HomeMy WebLinkAbout2021 06-28 EDAPE conomic Development
Authority
V I RT UA L meeting being
conducted by electronic
means in accordance with
Minnesota S tatutes, section
13D.021 P ublic portion
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J une 28, 2021
AGE NDA
1.Call to Order
The City Council requests that attendees turn off cell phones and pagers during the meeting. A
copy of the full C ity Counc il packet, including E D A (E conomic Development Authority ), is
available to the public. The packet ring binder is located at the entrance of the council
chambers.
a.Approval of Minutes
- Approval of minutes from the May 24, 2021 EDA meeting.
2.Roll Call
3.Approval of Consent Agenda
The following items are considered to be routine by the Economic Development Authority (E D A)
and will been acted by one motion. There will be no separate disc ussion of these items unless a
Commissioner so requests, in whic h event the item will be removed from the c onsent agenda
and considered at the end of Commission Consideration I tems.
4.Commission Consideration Items
a.A Resolution A pproving the Award of Grants Under the Micro-Grant F acade
Program
- Motion to approve a resolution approving the award of grants under the
Micro-Grant Facade Program.
b.Resolution Supporting the Use of Tax I ncrement Financing for a Rental
Housing Development Project
- Motion to approve a resolution supporting the use of tax increment
financing for a rental housing development project.
c.Resolution A pproving an Option A greement with J O Properties for Certain
E D A -owned Parcels and Term S heet
- Motion to approve a resolution approving an Option Agreement with J O
Properties for certain EDA-owned parcels and a term sheet.
5.Adjournment
Economic Development Authority
DAT E:6/28/2021
TO :C ity C ouncil
F R O M:D r. Reggie Edwards, A c#ng City Manager
T H R O U G H :N/A
BY:Barb S uciu, C ity C lerk
S U B J E C T:A pproval of Minutes
Requested Council A con:
- A pproval of minutes from the M ay 24, 2021 E DA mee ng.
B ackground:
I n accordance with M innesota S tate S tatute 15.17, the official records of all mee#ngs must be documented
and approved by the governing body.
B udget I ssues:
I nclusive C ommunity Engagement:
A nracist/Equity Policy Effect:
S trategic Priories and Values:
AT TA C H M E N TS :
D escrip#on U pload D ate Type
M inutes 6/21/2021 Backup M aterial
05/24/21 -1- DRAFT
MINUTES OF THE PROCEEDINGS OF THE
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF BROOKLYN CENTER
IN THE COUNTY OF HENNEPIN AND THE
STATE OF MINNESOTA
REGULAR SESSION
MAY 24, 2021
CITY HALL – COUNCIL CHAMBERS
1. CALL TO ORDER
The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to
order by President Mike Elliott at 8:40 p.m.
2. ROLL CALL
President Mike Elliott and Commissioners Marquita Butler, April Graves, Kris Lawrence-
Anderson, and Dan Ryan. Commissioner April Graves was excused. Also present were Acting
Executive Director Reggie Edwards, Community Development Director Meg Beekman,
Economic Development Coordinator Vong Thao, City Clerk Barb Suciu, and City Attorney Troy
Gilchrist.
3. APPROVAL OF AGENDA AND CONSENT AGENDA
Commissioner Butler moved and Commissioner Ryan seconded to approve the Agenda and
Consent Agenda, and the following item was approved:
3a. APPROVAL OF MINUTES
1. May 10, 2021 – Regular Session
Motion passed unanimously.
4. COMMISSION CONSIDERATION ITEMS
4a. RESOLUTION NO. 2021-XX APPROVING AN AMENDMENT TO THE RIGHT
OF ENTRY AGREEMENT FOR THE USE OF THE FORMER TARGET
BUILDING BY NORTH MEMORIAL HOSPITALS AND CLINICS
Acting Executive Director Reggie Edwards introduced the item and invited Ms. Beekman to
present the staff report.
Community Development Director Meg Beekman reviewed that in November of 2020, the EDA
entered into a right of entry agreement with North Memorial Hospitals and Clinics for the use of
the former Target building, which is owned by the EDA. The purpose at that time was to open a
05/24/21 -2- DRAFT
COVID testing facility available to the public to provide testing. The lease was for six months
and then from month-to-month with notice provided by either party. She advised that two months
ago, North Memorial shifted their focus from providing COVID tests to providing COVID
vaccines. Initially, they provided those strictly to their patient base but have since opened it to the
general public and are now accepting walk ins as well. North Memorial’s lease went through the
end of May and they have provided notice they would like to extend to the end of June. They
initially asked for a reduction in rent from $8,500 per month to $4,000 per month, generally citing
the drop off in number of vaccines provided and interest, which is a trend seen in other parts of the
State and country. She noted North Memorial does get reimbursed for the vaccines so it was a
cost benefit.
Ms. Beekman stated staff reached out to North Memorial to ask if there are ways to promote the
site more broadly to Brooklyn Center residents so folk are aware it is available and explored the
idea of incentivize vaccines. North Memorial replied that offering incentives is not permitted
within the Medicare rules they have to follow. However, they have offered their marketing
department to help prepare some collateral to push out into the community more widely that this
is available.
Ms. Beekman explained that at this point, the resolution before the EDA is to amend the agreement,
focused specifically on the lease rate reduction from $8,500 to $4,000. She had a conversation
with Mike Opat who is on the board and indicated there has been some requests to waive the rent
altogether for the month of June. She has not received that request in writing but had a
conversation with staff who indicated they would be appreciative of that given the cost of running
the operation compared with the number of vaccines they are providing. Ms. Beekman offered to
answer questions.
Mary Beth __, North Memorial, thanked Ms. Beekman for a great summary and stated they are
proud of the work they have been able to do at that vaccine site, noting since the end of November
they have given almost 61,000 vaccines. She stated she appreciated the EDA’s consideration and
offered to answer questions.
President Elliott stated he would be inclined to support the reduction in rent as he knows North
Memorial has chosen to be in Brooklyn Center, which has been and continues to be at the top of
the list for infections in Hennepin County. He stated having North Memorial here is an asset to
Brooklyn Center and he is interested in finding ways to continue to better target folks in our
community and promote the availability of the vaccine. President Elliott stated this is a public
service that North Memorial is providing and the City is fortunate to have them located here in
Brooklyn Center.
President Elliott moved and Commissioner Ryan seconded to adopt RESOLUTION NO. 2021-__
Approving an Amendment to the Right of Entry Agreement for the use of the former Target
Building by North Memorial Hospitals and Clinics.
Motion passed unanimously.
05/24/21 -3- DRAFT
4b. RESOLUTION NO. 2021-XX ESTABLISHING A MICRO-GRANT FAÇADE
IMPROVEMENT PROGRAM
4c. MICRO-GRANT FAÇADE IMPMROVEMENT AGREEMENT
4d. RESOLUTION NO. 2021-XX APPROVING THE AWARD OF GRANTS UNDER
THE MICRO-GRANT FAÇADE PROGRAM
Acting Executive Director Reggie Edwards introduced the item and invited Ms. Beekman to
present the staff report.
Ms. Beekman stated Economic Development Coordinator Vong Thao has been with Brooklyn
Center since January and prepared the Micro-Grant Façade Improvement Program and reviewed
the applications. She invited Mr. Thao to present the staff report.
Economic Development Coordinator Vong Thao introduced himself and stated the EDA is
considering a motion to approve the eight applications in the current amount of $37,500. He
provided background on the Micro-Grant Program, noting the City Council established strategic
priorities for the 2021 budget that included a $50,000 initiative to support a program to help
incentivize businesses with clean up and property improvements, which includes repair and
damages as a result of the civil unrest. Mr. Thao stated most of the work would be exterior
improvements and façade beautification. The grant awards up to $5,000 per business to assist with
the improvement of exterior properties.
Mr. Thao explained there was a scoring criterion but based on the number of applications received,
it was not needed as the requests for grants was under the amount available. He read a list of
eligible uses and stated the approval process was on a rolling basis. Once the program was
launched, 11 applications were received and 8 were recommended for approval for a total amount
of $37,500. Three applications were denied for various reasons including being a home-based
business, a business not located within Brooklyn Center, and for replacement of stolen vehicle
catalytic converters.
Mr. Thao restated the request of the EDA is to approve the eight applications for $37,500, noting
the businesses are listed in the staff report and included in tonight’s meeting packet as follows:
• Allstate - Chima Ogwurike Agency will be installing exterior cameras, athena gun
detectors, glass break sensor, door access control with video. Grant request amount of
$5,000, match amount of $9,765 and total project cost of $14,765.
• BT Nails will be replacing glass windows. Grant requested of $3,500 with a matching
amount of $2,000 and total project cost of $5,500.
• F and G Beauty will be repairing broken windows and door. Grant requested of $5,000,
matching funds of $1,259 and total project cost of $6259.
• God Will Fashion will be replacing windows and doors. Grant requested of $5,000,
matching funds of $5,000 and total project cost of $10,000.
05/24/21 -4- DRAFT
• Hmong Senior Healthcare will be upgrading their gutters and landscaping expenses. Grant
request of $5,000, no match at this time and an estimated project cost of over $5,000.
• Jammin Wings will be repairing front entrance windows, replace lighting and add cameras.
Grant request of $5,000, match amount of $5,000 and total project cost of $10,000.
• Vinai Market will be replacing their front doors and window glass replacement. Grant
request of $5,000, no match amount is provided at this time and total project cost is not yet
known.
• Xin Xin Restaurant will be replacing damaged windows and frames. Grant requested is
$4,000, no match and total project cost of $4,000.
Mr. Thao noted all are businesses of color, small business operations, and this money will go a
long way for these applicants.
President Elliott asked, generally speaking, how did people find out about the availability of these
grants. Mr. Thao stated an e-mail blast was sent to businesses twice and phone calls were made
as well as visiting businesses face to face. Also, staff helped businesses complete the application
process and worked with them on the level of grant requested. Mr. Thao noted the list of applicants
represents a very diverse group of business entities and many are small businesses in mixed retail
and service businesses.
President Elliott asked what staff saw in differences between applicants and the awards
recommended and if there is a difference between the demand and funds available. Mr. Thao
stated there is a high demand for what the EDA has available, noting the program is new and staff
had to walk some business owners through the application process. Staff continues to accept
applications on a rolling basis and today he received two new applications that will be considered
in round two of approvals and he is expecting more businesses to submit an application in the next
few weeks.
President Elliott moved and Commissioner Ryan seconded to adopt RESOLUTION NO. 2021-__
Establishing a Micro-Grant Façade Improvement Program; to approve eight applications for the
Micro Façade Grant Program with total grant amount to approve as $37,500 as recommended by
staff; and, adopt RESOLUTION NO. 2021-__ Approving the Award of Grants Under the Micro-
grant Façade Program.
Motion passed unanimously.
5. ADJOURNMENT
Commissioner Ryan moved and President Elliott seconded adjournment of the Economic
Development Authority meeting at 9:00 p.m.
Motion passed unanimously.
Economic Development Authority
DAT E:6/28/2021
TO :C ity C ouncil
F R O M:D r. Reggie Edwards, A c#ng City Manager
T H R O U G H :M eg Beekman, C ommunity D evelopment D irector
BY:Vong Thao, Economic D evelopment C oordinator
S U B J E C T:A Res olu#on A pproving the A ward of G rants Under the Micro-G rant Facade P rogram
Requested Council A con:
- Moon to approve a resoluon approving the aw ard of grants under the Micro-G rant Facade P rogram.
B ackground:
O n A pril 26, the Brooklyn C enter Economic D evelopment A uthority approved the crea#on of a M icro-grant
Facade I mprovement P rogram, and provided $50,000 in E DA funds to support the program.
A s part of the 2021 budget, the Brooklyn C enter C ity C ouncil iden#fied a s trategic Council P riority to
promote beau#fica#on and cleanlines s . The goal of the strategy w as to put into effect new programs and
approaches to improve the look and quality of the City. O n of the ac#vi#es under this priority that w as
iden#fied was to explore and implement a program to incen#vize bus inesses to inves t in bea#fica#on
s trategies. The E DA budget included $50,000 to fund such a program.
The purpos e of the Micro-grant Façade I mprovement P rogram is to s upport busines s es with exterior
improvements , beau#fica#on and repairs. The inten#on is to encourage and as s is t bus inesses w ith
improving the exterior of proper#es w hile improving the public realm, beau#fying bus inesses , improving
public s afety and maintaining cleanliness. The P rogram Policies and P rocedures are a>ached to this report.
G rant proceeds w ould be able to be us ed for the following purposes :
I nstalla#on, repair or replacement of exterior s ignage including, monument signs on the property and
w all signs affixed to the building
Exterior ligh#ng
Exterior pain#ng
Repair and /or replacement of w indow s and exterior doors
Mas onry repairs and tuck poin#ng
A rt installa#ons and wall murals, w ith an approved maintenance plan
Canopy and/or awning ins talla#on or repair
Pedes trian improvements , which improve access for pers ons w ith dis abili#es.
Permanent site improvements (w alks , pa#os, courts)
Trash and mechanical enclosures
Parking area repairs and improvements (including the addi#on of bicycle facili#es )
S ecurity cameras , as approved by the Brooklyn Center Police D epartment
Fences
Materials for any of the above iden#fied items
O n May 24, 2021, the E DA approved an ini#al round of applica#ons to the grant program. The total aw ard
provided during the ini#al round was $37,500.
The E DA has s ince received an addi#onal s ix applica#ons, totaling $30,000 of reques ted funds. S taff has
s cored the applica#ons based on the informa#on provided and ranked the projects . A ll of the applica#ons
meet the minimum requirements for program eligibility.
A pplicaons
The A pplicants are listed below:
H allels M arket - replacing glass windows and doors. G rant reques ted of $5,000 w ith a matching
amount of $5,650 and total project cos t of $10,650.
H umu H air Braiding - replacing windows and doors. G rant reques ted of $5,000, matching funds of
$15,000 and total project cos t of $20,000.
Jambo A frica - upgrading their signage and doors. G rant reques t of $5,000, w ith a match of $5,000.
Es #mated project cost of over $10,000.
S un Foods - repaving their parking lot. G rant request of $5,000, match amount of $180,000 and total
project cost of $185,000.
I n addi#on, the applica#ons included two reques ts to provide an excep#on to the program policies to allow
interior improvements. These requests are from bus inesses located in the H umboldt S quare S hopping
Center located at 6800-6840 H umboldt P lace North. Thes e busines s es experienced s ignificant damage and
los t revenue as a result of the civil unrest.
A nne H air S alon - installing new ceiling #les and bathroom upgrades . G rant request amount of
$5,000, match amount of $0.
H andz on Barber - installing new ligh#ngs, paint, w alls and bathroom upgrade. G rant reques ted of
$5,000, matching funds of $0.
Opons
O p#on 1:
Move forward with all six applica#ons, for a total award amount of $30,000. T his would exceed the ini#al funding
for the program by $17,500.
O p#on 2:
Elect not to exceed the ini#al program budget of $50,000 and award only three of the applica#ons, based
on s coring. This would fully fund the top two scoring projects , and par#ally fund the third highest scoring
project.
Bas ed on the s coring this w ould be:
H umu H air Braiding - $5,000
S un Foods - $5,000
H allels M arket - $2,500
The a>ached res olu#on reflects O p#on 1; how ever, can be amended this evening by the E DA , s hould
O p#on 2 be s elected.
B udget I ssues:
E DA has allocated $50,000 budget to the Micro-G rant Facade I mprovement P rogram. A full approval of all
funding reques ts w ould res ult in a total project cost of $67,500.
I nclusive C ommunity Engagement:
A nracist/Equity Policy Effect:
The program s coring criteria awards addi#on points if the bus iness is locally owned and either cons idered a
s mall bus iness (under 25 employees ), and/or is ow ned by a woman or pers on of color.
S trategic Priories and Values:
S afe, S ecure, S table C ommunity
AT TA C H M E N TS :
D escrip#on U pload D ate Type
Policies 5/17/2021 Resolu#on Le>er
G rant A greement 5/17/2021 Resolu#on Le>er
Res olu#on 6/17/2021 Resolu#on Le>er
EXHIBIT A
POLICY AND PROCEDURES FOR THE MICRO-GRANT FAÇADE IMPROVEMENT
PROGRAM OF THE BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY
I. PURPOSE
The purpose of the Micro-grant Façade Improvement Program is to provide matching grants
of up to $5,000 to support small and medium sized businesses in the City with exterior
improvements, beautification and repairs. The intention is to encourage and assist
businesses with improving the exterior of properties while improving the public realm,
beautifying businesses, improving public safety and maintaining cleanliness.
II. MICRO-GRANT FAÇADE IMPROVEMENT FUND GOALS
By providing matching grants of up to $5,000 to existing or new businesses, the Economic
Development Authority of Brooklyn Center has established the following goals:
1. The proposed project must be a conforming use in the zoning district in which it is
located and generally consistent with the City of Brooklyn Center’s Comprehensive Plan.
2. The project will consist of permanent building and/or site improvements, which improve
the exterior appearance of buildings and property, comply with all building codes and
city regulations.
3. The project will not significantly or adversely increase the impacts on existing utility
service needs in the City.
4. The project should seek to utilize local contractors, suppliers, vendors, professionals,
and/or financial institutions when feasible.
5. The project will help protect or increase property values and the general public’s health,
safety and welfare.
6. The proposed project will improve the customer experience and contribute to the
aesthetic quality of the area.
III. QUALIFYING IMPROVEMENTS AND USE OF FUNDS
Micro-grant Façade Improvement Fund proceeds may be used for the following purposes:
1. Installation, repair or replacement of exterior signage including, monument signs on the
property and wall signs affixed to the building
2. Exterior lighting
3. Exterior painting
4. Repair and /or replacement of windows and exterior doors
5. Masonry repairs and tuck pointing
6. Art installations and wall murals, with an approved maintenance plan
7. Canopy and/or awning installation or repair
8. Pedestrian improvements, which improve access for persons with disabilities.
9. Permanent site improvements (walks, patios, courts)
10. Trash and mechanical enclosures
2
11. Parking area repairs and improvements (including the addition of bicycle facilities)
12. Security cameras, as approved by the Brooklyn Center Police Department
13. Fences
14. Materials for any of the above identified items
Grant proceeds may not be applied to:
1. Work, which is in process or purchases made prior to the application approval.
2. Improvement to residential-only (non-commercial) buildings or sites
3. New additions (new square footage) or new buildings
4. Billboards
5. Trees
6. Roofing
7. Kitchen or store equipment that is not affixed to building, such as free-standing
refrigerators
8. Plantings
9. Pylon, temporary, or roof signs
10. Labor for an unlicensed contractor
Qualifying Improvements must begin construction or be purchased within 90 days of loan
closing, unless an extension is requested and approved.
IV. APPLICANT ELIGIBILITY
1. Applicants may be individual owners, partnerships, corporations, tenant operators, or
contract for deed purchasers of a property or building within the City of Brooklyn
Center. Documentation of entity status shall be delivered with the application forms.
2. Land use of the property must be identified as a commercial, industrial, office or mixed-
use
3. Applicant must provide $1 for $1 match of program funds, up to $5,000. Any
expenditures related to a project, which exceed the EDA’s match, will come from
owners’ expense.
V. GRANT DETAILS
The Economic Development Authority of Brooklyn Center will review each application,
pursuant to the goals and policies set forth in this document, on a case-by-case basis.
1. Minimum Grant Amount. The minimum loan amount shall be $1,000.
2. Maximum Grant Amount. The maximum loan amount shall be $5,000.
3. Grant Terms. Grantee shall enter into a Grant Agreement with the Economic
Development Authority of Brooklyn Center prior to commencing work on the approved
project. Grantee shall furnish invoices for work done to complete the project. City shall
reimbursement up to 50% of eligible costs back to the Grantee.
4. Property Beautification. Grantees who control their parking and property areas shall
provide a property maintenance and beautification plan as part of their approval. The
Plan shall include how the property owner or property manager will ensure the parking
3
and landscaped areas of the property remain free of trash and litter. This may include
the addition of covered trash receptacles, trash enclosures or other devices to prevent
trash from blowing around the property; assigning staff to regularly clean up parking
and landscaped areas; and eliminating plastic bags and other one-time use items that
tend to accumulate as litter.
5. Equity Participation. Applicant shall provide a $1 for $1 match of grant funds, up to
$5,000.
6. Grant Repayments. No repayment of grant funds is required provided all funds are used
on eligible expenditures.
7. Grant Duration. Work for grant funded activities must commence within 90 days of the
execution of the Grant Agreement, unless an extension is approved in writing by EDA
staff, or the Grant Agreement shall expire and grant funds shall be absorbed back into
the program to fund other eligible projects.
VI. APPLICATION PROCESS
In order to be considered for a grant award, an applicant must submit a completed
application to the Economic Development Authority of the City of Brooklyn Center with the
following attachments:
1. Picture(s) of existing conditions of proposed area to be improved;
2. Descriptions, drawings, renderings and/or pictures of proposed improvements;
3. Contractor estimates;
4. Timeline for project;
5. For tenants: Letter of consent for improvements from building owner
VII. REVIEW GROUP
City of Brooklyn Center staff will review applications to ensure they are complete, and score
them based on the scoring criteria below. Applications will be ranked based on the scoring
results. A recommendation for funding shall be presented to the Economic Development
Authority of Brooklyn Center, which will make the final determination. Determination of
whether a grant application is approved will be in the sole discretion of the EDA.
1. Scoring Criteria:
i. Aesthetic improvement/“curb appeal”. Improvements that enhance the customer
experience and aesthetic quality of the business, property and area (10 points)
ii. Community Impact. The project provides a positive impact to the neighborhood, such
as improving safety, increasing ADA accessibility, improving public spaces, building
community connections, honoring cultural assets or creating jobs. (10 points)
iii. Local Economic Impact. The project utilizes local contractors, suppliers, vendors,
professionals, and/or financial institutions (5 points)
iv. Readiness. The project can be completed in a reasonable timeframe, with a budget
that matches the scope of work. The scope of work is achievable with the funding and
timeline provided. (5 points)
v. Local Business Impact. The business is owned (at least 25% stake) by a resident(s) of
the seven-county metro area and meet at least one of the criteria below (5 points):
ii. Be a small business (25 or fewer full-time equivalent employees);
4
iii. Be owned (at least 25% stake) and/or operated by women, or persons of color.
VIII. PAYMENT OF GRANT PROCEEDS
Grant payments shall be paid directly to Grantees. Grantees shall submit invoices to EDA
staff. The City shall reimburse up to 50% of all eligible expenditures identified on the invoice.
A final reimbursement payment shall not be issued until all work for the grant-funded
activities has been completed. Invoices and other necessary information as related to the
project costs shall be provided to the EDA or its representative prior to the disbursement of
funds. The EDA may, in its sole discretion, allow proceeds to be released earlier than upon
completion of work if used as a down payment for work and/or to allow payment to be
made directly to the participating lender, contractor, or vendor.
IX. DISCRIMINATION PROHIBITED
All persons/businesses submitting an application and receiving loan proceeds agree, by
accepting said proceeds, to comply with all federal and state laws and related rules and
regulations which prohibit discrimination. Generally, these laws and rules make it an unfair
employment practice, expect when based on limited, statutory exception or a bona fide
occupational qualification, for an employer to refuse to hire, discharge, or otherwise treat a
person differently with respect to fire, compensation, terms, upgrading, conditions, facilities
or privileges of employment because of race, color, creed, religion, national origin, sex,
marital status, status with regard to public assistance, disability, age, or sexual orientation;
or in reprisal for objection to, or participating in the investigation or litigation of, alleged
discrimination or for associating with disabled person(s) of a different race, color, creed,
religion, sexual orientation or national origin.
BR291-4-717767.v2 1
MICRO FAÇADE GRANT AGREEMENT
THIS MICRO FAÇADE GRANT AGREEMENT (“Agreement”) is made effective as of
__________________, 2021, by and between [name of grantee], a Minnesota [type of business]
(the “Grantee”), and the Economic Development Authority of Brooklyn Center, a public body
corporate and politic under the laws of Minnesota (“Lender”).
RECITALS
A. Grantor has duly established its Micro-Facade Grant Program (the “Program”) and
has approved policy and guidelines for said Program (the “Program Guidelines”).
B. Grantee has submitted an application for a grant (the “Grant Application”) pursuant
to the Program Guidelines, and Grantor has approved a grant to the Grantee in the maximum
principal amount of $_______ (the “Grant”) to pay a portion of the costs of qualifying expenditures
under the Grant Guidelines as set forth in the Grant Application, in connection with Grantee’s
business located at ______________ in the City of Brooklyn Center, Minnesota (the “City”) (the
“Grant Activities”).
C. The Grantor and Grantee have negotiated the terms of the Grant, and now desire to
memorialize such terms in this Agreement.
AGREEMENT
To induce Grantor to make the Grant to Grantee, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. The Grant Amount. Subject to and upon the terms and conditions of this
Agreement, the Program Guidelines, and the Grant Application (together, the “Grant
Documents”), Grantor agrees to grant to Grantee the sum of ______________ and no/100ths
Dollars ($___________)Proceeds of the Grant shall be disbursed for the Grant Activities approved
pursuant to the Grant Documents in accordance with Section 2 hereof.
2. Disbursement of Grant Proceeds.
(a) All Grant proceeds shall be paid to Grantee in accordance with the terms
and conditions of the Grant Documents. Notwithstanding anything to the contrary herein,
any costs of the Grant Activities exceeding the amount to be reimbursed under this
Agreement shall be the sole responsibility of the Grantee.
(b) On the date of closing on the Grant, Grantor shall direct Business Legal
Name to distribute Grant proceeds to the Grantee for façade improvement. The
disbursement of proceeds of the Grant will be made subject to the conditions precedent,
which require that prior to or as of the date of disbursement:
BR291-4-717767.v2 2
(i) The Grantor has received from Grantee, without expense to Grantor,
an executed copy of this Agreement; and
(ii) Grantee is in compliance with the terms of the Grant Documents.
3. Representations and Warranties. Grantee represents and warrants to Grantor that:
(a) Grantee is duly authorized and empowered to execute, deliver, and perform
this Agreement and to receive the Grant from Grantor.
(b) The execution and delivery of this Agreement, and the performance by
Grantee of its obligations under the Grant Documents, do not and will not materially violate
or conflict with any applicable provision of law and do not and will not materially violate
or conflict with, or cause any default or event of default to occur under, any material
agreement binding upon Grantee.
(c) The execution and delivery of this Agreement has been duly approved by
all necessary action of Grantee, and this Agreement has in fact been duly executed and
delivered by Grantee and constitutes its lawful and binding obligation, legally enforceable
against it.
(d) Grantee warrants that it shall keep and maintain books, records, and other
documents relating directly to the receipt and disbursements of Grant proceeds and that
any duly authorized representative of Grantor shall, with reasonable advance notice, have
access to and the right to inspect, copy, audit, and examine all such books, records, and
other documents of Grantee pertaining to the Grant until the completion of all closeout
procedures and the final settlement and conclusion of all issues arising out of this Grant.
(e) Grantee warrants that to the best of its knowledge, it has fully complied with
all applicable state and federal laws reasonably relevant to this Agreement and will
continue to comply throughout the terms of this Agreement. If at any time Grantee receives
notice of noncompliance from any governmental entity, Grantee agrees to take any
necessary action to comply with the state or federal law in question.
(f) Grantee warrants that it will use the proceeds of the Grant made by Grantor
solely for the Grant Activities, and Grant funds have been utilized and providing evidence
in the form of paid invoices, statements, or similar.
(g) Grantee acknowledges that Grant funds may only be used for eligible
expense under the Program Guidelines. If it is determined by an audit or review that Grant
funds have been misspent, Grantee shall be liable to Grantor for the amount deemed to
have been misspent.
4. No Business Subsidy. The parties agree that the Grant is not a business subsidy as
defined in Minnesota Statutes, Sections 116J.993 to 116J.995, as amended (the “Business Subsidy
Act”), because the assistance is in an amount less than $150,000.
BR291-4-717767.v2 3
5. Event of Default by Grantee. The following shall be Events of Default under this
Agreement:
(a) failure to complete any part of the Grant Activities by December 31, 2021
(b) any representation or warranty made by Grantee herein is false when made;
or
(c) any material breach or failure of Grantee to perform any material term or
condition of this Agreement not specifically described as an Event of Default in this
Agreement and such breach or failure continues for a period of thirty (30) days after
Grantor has given written notice to Grantee specifying such default or breach, unless
Grantor agrees in writing to an extension of such time prior to its expiration; provided,
however, if the failure stated in the notice cannot be corrected within the applicable period,
Grantor will not unreasonably withhold its consent to an extension of such time if
corrective action is instituted by Grantee within the applicable period and is being
diligently pursued until the Event of Default is corrected, but no such extension shall be
given for an Event of Default that can be cured by the payment of money (i.e., payment of
taxes, insurance premiums, or other amounts required to be paid hereunder).
6. Grantor's Remedy upon Grantee's Default. Upon an Event of Default by Grantee
and after provision by Grantor of written notice, Grantor shall have the right to suspend or
terminate its performance under this Agreement. In addition, Grantee will be ineligible for future
grants under the Program.
7. Indemnification.
(a) Grantee shall and does hereby agree to indemnify against and to hold
Grantor, and its officers, agents, and employees, harmless of and from any and all liability,
loss, or damage that it may incur under or by reason of this Agreement, and of and from
any and all claims and demands whatsoever that may be asserted against Grantor by reason
of any alleged obligations or undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained herein.
(b) This indemnification and hold harmless provision shall survive the
execution, delivery, and performance of this Agreement and the payment by Grantor of
any portion of the Grant.
(c) Nothing in this Agreement shall constitute a waiver of or limitation on any
immunity from or limitation on liability to which Grantee is entitled under law.
8. Miscellaneous.
(a) Waiver. The performance or observance of any promise or condition set
forth in this Agreement may be waived, amended, or modified only by a writing signed by
BR291-4-717767.v2 4
Grantee and Grantor. No delay in the exercise of any power, right, or remedy operates as a
waiver thereof, nor shall any single or partial exercise of any other power, right, or remedy.
(b) Assignment. This Agreement shall be binding upon the parties, their
successors, and assigns. All rights and powers specifically conferred upon Grantor may be
transferred or delegated by Grantor to any of its successors and assigns. Grantee's rights
and 4 obligations under this Agreement may be assigned only when such assignment is
approved in writing by Grantor; except that if such assignment is made to an affiliate or
subsidiary of Grantee, Grantee may assign any of its rights or obligations to such affiliate
or subsidiary upon written notice to the Grantor.
(c) Governing Law. This Agreement is made and shall be governed in all
respects by the laws of the state of Minnesota. Any disputes, controversies, or claims
arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and
all parties to this Agreement waive any objection to the jurisdiction of these courts, whether
based on convenience or otherwise.
(d) Severability. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect
other provisions or applications that can be given effect, and this Agreement shall be
construed as if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby.
(e) Notice. All notices required hereunder shall be given by depositing in the
U.S. mail, postage prepaid, certified mail, return receipt requested, to the following
addresses (or such other addresses as either party may notify the other):
To Grantor: Economic Development Authority of Brooklyn Center
6301 Shingle Creek Parkway, Brooklyn Center, MN 55430
Attn: Executive Director
To Grantee:
Attn: __________________
(f) Termination. Upon the date of receipt by the Grantor of Grantee’s written
report on Grantee’s expenditure of Grant proceeds as described in paragraph 3
(f) of this Agreement, this Agreement shall terminate and neither party shall have any
further obligation to the other.
(g) Entire Agreement. This Agreement, together with the Grant Documents,
which are incorporated by reference, constitutes the complete and exclusive statement of
all mutual understandings between the parties with respect to this Agreement, superseding
all prior or contemporaneous proposals, communications, and understandings, whether oral
or written, concerning the Grant.
BR291-4-717767.v2 5
(h) Headings. The headings appearing at the beginning of the several sections
contained in this Agreement have been inserted for identification and reference purposes
only and shall not be used in the construction and interpretation of this Agreement.
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
[GRANTEE NAME]
By:
Name:
Its: [Title of Signatory]
ECONOMIC DEVELOPMENT AUTHORITY OF
BROOKLYN CENTER
By:
Name:
Its: President
By:
Name:
Its: Executive Director
BR305-1-728788.v1
Commissioner _______________________ introduced the following resolution
and moved its adoption:
AUTHORITY RESOLUTION NO. ______
RESOLUTION APPROVING THE AWARD OF GRANTS UNDER THE
MICRO-GRANT FAÇADE PROGRAM
WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota (the
“Authority”) was created pursuant to Minnesota Statutes, sections 469.090 through 469.1082 to
exercise its powers to promote and protect economic development within the City of Brooklyn
Center (“City”); and
WHEREAS, on April 26, 2021 the Authority exercised its authority to establish the
Micro-Grant Façade Program (“Program”) to promote local businesses and economic
development by encouraging the improvement of business facades within the City; and
WHEREAS, since the first round of approved grants, additional businesses have applied
for grants under the Program and the Authority desires to award additional grants for use in
accordance with the guidelines established for the Program and the terms and conditions of the
agreement established for the Program, which is attached hereto as Exhibit A (“Grant
Agreement”).
NOW, THEREFORE, BE IT RESOLVED, by the Economic Development Authority of
Brooklyn Center, Minnesota Board of Commissioners (“Board”) as follows:
1. The Board hereby awards $30,000 in grants under the Program to the following
businesses and in the following amounts:
Businesses Grant Amounts
Hallels Market $5,000
Humu Hair Braiding $5,000
Jambo Africa $5,000
Sun Foods $5,000
Anne Hair Salon $5,000
Handz on Barber $5,000
2. The businesses shall utilize the grant funds in accordance with the Program guidelines
and the Grant Agreement.
3. Staff are hereby authorized to enter into Grant Agreements with the businesses in
substantially the form as attached, issue the grants, and to otherwise take such actions as
may be necessary to carry out the Program.
BR305-1-728788.v1
Date President
ATTEST:
Secretary
The motion for the adoption of the foregoing resolution was duly seconded by Commissioner
___________________
and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
BR305-1-728788.v1
EXHIBIT A
Grant Agreement
[attached hereto]
Economic Development Authority
DAT E:6/28/2021
TO :C ity C ouncil
F R O M:D r. Reggie Edwards, A c#ng City Manager
T H R O U G H :N/A
BY:M eg Beekman, C ommunity D evelopment D irector
S U B J E C T:Res olu#on S uppor#ng the U s e of Tax I ncrement F inancing for a Rental H ous ing
D evelopment P roject
Requested Council A con:
- Moon to approve a resoluon supporng the use of tax increment financing for a rental housing
development project.
B ackground:
The E DA entered into a preliminary development agreement (P DA ) with J O P roper#es in March 2019. The
agreement provided J O P roper#es development rights to four E DA -owned parcels at 61s t Avenue N and
Brooklyn Boulevard for a dura#on of tw o years , while the developer conducted their due diligence and
gathered financing for the project.
I n M ay 2019, the City applied for a pre-development grant from the M etropolitan C ouncil on behalf of the
project. A grant in the amount of $50,000 was awarded to provide site planning and financial analys is
assistance to the project.
The developer pres ented an update of their project to the E DA in M arch 2020. The update included a
revised concept plan, which the E DA indicated their general support of.
The developer is in the process of submi>ng to the Minnes ota H ous ing F inance A gency (M H FA ) an
applica#on for Low I ncome H ousing Tax C redits (L I H TC), w hich w ould provide the majority financing for
the project. I n addi#on, the City is preparing an applica#on to the Metropolitan Council's L C DA program for
a development grant on behalf of the project.
The developer has made a reques t to the E DA to provide tax increment financing, w hich w ould fill a financial
gap in the project. Ehlers, the C ity's public financing consultant, has review ed the request and prepared a
res olu#on bas ed on their ini#al as s essment of the projects need. The resolu#on (aBached), w ould provide a
leBer of support for the project, indica#ng the City's w illingnes s to provide tax increment financing s hould
the project be aw arded with tax credits from M H FA , and provided the project s a#s fies all condi#ons
required by state law as it pertains to the use of public s ubs idy. The leBer of support is required as part of
the developers applica#on to M H FA for L I H TC .
Ehlers has performed a financial analys is of the project, and iden#fied an amount of tax increment
financing, combined with a par#al land write-down, that would be needed to make the project financially
feas ible. Bas ed on Ehlers' analys is of the project, project need, and available increment, they have indicated
that the project would support tax increment financing in an amount not to exceed $790,000, payable over
15 years , with a land write-down of 1.1% of the total project costs (currently es #mated at $214,000).
Ehlers ' full financial analysis is aBached to this report.
A s eparate term s heet and op#on agreement have also been prepared and are part of a separate agenda
item for this evening.
B udget I ssues:
A pproval of this item has no immediate budget impact; how ever, does provide E DA support to provide T I F
to the project, should the project receive financing, land us e approvals, and meet the requirements for the
us e of public subsidy as iden#fied by state law.
I nclusive C ommunity Engagement:
The developer has ini#ated a workshop series w ith the community in regards to the project, w ith the goal of
receiving input on the s ite layout and development program.
A nracist/Equity Policy Effect:
S trategic Priories and Values:
Targeted Redevelopment
AT TA C H M E N TS :
D escrip#on U pload D ate Type
Ehlers - F inancial A nalysis M emo 6/17/2021 Backup M aterial
L eBer of S upport to M H FA 6/17/2021 Backup M aterial
Res olu#on 6/23/2021 Resolu#on LeBer
SOURCES
Amount Pct.Per Unit
First Mortgage 4,078,000 21%75,519
TIF Mortgage 790,000 4%14,630
Tax Credits 12,283,772 63%227,477
Deferred Developer Fee (38% of Total Fee)755,727 4%13,995
Land Write-Down 213,646 1%3,956
Other Public Sources 1,301,193 7%24,096
TOTAL SOURCES 19,422,338 100%359,673
USES
Amount Pct.Per Unit
Acquisition Costs 722,000 4%13,370
Construction Costs 14,227,291 73%263,468
Professional Services 821,106 4%15,206
Financing Costs 1,166,928 6%21,610
Developer Fee 2,000,000 10%37,037
Cash Accounts/Escrows/Reserves 485,013 2%8,982
TOTAL USES 19,422,338 100%359,673
1 2 3 4 5 6 7 8
30%22,050 25,200 28,350 31,450 34,000 36,500 39,000 41,550
50%36,750 42,000 47,250 52,450 56,650 60,850 65,050 69,250
60%44,100 50,400 56,700 62,940 67,980 73,020 78,060 83,100
Studio 1 2 3 4 5 6
30%551 590 708 818 912 1,007 1,101
50%918 984 1,181 1,363 1,521 1,678 1,835
60%1,102 1,181 1,471 1,636 1,825 2,014 2,202
June 28, 2021
Minnesota Housing
400 Wabasha Street North
St. Paul, Minnesota 55102
Re: Wangstad Commons Apartment, Brooklyn Center, MN
Minnesota Housing Tax Credit Program
Dear Sir/Madam:
The City of Brooklyn Center is a first-ring suburb with nearly a third of the City’s housing stock being
renter occupied. However, there has not been a new multi-family housing development for more than
40-years which may signal potential issues with deferred maintenance, conversions to higher market-
rate products, deteriorating quality and lack of options to meet the changing demands of our residents.
Quality affordable housing is an integral component of a vibrant community. It helps families meet their
fundamental need of having shelter, prevents and decreases homelessness, and increases residential
stability. It ultimately leads to improved educational outcomes for children and improved labor market
results for adults. Now is the time to prioritize affordable housing and address this fundamental need
within Brooklyn Center.
The City’s Comprehensive Plan sets goals, strategies, and priorities in a comprehensive manner to
communicate the values of the City, as a governing body. Brooklyn Center has adopted a strategic
priority to ensure that all neighborhoods are safe, stable, and accessible to all residents. This priority
may only be achieved through public-private partnerships with developers and other units of
government. Wangstad Commons will truly be a cooperative development and ensure quality affordable
housing is available to low- and moderate-income families within our community.
JO Companies submitted an application requesting tax increment financing to support the construction
of a 54-unit workforce housing apartment project. On June 28, 2021, the Brooklyn Center Economic
Development Authority (the “EDA”) held an initial review of the public assistance request and moved to
support the project. They approved an allocation of up to $790,000 in tax increment financing for an
anticipated term of 15 years on a pay-as-you-go basis.
The EDA’s endorsement is evidenced by this letter of support and the approval of a Resolution, a copy of
which is included with this letter. We respectively request funding approval for the Wangstad Commons
Apartment to provide quality affordable housing to our residents.
Sincerely,
President Elliott
Brooklyn Center Economic Development Authority
Commissioner _______________introduced the following resolution and
moved its adoption:
RESOLUTION NO.
RESOLUTION SUPPORTING USE OF TAX INCREMENT FINANCING FOR A
RENTAL HOUSING DEVELOPMENT PROJECT
WHEREAS, the Brooklyn Center Economic Development Authority (the “EDA”) was
created pursuant to the Economic Development Authorities Act, Minnesota Statutes, Sections
469.090 to 469.1080 (the “EDA Act”), and is authorized pursuant to Minnesota Statutes §469.174
to §469.1794 (the “TIF Act”) to use Tax Increment Financing to carry out the public purposes
described herein;
WHEREAS, the EDA has received a request to provide tax increment financing assistance
to JO Companies, LLC, a Minnesota limited liability company (or an affiliated entity, the
“Developer”) for construction of a 54-unit multifamily workforce rental housing apartment (the
“Project”) to be located on approximately 1.8 acres of land at the northwest intersection of Brooklyn
Boulevard and 61st Avenue N in Brooklyn Center, Minnesota; and
WHEREAS, in connection with its application to Minnesota Housing for tax credits for the
Project, the Developer has requested that the EDA indicate its support of the use of tax increment
financing for the Project.
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the
Brooklyn Center Economic Development Authority (the “Board”) as follows:
The EDA supports the use of tax increment financing for the Project in an amount not to
exceed $790,000 payable over approximately 15 years; provided, however, that authorization of
tax increment financing for the Project is solely within the discretion of the City Council after
satisfaction of all conditions required pursuant to the EDA Act and the TIF Act, including without
limitation, (i) a public hearing; (ii) determining that tax increment financing assistance is necessary
for the Project; and (iii) verification of development financing need that substantiates that “but for”
the use of tax increment financing the Project would be unable to proceed.
June 28, 2021
Date President
ATTEST:
Executive Director
The motion for the adoption of the foregoing resolution was duly seconded by
Commissioner
and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
Economic Development Authority
DAT E:6/28/2021
TO :C ity C ouncil
F R O M:D r. Reggie Edwards, A c#ng City Manager
T H R O U G H :N/A
BY:M eg Beekman, C ommunity D evelopment D irector
S U B J E C T:Res olu#on A pproving an O p#on A greement w ith J O P roper#es for Certain E DA -ow ned
Parcels and Term S heet
Requested Council A con:
- Moon to approve a resoluon approving an Opon A greement w ith J O P roperes for certain E DA-
ow ned parcels and a term sheet.
B ackground:
The E DA entered into a preliminary development agreement (P DA ) with J O P roper#es in March 2019. The
agreement provided J O P roper#es preliminary development rights to four E DA -owned parcels at 61s t
Avenue N and Brooklyn Boulevard for a dura#on of tw o years , while the developer conducted their due
diligence and gathered financing for the project.
I n M ay 2019, the City applied for a pre-development grant from the M etropolitan C ouncil on behalf of the
project. A grant in the amount of $50,000 was awarded to provide site planning and financial analys is
assistance to the project.
The developer pres ented an update of their project to the E DA in M arch 2020. The update included a
revised concept plan, which the E DA indicated their general support of.
The developer is in the process of submi=ng to the Minnes ota H ous ing F inance A gency (M H FA ) an
applica#on for Low I ncome H ousing Tax C redits (L I H TC), w hich w ould provide the majority financing for
the project. I n addi#on, the City is preparing an applica#on to the Metropolitan Council's L C DA program for
a development grant on behalf of the project.
The developer has made a reques t to the E DA to provide tax increment financing, w hich w ould fill a financial
gap in the project. Ehlers, the C ity's public financing consultant, has review ed the request and prepared a
res olu#on bas ed on their ini#al as s essment of the projects need. This res olu#on, and subsequent leBer of
s upport for the project, has been prepared as a separate agenda item for this evening's mee#ng.
I n addi#on to the leBer of support for the us e of T I F, the developer is reques #ng the execu#on of an O p#on
A greement for the E DA -ow ned parcels and a term sheet, w hich outlines the terms and condi#ons under
w hich a development agreement would be nego#ated. The O p#on A greement w ould convert to a purchas e
agreement should the project meet all of the condi#ons of approval and the developer chos e to exercis e the
op#on. The term s heet forms the bas is for a future development agreement
A pproval of the O p#on A greement and term sheet does not cons #tute approval of the project. The
developer would s#ll be required to submit a full and complete land us e applica#on for formal review and
approval by the City prior to being able to exercise the O p#on A greement.
A n op#on agreement and term s heet are required as part of the developers applica#on to M H FA for tax
credits for the project.
Opon A greement
The O p#on A greement provides the developer with exclus ive rights and an op#on to purchase the property
during the op#on period. The op#on period would go into effect at the signing of the agreement and remain
in place un#l 60 days following the developer receiving M H FA financing or J anuary 1, 2023, w hichever
occurs firs t. The developer would provide a $2,500 earnes t money payment at s igning of the op#on
agreement, and an addi#onal $10,000 upon execu#on of the op#on to purchase.
The op#on agreement provides the developer w ith #me to complete their due diligence on the property,
including obtaining land us e approvals and rez oning of the property, as well as obtain financing and T I F.
The op#on agreement provides right of entry for the developer to conduct due diligence on the property.
The purchase price w ill be the greater of $712,000, or the appraised value of the property w hen the op#on
is exercised, minus 1.1% of the total development cos ts . The op#on agreement provides for a land w rite
dow n in the amount of 1.1% of the total development costs of the project, currently es#mated to be
$214,000. This contribu#on to the project by the E DA w ill award addi#onal points to the project on its
M H FA tax credit applica#on.
Term S heet
A P reliminary Term S heet has been prepared w hich outline the terms under which the developer and the
E DA may be w illing to enter into a development agreement. The term s heet ini#ates the nego#a#on of a
development agreement.
The Term S heet indicates the following terms:
D eveloper Condi#ons :
a. Execu#on of D evelopment A greement
b. S ecure neces s ary financing for the construc#on of the Minimum I mprovements
c. S ite Control
d. S a#sfac#on of all Buyer ’s C on#ngencies under the O p#on A greement
E DA Condi#ons :
a. E DA approval of the sale of the P roperty aJer all proceedings required by law
b. E DA approval of C ons truc#on P lans
c. C ity C ouncil approval of P lanning A pplica#on
d. Execu#on of a D evelopment A greement
e. S a#s fac#on of all S eller ’s C on#ngencies under the O p#on A greement
Minimum I mprovements : 54-unit mul#-family apartment with at leas t 40% of units held for
occupancy by persons or families whose incomes do not exceed 60 percent area median income
Construc#on S chedule: Construc#on shall be substan#ally complete by D ecember 31, 2025, and the
requirement of a "C er#ficate of C omple#on" by the E DA
P ublic A ssistance: Lays out the minimum terms of a T I F note
Pay-as-you-go-note
Not to exceed $790,000
Note w ill be payable from 90% of the tax increment generated by the project for a period up to
15 years
A reduc#on in the cash payment of the purchas e of the property by an amount equal to 1.1
percent of the total project cos ts
Minimum as s essment agreement for the project
B udget I ssues:
There are no budget is s ues to consider at this #me. Cas h proceeds for the sale of the E DA -ow ned property
w ill be returned to the T I F 3 account from w hich they originated. Thes e funds will then be available to
s upport other redevelopment projects.
I nclusive C ommunity Engagement:
A nracist/Equity Policy Effect:
S trategic Priories and Values:
Targeted Redevelopment
AT TA C H M E N TS :
D escrip#on U pload D ate Type
O p#on A greement 6/8/2021 Backup M aterial
Term S heet 6/17/2021 Backup M aterial
Res olu#on 6/17/2021 Resolu#on LeBer
1
BR305-163-725043.v2
OPTION AGREEMENT
THIS OPTION AGREEMENT (this “Agreement”) is made and entered into as of this ____
day of ____________, 2021 (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:
2
BR305-163-725043.v2
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, 2023 (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.
3
BR305-163-725043.v2
6. Purchase Price. The total purchase price for the Option Property shall be
determined as follows: the greater of $712,000 or the appraised value of the Option Property when
the Option is exercised, less 1.1% of the total project costs for the Development as set forth in the
Buyer’s HTC-1 Workbook submitted to MHFA (currently estimated to be $214,000) (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.
7. 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”).
8. 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:
i. MHFA Affordable Housing Tax Credits;
ii. Tax Increment Financing assistance from the Seller;
4
BR305-163-725043.v2
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.
9. 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
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
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BR305-163-725043.v2
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.
10. 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.
11. 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.
12. 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.
13. 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:
6
BR305-163-725043.v2
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
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
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BR305-163-725043.v2
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 4.475 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 $780,000
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;
viii. By the Closing Date, the Buyer shall have obtained and provided to the
Seller evidence of all necessary financing for the Development; and
8
BR305-163-725043.v2
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.
14. 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.
15. 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
9
BR305-163-725043.v2
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.
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.
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BR305-163-725043.v2
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.
16. 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”).
17. 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.
18. 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.
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
11
BR305-163-725043.v2
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.
19. 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. $2,430,000 as of January 2, 2024; and
ii. $7,290,000 as of January 2, 2025; and
iii. $9,720,000 as of January 2, 2025.
g. Such other documents as shall be required to carry out the intent of this
Agreement.
20. 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
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.
12
BR305-163-725043.v2
21. 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.
22. 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.
23. 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:
___________________________
___________________________
___________________________
24. 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.
13
BR305-163-725043.v2
25. Survival. All representations, warranties, and indemnities set forth herein shall
survive the Closing, except as otherwise provided herein.
26. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
27. 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.
28. Binding Effect. This Agreement is binding upon the Parties and their respective
permitted successors and assigns.
29. 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.
30. 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.
31. 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.
32. 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.
33. 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.
34. 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.
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BR305-163-725043.v2
35. 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.
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BR305-163-725043.v2
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 _____________,
2021, 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
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BR305-163-725043.v2
BUYER:
JO COMPANIES, LLC
By:
Its: ______________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledgment before me this ____ day of _____________,
2021, 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.v2
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.v2
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.
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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Commissioner _________________ introduced the following resolution and moved its adoption:
EDA RESOLUTION NO. 2021-____
RESOLUTION APPROVING AN OPTION AGREEMENT WITH JO
COMPANIES, LLC AND A PRELIMINARY TERM SHEET FOR A
DEVELOPMENT AGREEMENT
WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota (the
“Authority”) owns the parcels located in the City of Brooklyn Center (the “City”) legally described
on Exhibit A attached hereto (the “Option Property”); and
WHEREAS, JO Companies, LLC, a Minnesota limited liability company (the “Developer”)
has proposed 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
WHEREAS, the Authority and the Developer have negotiated that certain Option
Agreement (the “Option Agreement”), setting out the respective rights of the Developer to
purchase the Option Property from the Authority, contingent among other things on the Developer
obtaining financing for the Development; and
WHEREAS, the Authority and the City have undertaken a program to promote economic
development and job opportunities, promote the development and redevelopment of land which is
underutilized within the City, and promote the development of adequate and affordable housing,
and in this connection created a development district in the City; and
WHEREAS, the City and the Authority are considering establishing a tax increment
financing district which is anticipated to include the Option Property (the “TIF District”) pursuant
to Minnesota Statutes Sections 469.174 to 469.1794, as amended (the “TIF Act”); and
WHEREAS, the City or the Authority may incur certain costs related to the TIF District
which may be financed on a temporary basis from available Authority funds; and
WHEREAS, under Section 469.178, subdivision 7 of the TIF Act, the City and the Authority
are authorized to advance or loan money from any fund loan from which such advances may legally
be made in order to finance expenditures that are eligible to be paid with tax increments under the
TIF Act; and
WHEREAS, the City has determined that it or the Authority must pay for administrative
costs associated with the establishment of the TIF District and certain other costs incurred in
connection with the proposed development of the TIF District (the “Cost Advances”) on a temporary
basis from the City’s General Fund, the Authority’s General Fund, or any other fund from which
such advances, from time to time, may be legally made (the “Fund”) as an interfund loan pursuant
to Minnesota Statutes Section 469.178, subdivision 7; and
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NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic
Development Authority of Brooklyn Center, Minnesota (the “Board”), as follows:
1. Subject to all of the contingencies set forth therein, including, without limitation, the
establishment of the TIF District after all proceedings required by the TIF Act and a
public hearing on the sale of the Option Property to the Developer in accordance with
the requirements of law, the Authority hereby approves the Preliminary Term Sheet
and the Option Agreement, in substantially the forms presented to the Board, together
with any related documents necessary in connection therewith, including without
limitation, documents or certifications referenced in or attached thereto (the
“Development Documents”), and hereby authorizes the President and Executive
Director to execute, on behalf of the Authority, the Development Documents to which
the Authority is a party and to carry out, on behalf of the Authority, the Authority’s
obligations thereunder when all conditions precedent thereto have been satisfied.
2. The approval hereby given to the Development Documents includes approval of such
additional details therein as may be necessary and appropriate and such modifications
thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by legal counsel to the Authority and by the officers
authorized herein to execute said documents prior to their execution; and said officers
are hereby authorized to approve said changes on behalf of the Authority. The
execution of any instrument by the appropriate officers of the Authority herein
authorized shall be conclusive evidence of the approval of such document in
accordance with the terms hereof. This Resolution shall not constitute an offer and
the Development Documents shall not be effective until the date of execution thereof
as provided herein. In the event of absence or disability of the authorized officers,
any of the documents authorized by this Resolution to be executed may be executed
without further act or authorization of the Board by any duly designated acting
official, or by such other officer or officers of the Board as, in the opinion of legal
counsel to the Authority, may act on their behalf.
3. The Authority hereby authorizes the expenditure of available Authority general fund
dollars for the administrative costs of the TIF District in such amount as is permitted
under the TIF Act and determined necessary and set forth in writing by the Executive
Director of the Authority for the establishment of the TIF District.
4. This Resolution is evidence of an internal borrowing by the Authority in accordance
with Section 469.178, subdivision 7 of the TIF Act in an amount equal to the Cost
Advances, and is a special, limited obligation payable solely from the respective TIF
District pledged to the payment hereof under this Resolution (collectively, the
“Interfund Loans”). The Authority will reimburse itself solely from the tax increment
from the applicable TIF District for the Cost Advances together with interest at the
rate of four percent per annum (which is the greater of the rates specified under
Section 270C.040 or 549.09, in accordance with Minnesota Statutes Section 469.178,
subdivision 7); provided, however, the Executive Director of the Authority is
authorized to specify a lower rate. Payments shall be applied first to accrued interest,
and then to unpaid principal, unless otherwise specified by the Executive Director of
the Authority. Interest accruing from the date of each Cost Advance will be
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BR305-163-726971.v2
compounded semiannually on February 1 and August 1 of each year and added to
principal, unless otherwise specified by the Executive Director of the EDA.
5. Payments on the Interfund Loans may be subordinated to any outstanding or future
bonds, notes, or contacts secured in whole or in part with available tax increment and
are on a parity with any other outstanding or future interfund loans secured in whole
or in part with available tax increment. The Interfund Loans shall not be deemed to
constitute a general obligation of the State of Minnesota or any political subdivision
thereof, including, without limitation, the City, or the Authority. Neither the State of
Minnesota, nor any political subdivision thereof shall be obligated to pay the principal
of or interest on the Interfund Loans or other costs incident hereto except out of the
applicable TIF District. The Authority shall have no obligation to pay any principal
amount of the Interfund Loans or accrued interest thereon from any other source, and
such amounts may remain unpaid after the final Payment Date.
6. The Authority may at any time, make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loans, in whole or in part, on
any date from time to time, to the extent permissible under law.
7. The Authority may from time to time amend the terms of this Resolution to the extent
permitted by law, including without limitation, amending the payment schedule and
the interest rate; provided that the interest rate may not be increased above the
maximum specified in Section 469.178, subdivision 7 of the TIF Act.
_________________________ _________________________________
Date President
The motion for the adoption of the foregoing resolution was duly seconded by Commissioner
and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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EXHIBIT A
Legal Description 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