of Brooklyn Center (the “EDA”) and is
intended to set forth the general terms upon which the parties hereto may be willing to enter into a definitive
tax increment financing assistance and purchase agreement (whether one or more separate agreements, the
“Definitive Agreement”).
1. Developer: Alatus Brooklyn Center MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
The Developer will have the right to assign its rights and obligations under the Definitive
Agreement with respect to each Building described below (together with the applicable related
Property, each a “Phase”) to another developer (each an “Applicable Developer”) so long as
certain conditions set forth in the Definitive Agreement are satisfied; provided, however, the
Developer’s assignment of its rights and obligations (i) with respect to a Phase to an affiliate of
Developer, (ii) with respect to the Building 2 Phase to Resurrecting Faith World Ministries (or an
affiliate thereof), and (iii) with respect to the Building 4 Phase and/or Building 5 Phase to Project
for Pride in Living (or an affiliate thereof), shall be pre-approved. Upon a valid assignment of
rights and obligations of a Phase to an Applicable Developer, the assigning Developer will be
released from its obligations with respect to such Phase.
2. Site: Parcel #1: 2500 County Road 10 (PID# 02-118-21-24-0019)
Parcel #2: 5900 Shingle Creek Parkway (PID#02-118-21-24-0020)
3. Legal Description of Site: A portion of the property legally described below:
PARCEL 1:
Lot 2, Block 2 Brookdale Square Addition
PARCEL 2:
Lot 1, Block 1, Brookdale Square Addition
Property will be re-platted as follows:
Lot 1, Block 1 Opportunity Site Addition
Lot 1, Block 2 Opportunity Site Addition
Lot 1, Block 3 Opportunity Site Addition
Lot 1, Block 4 Opportunity Site Addition
Lot 2, Block 4 Opportunity Site Addition
Lot 1, Block 5 Opportunity Site Addition
Lot 2, Block 5 Opportunity Site Addition
Outlot A Opportunity Site Addition
Outlot B Opportunity Site Addition
BR291-386-822302.v5
4. Acquisition of Property: Parcel #1 and Parcel #2 are currently owned by the EDA. The Developer
proposes to purchase the following portion of such re-platted property (the “Property”):
Lot 1, Block 1 Opportunity Site Addition
Lot 1, Block 2 Opportunity Site Addition
Lot 1, Block 3 Opportunity Site Addition
Lot 1, Block 4 Opportunity Site Addition
Lot 2, Block 4 Opportunity Site Addition
Outlot A Opportunity Site Addition
The purchase price for such Property is as set forth below:
The Developer will have the right to acquire the entire Property in one closing. The Developer also
will have the option to acquire one or more parcels of the Property in separate closings, provided
that either Lot 1, Block 1 Opportunity Site Addition or Lot 1, Block 3 Opportunity Site Addition is
part of the first closing.
The Definitive Agreement will give the Developer a purchase option or right of first refusal to
acquire the portion of the Site proposed to be re-platted as Lots 1 and 2, Block 5 Opportunity Site
Addition (the “Additional Property”), provided that, as a condition to accepting the Developer’s
exercise of the purchase option, the EDA will have the right to review and approve the Developer’s
proposed plan of development for the Additional Property. Except for the terms of such purchase
option or right of first refusal, the disposition and development of the Additional Property will be
governed by a future agreement and not subject to the Definitive Agreement described herein.
5. Conveyance Subject to Right of Re-entry. The EDA’s conveyance of the Property to the Developer
pursuant to the Definitive Agreement shall be made in the form of a quit claim deed (the “Deed”).
The Deed shall include a right of re-entry for breach of a condition subsequent in favor of the EDA
(the “Right of Re-entry”) on a Phase-by-Phase basis. The condition(s) subsequent shall be
determined by the EDA in accordance with Minnesota Statutes Section 469.105 and set forth in the
Deed conveying the Property to the Developer in the form attached to the Definitive Agreement.
If the Developer breaches such condition(s) subsequent with respect to a Phase, the Developer shall
re-convey the applicable Phase (or applicable portion thereof) back to the EDA. If the Developer
fails to re-convey such applicable Phase to the EDA, the EDA may elect to exercise its right of
reentry by commencing an action in Hennepin County District Court to establish the breach of the
condition subsequent. If the EDA establishes a breach of the condition subsequent, title to and the
right to possession of such applicable Phase and title to all improvements located thereon reverts
to the EDA, and the Developer is not entitled to any compensation from the EDA for such
applicable Phase or the value of any improvements the Developer has made to such applicable
Phase. The Developer must record any certificate of completion or certificate of release of the
Right of Re-entry in the proper County land records at its expense.
BR291-386-822302.v5
6. Minimum Improvements: Construction of multiple Buildings containing approximately 613 multi-
family rental units with affordable levels within each Building noted in the table below, inclusion
of an approximately 30,000 sq. ft. of space for an Entrepreneurial Market, construction of an
approximately 26,500 sq. ft. privately owned conference center, construction of approximately
$13.9 million in public infrastructure, and related structured and surface parking.
Building Use
Building 1
(Lot 1, Block 1)
Single 6-Story multi-family rental Building consisting of approximately
278-units of market rate apartments (Unit/Tract A). Building will include
approximately 30,000 sq. ft. of space built-out for use by an
Entrepreneurial Market (Unit/Tract B). The Developer shall pursue New
Market Tax Credits (NMTC) as a potential funding source for the
Entrepreneurial Market.
Building 2
(Lot 1, Block 2)
One single-story 26,500 sq. ft. Conference Center with 24-hour childcare
and wellness and barber suites. The Developer shall pursue New Market
Tax Credits (NMTC) as a potential funding source for this Building.
Building 3
(Lot 1, Block 3)
Single 6-Story multi-family rental Building consisting of approximately
205-units of market rate apartments, in which 41 units (approximately
20%) are affordable to persons at or below 80% AMI
Building 4
(Lot 1, Block 4)
4-Story Building with approximately 60 Low Income Housing Tax Credit
(LIHTC) apartments. Approximately 16 units are affordable at or below
30% AMI and 44 units are affordable at or below 50% AMI
Building 5
(Lot 2, Block 4)
4-Story Building with approximately 70 Low Income Housing Tax Credit
(LIHTC) apartments. Approximately 15 units are affordable at or below
50% AMI and 55 units are affordable at or below 60% AMI
The affordability within the project is summarized in the table below:
7. Construction Schedule: Commence construction of each Building by the Commencement Date,
and substantially complete construction of each Building by the Completion Date as set forth
below. For the purpose hereof, “Commence” shall mean beginning of physical improvement to the
Property for the respective Building, including excavation, or footings. “Complete” shall mean that
the Minimum Improvements are sufficiently complete for the issuance of a Certificate of
Occupancy.
Building 1 Building 3
Building 4
LIHTC
Building 5
LIHTC Total
%
Affordable
Number of Units 278 205 60 70 613
30% AMI 0 0 16 0 16 3%
50% AMI 0 0 44 15 59 10%
60% AMI 0 0 0 55 55 9%
80% AMI 0 41 0 0 41 7%
Total Affordable 0 41 60 70 171 28%
BR291-386-822302.v5
The Developer and the EDA propose that the dates for each Building of the construction schedule
may be revised based upon timing of actual construction schedules, financing, market conditions,
etc. Revisions to the dates of each Building of the construction schedule shall not require approval
or further action by the EDA and may be approved administratively by staff and legal counsel, so
long as such revisions are no more than 18 months from each Building of the construction schedule
as noted above. Any revision to the dates beyond 18 months for each Building in the construction
schedule shall require renegotiation between the parties.
8. Affordability Covenants Buildings 3, 4, and 5: Developer proposes that the Minimum
Improvements are subject to the following affordability covenants:
(a) The Developer expects that the Building 3, 4, and 5 Minimum Improvements will include
the mix of rental housing units as noted in the table above. The affordable units in Building 3 will
be “fixed” units, and income verification will be performed at initial occupancy only.
(b) With respect to Buildings 4 and 5 only:
1. The Developer will apply to Metropolitan Council HRA and/or Hennepin County for
project based housing choice vouchers. The Developer will be required to enter into a
Declaration of Restrictive Covenants that will cause the affordable restrictions to
remain in effect for a thirty (30) year period. On the date of execution of the Definitive
Agreement, the Developer will deliver an executed Declaration to the EDA in
recordable form.
2. During the term of the Declaration, the Developer shall not adopt any policies
specifically prohibiting or excluding rental to tenants holding certificates/vouchers
under Section 8 of the United States Housing Act of 1937, as amended, codified as 42
U.S.C. Sections 1401 et seq., or its successor because of such prospective tenant’s
status as such a certificate/voucher holder.
3. The Developer will promptly notify the EDA if at any time during the term of the
Declaration the number of Rental Housing Units in Buildings 4 and 5 occupied by
Qualifying Tenants (as defined in the Declaration) or held vacant and available for
occupancy by Qualifying Tenants pursuant to the Declaration are fewer than the
number required by the terms of the Declaration.
4. The Developer must submit evidence of tenant incomes, showing that the Building 4
and 5 Minimum Improvements meet the income requirements set forth in the
Declaration by April 1st of each year. The EDA will review the submitted evidence
Building Legal Description
Commencement
Dates: Estimated
Outside Date
1(a) - Market Rate Lot 1, Block 1, Opportunity Site Additio 6/30/2023
1(b) - EMP Lot 1, Block 1, Opportunity Site Additio 6/30/2023
2 - Conference Center Lot 1, Block 2, Opportunity Site Additio 6/30/2023
3 - Mixed Rate Lot 1, Block 3, Opportunity Site Additio 12/31/2023
4 - PPL & RFWM Affordable Lot 1, Block 4, Opportunity Site Additio 12/31/2023
5 - PPL Affordable Lot 2, Block 4, Opportunity Site Additio 12/31/2024
BR291-386-822302.v5
related to the income restrictions and to the extent the thresholds are not met, the EDA
will withhold the TIF payment related to such Building for that time period.
(c) The EDA and its representatives will have the right at all reasonable times during normal
business hours while the covenants in this Section are in effect, after reasonable notice to inspect,
examine and copy all books and records of the Developer and its successors and assigns relating to
the covenants described in this Section and in the Declaration.
9. Affordable Housing Reporting Buildings 4 and 5: At least annually, no later than April 1 of each
year commencing on the April 1 first following the issuance of the Certificate of Completion for
the applicable Building Minimum Improvements, the Developer shall provide a report to the EDA
evidencing that the Developer complied with the income affordability covenants during the
previous calendar year. The income affordability reporting shall be on the form entitled “Tenant
Income Certification” from the Minnesota Housing Finance Agency (MHFA HTC Form 14), or if
unavailable, any similar form. The EDA may require the Developer to provide additional
information reasonably necessary to assess the accuracy of such certification. Unless earlier
excused by the EDA, the Developer shall send affordable housing reports to the EDA until the
Declaration terminates.
10. Change in Construction Plans: If the Developer desires to make any material change in the
Construction Plans after their approval by the EDA, the Developer shall submit the proposed
change to the EDA for its approval. The term “material” means a change in the exterior elements
of the applicable Building that affects the original character, purpose as described in Section 6
hereof, and visual preference that was approved by the City.
11. City Public Improvements: The Developer will construct the following public infrastructure
improvements, as further outlined below. Final Construction documents of all public infrastructure
will be provided by the City to the Developer to be used by the Developer for construction. After
certificate of construction completion is issued and a determination of acceptance by the City
engineer, the Developer will turn over infrastructure back to control of the City.
a. Shingle Creek Parkway improvements including roadway enhancements, and
rebuilt curb, boulevard, sidewalk, and landscaping.
b. Signal and intersection improvements at Shingle Creek and new Parkway
roadway.
c. Construction of new Parkway roadway and associated utilities, connecting Shingle
Creek Parkway to John Martin Drive.
d. Regional Stormwater Pond system and associated utilities.
12. Community Benefits: The Developer will deliver, through construction of the Minimum
Improvements, the Community Benefits as further outlined in Exhibit B.
13. Restrictive Covenants: The EDA acknowledges that the Developer may utilize reciprocal easement
agreements, deed restrictions, covenants, agreements, architectural controls, master associations
and/or other means to control the use and to ensure the maintenance of the land within the
Project. No such instruments shall adversely affect the rights of the City or EDA under the
Definitive Agreement, without their consent, which consent shall not be unreasonably
BR291-386-822302.v5
withheld. The Developer shall submit any such instruments to the City and EDA for their review
and comment.
14. Maintenance: The Developer and the EDA propose that the Applicable Developer or Association
shall be responsible for all maintenance (including snow and ice removal) and repair costs
associated with the Minimum Improvements on the Property including:
x Driveways and service drives to Buildings 1-5, and surface parking stalls.
x Parking structure
x Sidewalks
x Streetlights
x Landscaping
x Streetscape improvements
x Bicycle Parking
x Plazas
x Greenway commons
The costs of such maintenance and repairs will be allocated among the owners/users of the Phases
(or applicable portion thereof), including, without limitation, the owner/user of the Entrepreneurial
Market. The City (and not the Developer) shall be responsible for the maintenance and repair of
the Parkway roadway and the other City Public Improvements described in Section 11 above.
15. Reciprocal Easement and Operating Agreement: The Developer and City will enter into a mutually
acceptable reciprocal easement and operating agreement (the “REOA”) or other easement
agreements to include, without limitation, the following key terms:
a. Developer and/or City responsibility for maintenance and operation of the
private applicable Building Minimum Improvements, road network, and other City Public
Improvements, with such costs being allocated to and among Developer, the City and/or
any other owners of applicable Building Minimum Improvements;
b. perpetual public access easements and perpetual drainage and utility
easements, in each case, over the applicable City Public Improvements and at no cost to
the City;
c. perpetual license or public access easements for greenway commons, or
other private areas that provide public benefit that the City and Developer deem
appropriate.
16. TIF District: The City established TIF District 7 on March 28, 2016. Eligible costs to be
reimbursed with tax increments must be incurred not later than June 29, 2026.
17. Public Assistance: Subject to all terms and conditions of the Definitive Agreement, the EDA
proposes to provide the Developer with up to $30,209,000 in public assistance for Qualified Costs
and Public Improvements noted in Section 11. Currently it is anticipated that the EDA will
reimburse the Developer with a percentage of Tax Increment generated from TIF District #7 for
each Building within the Minimum Improvements up to a principal amount of up to $30,209,000
(Present Value). The EDA will complete an analysis of the applicable Building the earliest of (i)
when construction is ready to commence, (ii) final GMP pricing is obtained to determine the
amount and term of the assistance to be provided to that Building, or (iii) such earlier time as may
be mutually agreed upon by the EDA and the Developer with respect to a particular Phase. The
BR291-386-822302.v5
EDA’s analysis will take into account any additional grants and subsidies (including New Markets
Tax Credits) committed to the applicable Building as well as such Building/Phase’s applicable
portion of the aggregate Gap Amount (as defined in and as may be adjusted by Section 17 below).
The allocation of the amount and term of the assistance to be provided to a Building shall not
require approval or further action by the EDA and can be completed administratively by staff and
legal counsel. Payments from TIF District 7 will be made through one or more TIF Notes (the
“Notes”) issued on a pay-as-you-go basis for an applicable Building assuming a percentage of
increment from TIF District #7 at the lesser of 5% or the Developer’s actual financing rate for such
Building. The Notes will be issued upon completion of the Public Improvements related to the
applicable Building, issuance of a CO for the applicable Building and proof of expenditure related
to the Qualified Costs for the applicable Building.
Prior to entering into the Definitive Agreement, the EDA may substitute other funding sources for
the TIF assistance contemplated in this section. These sources of funds include, but are not limited
to, grants, utility or other EDA funds, pooled TIF, and land write-down. After entering into the
Definitive Agreement, the EDA may propose substitute other funding sources for the TIF
assistance, but such substitution would be subject to the Applicable Developer’s approval.
18. Look Back: The EDA will complete a lookback for each applicable Building that receives TIF
assistance. The lookback will be completed upon stabilization and upon any sale of a Building in
that occurs within five (5) years after such Building’s certificate of occupancy, and there will be no
lookback for Buildings 4 and 5.
19. Fees: The City acknowledges the Developer made an escrow deposit of $129,327.13 for out-of-
pocket expenses for legal and financial consultant services related to TIF district creation, drafting,
negotiation and approval of the Definitive Agreement, analysis, and administrative fees associated
with this transaction. This includes costs related to the above incurred to date as well as future
expenditures.
The current escrow balance is -$171,413.75 and the Developer will be required to repay this escrow
upon approval of this Term Sheet by the EDA. The Developer will deposit additional funds as
necessary for completion of the entire project. The Developer shall pay all other normal and
customary City fees and expenses for the approval and construction of the Minimum
Improvements.
20. Minimum Assessment Agreement: The Developer and EDA will enter into a Minimum Market
Value Assessment Agreement (“MAA”) setting a minimum property tax value for the rental
portions of the various Buildings as noted below:
Phase Amount Date
Building 1 $63,600,000 January 2, 2025 for payable 2026
Building 2 $9,000,000 January 2, 2025 for payable 2026
Building 3 $49,945,000 January 2, 2025 for payable 2026
Building 4 $11,700,000 January 2, 2025 for payable 2026
Building 5 $13,650,000 January 2, 2026 for payable 2027
The Developer and the EDA propose that the dates for the applicable Building MAA may be revised
based upon timing of actual construction schedules. Revisions to the dates of the applicable
Building MAA and execution thereof shall not require approval or further action by the EDA and
can be completed administratively by staff and legal counsel, so long as such revision is no more
BR291-386-822302.v5
than 18 months from the applicable Building MAA as noted in the above schedule. Any revisions
to the dates beyond 18 months for the applicable Building MAA shall require renegotiation between
the parties.
Each MAA shall terminate on the Termination Date of the applicable TIF Note.
21. 4d Tax Classification: The Developer will be applying for 4d tax classification status for 100% of
Buildings 4 and 5.
22. Taxes: The Developer will covenant to pay property taxes and maintain customary insurance.
Developer will agree for itself and its successors and assigns that prior to the end term of the
applicable TIF Note it will not:
(a) Cause a reduction in real property taxes paid;
(b) Transfer the property or any Phases to an entity that would result in the Minimum
Improvements being exempt from property taxes;
(c) Will not seek tax exemption, deferral or abatement for the Minimum Improvements;
(d) If Developer brings a petition challenging a Market Value determination exceeding the
minimum value established in the Assessment Agreement, the Developer must inform the EDA of
such petition. The EDA will pay principal and interest on the TIF Note only to the extent of
Available Tax Increment attributable to the minimum value under the applicable MAA until final
resolution of such petition. Upon resolution of Developer’s tax petition, any Available Tax
Increment deferred and withheld will be paid, without interest thereon, to the extent payable under
the assessor’s final determination of Market Value.
23. Public Art: The Developer is obligated to expend or cause to be expended at least $275,000.00 for
public artwork to be placed in prominent locations on the Property and/or on the exterior of the
Minimum Improvements. Prior to its installation, the public artworks shall be approved by the
City, which approval shall not be unreasonably withheld.
24. Stormwater: The Developer will agree to construct the Regional Stormwater Pond system and
associated utilities in accordance with Section 11 above and subject to City review of project design
and City approval of construction costs (and public bidding, if required by law). In connection
therewith, the City proposes to pay for the cost of such public infrastructure improvements as
follows: (a) by providing a waiver of stormwater impact fees that would otherwise be payable by
the Developer of $97,250.18 per acre (approximately $1,600,000.00), and (b) by paying the
Developer, in legally available funds from the City’s stormwater fund and TIF District #3, the
difference between the actual out-of-pocket cost of such public infrastructure improvements, less
the amount of the stormwater impact fee waiver, in an aggregate amount not to exceed $1,100,000
without City written consent prior to the commencement of construction of the stormwater pond.
The Developer further acknowledges the City of Brooklyn Center may establish a storm sewer
improvement taxing district pursuant to MN Statutes 444 for purposes of funding the on-going
maintenance of such public infrastructure improvements. The proposed district will include the
property acquired by the Developer described herein, the cost of which is not to be included in the
project cost proposed to be reimbursed by the City as provided in this Section.
BR291-386-822302.v5
25. Business Subsidy: The Developer and the EDA expect that any assistance provided to the
Developer under the Contract will not constitute a “business subsidy” under Minnesota Statutes
because the assistance is for redevelopment in which the Developer’s investment in the purchase
of the Property and in site preparation is 70% or more of the assessor's current year's estimated
market value.
26. No Cross-Default: No default or Event of Default by Applicable Developer with respect to one
Phase shall constitute a default or Event of Default by another Applicable Developer for any other
Phase, and the EDA may not seek any remedies against an Applicable Developer whose actions
did not give rise to the default or Event of Default, and the rights of an Applicable Developer shall
not be limited, impaired or revoked under the Definitive Agreement or the respective TIF Note
issued or to be issued to such non-defaulting Applicable Developer.
27. Miscellaneous:
a. Grants: The EDA, the Developer, RFWM and/or PPL have applied for various grants, the
status of which is set forth in the table below.
(b) These grants have been accounted for in the Developer’s Proforma for purposes of Section
17 above. Assuming these grants are obtained and projected costs remain constant, the
Developer estimates the remaining aggregate financing gap to be $7,000,000 (the “Gap
Amount”). The Gap Amount shall increase or decrease as project costs are confirmed on a
Phase by Phase basis. To the extent additional grants are obtained with respect to a Phase
and/or New Market Tax Credit funding is obtained to support the Entrepreneurial Market
component of the project and/or Building 2 are obtained, and such amounts are in excess
of the Gap Amount (as may be adjusted) applicable to such Phase, such excess amount will
reduce the principal amount of the TIF Note(s) for the applicable Phase.
(c) Additional conditions of assistance remain under consideration.
28. Nonbinding. The Developer acknowledges that except for Section 19 above which shall be binding
upon the Developer, this Term Sheet shall not be deemed conclusive or legally binding upon either
the Developer or the EDA, and neither the Developer nor the EDA shall have any obligations
regarding the Property, the Minimum Improvements or the Public Assistance described herein,
unless and until a Definitive Agreement is approved by the EDA board and executed by both the
Developer and the EDA.
Grant Name Grant Applicant Grant Amount Grant Status
Hennepin County TOD BC EDA 595,000$ Awarded
Hennepin County CII BC EDA & Developer 750,000$ Awarded
Metropolitan Council TOD BC EDA & Developer 2,000,000$ Applied for
Metropolitan Council LCDA BC EDA & Developer 1,500,000$ Applied for
Hennepin County TOD BC EDA & Developer TBD Expected Application Jan 2023
MN DEED Redevelopment BC EDA & Developer TBD Expected Application Jan 2023
Main Street RFWM TBD Expected Application 2023
Child Care Economic Development BC EDA & RFWM 150,000$ Applied for
MHFA Deferred Loan Request PPL 173,400$ Expected Application at later date
BR291-386-822302.v5
Exhibit A
[Reserved]
Exhibit B
Community Benefits
24753585v2
EXHIBIT B – COMMUNITY BENEFITS
CODES
CG Community Good
GS Green Space
HS Housing
PA Public Artwork
TR Trails and Transportation
DIRECT COMMUNITY BENEFITS
Code Name & Benefit Description SF
CG-1 Entrepreneur Marketplace ("EMP") 27,000
Approximately 27,000 sf entrepreneurial market, constructed and turned over to CITY, as
mutually agreed upon between Developer and CITY
The Developer has committed to pay $750,000.00 for EMP startup costs (shown within the
purchase price for land for the Mixed Income development - Site 3 - and paid at closing on
the land for that site).
Use of contractors that are part of a registered building trades apprenticeship program and
work with those trades to provide job opportunities to local workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors a minimum of
60 days prior to the start of each phase of construction. Developer, City and GC agree to
develop a plan for who to engage and where to hold meetings to most effectively meet this
goal
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County (Hennepin)
workforce goals. Developer, City and GC agree to develop a plan for who to engage and
where to hold meetings to most effectively meet this goal
CG-2 RFWM [Conference] Center 16,449
Delivery of an approximately 16,500 sf community event center that is available to
community for rent
The Conference Center will be available to the City of Brooklyn Center to rent at no cost, no
less than 6 times a year. The City will be required to provide at least 3 months’ notice and
will not take priority over other events that have already been booked for a specific
date/time.
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County (Hennepin)
workforce goals. Developer, City and GC agree to develop a plan for who to engage and
where to hold meetings to most effectively meet this goal
CG-3 24 - hour Child Care Center 6,106
24-hour childcare [center]
CG-6 Regional Stormwater Mgmt System 74,200
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers. GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
Construction of regional stormwater ponding elements, to be turned over to
the City upon completion, to serve stormwater needs of approx. 65% of the
full Opportunity Site
CG-7 Public Street Connecting Shingle Creek to John Martin Dr 68,400
Fully ADA compliant development
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
Integrated site design that connects to existing trail and sidewalk system to
connect new development with existing community
Construction of a new east-west roadway that connects Shingle Creek
Parkway with John Martin Drive, to be turned over to the City upon
completion.
Reconstruction and improvements of the intersection and signal at Shingle
Creek Parkway and the new east-west roadway, and Shingle Creek Parkway
improvements to the roadway, curb, boulevard, sidewalk, and landscaping, to
be turned over to the City upon completion.
CG-8 Street Lighting 65 total
lights
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
GS-1 Stormwater Park And Trail System 222,900
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers. GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
Integrated site design that connects to existing trail and sidewalk system to
connect new development with existing community
GS-3 Entrepreneur Market Plaza 12,000
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
GS-4 Community Flex Street 34,700
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
PA-1 Public Art - Master Developer Commitment TBD
Integrated public art – commitment to seeking out and utilizing a BIPOC
artist(s) that is culturally responsive to the Brooklyn Center community and
demonstrated by having a preference to selecting a Brooklyn Center artist to
create the public artwork.
TR-1 Connection to Shingle Creek Regional Trail 12,300
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
Use of contractors that are part of a registered building trades apprenticeship
program and work with those trades to provide job opportunities to local
workers.
GC shall have a goal for 25% of committed MBE/WBE spend
GC shall have a goal to hold meet and greet sessions for local subcontractors
a minimum of 60 days prior to the start of each phase of construction.
Developer, City and GC agree to develop a plan for who to engage and where
to hold meetings to most effectively meet this goal
TR-2 Connection to Pedestrian and Bicycle Bridge 11,300
Hiring goals of 30% People of color, and Indigenous people and 10% Women.
All contractors will work in alignment with Minnesota State and County
(Hennepin) workforce goals. Developer, City and GC agree to develop a plan
for who to engage and where to hold meetings to most effectively meet this
goal
TR-4 Public Bike Parking
Explore multi-modal transportation options such as electric scooters, shared
bicycles, shared vehicles, and other “pay per use” 'transportation options
Environmental Work (CCP, test pits, testing, etc) 693,475
Compliance with any and all MPCA requirements pertaining to soil
contamination and clean-up
Comply with all recommendations identified in the adopted Environmental
Assessment Worksheet (EAW )
LEED or equivalent - Market-Rate + Entrepreneurial Market Place
Sustainable design practices: commitment to green building standards
LEED or equivalent - "Mixed-Income"
Sustainable design practices: commitment to green building standards
Solar Array - Market-Rate
Sustainable design practices: commitment to green building standards
Solar Array - "Mixed-Income"
Sustainable design practices: commitment to green building standards
INDIRECT COMMUNITY BENEFITS
Name & Benefit Description Unit
Count
The Developer has committed to pay a total of $2,000,000.00 ($1M at close
of the Market Rate and $1M at close of the Mixed Income land) as part of the
purchase price of the land, to the City of Brooklyn Center's affordable housing
trust fund.
Alatus (via PPL) – Affordable Building #1 - 60
total unit count, unit mix, and affordability levels:
0BR/Eff - 2 units @ 50% MTSP
1BR - 7 units @ 50% MTSP
2BR - 22 units @ 50% MTSP
3 BR - 9 units @ 50% MTSP
4 BR - 4 units @ 50% MTSP
0BR/Eff - 3 units @ 30% MTSP
1BR - 3 units @ 30% MTSP
2BR - 8 units @ 30% MTSP
3 BR - 1 unit @ 30% MTSP
4 BR - 1 unit @ 30% MTSP
Alatus (via PPL) – Affordable Building #2 - 70
total unit count, unit mix, and affordability levels:
0BR/Eff - 7 units @ 50% MTSP
1BR - 6 units @ 50% MTSP
2BR - 2 units @ 50% MTSP
0BR/Eff - 8 units @ 60% MTSP
1BR - 24 units @ 60% MTSP
2BR - 23 units @ 60% MTSP
Crime Prevention Through Environmental Design (CPTED) review of each
development phase to maximize public safety and inhibit crime
Exhibit B - 1
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1
Opportunity Site - Alatus Phase 1 Update
October 8, 2018
Review
BrooklynCenterCityCouncilMarch27,2023
JesseAnderson,InterimCommunityDevelopmentDirectorandJasonAarsvold,Ehlers
Presentation Purpose
•ReviewofapprovedTerm SheetforpublicassistancetoAlatus’
OpportunitySiteProject
•OutlineoffinancingchangesproposedbyAlatus
•DiscissionanddirectionfromCityCouncil
2
3/28/2023
2
Term Sheet Provisions
October 8, 2018
Review
4
Term Sheet
Parcels
3/28/2023
3
Property Acquisition
5
Building/Parcel
Cashat
Closing
HousingTrust
FundContribution
EMPStartUp
Contribution
SellerNote/
LandWriteͲDown TOTAL
Building1:MarketRateand EMP $2,780,000 $1,000,000 $0 $0 $3,780,000
Building2:ConferenceCenter $1 $0 $0 $0 $1
Building3:MixedͲIncome $2,050,000 $1,000,000 $750,000 $0 $3,800,000
Building4:PPLAffordable $0 $0 $0 $1,060,000 $1,060,000
Building5:PPLAffordable $0 $0 $0 $1,050,000 $1,050,000
Total $4,830,001 $2,000,000 $750,000 $2,110,000 $9,690,001
AcquisitionPrice
Developer Improvements
6
Building Use
Building 1
(6Ͳ30Ͳ2023 Start)
6ͲStory multiͲfamily rental Building consisting of approximately 278Ͳunits of market rate apartments and
approximately 30,000 sq. ft. of space builtͲout for use by an Entrepreneurial Market and delivered to the
EDA
Building 2
(6Ͳ30Ͳ2023 Start)
One singleͲstory 26,500 sq. ft. Conference Center with 24Ͳhour childcare and wellness and barber suites.
Building 3
(12Ͳ31Ͳ2023 Start)
Single 6ͲStory multiͲfamily rental Building consisting of approximately 205Ͳunits of market rate apartments,
in which 41 units (approximately 20%) are affordable to persons at or below 80% AMI
Building 4
(12Ͳ31Ͳ2023 Start)
4ͲStory Building with approximately 60 Low Income Housing Tax Credit (LIHTC) apartments. Approximately
16 units are affordable at or below 30% AMI and 44 units are affordable at or below 50% AMI
Building 5
(12Ͳ31Ͳ2023 Start)
4ͲStory Building with approximately 70 Low Income Housing Tax Credit (LIHTC) apartments. Approximately
15 units are affordable at or below 50% AMI and 55 units are affordable at or below 60% AMI
3/28/2023
4
Housing Affordability
7
Building1Building3
Building4
LIHTC
Building5
LIHTC Total
%
Affordable
NumberofUnits 278 205 60 70 613
30%AMI 0 0 16 0 16 3%
50%AMI 0 044155910%
60%AMI 0 0 0 55 55 9%
80%AMI 04100417%
Total Affordable 0 41 60 70 171 28%
*Building1proposedtoincreaseto293Units
Infrastructure
•Alatus willconstructallpublicandprivateinfrastructure,including:
•ShingleCreekParkway Improvements
•Constructionofneweast/westparkwayconnectingShingleCreekParkwaytoJohn
MartinDrive.
•SignalandintersectionimprovementsatShingleCreekandneweast/westParkway
•RegionalStormwaterPondsystemandassociatedutilities.
•EDAwillwaiveAlatus’stormwaterimpactfee ($1.6millionestimate)and
reimburseAlatus forportionofstormwaterpondattributabletofuture
developmentparcels($1.1millionestimate)
•Total infrastructurecostscurrentlyestimatedat$14.8million
8
3/28/2023
5
Community Benefits
•DetailedinAppendixBofTerm Sheet
•Deliveryofalltheprojectelements
•Cashcontributionsfor EMPandHousing
•Contractorgoals
•Localworkers,25%ofcommittedMBE/WBEspend
•Hiringgoals
•30%People ofcolor,andIndigenouspeopleand10%Women
•Lighting,infrastructure,publicart,ParkandTrail enhancements
•Sustainabilityelements
9
Maintenance
•Developerwillberesponsiblefor maintenanceofalltheprivateareasand
infrastructurearoundthebuildings
•Willbespecifiedinaformalagreement
•Citywillmaintainpublicinfrastructure,includingparkwayandregional
stormwaterpond
•Citycancreateastormsewerimprovementtaxingdistrict
•Needtoplanforfuturemaintenanceofparkway
10
3/28/2023
6
Public Assistance
•EDAwouldprovideupto$30,209,000for QualifiedCostsandPublic
Improvements
•FundingsourceisTIFDistrict#7
•SeparatePayAsYou GoTIFnotesanticipatedforeachbuilding
•OtherfundingwillbesoughtandcansubstitutefortheTIF
•DefinedfurtherinfutureContractforPrivateRedevelopment
•Contractwillcontaina“lookback”provisiontoensureassistanceamount
isaccuratebasedonactualprojectcosts
•Alatus willcontributetoescrowaccounttocoverEDAcosts
11
What is Tax Increment Financing?
Tax IncrementFinancing(TIF):
Theabilitytocaptureandusemostoftheincreasedlocalpropertytax
revenuesfromnewdevelopmentwithinadefinedgeographicareafora
definedperiodoftimewithoutapprovaloftheothertaxingjurisdictions.
12
3/28/2023
7
13
TIFEXAMPLE
As
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s
s
e
d
Va
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e
Time
BaselinePropertyValue
Value After
Termination of
TIF
Creation Termination
Tax Increment
Captured
Assessed
Value
TIF / Abatement Financing Options
•PayͲasͲyouͲgoTIFNote
9NoupͲfrontfundsfromtheCity
9Developerfundseligibleexpensesandisrepaidwithinterest,overtime,from
availabletaxincrement/abatement
9NorisktoTIF/abatementauthorityiftermexpiresbeforenoteisretired
•G.O.orRevenueBonds
9BondproceedsfundupͲfrontprojectcostsandTIFrevenueisusedtorepaybonds
9HigherͲrisktoCityforG.O.debt
14
3/28/2023
8
Revised Alatus Proposal
October 8, 2018
Review
Current Financing Challenges
•Inflationondevelopmentcosts(publicandprivate)areaffectingtheAlatus
project
•Increasinginterestrateserodingsourcesfortheproject
•Abilitytoraise fundsfortheprojectfrominvestorsisdiminished
•Alatus feelsitcanstillraisemostofthefundingfortheproject,butcannot
raise100%asoriginallyenvisioned
•Alatus iscommittedtotheproject,butcannotproceedasapproved
•TheirrequestisforsomeupͲfront financingfromtheCitytohelppayfor
projectcosts
16
3/28/2023
9
Alternative City Financing
•OnlyfeasiblesourceforupͲfrontassistancewouldbeissuancetoGeneral
ObligationTIFbonds
•Currentaskis$8Ͳ$9millionforAlatus’marketratebuildingand$7Ͳ$8millionfor
themixedͲincomebuilding
•Thebondswouldstillbepaidbackwithrevenuefromtheproject,butif
therevenuedoesnotmaterialize,thenthentheCitymustpaythebonds
fromotherCitysources
•ThisshiftssomeoftheriskoftheprojecttotheCity
17
Alternative City Financing
•DetailswouldneedtobenegotiatedandapprovedbytheCouncil,but
generallythisriskwouldbemitigatedinthefollowingmanner:
•Startwithonebuildingfirst
•Deferthe$3,780,000landpaymentfor building1(reducessizeofbondneed)
•Thiscanpaidbackovertime,ratherthanupfront
•IncludeaspecialassessmentforthepublicimprovementsonAlatus’property
•Usespecialassessmentsand(potentially)someofthetaxincrementtorepaybonds
–noadditionaltaxlevynecessarytorepaydebtinthisscenario
•Citywouldhavefirstpriorityontaxincrement
•ApayͲasͲyouͲgoTIFnotewouldstillbeissuedtoAlatus
18
3/28/2023
10
Potential Benefits of This Approach
•Theprojectismorelikelytoproceedthisyear
•Itwillbeputonholdindefinitelyunderthecurrentfinancingscenario
•Assumingtheprojectgetsbuiltasplanned,specialassessmentsandTIF
willrepaythebondsandtherewillbenoadditionalCityortaxpayerrisk
•PublicinfrastructureisalsoinstalledalongwithAlatus’buildings,providing
for theadditionaldevelopmentenvisionedinPhase1oftheOpportunity
Site.
19
Potential Risks of This Approach
•Issuanceofgeneralobligationbondsdoesshiftsomeoftheriskontothe
City
•IftheCityissuedbondsandtheprojectdidnotgetbuilt,therewouldbe
noassessmentrevenueorTIFtorepaythebonds–theCitywouldthen
needtorepaythebondsfromanotherCitysource
•ThisriskwillbemitigatedthroughtheagreementwithAlatus – nocitydebtuntilwe
arecertaintheyhavealltheotherfundingtobuildtheproject
•Investmentwouldnotbe“lost”astheCityfundingwouldbepayingforinstallation
ofnewinfrastructureneededtorebuildthesite.
20
3/28/2023
11
Alternative City Financing
•Thisfinancingmodelisconceptualatthispoint
•TheCouncilisnotbeingaskedtoapproveanythingthisevening
•BeforeproceedingfurtherwithAlatus onthisfinancingalternative,staff
wantedtocheckwithCouncilaboutwillingnesstoconsiderthisoption
•Ifgiventheokaytocontinue,afull,detailedfinancingplanwithnecessary
agreementswouldbebroughtbackfor Councilconsideration
•Allthedetailedassumptionsandspecificnumberswouldbepresentedatthattime
21
Entrepreneurial Market Changes
•Listedasa30,000sq.ft.buildingintheapprovedTerm Sheet
•Staffbeganworkingonfinancingdetailsfollowingtermsheetapproval
•Capitalcostsfor a30,000sq.ft.buildingaremorethantheprojectcansupport
•Buildingsizeandinefficiencyalsoledtoaprojectedoperatingcostsubsidyof
between$100,000and$250,000annually
•Sizeanddesignneededtochangefor feasibility
•Sizeisreducedtojustaround17,000sq.ft– about3,000ofwhichcouldbefor a
marketrateanchortenant
•ShellwouldbebuiltanddeliveredbyAlatus totheEDAwithtenantallowance
•Interiorbuildoutwillrelyon3rd partyexpertiseforoperationalefficiency
22
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