HomeMy WebLinkAbout2021 12-13 EDAPE conomic Development
Authority
V I RT UA L meeting being
conducted by electronic
means in accordance with
Minnesota S tatutes, section
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December 13, 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.
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.Resolution A pproving the Establishment of Tax I ncrement Financing District
No. 9 and Authorizing the Execution of a T I F A ssistance A greement
- Motion to approve a resolution approving a modification to the
Redevelopment Plan for Housing Development and Redevelopment
Project No. 1 establishing Tax Increment Financing District No. 9 therein,
approving a Tax Increment Financing Plan therefor, and authorizing the
execution of a TIF Assistance Agreement related thereto (Crest Apartments
Project)
5.Adjournment
Economic Development Authority
DAT E:12/13/2021
TO :C ity C ouncil
F R O M:D r. Reggie Edwards, 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 the Establis hment of Tax I ncrement F inancing D istrict No. 9 and
A uthoriz ing the Execu.on of a T I F A s s is tance A greement
Requested Council A con:
- Moon to approve a resoluon approving a modificaon to the Redevelopment P lan for H ousing
D evelopment and Redevelopment P roject No. 1 establishing Tax I ncrement F inancing D istrict No. 9 therein,
approving a Tax I ncrement F inancing P lan therefor, and authorizing the execuon of a T I F A ssistance
A greement related thereto (C rest A partments P roject)
B ackground:
Earlier this evening, the C ity C ouncil received a pres enta.on and approved the es tablishment of Tax
I ncrement F inancing D is trict No. 9. A s part of that approval, the Brooklyn Economic D evelopment A uthority
must als o approve the es tablishment of the dis trict, the T I F P lan, and the T I F A s s is tance A greement
between the E DA and the developer.
The T I F A s s is tance A greement w ill establis h the rental criteria for the project and the dura.on of the rent
res tric.ons , as w ell as the use and amount of increment and the repayment of the T I F note.
A eon is reques .ng T I F in an amount not to exceed $1,100,000. I t is an.cipated that the T I F note will be
repaid within 15 years; how ever, the T I F A ssistance A greement and T I F plan allows the City to keep the
dis trict open for up to 26 years. The rent restric.ons as s ociated w ith the use of T I F will remain in effect as
long as the district is open. A ny excess T I F collected by the City once the T I F note is repaid can be retained
by the City for the purpose of crea.ng or pres erving affordable housing.
B udget I ssues:
There are no budget is s ues to consider at this .me.
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
Res olu.on 12/6/2021 Resolu.on Le?er
T I F A s s is tance A greement 12/7/2021 Backup M aterial
BR291-414-763916.v2
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF
BROOKLYN CENTER, MINNESOTA
CITY OF BROOKLYN CENTER
COUNTY OF HENNEPIN
STATE OF MINNESOTA
Commissioner _______________________ introduced the following resolution
and moved its adoption:
RESOLUTION NO. ______
RESOLUTION APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR
HOUSING DEVELOPMENT AND REDEVELOPMENT PROJECT NO. 1, ESTABLISHING
TAX INCREMENT FINANCING DISTRICT NO. 9 THEREIN, APPROVING A TAX
INCREMENT FINANCING PLAN THEREFOR, AND AUTHORIZING THE EXECUTION OF
A TIF ASSISTANCE AGREEMENT RELATED THERETO (CREST APARTMENTS
PROJECT)
WHEREAS, it has been proposed that the Economic Development Authority of the City
of Brooklyn Center, Minnesota (the “EDA”) modify the Redevelopment Plan for its Housing and
Redevelopment Project No. 1 (the “Redevelopment Project”); establish Tax Increment Financing
District No. 9: Crest Apartments (a housing district) (“TIF District No. 9”) within the
Redevelopment Project; adopt the Tax Increment Financing Plan (the “TIF Plan”) therefor; and
authorize the execution of certain development agreements related thereto (as further described
and defined herein); all pursuant to and in conformity with applicable law, including Minnesota
Statutes, Sections 469.174 to 469.1794, as amended (the “TIF Act”), Minnesota Statutes, Sections
469.001 to 469.047 and Sections 469.090 to 469.1081, all inclusive, as amended, (collectively,
and together with the TIF Act, the “Act”), and all as reflected in that certain document entitled in
part “Modification to the Redevelopment Plan for Housing Development and Redevelopment
Project No. 1 and Tax Increment Financing Plan for Tax Increment Financing District No. 9: Crest
Apartments (a Housing District)” dated December 13, 2021 (collectively, the “Plans”), presented
for consideration by the Board of Commissioners of the EDA (the “Board”); and
WHEREAS, the Board has investigated the facts relating to the Plans and certain
information and material (collectively, the “Materials”) relating to the TIF Plan and to the activities
contemplated in TIF District No. 9 have heretofore been prepared and submitted to the Board
and/or made a part of the EDA files and proceedings on the TIF Plan. The Materials include the
tax increment application, project pro forma financial statement, project sources and uses and other
information supplied by Aeon, a Minnesota non-profit corporation (or one or more limited
partnerships or other entities to be formed thereby or affiliated therewith, the “Developer”) as to
the activities contemplated therein, the items listed under the heading “Supporting
Documentation” in the TIF Plan, and information constituting or relating to (1) why the assistance
satisfies the so-called “but for” test and (2) the bases for the other findings and determinations
made in this resolution. The Board hereby confirms, ratifies and adopts the Materials, which are
hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth
in full herein; and
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BR291-414-763916.v2
WHEREAS, the EDA has performed all actions required by law to be performed prior to
the adoption and approval of the Plans, including but not limited to notice to the County
Commissioner representing the area of the County to be included in TIF District No. 9, and
delivery of the Plans to Hennepin County and Independent School District No. 281 (Robbinsdale);
and the City Council has held a public hearing thereon on the date hereof following notice thereof
published in accordance with state law; and
WHEREAS, TIF District No. 9 is being established to facilitate the acquisition of an
approximately 122-unit rental housing facility located at 6221 Shingle Creek Parkway in the City,
the rehabilitation thereof to include, among other things, one additional unit, and the construction
of an approximately 48-unit addition and related amenities to be located on the same property in
TIF District No. 9 (the “Development”) to be constructed by the Developer.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the “Board”)
of the Economic Development Authority of the City of Brooklyn Center, Minnesota (the “EDA”),
as follows:
Section 1. Findings for the Adoption and Approval of the Plans.
1.01. The Board hereby finds that the boundaries of the Project Area are not being
expanded and the Redevelopment Plan is not being modified other than to incorporate the
establishment of TIF District No. 9 therein and therefore the Board reaffirms the findings and
determinations originally made in connection with the establishment of the Redevelopment Project
area and the adoption of the Redevelopment Plan therefor. The Board hereby finds that: (a) the
land within the Project Area would not be available for redevelopment without the financial aid to
be sought under the Plans; (b) the Plans will afford maximum opportunity, consistent with the
needs of the City as a whole, for the development of the Project Area by private enterprise; and (c)
the Plans conform to the general plan for the development of the City as a whole, and otherwise
promotes certain public purposes and accomplishes certain objectives as specified in the Plans,
including without limitation the development of affordable housing. The purposes and
development activities set forth in the Redevelopment Plan, as modified, are hereby expanded by
to include all development and redevelopment activities occurring within the TIF District.
1.02. The Board hereby finds that TIF District No. 9 is in the public interest and is a
“housing district” within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11,
because it consists of a project or portions of a project intended for occupancy, in part, by persons
or families of low and moderate income as defined in Chapter 462A, Title II of the National
Housing Act of 1934; the National Housing Act of 1959; the United States Housing Act of 1937,
as amended; Title V of the Housing Act of 1949, as amended; and any other similar present or
future federal, state or municipal legislation or the regulations promulgated under any of those
acts. No more than 20% of the square footage of buildings that receive assistance from tax
increments will consist of commercial, retail or other nonresidential uses.
The Development to be constructed in TIF District No. 9 will consist of approximately 171
units of multi-family affordable housing. Developer has represented that at least 40% of the units
(i.e., 69 units) will be rented to and occupied by individuals or families whose income is not greater
than 60% or less of area median income and that no more than 20% of the square footage of
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BR291-414-763916.v2
buildings that receive assistance from tax increments will consist of commercial, retail or other
nonresidential uses.
1.03. The Board hereby makes the following additional findings in connection with TIF
District No. 9:
(a) The Board further finds that the proposed development, in the opinion of
the Board of Commissioners, would not occur solely through private investment within the
reasonably foreseeable future and, therefore, the use of tax increment financing is deemed
necessary. The specific basis for such finding being:
The construction of the Development would not be undertaken in
the reasonably foreseeable future. The rents for affordable housing
projects do not provide a sufficient return on investment to stimulate
new development. The Developer has represented that it could not
proceed with the Development without the tax increment assistance
to be provided to the Developer. The Developer has provided the
EDA its estimated Development proforma outlining project sources
and uses as well as projected rent, vacancy and financing
assumptions. City staff and the City’s advisors reviewed the
information and have determined the Development is not feasible
without the proposed assistance due to anticipated rent levels and
market returns not supporting the development costs. Based on the
review, the EDA does not expect that a development of this type
would occur in the reasonably foreseeable future but for the use of
tax increment assistance.
(b) The Board further finds that the TIF Plan conforms to the general plan for
the development or redevelopment of the EDA as a whole. The specific basis for such
finding being:
The TIF Plan conforms with the general development plan of the
City and will generally complement and serve to implement policies
adopted in the City’s comprehensive plan. The development
contemplated on the property is in accordance with the existing
zoning for the property, as modified in accordance with an approved
planned unit development agreement.
(c) The Board further finds that the TIF Plan will afford maximum opportunity
consistent with the sound needs of the EDA as a whole for the development of TIF District
No. 9 by private enterprise. The specific basis for such finding being:
The proposed Development to occur within TIF District No. 9 is the
construction by private enterprise of primarily low and moderate
income multi-family rental housing. The Development will increase
the taxable market valuation of the City, and the number of available
low and moderate income multi-family housing units in the City.
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BR291-414-763916.v2
Through the implementation of the TIF Plan, the EDA will provide
an impetus for residential development, which is desirable or
necessary for increased population and an increased need for
workforce, life cycle, and affordable housing within the City.
1.04. The City elects the method of tax increment computation set forth in Minnesota
Statutes, Section 469.177, Subdivision 3(b). The City elects to retain all of the captured tax
capacity to finance the costs of TIF District No. 9 and the Redevelopment Project and elects to
delay the receipt of the first increment until tax payable year 2024.
1.05. The provisions of this Section 1 are hereby incorporated by reference into and made
a part of the TIF Plan and the findings set forth in Appendix C to the TIF Plan are hereby
incorporated by reference into and made a part of this Resolution.
1.06. The Board further finds that the Plans are intended and in the judgment of the Board
their effect will be to promote the public purposes and accomplish the objectives specified in the
TIF Plan for TIF District No. 9 and the Redevelopment Plan for the Redevelopment Project.
Section 2. Approval and Adoption of the Plans; Policy on Interfund Loans and
Advances.
2.01. TIF District No. 9 is hereby established and the Plans, as presented to the Board on
this date, including without limitation the findings and statements of objectives contained therein,
are hereby approved, ratified, established, and adopted, and shall be placed on file in the office of
the City Finance Director. Approval of the Plans does not constitute approval of any project or a
development agreement with any developer. The Business and Development Director is hereby
directed to request, in writing, the Hennepin County Auditor to certify the new TIF District No. 9
and to file the Plans with the Commissioner of Revenue and the Office of the State Auditor.
2.02. The Board hereby approves a policy on interfund loans or advances (“Loans”) for
TIF District No. 9, as follows:
(a) The authorized tax increment eligible costs (including without limitation
out-of-pocket administrative expenses in an amount up to $621,253, interest in an amount
up to $1,514,751 and other development costs in an amount up to $4,697,782) payable
from TIF District No. 9, as provided in the TIF Plan as originally adopted or as it may be
amended, may need to be financed on a short-term and/or long-term basis via one or more
Loans, as may be determined by the City Finance Director from time to time.
(b) The Loans may be advanced if and as needed from available monies in any
fund or account of the EDA designated by the City Finance Director. Loans may be
structured as draw-down or “line of credit” obligations of the lending fund(s).
(c) Neither the maximum principal amount of any one Loan nor the aggregate
principal amount of all Loans may exceed $6,833,786 outstanding at any time.
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BR291-414-763916.v2
(d) All Loans shall mature not later than February 1, 2050 or such earlier date
as the City Finance Director may specify in writing. All Loans may be pre-paid, in whole
or in part, whether from tax increment revenue, tax increment revenue bond proceeds or
other eligible sources.
(e) The outstanding and unpaid principal amount of each Loan shall bear
interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178,
Subdivision 7), which is the greater of the rates specified under Sections 270C.40 or 549.09
at the time a Loan, or any part of it, is first made, subject to the right of the EDA Finance
Director to specify a lower rate (but not less than the EDA’s then-current average
investment return for similar amount and term).
(f) Such Loans within the above guidelines are pre-approved. The Loans need
not take any particular form and may be undocumented, except that the City Finance
Director shall specify the principal amount and interest rate and maintain all necessary or
applicable data on the Loans.
Section 3. Approval of TIF Assistance Agreement.
3.01. The Developer has presented the EDA with a proposal for the construction of the
Development by the Developer, and there has been prepared and presented to the Board for its
consideration a certain TIF Assistance Agreement (the “TIF Assistance Agreement”) between the
EDA and the Developer, stating the Developer’s responsibilities and the terms and conditions the
EDA’s assistance with the financing of certain costs of the Development.
3.02. The Board hereby approves the TIF Assistance Agreement in substantially the form
presented to the Board, together with any related documents necessary in connection therewith,
including without limitation all documents, exhibits, certifications, subordinations or consents
referenced in or attached to the TIF Assistance Agreement including without limitation the TIF
Note and the Declaration of Restrictive Covenants (all as defined in the TIF Assistance
Agreement) (collectively, the “Development Documents”), and hereby authorizes the President
and Executive Director, in their discretion and at such time, if any, as they may deem appropriate,
to execute the same on behalf of the EDA, and to carry out, on behalf of the EDA, the EDA’s
obligations thereunder when all conditions precedent thereto have been satisfied.
3.03. 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 EDA 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
EDA. The execution of any instrument by the appropriate officers of the EDA 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.
3.04. In the event of absence or disability of the officers, any of the documents authorized
by this resolution to be executed may be executed without further act or authorization of the Board
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BR291-414-763916.v2
by any duly designated acting official, or by such other officer or officers of the Board as, in the
opinion of the City Attorney, may act in their behalf. Upon execution and delivery of the
Development Documents, the officers and employees of the Board are hereby authorized and
directed to take or cause to be taken such actions as may be necessary on behalf of the Board to
implement the Development Documents, including without limitation the issuance of tax
increment revenue obligations thereunder when all conditions precedent thereto have been
satisfied and reserving funds for the payment thereof in the applicable tax increment accounts.
3.05. The Board hereby determines that the execution and performance of the
Development Documents will help realize the public purposes of the Act.
The motion for the adoption of the foregoing resolution by Commissioner _____________ 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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BR291-414-763916.v2
SECRETARY’S CERTIFICATE
I, the undersigned, being the duly qualified and acting Secretary of the Economic
Development Authority of the City of Brooklyn Center, Minnesota, DO HEREBY CERTIFY that
I have carefully compared the attached and foregoing extract of minutes of a duly called and
regularly held meeting of the Board of Commissioners of said EDA held on December 13, 2021,
with the original minutes thereof on file in my office and I further certify that the same is a full,
true, and correct transcript thereof insofar as said minutes relate to the tax increment and related
actions referenced therein with respect to the EDA’s Housing and Redevelopment Project No. 1
and Tax Increment Financing District No. 9 therein.
WITNESS My hand this ____ day of December, 2021.
_______________________________________
Secretary
Economic Development Authority of the City
of Brooklyn Center, Minnesota
{01995856;1} BR291-414-764376.v3
TIF ASSISTANCE AGREEMENT
BETWEEN
ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA
AND
THE CREST APARTMENTS, LLC
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (JSB)
150 South Fifth Street, Suite 700
Minneapolis, Minnesota 55402
(P) 612-337-9300
(F) 612-337-9310
{01995856;1} i
BR291-414-764376.v3
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ............................................................................................................2
Section 1.1. Definitions..............................................................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES ..........................................................6
Section 2.1. Representations and Warranties of the EDA .........................................6
Section 2.2. Representations and Warranties of the Developer .................................6
ARTICLE III UNDERTAKINGS BY DEVELOPER AND EDA..................................................8
Section 3.1. Total Development Costs and Public Costs. ..........................................8
Section 3.2. TIF Note. ................................................................................................8
Section 3.3. Income Restrictions .............................................................................10
Section 3.4. Developer to Pay EDA’s Fees and Expenses ......................................11
Section 3.5. Compliance with Environmental Requirements. .................................11
Section 3.6. Construction Plans. ..............................................................................12
Section 3.7. Commencement and Completion of Construction ...............................13
Section 3.8. Certificate of Completion. ...................................................................13
Section 3.9. Encumbrance of the Development Property. .......................................13
Section 3.10. Business Subsidy Act ...........................................................................14
Section 3.11. Right to Collect Delinquent Taxes. ......................................................14
Section 3.12. Review of Taxes. .................................................................................14
Section 3.13. Project Rents ........................................................................................15
ARTICLE IV EVENTS OF DEFAULT ........................................................................................16
Section 4.1. Events of Default Defined. ..................................................................16
Section 4.2. Remedies on Default ............................................................................16
Section 4.3. No Remedy Exclusive..........................................................................17
Section 4.4. No Implied Waiver ..............................................................................17
Section 4.5. Indemnification of EDA. .....................................................................17
Section 4.6. Reimbursement of Attorneys’ Fees. ....................................................18
ARTICLE V ADDITIONAL PROVISIONS ................................................................................19
Section 5.1. Restrictions on Use ..............................................................................19
Section 5.2. Reports .................................................................................................19
Section 5.3. Limitations on Transfer and Assignment. ............................................19
Section 5.4. Conflicts of Interest..............................................................................20
Section 5.5. Titles of Articles and Sections .............................................................20
Section 5.6. Notices and Demands ..........................................................................20
Section 5.7. No Additional Waiver Implied by One Waiver ...................................22
Section 5.8. Counterparts .........................................................................................22
Section 5.9. Law Governing ....................................................................................22
Section 5.10. Term; Termination ...............................................................................22
Section 5.11. Provisions Surviving Rescission, Expiration or Termination ..............22
Section 5.12. Superseding Effect ...............................................................................22
Section 5.13. Relationship of Parties .........................................................................22
Section 5.14. Venue ...................................................................................................22
{01995856;1} ii
BR291-414-764376.v3
EXHIBIT A DESCRIPTION OF TIF DISTRICT .................................................................... A-1
EXHIBIT B LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY ..............................B-1
EXHIBIT C PUBLIC DEVELOPMENT COSTS ......................................................................C-1
EXHIBIT D FORM OF TAXABLE TIF NOTE ....................................................................... D-1
EXHIBIT E PROJECT SOURCES AND USES ........................................................................ E-1
EXHIBIT F DECLARATION OF RESTRICTIVE COVENANTS .......................................... F-1
EXHIBIT G PERMITTED ENCUMBRANCES ...................................................................... G-1
EXHIBIT H CERTIFICATE OF COMPLETION OF PROJECT ............................................ H-1
{01995856;1} 1
BR291-414-764376.v3
TIF ASSISTANCE AGREEMENT
THIS AGREEMENT, made as of the ___ day of December, 2021, by and between the
Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”), a public body
corporate and politic under the laws of the State of Minnesota, and The Crest Apartments, LLC, a
Minnesota limited liability company (the “Developer”),
WITNESSETH:
WHEREAS, the EDA was created pursuant to Minnesota Statutes, Sections 469.090 to
469.1081, as amended (the “EDA Act”) and was authorized to transact business and exercise its
powers by a resolution (the “Enabling Resolution”) of the City Council of the City of Brooklyn
Center (the “City”); and
WHEREAS, under the EDA Act and the Enabling Resolution, the EDA has all the powers
of a housing and redevelopment authority under Minnesota Statutes, Sections 469.001 to 469.047,
as amended (the “HRA Act”); and
WHEREAS, pursuant to the EDA Act and the HRA Act, the EDA has undertaken a
program to promote the development and redevelopment of land which is underutilized or
characterized by blight within the City, and in connection therewith created the Housing and
Redevelopment Project No. 1 (the “Project Area”) and adopted a Redevelopment Plan (the
“Redevelopment Plan”) for the Project Area; and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through
469.1794, as amended, (the “TIF Act”), the City and the EDA have created, within the Project
Area, the Tax Increment Financing District No. 9: Crest Apartments (a housing district) qualified
as a housing tax increment financing district (the “TIF District”), the legal description of which is
attached hereto as Exhibit A, and has adopted a tax increment financing plan therefor approved
by the City Council of the City on December 13, 2021 (the “TIF Plan”) which provides for the use
of tax increment financing in connection with certain development within the Project Area and
TIF District; and
WHEREAS, the Developer proposes the acquisition, construction and equipping of an
approximately 122-unit rental housing facility located at 6221 Shingle Creek Parkway in the City,
the rehabilitation thereof to include, among other things, one additional unit, and the construction
and equipping of an approximately 48-unit addition to be located on the same property in the City
within the TIF District (the “Project”); and
WHEREAS, the Developer has requested that the EDA use tax increment financing to
assist the Developer with certain costs thereof in order to fill the gap between the Total
Development Costs (as hereinafter defined) and the funds available to pay such costs;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
{01995856;1} 2
BR291-414-764376.v3
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein
shall have the following meanings unless a different meaning clearly appears from the context:
Administrative Costs has the meaning set forth in Section 3.4;
Affiliate means a corporation, partnership, joint venture, association, business trust or
similar entity organized under the laws of the United States of America or a state thereof which is
directly controlled by or under common control with the Developer or any other Affiliate. For
purposes of this definition, control means the power to direct management and policies through
the ownership of at least a majority of its voting securities, or the right to designate or elect at least
a majority of the members of its governing body by contract or otherwise;
Agreement means this TIF Assistance Agreement, as the same may be from time to time
modified, amended or supplemented;
Architect means Boarman Kroos Vogel Group Inc, as the architect for the Project;
Business Day means any day except a Saturday, Sunday or a legal holiday or a day on
which banking institutions in the City are authorized by law or executive order to close;
Certificate of Completion means a Certificate of Completion with respect to the Project
executed by the EDA pursuant to Section 3.8;
City means the City of Brooklyn Center, Minnesota;
Completion Date means the date on which the Certificate of Completion with respect to
the Project is executed by the EDA pursuant to Section 3.8;
Construction Costs means the capital costs of the construction of the Project, including the
costs of labor and materials; construction management and supervision expenses; insurance and
payment or performance bond premiums; architectural and engineering fees and expenses;
property taxes; usual and customary fees or costs payable to the EDA, the City or any other public
body with regulatory authority over construction of the Project (e.g. building permits and
inspection fees); the developer fee; and all other costs chargeable to the capital account of the
Project under generally accepted accounting principles;
Construction Documents means the following documents, all of which shall be in form and
substance acceptable to the EDA: (a) evidence satisfactory to the EDA showing that the Project
conforms to applicable zoning, subdivision and building code laws and ordinances, including a
copy of the building permit for the Project; (b) a copy of the executed standard form of agreement
between owner and Architect for architectural services for the Project, if any, and (c) a copy of the
executed General Contractor’s contract for the Project, if any;
{01995856;1} 3
BR291-414-764376.v3
Construction Lender means Bridgewater Investment Management, Inc., a Minnesota
corporation;
Construction Phase means the period prior to the Conversion Date;
Construction Plans means the plans, specifications, drawings and related documents for the
construction of the Project, which shall be as detailed as the plans, specifications, drawings and
related documents which are submitted to the building inspector of the City;
Conversion Date means the date on which the City’s Multifamily Housing Revenue Note
(The Crest Apartments Project), Series 2021 is refinanced with proceeds of a loan from the
Permanent Lender;
County means Hennepin County, Minnesota;
Declaration means the Declaration of Restrictive Covenants in substantially the form
attached hereto as Exhibit F;
Design Drawings means the floor plans, renderings, elevations and material specifications
for the Project prepared by the Architect;
Developer means The Crest Apartments, LLC, a Minnesota limited liability company, and
its authorized successors and assigns;
Development Property means the real property legally described in Exhibit B attached to
this Agreement;
EDA means the Economic Development Authority of Brooklyn Center, Minnesota
Event of Default means any of the events described in Section 4.1 hereof;
Final Payment Date means the earlier of (i) the date on which the entire principal and
accrued interest on the TIF Note has been paid in full; or (ii) February 1, 2039; or (iii) any earlier
date this Agreement or the TIF Note is cancelled in accordance with the terms hereof or deemed
paid in full; or (iv) the February 1 following the date the TIF District is terminated in accordance
with the TIF Act (provided that there shall be no payment of any Tax Increments on such date
unless it is a regular Payment Date);
General Contractor means Watson-Forsberg Co.
Mortgage Lender means: (i) during the Construction Phase, the Construction Lender and
(ii) during the Permanent Phase, the Permanent Lender;
Mortgage Lender Collateral Assignment means (i) during the Construction Phase, a
Collateral Assignment of Development Agreement, Tax Increment Financing Note and Available
Tax Increment given by the Developer in favor of the Construction Lender, together with any
amendments thereto and (ii) during the Permanent Phase, a Collateral Assignment of Tax
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Increment Financing Note and Available Tax Increment given by the Developer in favor of the
Permanent Lender, together with any amendments thereto;
Payment Date means August 1, 2024 and each February 1 and August 1 thereafter to and
including the Final Payment Date; provided, that if any such Payment Date should not be a
Business Day, the Payment Date shall be the next succeeding Business Day;
Permanent Lender means [JLL Real Estate Capital, LLC,] and its successors and assigns;
Permanent Phase means the period from and after the Conversion Date;
Permitted Encumbrances means those encumbrances set forth in Exhibit G;
Pledged Tax Increments means for any six month period, 90% of the Tax Increments
received by the EDA since the previous Payment Date;
Project means the acquisition, construction and equipping of an approximately 122-unit
rental housing facility located at 6221 Shingle Creek Parkway in the City, the rehabilitation thereof
to include, among other things, one additional unit, and the construction and equipping of an
approximately 48-unit addition to be located on the same property in the City within the TIF
District;
Public Development Costs means the Public Development Costs of the Project identified
on Exhibit C attached hereto and any other cost incurred by the Developer, or its assigns, that the
EDA determines is eligible for reimbursement with Pledged Tax Increments;
PUD Agreement means the ______________, dated as of ______________, between the
City and the Developer in connection with the construction of the Project and related public
infrastructure in accordance with Planned Unit Development Ordinance #___;
Reimbursement Amount means the lesser of (i) $1,100,000 or (ii) the Public Development
Costs actually incurred and paid by the Developer;
Site Plan means the site plan prepared for the Development Property approved by the City;
State means the State of Minnesota;
Tax Credit Investor means Enterprise Housing Credit Investments, LLC;
Tax Increments means the tax increments derived from the Development Property and the
improvements thereon which have been received and are permitted to be retained by the EDA in
accordance with the TIF Act including, without limitation, Minnesota Statutes, Section 469.177;
469.176, Subd. 4h; and 469.175, Subd. 1a, as the same may be amended from time to time;
Termination Date means, with respect to this Agreement, the Final Payment Date and, with
respect to the Declaration, the end of the Qualified Project Period as defined therein;
TIF Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended;
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TIF District means the Tax Increment Financing District No. 9: Crest Apartments (a
housing district) consisting of the property legally described in Exhibit A attached hereto, which
was established as a housing district under the TIF Act;
TIF Note means the Taxable Tax Increment Revenue Note (Crest Apartments Project) to
be executed by the EDA and delivered to the Developer pursuant to Article III hereof, a form o f
which is attached hereto as Exhibit D;
TIF Plan means the tax increment financing plan approved for the TIF District;
Total Development Costs means all Construction Costs and any other costs of the
development of the Project to be incurred by the Developer as set forth on Exhibit E;
Unavoidable Delays means delays, outside the control of the party claiming their
occurrence, which are the direct result of strikes, lockouts or other labor troubles, prolonged
adverse weather or acts of God, fire or other casualty to the Project, litigation commenced by third
parties which, by injunction or other similar judicial action, directly results in delays, acts of any
federal, State, or local governmental unit (other than the City or the EDA) which directly result in
delays, war, invasion, rebellion, revolution, insurrection, riots or civil war, or unavailability or
shortage of supply of construction materials or construction labor, other than by reason of non -
payment of costs of the same.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the EDA. The EDA makes the following
representations and warranties:
(1) The EDA is a public body corporate and politic organized and existing under the
Constitution and laws of the State of Minnesota and has the power to enter into this Agreement
and carry out its obligations hereunder.
(2) The EDA has taken the actions necessary to establish the TIF District as a “housing
district” within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11.
(3) The development contemplated by this Agreement is in conformance with the
development objectives set forth in the Redevelopment Plan and the TIF Plan.
(4) The EDA makes no representation or warranty, either express or implied, as to the
Development Property or its condition, or that the Development Property shall be suitable for the
Developer’s purposes or needs.
Section 2.2. Representations and Warranties of the Developer. The Developer makes
the following representations and warranties:
(1) The Developer is a Minnesota limited liability company duly and validly organized
and existing in good standing under the laws of the State, and has power and authority to enter into
this Agreement and to perform its obligations hereunder and is not in violation of any provision of
the laws of the State.
(2) The construction of the Project would not be undertaken by the Developer, and in
the opinion of the Developer would not be economically feasible within the reasonably foreseeable
future, without the assistance and benefit to the Developer provided for in this Agreement.
(3) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement is prevented, limited b y or conflicts with or results in a breach of,
the terms, conditions or provision of any contractual restriction, evidence of indebtedness,
agreement or instrument of whatever nature to which the Developer is now a party or by which it
is bound, or constitutes a default under any of the foregoing.
(4) The Developer understands that the EDA or the City may subsidize or encourage
the development of other developments in the City, including properties that compete with the
Development Property and the Project, and that such subsidies may be more favorable than the
terms of this Agreement, and that neither the EDA nor the City has informed the Developer that
development of the Development Property will not be favored over the development of other
properties.
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(5) To the Developer’s knowledge, no member of the City Council of the City, the
Board of Commissioners of the EDA, or other officer of the City or the EDA has either a direct or
indirect financial interest in this Agreement, nor will any member of City Council, the Board of
Commissioners, or other officer of the City or the EDA, benefit financially from this Agreement
within the meaning of Minnesota Statutes, Sections 412.311 and 471.87.
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ARTICLE III
UNDERTAKINGS BY DEVELOPER AND EDA
Section 3.1. Total Development Costs and Public Costs.
(1) The Developer’s estimate of the Total Development Costs of the Project and
sources of revenue to pay such costs are set forth on Exhibit E attached hereto.
(2) Based on the Developer’s representation that, and as set forth on Exhibit E attached
hereto, the Total Development Costs for the Project are approximately $39,841,606, that the
sources of revenue available to pay such costs, excluding the tax increment assistance
contemplated herein, is $38,741,606, and that the Developer is unable to obtain additional private
financing for the estimated Total Development Costs, the EDA has agreed to provide tax increment
financing subject to the terms and conditions as hereinafter set forth. The Developer must provide
the EDA copies of all executed financing documents related to financing the Total Development
Costs of the Project.
(3) The parties agree that the Public Development Costs to be incurred by the
Developer are essential to the successful completion of the Project. The Developer anticipates that
the Public Development Costs for the Project which are identified on Exhibit C attached hereto
will be at least $1,100,000.
(4) As of January 2, 2024, the estimated market value of the Development Property, as
improved, is expected to be at least $26,505,000.
(5) The Developer has acquired or has entered into a purchase agreement pursuant to
which it will acquire fee title to the Development Property, and will cause the Project to be
constructed in accordance with the terms of this Agreement, the Redevelopment Plan, and all local,
state and federal laws and regulations including, but not limited to, environmental, zoning, energy
conservation, building code and public health laws and regulations.
(6) The Developer will obtain, or cause to be obtained, in a timely manner, all required
permits, licenses and approvals, and will meet, in a timely manner, all requirements of all
applicable local, State, and federal laws and regulations which must be obtained or met for the
construction and operation of the Project.
(7) The Total Development Costs shall be paid by the Developer, and the EDA shall
reimburse the Developer for the Public Development Costs in the Reimbursement Amount solely
through the issuance of the TIF Note as provided herein.
Section 3.2. TIF Note.
(1) The TIF Note will be originally issued to the Developer, as provided in Section
3.2(2), in a principal amount equal to the Reimbursement Amount and shall be dated as of its date
of issuance. The principal of the TIF Note and interest thereon shall be payable on a pay-as-you-
go basis solely from the Pledged Tax Increments as provided below.
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(2) The TIF Note shall be issued, in substantially the form attached hereto as Exhibit
D and interest will commence to accrue on the TIF Note only when: (A) the Developer shall have
submitted written proof and other documentation as may be reasonably satisfactory to the EDA of
the exact nature and amount of the Public Development Costs incurred by the Developer, together
with such other information or documentation as may be reasonably necessary and satisfactory to
the EDA to enable the EDA to substantiate the Developer’s tax increment expenditures per Exhibit
C and/or to comply with its tax increment reporting obligations to the Commissioner of Revenue,
the Office of the State Auditor or other applicable official; (B) the EDA shall have received
evidence that the Declaration has been recorded against the Development Property; (C) the
Developer shall have obtained from the City a certificate of occupancy for all residential units in
the Project and a Certificate of Completion as provided in this Agreement; (D) the Developer shall
have paid all of the EDA’s Administrative Costs required to have been paid as of such date in
accordance with Section 3.4 hereof; (E) the Developer is in material compliance with each term or
provision of this Agreement and the PUD Agreement required to have been satisfied as of such
date; and (F) the PUD Agreement has been executed by the Developer in a form acceptable to the
City. The documentation provided in accordance with Section 3.2(2)(A) shall include specific
invoices for the particular work from the contractor or other provider and shall include paid
invoices, copies of remittances and/or other suitable documentary proofs of the Developer’s
payment thereof.
(3) Subject to the provisions thereof, the TIF Note shall bear simple, non-compounding
interest at the rate equal to the lesser of 3.85% per annum or the rate per annum on the Permanent
Phase financing for the Project. Interest shall be computed on the basis of a 360 day year consisting
of twelve 30-day months. Principal and interest on the TIF Note will be payable on each Payment
Date; however, the sole source of funds required to be used for payment of the EDA’s obligations
under this Section and correspondingly under the T IF Note shall be the Pledged Tax Increments
received in the 6-month period preceding each Payment Date. On each Payment Date the Pledged
Tax Increment shall be credited against the accrued interest then due on the TIF Note and then
applied to reduce the principal. In the event the Pledged Tax Increments are not sufficient to pay
the accrued interest, the unpaid accrued interest shall be carried forward without interest. All Tax
Increments in excess of the Pledged Tax Increments necessary to pay the principal and accrued
interest on the TIF Note are not subject to this Agreement, and the EDA retains full discretion as
to any authorized application thereof. To the extent that the Pledged Tax Increments are
insufficient through the Final Payment Date, to pay all amounts otherwise due on the TIF Note,
said unpaid amounts shall then cease to be any debt or obligation of the EDA whatsoever.
(4) No interest will accrue during any period in which payments have been suspended
pursuant to Section 4.2.
(5) Any interest accruing on Pledged Tax Increments held by the EDA pending
payment to the Developer on the TIF Note shall accrue to the account of the TIF District.
(6) The TIF Note shall be a special and limited obligation of the EDA and not a general
obligation of the City or the EDA, and only Pledged Tax Increments shall be used to pay the
principal of and interest on the TIF Note.
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(7) The EDA’s obligation to make payments on the TIF Note on any Payment Date
shall be conditioned upon the requirement that (A) there shall not at that time be an Event of
Default that has occurred and is continuing under this Agreement that has not been cured during
the applicable cure period, and (B) this Agreement shall not have been terminated pursuant to
Section 4.2, and (C) all conditions set forth in Section 3.2(2) have been satisfied as of such date.
(8) The TIF Note shall be governed by and payable pursuant to the additional terms
thereof, as actually executed, in substantially the form set forth in Exhibit D. In the event of any
conflict between the terms of the TIF Note and the terms of this Section 3.2, the terms of the TIF
Note shall govern. The issuance of the TIF Note is pursuant and subject to the terms of this
Agreement.
(9) In accordance with Section 469.1763, Subdivision 3 of the TIF Act, conditions for
delivery of the TIF Note must be met within 5 years after the date of certification of the TIF District
by the County. If the conditions are not satisfied by such date, the City has no further obligations
under this Section 3.2.
Section 3.3. Income Restrictions. The Developer hereby represents, covenants and
agrees as follows:
(1) The Project is intended for occupancy by persons or families of low and moderate
income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National
Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing
Act of 1949, as amended, any other similar present or future federal, State or municipal legislation,
or the regulations promulgated under any of those acts; and
(2) No more than 20% of the square footage of any building of the Project financed
with the proceeds of the TIF Note will consist of commercial, retail or other non-residential uses;
and
(3) In accordance with the Declaration, commencing on the Completion Date and
continuing until the end of the Qualified Project Period as defined in the Declaration, at least (A)
11 of the residential units in the Project shall be occupied by persons or families whose income is
30% or less of the area-wide median family income for the standard metropolitan statistical area
which includes Brooklyn Center, Minnesota, as that figure is determined and announced from time
to time by HUD, as adjusted for family size (“Median Income”) and rents for such units shall not
exceed 30% of 30% of Median Income (“30% Qualifying Tenants”); (B) 37 of the residential units
in the Project shall be occupied by persons or families whose income is 40% or less of area Median
Income and rents for such units shall not exceed 30% of 40% of Median Income in accordance
with Section 42 of the Code (“40% Qualifying Tenants”); (C) 64 of the resident units in the Project
shall be occupied by persons or families whose income is 50% or less of area Median Income and
rents for such units shall not exceed 30% of 50% of Median Income in accordance with Section
42 of the Code (“50% Qualifying Tenants”); and (D) 59 of the residential units in the Project shall
be occupied by persons or families whose income is 60% or less of area Median Income and rents
for such units shall not exceed 30% of 60% of Median Income in accordance with Section 42 of
the Code (“60% Qualifying Tenants”); provided that the rental rates of units for which project-
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based federal assistance payments are made are deemed to be within the rent limitations of this
clause to the extent the amount paid by the tenant does not exceed such rent limitation; and
(4) The Developer will provide the EDA an annual certification in the form attached
as Exhibit 3 to the Declaration (the “Compliance Certificate”) evidencing compliance with the
requirements of paragraph (3) above, and the income verifications from tenants used to meet such
requirements. The annual certification shall also include the vacancy rate for the preceding
calendar year. The annual certification shall be provided on or before May 1 of each year
commencing May 1, 2024, and shall cover the preceding calendar year.
(5) The provisions of this Section 3.3 shall be incorporated into the Declaration in
substantially the form attached as Exhibit F, and recorded against the Development Property prior
to the issuance of the TIF Note.
Section 3.4. Developer to Pay EDA’s Fees and Expenses. The Developer will pay all of
the EDA’s reasonable Administrative Costs (as defined below) and must pay such costs to the
EDA within 30 days after receipt of a written invoice from the EDA describing the amount and
nature of the costs to be reimbursed. For the purposes of this Agreement, the term “Administrative
Costs” means out of pocket costs incurred by the EDA, including without limitation legal, financial
advisor, and other consultant costs of the City, all attributable to or incurred in connection with the
establishment of the TIF District and adoption of the TIF Plan and review, negotiation and
preparation of this Agreement (together with any other agreements entered into between the parties
hereto contemporaneously therewith) and review and approvals of other documents and
agreements in connection with the Project and any amendments to any such documents. In
addition, certain engineering, environmental advisor, legal, land use, zoning, subdivision and other
costs related to the development of the Development Property are required to be paid, or additional
funds deposited in escrow, as provided in accordance with the City’s planning, zoning, and
building fee schedules. The parties acknowledge that Developer deposited with the EDA $10,000
toward payment of the EDA’s Administrative Costs. If such costs exceed such amount, then at
any time, but not more often than monthly, the EDA will deliver written notice to Developer setting
forth any additional fees and expenses, together with suitable billings, receipts or other evidence
of the amount and nature of the fees and expenses, and Developer agrees to pay all fees and
expenses within 30 days of EDA’s written request. Any unused amount of such deposit shall be
returned to the Developer.
Section 3.5. Compliance with Environmental Requirements.
(1) The Developer shall comply with all applicable local, State, and federal
environmental laws and regulations, and will obtain, and maintain compliance under, any and all
necessary environmental permits, licenses, approvals or reviews.
(2) The EDA makes no warranties or representations regarding, nor does it indemnify
the Developer with respect to, the existence or nonexistence on or in the vicinity of the
Development Property or anywhere within the TIF District of any toxic or hazardous substances
or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde,
the group of organic compounds known as polychlorinated biphenyls, petroleum products
including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous
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substance as defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (“CERCLA”), 42 U.S.C. §§ 961-9657, as amended) (collectively, the “Hazardous
Substances”).
(3) The Developer agrees to take all necessary action to remove or remediate any
Hazardous Substances located on the Development Property to the extent required by and in
accordance with all applicable local, State and federal environmental laws and regulations.
Section 3.6. Construction Plans.
(1) Prior to the commencement of construction of the Project, the Developer will
deliver to the EDA the Construction Plans, Construction Documents and a sworn construction cost
statement certified by the Developer and the General Contractor (the “Sworn Construction Cost
Statement”) all in form and substance acceptable to the EDA. The Construction Plans for the
Project shall be consistent with the Redevelopment Plan, this Agreement, the PUD Agreement and
all applicable State and local laws and regulations and the Site Plan and Design Drawings
previously submitted to the EDA and shall provide for design, quality, materials, building finishes,
site layout and amenities substantially similar to those which were presented to the City and shared
publicly in connection with the Developer’s request for tax increment financing assistance and
identified on the preliminary building elevations and site layout. The City’s building official and
the Executive Director of the EDA, on behalf of the EDA shall promptly review any Construction
Plans upon submission and deliver to the Developer a written statement approving the
Construction Plans or a written statement rejecting the Construction Plans and specifying the
deficiencies in the Construction Plans. The City’s building official and the Executive Director of
the EDA on behalf of the EDA shall approve the Construction Plans if: (i) the Construction Plans
substantially conform to the terms and conditions of this Agreement and the PUD Agreement; (ii)
the Construction Plans are consistent with the goals and objectives of the Redevelopment Plan and
the TIF Plan; (iii) the Construction Plans comply with the Site Plan and Design Drawings; (iv) the
Construction Plans do not violate any applicable federal, State or local laws, ordinances, rules or
regulations; and (v) the Construction Plans provided to the City are complete and final and meet
all requirements necessary for the City to issue a building permit. If the Construction Plans are
not approved by the EDA, then the Developer shall make such changes as the EDA may reasonably
require and resubmit the Construction Plans to the EDA for approval, which will not be
unreasonably withheld, unreasonably conditioned or unreasonably delayed.
(2) No changes shall be made to the Construction Plans for the Project without the
EDA’s prior written approval, unless the aggregate of such changes do not increase or decrease
the Total Development Costs by more than 10%. No changes which materially alter (a) the
Project’s site plan, (b) exterior appearance, (c) construction quality, (d) exterior materials or (e)
amenities included in the final Design Drawings and Construction Plans shall be made without the
EDA’s prior written consent. The approval of the EDA will not be unreasonably withheld,
conditioned or delayed.
(3) The approval of the Construction Plans, or any proposed amendment to the
Construction Plans, by the EDA does not constitute a representation or warranty by the EDA that
the Construction Plans or the Project comply with any applicable building code, health or safety
regulation, zoning regulation, environmental law or other law or regulation, or that the Project will
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meet the qualifications for issuance of a certificate of occupancy, or that the Project will meet the
requirements of the Developer or any other users of the Project. Approval of the Construction
Plans, or any proposed amendment to the Construction Plans, by the EDA will not constitute a
waiver of an Event of Default. Nothing in this Agreement shall be construed to relieve the
Developer of its obligations to receive any required approval of the Construction Plans from any
City department.
Section 3.7. Commencement and Completion of Construction. Subject to the terms and
conditions of this Agreement and the PUD Agreement and subject to Unavoidable Delays, the
Developer will commence construction of the Project by April 30, 2022 and shall substantially
complete the Project by July 31, 2023. Notwithstanding the foregoing, failure of the Developer to
commence construction or substantially complete the Project shall not be an Event of Default
hereunder unless the Developer fails to commence construction of the Project by October 31, 2022
or the Developer fails to obtain a certificate of occupancy for the Project by January 31, 2024. The
Project will be constructed by the Developer on the Development Property in conformity with the
Construction Plans approved by the EDA. Prior to completion, upon the request of the EDA, and
subject to applicable safety rules, the Developer will provide the EDA reasonable access to the
Development Property. “Reasonable access” means at least one site inspection per week during
regular business hours. During construction, marketing and rentals of the Project, the Developer
will deliver progress reports to the EDA from time to time as reasonably requested by the EDA.
Section 3.8. Certificate of Completion. The Developer shall notify the EDA when
construction of the Project has been substantially completed. The EDA shall, within 20 days after
such notification, inspect the Project in order to determine whether the Project has been constructed
in substantial conformity with the approved Construction Plans and this Agreement. If the EDA
determines that the Project has not been constructed in substantial conformity with the approved
Construction Plans and this Agreement, the EDA shall deliver a written statement to the Developer
indicating in adequate detail the specific respects in which the Project has not been constructed in
substantial conformity with the approved Construction Plans and Developer shall have a
reasonable period of time to remedy such deficiencies. The EDA shall re-inspect the Project within
a reasonable period of time after receiving notice that such deficiencies have been remedied in
order to determine whether the Project has been constructed in substantial conformity with the
approved Construction Plans and this Agreement. Within a reasonable period of time after
determining that the Project has been constructed in substantial conformity with the approved
Construction Plans and this Agreement, the EDA will furnish to the Developer a Certificate of
Completion substantially in the form attached hereto as Exhibit H certifying the completion of the
Project. The Certificate of Completion issued for the Project shall conclusively satisfy and
terminate the agreements and covenants of the Developer in this Agreement solely with respect to
construction of the Project. The issuance of a Certificate of Completion under this Agreement shall
not be construed to relieve the Developer of any approval required by any City department in
connection with the construction, completion or occupancy of the Project nor shall it relieve the
Developer of any other obligations under this Agreement.
Section 3.9. Encumbrance of the Development Property. Until the Final Payment Date,
without the prior written consent of the EDA, neither the Developer nor any successor in interest
to the Developer will engage in any financing or any other transaction creating any mortgage or
other encumbrance or lien upon the Development Property, or portion thereof, whether by express
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agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the
Development Property except for the purpose of obtaining funds only to the extent necessary for
financing or refinancing the acquisition and construction of the Project (including, but not limited
to, land and building acquisition, labor and materials, professional fees, development fees, real
estate taxes, reasonably required reserves, construction interest, organization and other direct and
indirect costs of development and financing, costs of constructing the Project, and an allowance
for contingencies) including without limitation regulatory agreements and land use restriction
agreements in connection with such financings; provided, however, this provision shall not be
considered a waiver of the requirements of Section 5.3 with respect to any Transfer of the TIF
Note in connection with any such financing or refinancing nor shall anything contained in this
Section prohibit the Developer from making transfers in accordance with Section 5.3. The EDA
hereby consents to any mortgages securing the Developer’s construction financing for the Project
and to the succession of the mortgagee thereunder (or any assignee of the mortgagee) or any
purchasers at or after foreclosure thereof, by the successful bidder at the sale, to title to the
Development Property, and to any other Permitted Encumbrances set forth in Exhibit G; provided,
however, this provision shall not be considered a waiver of the requirements of Section 5.3 with
respect to any Transfer of the TIF Note in connection with any such mortgage. Notwithstanding
the foregoing, the TIF Note shall be terminated by the EDA in the event that any mor tgagee (or
any assignee of the mortgagee) or any purchasers at or after foreclosure thereof, by the successful
bidder at the sale, to the title to the Development Property, terminates the Declaration, in
accordance with its terms, or does not otherwise comply with the Declaration.
Section 3.10. Business Subsidy Act. The subsidy granted to the Developer pursuant to
this Agreement is assistance for housing and therefore the provisions of Minnesota Statutes,
Section 116J.993 to 116J.995 do not apply. No portion of the tax increment assistance shall be
used to construct any commercial space.
Section 3.11. Right to Collect Delinquent Taxes. The Developer acknowledges that the
EDA is providing substantial aid and assistance in furtherance of the Project through
reimbursement of Public Development Costs. To that end, the Developer agrees for itself, its
successors and assigns, that in addition to the obligation pursuant to statute to pay real estate taxes,
it is also obligated by reason of this Agreement, to pay before delinquency all real estate taxes
assessed against the Development Property and the Project. The Developer acknowledges that
this obligation creates a contractual right on behalf of the EDA through the Termination Date to
sue the Developer or its successors and assigns, to collect delinquent real estate taxes related to
the Development Property and any penalty or interest thereon and to pay over the same as a tax
payment to the county auditor. In any such suit in which the EDA is the prevailing party, the EDA
shall also be entitled to recover its costs, expenses and reasonable attorney fees.
Section 3.12. Review of Taxes.
(1) The Developer agrees that prior to the Termination Date it will not cause a
reduction in the real property taxes paid in respect of the Development Property through: (i) willful
destruction of the Development Property or any part thereof; or (ii) willful refusal to reconstruct
damaged or destroyed property. The Developer also agrees that it will not, prior to the Termination
Date, apply for an exemption from or a deferral of property tax on the Development Property
pursuant to any law, or transfer or permit transfer of the Development Property to any entity whose
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ownership or operation of the property would result in the Development Property being exempt
from real property taxes under State law; provided, however, the Developer may apply for and
obtain designation of the Development Property as low-income rental property classified as “4d”
under Minn. Stat., Section 273.13, subdivision 25 (“4d Classification”).
(2) Other than 4d Classification, the Developer shall notify the EDA within 10 days of
filing any petition to seek reduction in market value or property taxes on any portion of the
Development Property under any State law (referred to as a “Tax Appeal”). If as of any Payment
Date, any Tax Appeal is then pending, the EDA will withhold the Pledged Tax Increment related
to property taxes paid with respect to the market value of the Development Property being
challenged as part of the Tax Appeal as determined by the EDA in its sole discretion. The EDA
will apply any withheld amount to the extent not reduced as a result of the Tax Appeal promptly
after the Tax Appeal is fully resolved and the amount of Pledged Tax Increment, as applicable,
attributable to the disputed tax payments is finalized.
(3) If the Development Property qualifies for 4d Classification and Minn. Stat. 273.13,
subdivision 25 or any applicable successor statute is further amended to reduce the 4d
Classification tax rate, the Developer acknowledges that the amount of Tax Increments may be
negatively impacted.
Section 3.13. Project Rents. The Developer covenants and agrees that during the
Qualified Project Period (as defined in the Declaration) it will not increase the rent charged to any
tenant of a rental unit within the Project during such tenant’s lease term and, at any rate, will not
increase the rent charged to any tenant more than once in any 12-month period.
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ARTICLE IV
EVENTS OF DEFAULT
Section 4.1. Events of Default Defined. The following shall be “Events of Default”
under this Agreement and the term “Event of Default” shall mean whenever it is used in this
Agreement any one or more of the following events:
(1) Failure by the Developer to timely pay any ad valorem real property taxes assessed
with respect to the Development Property.
(2) Subject to Unavoidable Delays, failure by the Developer to commence construction
of the Project by October 31, 2022, and to proceed with due diligence to substantially complete
the construction of the Project pursuant to the terms, conditions and limitations of this Agreement
and obtain a certificate of occupancy from the City by January 31, 2024.
(3) Failure of the Developer to observe or perform any other material covenant,
condition, obligation or agreement on its part to be observed or performed under the Declaration,
the PUD Agreement or this Agreement, including, without limitation, compliance with the
requirements set forth in Section 3.3 hereof.
(4) If, prior to the Completion Date, the Developer shall
(a) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act of 1978, as amended or under any similar federal or State law; or
(b) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing
the adjudication of the Developer, as a bankrupt or its reorganization under any present or
future federal bankruptcy act or any similar federal or State law shall be filed in any court
and such petition or answer shall not be discharged or denied within 90 days after the filing
thereof; or a receiver, trustee or liquidator of the Developer, or of the Project, or part
thereof, shall be appointed in any proceeding brought against the Developer, and shall not
be discharged within 90 days after such appointment, or if the Developer, shall consent to
or acquiesce in such appointment.
Section 4.2. Remedies on Default. Whenever any Event of Default referred to in Section
4.1 occurs and is continuing, the EDA, as specified below, may take any one or more of the
following actions after the giving of 30 days’ written notice to the Developer, but only if the Event
of Default has not been cured within said 30 days; provided that if such Event of Default cannot
be reasonably cured within the 30 day period, and the Developer has provided assurances
reasonably satisfactory to the EDA that it is proceeding with due diligence to cure such default,
such 30 day cure period shall be extended for a period deemed reasonably necessary by the EDA
to effect the cure, but in any event not to exceed 180 days:
(1) The EDA may suspend its performance under this Agreement and the TIF Note
until such default is cured or the EDA determines that it has received adequate that the Developer
{01995856;1} 17
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will cure its default and continue its performance under this Agreement. Interest on the TIF Note
shall not accrue during the period of any suspension of payment.
(2) The EDA may terminate this Agreement and/or cancel the TIF Note.
(3) The EDA may take any action, including legal or administrative action, in law or
equity, which may appear necessary or desirable to enforce performance and observance of any
obligation, agreement, or covenant of the Developer under this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement the lenders providing
construction or permanent financing for the Project and the Tax Credit Investor shall have the
right, but not the obligation, to cure an Event of Default during the cure period provided for the
Developer.
Section 4.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
EDA is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient.
Section 4.4. No Implied Waiver. In the event any agreement contained in this
Agreement should be breached by any party and thereafter waived by any other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other
concurrent, previous or subsequent breach hereunder.
Section 4.5. Indemnification of EDA.
(1) The Developer releases from and covenants and agrees that the City and the EDA,
and their governing bodies’ members, officers, agents, including the independent contractors,
consultants and legal counsel, servants and employees thereof (for purposes of this Section,
collectively the “Indemnified Parties”) shall not be liable for and agrees to indemnify and hold
harmless the Indemnified Parties against any loss or damage to property or any injury to or death
of any person occurring at or about or resulting from any defect in the Project, or any other loss,
cost expense, or penalty, except to the extent caused by any willful misrepresentation or any willful
or wanton misconduct of the Indemnified Parties.
(2) Except for any willful misrepresentation or any willful or wanton misconduct of
the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now
and forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand,
suit, action or other proceeding whatsoever by any person or entity whatsoever arising or
purportedly arising from the actions or inactions of the Developer (or if other persons acting on its
behalf or under its direction or control) under this Agreement, or the tran sactions contemplated
hereby or the acquisition, construction, installation, ownership, and operation of the Project;
including, without limitation, any pecuniary loss or penalty (including interest thereon at the rate
of 5.00% per annum from the date such loss is incurred or penalty is paid by the EDA or the City)
{01995856;1} 18
BR291-414-764376.v3
as a result of the Project failing to cause the TIF District to qualify as a “housing district” under
Section 469.174, Subdivision 11, of the TIF Act, or to violate limitations as to the use of Tax
Increments as set forth in Section 469.176, subd. 4d of the TIF Act.
(3) All covenants, stipulations, promises, agreements and obligations of the EDA
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the EDA or the City and not of any governing body member, officer, agent, servant
or employee of the EDA or the City, as the case may be.
Section 4.6. Reimbursement of Attorneys’ Fees. If the Developer shall default under
any of the provisions of this Agreement, and the EDA shall employ attorneys or incur other
reasonable expenses for the collection of payments due hereunder, or for the enforcement of
performance or observance of any obligation or agreement on the part of the Developer contained
in this Agreement, the Developer will within 30 days reimburse the EDA for the reasonable fees
of such attorneys and such other reasonable expenses so incurred.
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ARTICLE V
ADDITIONAL PROVISIONS
Section 5.1. Restrictions on Use. The Developer agrees for itself, its successors and
assigns and every successor in interest to the Development Property, or any part thereof, that the
Developer and such successors and assigns shall operate, or cause to be operated, the Project as an
affordable rental housing development in accordance with this Agreement until the Termination
Date and the Declaration until the end of the Qualified Project Period (as defined therein).
Section 5.2. Reports. The Developer shall provide the EDA reports in a timely manner
with such information about the Project as the EDA may reasonably request for purposes of
satisfying any reporting requirements imposed by law on the EDA.
Section 5.3. Limitations on Transfer and Assignment.
(1) Except as provided in Sections 3.9 and 5.3(5), the Developer will not sell, assign,
convey, lease or transfer in any other mode or manner (collectively, “Transfer”) this Agreement,
the TIF Note, or the Development Property or the Project, or any interest therein, without the
express written approval of the EDA, which consent will not be unreasonably withheld,
conditioned or delayed. The EDA shall, within 20 days after such a written request for approval of
a Transfer, deliver a written statement to the Developer indicating whether the Transfer is approved
or specifying the additional conditions to be satisfied in accordance with Section 5.3(3). The
provisions of this Section 5.3 apply to all subsequent Transfers by authorized transferees;
(2) Notwithstanding clause (3) below, the EDA hereby consents to (A) the Mortgage
Lender Collateral Assignment to the Construction Lender during the Construction Phase, upon
receipt of (i) an Acknowledgment Regarding TIF Note from the Construction Lender in the form
included in Exhibit 2 to the TIF Note, (ii) an executed copy of Mortgage Lender Collateral
Assignment between Construction Lender and the Developer, and (iii) reasonable legal fees of the
EDA in accordance with clause (4) below and (B) the Mortgage Lender Collateral Assignment to
the Permanent Lender during the Permanent Phase, upon receipt of (i) an Acknowledgment
Regarding TIF Note from the Permanent Lender in the form included in Exhibit 2 to the TIF Note,
(ii) an executed copy of Mortgage Lender Collateral Assignment between Permanent Lender and
the Developer, (iii) a termination and release from the Construction Lender of the Construction
Lender’s Mortgage Lender Collateral Assignment and (iv) reasonable legal fees of the EDA in
accordance with clause (4) below;
(3) The EDA shall be entitled to require, as conditions to any approval of any Transfer
of this Agreement, the Development Property, the Project, or the TIF Note in connection therewith,
which approval will not be unreasonably withheld, conditioned or delayed, that:
(a) Any proposed transferee shall have the qualifications and financial
responsibility, as determined by the EDA, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer;
(b) Any proposed transferee, by instrument in writing satisfactory to the EDA
shall, for itself and its successors and assigns, and expressly for the benefit of the EDA have
{01995856;1} 20
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expressly assumed any of the remaining obligations of the Developer under this Agreement
and agreed to be subject to all the conditions and restrictions to which the Developer is
subject;
(c) There shall be submitted to the EDA for review all instruments and other
legal documents involved in effecting transfer, and if approved by EDA, its approval shall
be indicated to the Developer in writing;
(d) Any proposed transferee of the TIF Note shall (i) execute and deliver to the
EDA the Acknowledgment Regarding TIF Note in the form included in Exhibit 2 to the
TIF Note and (ii) surrender the TIF Note to the EDA either in exchange for a new fully
registered note or for transfer of the TIF Note on the registration records for the TIF Note
maintained by the EDA;
(e) The Developer and its transferees shall comply with such other conditions as
are necessary in order to achieve and safeguard the purposes of the Act, the TIF Act and
this Agreement; and
(f) In the absence of a specific written agreement by the EDA to the contrary,
no such transfer or approval by the EDA thereof shall be deemed to relieve the Developer
or any other party bound in any way by this Agreement or otherwise with respect to the
construction of the Project, from any of its obligations with respect thereto.
(4) The Developer agrees to pay all reasonable legal fees and expenses of the EDA,
including fees of the City Attorney’s office and outside counsel retained by the EDA to review the
documents submitted to the EDA in connection with any Transfer.
(5) Nothing contained in this Section shall prohibit the Developer from (i) entering into
leases with tenants in the ordinary course of business, (ii) entering into easements or other
agreements necessary for the construction or operation of the Project, or (iii) entering into
easements necessary for the construction of the Project.
Section 5.4. Conflicts of Interest. No member of the governing body or other official of
the EDA shall have any financial interest, direct or indirect, in this Agreement, the Development
Property or the Project, or any contract, agreement or other transaction contemplated to occur or
be undertaken thereunder or with respect thereto, nor shall any such member of the governing body
or other official participate in any decision relating to this Agreement which affects his or her
personal interests or the interests of any corporation, partnership or association in which he or she
is directly or indirectly interested. No member, official or employee of the EDA shall be personally
liable to the EDA in the event of any default or breach by the Developer or successor or on any
obligations under the terms of this Agreement.
Section 5.5. Titles of Articles and Sections. Any titles of the several parts, articles and
sections of this Agreement are inserted for convenience of reference only and shall be disregarded
in construing or interpreting any of its provisions.
Section 5.6. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by any party to any
{01995856;1} 21
BR291-414-764376.v3
other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally, and
(a) in the case of the Developer is addressed to or delivered personally to:
The Crest Apartments, LLC
901 North Third Street, Suite 150
Minneapolis, MN 55401
Attn: Leslie Roering
With a copy to: Faegre Drinker Biddle & Reath LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Attn: Angela Christy
and a copy to: Bridgewater Bank
370 Wabasha Street North, Suite 1500
St. Paul, MN 55102
Attn: Ross Wieser
and a copy to: Messerli & Kramer
1400 Fifth Street Towers
100 South Fifth Street
Minneapolis, MN 55402
Attn: Michelle R. Jester
and a copy to: JLL Real Estate Capital, LLC
2177 Youngman Avenue, Suite 100
St. Paul, MN 55116
Attn: Pat McMullen
and a copy to: Cassin & Cassin LLP
711 Third Avenue
20th Floor
New York, New York 10017
Attn: Jordan Hersch
(b) in the case of the EDA is addressed to or delivered personally to the EDA at:
Economic Development Authority of Brooklyn Center, Minnesota
Brooklyn Center City Hall
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Attn: City Finance Director
or at such other address with respect to any such party as that party may, from time to time,
designate in writing and forward to the other, as provided in this Section.
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Section 5.7. No Additional Waiver Implied by One Waiver. If any agreement contained
in this Agreement should be breached by either party and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and shall not be deemed to waive
any other concurrent, previous or subsequent breach hereunder.
Section 5.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 5.9. Law Governing. This Agreement will be governed and construed in
accordance with the laws of the State.
Section 5.10. Term; Termination. Except as provided in the Declaration, and unless this
Agreement is terminated earlier in accordance with its terms, this Agreement shall terminate on
the Final Payment Date. After the Termination Date, if requested by the Developer, the EDA will
provide a termination certificate as to the Developer’s obligations hereunder.
Section 5.11. Provisions Surviving Rescission, Expiration or Termination. Sections 4.5
and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or
arising out of any event, occurrence or circumstance existing prior to the date thereof.
Section 5.12. Superseding Effect. This Agreement reflects the entire agreement of the
parties with respect to the development of the Development Property, and supersedes in all respects
all prior agreements of the parties, whether written or otherwise, with respect to the development
of the Development Property.
Section 5.13. Relationship of Parties. Nothing in this Agreement is intended, or shall be
construed, to create a partnership or joint venture among or between the parties hereto, and the
rights and remedies of the parties hereto shall be strictly as set forth in this Agreement. All
covenants, stipulations, promises, agreements and obligations of the EDA contained herein shall
be deemed to be the covenants, stipulations, promises, agreements and obligations of the EDA and
not of any governing body member, officer, agent, servant or employee of the City or the EDA.
Section 5.14. Venue. All matters, whether sounding in tort or in contract, relating to the
validity, construction, performance, or enforcement of this Agreement shall be controlled by and
determined in accordance with the laws of the State of Minnesota, and the Developer agrees that
all legal actions initiated by the Developer or EDA with respect to or arising from any provision
contained in this Agreement shall be initiated, filed and venued exclusively in the State of
Minnesota, Hennepin County, District Court and shall not be removed therefrom to any other
federal or State court.
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BR291-414-764376.v3
IN WITNESS WHEREOF, the EDA has caused this Agreement to be duly executed in its
name and on its behalf, and the Developer has caused this Agreement to be duly executed in its
name and on its behalf, on or as of the date first above written.
ECONOMIC DEVELOPMENT AUTHORITY
OF BROOKLYN CENTER, MINNESOTA
By _________________________________
Its President
By _________________________________
Its Executive Director
This is a signature page to the TIF Assistance Agreement.
{01995856;1} S-2
BR291-414-764376.v3
THE CREST APARTMENTS, LLC a Minnesota
limited liability company
By: ______________
Its: ____________
This is a signature page to the TIF Assistance Agreement.
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EXHIBIT A
DESCRIPTION OF TIF DISTRICT
The area encompassed by the TIF District shall also include all street or utility right -of-ways
located upon or adjacent to the property described below.
PID: 35-119-21-34-0004 (6221 Shingle Creek Parkway)
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EXHIBIT B
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
[To add]
{01995856;1} C-1
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EXHIBIT C
PUBLIC DEVELOPMENT COSTS
Land acquisition
Site grading and improvements
Underground and above ground utilities
Parking
All rental housing construction costs and any other expenses eligible for payment in accordance
with the TIF Act.
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EXHIBIT D
FORM OF TAXABLE TIF NOTE
No. R-1 [$1,100,000]
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
CITY BROOKLYN CENTER, MINNESOTA
TAXABLE TAX INCREMENT REVENUE NOTE
(CREST APARTMENTS PROJECT)
___________, 20___
The Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”),
hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the
amounts hereinafter described (the “Payment Amounts”) to The Crest Apartments, LLC, a
Minnesota limited liability company or its registered assigns (the “Registered Owner”), the
principal amount of one million and one hundred thousand and 00/100 Dollars ([$1,100,000]), but
only in the manner, at the times, from the sources of revenue, and to the extent hereinafter
provided.
This Note is issued pursuant to that certain TIF Assistance Agreement, dated as of
December __, 2021, as the same may be amended from time to time (the “TIF Assistance
Agreement”), by and between the EDA and The Crest Apartments, LLC (the “Developer”). Unless
otherwise defined herein or unless context requires otherwise, undefined terms used herein shall
have the meanings set forth in the TIF Assistance Agreement.
The outstanding and unpaid principal amount of this Note shall bear simple, non-
compounding interest at the rate equal to ______% (which is the lesser of 3.85% per annum or the
rate per annum on the Permanent Phase financing for the Project); provided that no interest shall
accrue on this Note during any period that an Event of Default has occurred, and such Event of
Default is continuing, under the TIF Assistance Agreement and EDA has exercised its remedy
under the TIF Assistance Agreement to suspend payment on the Note. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
The amounts due under this Note shall be payable on August 1, 2024 and on each February
1 and August 1 thereafter to and including the earliest of (i) the date on which the entire principal
and accrued interest on the TIF Note has been paid in full; or (ii) February 1, 2039; or (iii) any
earlier date the TIF Assistance Agreement or this Note is cancelled in accordance with the terms
of the TIF Assistance Agreement or deemed paid in full; or (iv) the February 1 following the date
the TIF District is terminated in accordance with the TIF Act (provided that there shall be no
payment of any Tax Increments on such date unless it is a regular Payment Date) (the “Final
Payment Date”) or, if the first should not be a Business Day (as defined in the TIF Assistance
Agreement) the next succeeding Business Day (collectively, the “Payment Dates”). On each
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BR291-414-764376.v3
Payment Date, the EDA shall pay by check or draft mailed to the person that was the Registered
Owner of this Note at the close of the last business day preceding such Payment Date an amount
equal to 90% of the Tax Increments (as hereinafter defined) received by the EDA during the 6-
month period preceding such Payment Date (“Pledged Tax Increments”).
“Tax Increments” are the tax increments derived from the Development Property (as
defined in the TIF Assistance Agreement) and the improvements thereon which have been received
and are permitted to be retained by the EDA in accordance with the Minnesota Statutes, Sections
469.174 through 469.1794, as the same may be amended or supplemented from time to time (the
“TIF Act”) including, without limitation, Minnesota Statutes, Section 469.177; 469.176, Subd. 4h;
and 469.175, Subd. 1a, as the same may be amended from time to time.
Payments on this Note shall be payable solely from the Pledged Tax Increments. All
payments made by the EDA under this Note shall first be applied to accrued interest and then to
principal. If Pledged Tax Increments are insufficient to pay any accrued interest due, such unpaid
interest shall be carried forward without interest.
This Note shall terminate and be of no further force and effect following the Final Payment
Date defined above, or any date upon which the EDA shall have terminated the TIF Assistance
Agreement under Section 4.2 thereof or on the date that all principal and interest payable hereunder
shall have been or deemed paid in full, whichever occurs earliest. This Note may be prepaid in
whole or in part at any time without penalty.
The EDA makes no representation or covenant, express or implied, that the Pledged Tax
Increments will be sufficient to pay, in whole or in part, the amounts which are or may become
due and payable hereunder. There are risk factors in the amount of Tax Increments that may
actually be received by the EDA and some of those factors are listed on the attached Exhibit 1.
The Registered Owner acknowledges these risk factors and understands and agrees that payments
by the EDA under this Note are subject to these and other factors.
The EDA’s payment obligations hereunder shall be further subject to the conditions that
(i) no Event of Default under Section 4.1 of the TIF Assistance Agreement shall have occurred
and be continuing at the time payment is otherwise due hereunder, including without limitation
failure to obtain the Compliance Certificate in accordance with Section 3.3 of the TIF Assistance
Agreement and deliver the Declaration (as defined therein), and (ii) the TIF Assistance Agreement
shall not have been terminated pursuant to Section 4.2, and (iii) all conditions set forth in Section
3.2(2) of the TIF Assistance Agreement have been satisfied as of such date. Any such suspended
and unpaid amounts shall become payable, without interest accruing thereon in the meantime, if
this Note has not been terminated in accordance with Section 4.2 of the TIF Assistance Agreement
and said Event of Default shall thereafter have been cured in accordance with Section 4.2. If
pursuant to the occurrence of an Event of Default under the TIF Assistance Agreement the EDA
elects, in accordance with the TIF Assistance Agreement to cancel and rescind the TIF Assistance
Agreement and/or this Note, the EDA shall have no further debt or obligation under this Note
whatsoever. Reference is hereby made to all of the provisions of the TIF Assistance Agreement,
for a fuller statement of the rights and obligations of the EDA to pay the principal of this Note and
the interest thereon, and said provisions are hereby incorporated into this Note as though set out in
full herein.
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BR291-414-764376.v3
THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION AND NOT A
GENERAL OBLIGATION OF THE CITY OF BROOKLYN CENTER, MINNESOTA
(THE “CITY”) OR THE EDA AND IS PAYABLE BY THE EDA ONLY FRO M THE
SOURCES AND SUBJECT TO THE QUALIFICATIONS STATED OR REFERENCED
HEREIN. THIS NOTE IS NOT A GENERAL OBLIGATION OF THE CITY OR THE
EDA, AND THE FULL FAITH AND CREDIT AND TAXING POWERS OF THE CITY
AND THE EDA ARE NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR
INTEREST ON THIS NOTE AND NO PROPERTY OR OTHER ASSET OF THE CITY
OR THE EDA, SAVE AND EXCEPT THE ABOVE-REFERENCED PLEDGED TAX
INCREMENTS, IS OR SHALL BE A SOURCE OF PAYMENT OF THE EDA’S
OBLIGATIONS HEREUNDER.
The Registered Owner shall never have or be deemed to have the right to compel any
exercise of any taxing power of the EDA or the City or of any other public body, and neither the
EDA nor any person executing or registering this Note shall be liable personally hereon by reason
of the issuance or registration thereof or otherwise.
This Note is issued by the EDA in aid of financing a project pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including the TIF Act.
This Note may be assigned only as provided in Section 5.3 of the TIF Assistance
Agreement and subject to the assignee executing and delivering to the EDA the Acknowledgment
Regarding TIF Note in the form included in Exhibit 2. Additionally, in order to assign the Note,
the assignee shall surrender the same to the EDA either in exchange for a new fully registered note
or for transfer of this Note on the registration records maintained by the EDA for the Note. Each
permitted assignee shall take this Note subject to the foregoing conditions and subject to all
provisions stated or referenced herein.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required
by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be
performed precedent to and in the issuance of this Note have been done, have happened, and have
been performed in regular and due form, time, and manner as required by law; and that this Note,
together with all other indebtedness of the EDA outstanding on the date hereof and on the date of
its actual issuance and delivery, does not cause the indebtedness of the EDA to exceed any
constitutional or statutory limitation thereon.
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IN WITNESS WHEREOF, the Economic Development Authority of Brooklyn Center,
Minnesota by its Board of Commissioners has caused this Note to be executed by the manual
signatures of its President and Executive Director and has caused this Note to be issued on and
dated as of the date first written above.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER,
MINNESOTA
By____________________________
Its President
By____________________________
Its Executive Director
Signature Page for Tax Increment Revenue Note (Crest Apartments Project)
{01995856;1} D-5
BR291-414-764376.v3
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on the date first written above,
was on said date registered in the name of The Crest Apartments, LLC, a Minnesota limited
liability company, and that, at the request of the Registered Owner of this Note, the undersigned
has this day registered the Note in the name of such Registered Owner, as indicated in the
registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF
EXECUTIVE DIRECTOR
The Crest Apartments, LLC
901 North Third Street, Suite 150
Minneapolis, MN 55401
Leslie Roering
_________, 20__
___________________
____________________
____________________
____________________
____________________
_________, 20__
___________________
____________________
____________________
____________________
____________________
_________, 20__
___________________
{01995856;1} D-6
BR291-414-764376.v3
Exhibit 1
to Taxable TIF Note
RISK FACTORS
Risk factors on the amount of Tax Increments that may actually be received by the EDA
include but are not limited to the following:
1. Value of Project. If the contemplated Project (as defined in the TIF Assistance
Agreement) constructed in the tax increment financing district is completed at a lesser level of
value than originally contemplated, it will generate fewer taxes and fewer tax increments than
originally contemplated.
2. Damage or Destruction. If the Project is damaged or destroyed after completion,
their value will be reduced, and taxes and tax increments will be reduced. Repair, restoration or
replacement of the Project may not occur, may occur after only a substantial time delay, or may
involve property with a lower value than the Project, all of which would reduce taxes and tax
increments.
3. Change in Use to Tax-Exempt. The Project could be acquired by a party that
devotes it to a use which causes the property to be exempt from real property taxation. Taxes and
tax increments would then cease.
4. Depreciation. The Project could decline in value due to changes in the market for
such property or due to the decline in the physical condition of the property. Lower market
valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes, either
in whole or in part, the lack of taxes received will cause a lack of tax increments. The Minnesota
system of collecting delinquent property taxes is a lengthy one that could result in substantial
delays in the receipt of taxes and tax increments, and there is no assurance that the full amount of
delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale
following a tax forfeiture of the property are not tax increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to decreased
municipal levies, taxes and tax increments will be reduced. Reasons for such reduction could
include lower local expenditures or changes in state aids to municipalities. For instance, in 2001
the Minnesota Legislature enacted an education funding reform that involved the state increasing
school aid in lieu of the local general education levy (a component of school district tax levies).
7. Reductions in Tax Capacity Rates. The taxable value of real property is determined
by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by
certain categories of property; for example, the tax capacity rates for residential homesteads are
currently less than the tax capacity rates for commercial and industrial property. In 2001 the
Minnesota Legislature enacted property tax reform that lowered various tax capacity rates to
{01995856;1} D-7
BR291-414-764376.v3
“compress” the difference between the tax capacity rates applicable to residential homestead
properties and commercial and industrial properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax increment
financing district is the lower of the current local tax rate or the original local tax rate for the tax
increment financing district. In the event that the Current Local Tax Rate is higher than the Original
Local Tax Rate, then the “excess” or difference that comes about after applying the lower Original
Local Tax Rate instead of the Current Local Tax Rate is considered “excess” tax increment and is
distributed by Hennepin County to the other taxing jurisdictions and such amount is not available
to the EDA as tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws affecting real
property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as
affected by state aid to municipalities.
10. Affordable Housing Declaration. The TIF District will cease to qualify as a housing
tax increment financing district and the TIF Note will terminate if the Project ceases to be operated
in accordance with the Declaration required by and defined in the TIF Assistance Agreement
defined in the attached Note.
{01995856;1} D-8
BR291-414-764376.v3
Exhibit 2
to Taxable TIF Note
ACKNOWLEDGMENT REGARDING TIF NOTE
The undersigned, ______________ a ___________ (“Note Holder/[Lender]”), hereby
certifies and acknowledges that:
A. On the date hereof the Note Holder has [acquired from]/[made a loan (the “Loan”)
[to/for the benefit] of] The Crest Apartments, LLC (the “Developer”) [secured in part by] the
Taxable Tax Increment Revenue Note (Crest Apartments Project), a pay-as-you-go tax increment
revenue note (the “Note”) in the original principal amount of [$1,100,000] [dated __________,
20___ of]/[to be issued by] the Economic Development Authority of Brooklyn Center, Minnesota
(the “EDA”).
B. The Note Holder has had the opportunity to ask questions of and receive from the
Developer all information and documents concerning the Note as it requested, and has had access
to any additional information the Note Holder thought necessary to verify the accuracy of the
information received. In determining to [acquire the Note]/[make the Loan], the Note Holder has
made its own determinations and has not relied on the EDA or information provided by the EDA.
C. The Note Holder represents and warrants that:
1. The Note Holder is acquiring [the Note]/[an interest in the Note as collateral
for the Loan] for investment and for its own account, and without any view to resale or
other distribution.
2. The Note Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of acquiring [the
Note]/[an interest in the Note as collateral for the Loan].
3. The Note Holder understands that the Note is a security which has not been
registered under the Securities Act of 1933, as amended, or any state securities law, and
must be held until its sale is registered or an exemption from registration becomes
available.
4. The Note Holder is aware of the limited payment source for the Note and
interest thereon and risks associated with the sufficiency of that limited payment source.
5. The Note Holder is [a bank or other financial institution] / [the owner of the
property from which the tax increments which are pledged to the Note are generated].
D. The Note Holder understands that the Note is payable solely from certain tax
increments derived from certain properties located in a tax increment financing district, if and as
received by the EDA. The Note Holder acknowledges that the EDA has made no representation
or covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to pay,
in whole or in part, the principal and interest due on the Note. Any amounts which have not been
{01995856;1} D-9
BR291-414-764376.v3
paid on the Note on or before the final maturity date of the Note shall no longer be payable, as if
the Note had ceased to be an obligation of the EDA. The Note Holder understands that th e Note
will never represent or constitute a general obligation, debt or bonded indebtedness of the City of
Brooklyn Center, Minnesota (the “City”), the EDA, the State of Minnesota, or any political
subdivision thereof and that no right will exist to have taxes levied by the City, the EDA, the State
of Minnesota or any political subdivision thereof for the payment of principal and interest on the
Note.
E. The Note Holder understands that the Note is payable solely from certain tax
increments, which are taxes received on improvements made to certain property (the “Project”) in
a tax increment financing district from the increased taxable value of the property over its base
value at the time that the tax increment financing district was created, which base val ue is called
“original net tax capacity”. There are risk factors in relying on tax increments to be received,
which include, but are not limited to, the following:
1. Value of Project. If the contemplated Project constructed in the tax
increment financing district is completed at a lesser level of value than originally
contemplated, it will generate fewer taxes and fewer tax increments than originally
contemplated.
2. Damage or Destruction. If the Project is damaged or destroyed after
completion, their value will be reduced, and taxes and tax increments will be reduced.
Repair, restoration or replacement of the Project may not occur, may occur after only a
substantial time delay, or may involve property with a lower value than the Project, all of
which would reduce taxes and tax increments.
3. Change in Use to Tax-Exempt. The Project could be acquired by a party
that devotes it to a use which causes the property to be exempt from real property taxation.
Taxes and tax increments would then cease.
4. Depreciation. The Project could decline in value due to changes in the
market for such property or due to the decline in the physical condition of the property.
Lower market valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes,
either in whole or in part, the lack of taxes received will cause a lack of tax increments.
The Minnesota system of collecting delinquent property taxes is a lengthy one that could
result in substantial delays in the receipt of taxes and tax increments, and there is no
assurance that the full amount of delinquent taxes would be collected. Amounts distributed
to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax
increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to decreased
municipal levies, taxes and tax increments will be reduced. Reasons for such reduction
could include lower local expenditures or changes in state aids to municipalities. For
instance, in 2001 the Minnesota Legislature enacted an education funding reform that
{01995856;1} D-10
BR291-414-764376.v3
involved the state increasing school aid in lieu of the local general education levy (a
component of school district tax levies).
7. Reductions in Tax Capacity Rates. The taxable value of real property is
determined by multiplying the market value of the property by a tax capacity rate. Tax
capacity rates vary by certain categories of property; for example, the tax capacity rates for
residential homesteads are currently less than the tax capacity rates for commercial and
industrial property. In 2001 the Minnesota Legislature enacted property tax reform that
lowered various tax capacity rates to “compress” the difference between the tax capacity
rates applicable to residential homestead properties and commercial and industrial
properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax
increment financing district is the lower of the current local tax rate or the original local
tax rate for the tax increment financing district. In the event that the Current Local Tax
Rate is higher than the Original Local Tax Rate, then the “excess” or difference that comes
about after applying the lower Original Local Tax Rate instead of the Current Local Tax
Rate is considered “excess” tax increment and is distributed by Hennepin County to the
other taxing jurisdictions and such amount is not available to the EDA as tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws
affecting real property taxes, particularly as they relate to tax capacity rates and the overall
level of taxes as affected by state aid to municipalities.
10. Affordable Housing Declaration. The TIF District will cease to qualify as
a housing tax increment financing district and the TIF Note will terminate if the Project
ceases to be operated in accordance with the Declaration required by and defined in the
TIF Assistance Agreement defined below.
F. The Note Holder acknowledges that the Note was issued as part of a TIF Assistance
Agreement between the EDA and the Developer dated December __, 2021 (“TIF Assistance
Agreement”), and that the EDA has the right to suspend payments under this Note and/or terminate
the Note upon an Event of Default under the TIF Assistance Agreement.
G. The Note Holder acknowledges that the EDA makes no representation about the
tax treatment of, or tax consequences from, the Note Holder’s acquisition of [the Note]/[an interest
in the Note as collateral for the Loan].
WITNESS our hand this ___ day of _______, 20__.
Note Holder/Lender:
By ________________________
Name: __________________
Its ________________________
{01995856;1} E-1
BR291-414-764376.v3
EXHIBIT E
PROJECT SOURCES AND USES
[To add]
{01995856;1} F-1
BR291-414-764376.v3
EXHIBIT F
DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated December __, 2021 (the
“Declaration”), by THE CREST APARTMENTS, LLC, a Minnesota limited liability company (the
“Developer”), is given for the benefit of the ECONOMIC DEVELOPMENT AUTHORITY OF
BROOKLYN CENTER, MINNESOTA, a public body corporate and politic organized under the
laws of the State of Minnesota (the “EDA”).
RECITALS
WHEREAS, the EDA and the Developer entered into that certain TIF Assistance Agreement,
dated December __, 2021, (the “TIF Assistance Agreement”); and
WHEREAS, pursuant to the TIF Assistance Agreement, the Developer is obligated to cause
the acquisition, construction and equipping of an approximately 122-unit rental housing facility,
the rehabilitation thereof to include, among other things, one additional unit, and the construction
and equipping of an approximately 48-unit addition (the “Project”) to be located on property
described in EXHIBIT 1 hereto (the “Property”), and to cause compliance with certain affordability
covenants described in Section 3.3 of the TIF Assistance Agreement; and
WHEREAS, Section 3.3 of the TIF Assistance Agreement requires that the Developer cause
to be executed an instrument in recordable form substantially reflecting the covenants set forth in
Section 3.3 of the TIF Assistance Agreement; and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set
forth herein will be and are covenants running with the Property for the term described herein and
binding upon all subsequent owners of the Property for the term described herein, and are not merely
personal covenants of the Developer; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the TIF
Assistance Agreement unless otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Developer agrees as follows:
1. Term of Restrictions.
(a) Occupancy Restrictions. The term of the Occupancy Restrictions set forth in Section
3 of this Declaration will commence on the date a certificate of occupancy is issued by the City for
all residential units on the Property and continue through the Termination Date defined below (the
“Qualified Project Period”).
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BR291-414-764376.v3
(b) Termination of Declaration. This Declaration shall terminate upon the date the TIF
District is terminated pursuant to Section 469.176, Subd. 1b(a)(4) of the TIF Act or otherwise in
accordance with the TIF Act.
In addition, in the event of foreclosure or transfer of title by deed in lieu of foreclosure, upon
completion of the foreclosure and expiration of the applicable redemption period, or recording of a
deed in lieu of foreclosure, any mortgagee (or any assignee of the mortgagee) or any purchasers at or
after foreclosure thereof, by the successful bidder at the sale, to the title to the Development Property,
may terminate this Declaration, by providing written notice to the EDA and by filing a termination
document in the applicable real property records in Hennepin County, and thereafter this Declaration
shall be of no further force and effect; provided, however, that the preceding provisions of this
sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time
subsequent to the termination of this Declaration as the result of the foreclosure, or the delivery of a
deed in lieu of foreclosure, or a similar event, the Developer or any related person (within the meaning
of Section 1.103-10(e) of the Treasury Regulations) obtains an ownership interest in the Project for
federal income tax purposes.
Each of the events set forth in the first two paragraphs of this Section 1(b) are referred to
individually and collectively herein as the “Termination Date”. The Developer acknowledges, on
behalf of itself and its successors and assigns that, upon any termination of this Declaration prior to
the payment in full of the TIF Note, the EDA will terminate the TIF Note.
(c) Removal from Real Estate Records. After the Termination Date of this Declaration,
the EDA will, upon request by the Developer or its assigns, provide a document appropriate for the
Developer to file to remove this Declaration from the real estate records of Hennepin County,
Minnesota.
2. Project Restrictions.
(a) The Developer represents, warrants, and covenants that all leases of residential units
to Qualifying Tenants (as defined in Section 3(a)(i) hereof) will contain clauses, among others,
wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed will be
deemed a substantial and material obligation of the lessee’s tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Developer or the EDA, and that
the lessee’s failure or refusal to comply with a request for information with respect
thereto will be deemed a violation of a substantial obligation of the lessee’s tenancy.
(b) The Developer will permit any duly authorized representative of the EDA to inspect
the books and records of the Developer pertaining to the income of Qualifying Tenants residing in
the Project.
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BR291-414-764376.v3
(c) The Developer covenants and agrees that during the Qualified Project Period it will
not increase the rent charged to any tenant of a residential unit within the Project during such tenant’s
lease term and, at any rate, will not increase the rent charged to any tenant more than once in any 12-
month period.
3. Occupancy Restrictions. The Developer represents, warrants, and covenants that:
(a) Qualifying Tenants. Throughout the Qualified Project Period, the Project shall satisfy
the following income restrictions (collectively, the Occupancy Restrictions”): at least (A) 11 of the
residential units in the Project shall be occupied (or treated as occupied as provided herein) or
held vacant and available for occupancy by persons or families whose income is 30% or less of
the area-wide median family income for the standard metropolitan statistical area which includes
Brooklyn Center, Minnesota, as that figure is determined and announced from time to time by
HUD, as adjusted for family size (“Median Income”) and rents for such units shall not exceed 30%
of 30% of Median Income (“30% Qualifying Tenants”); (B) 37 of the residential units in the
Project shall be occupied (or treated as occupied as provided herein) or held vacant and available
for occupancy by persons or families whose income is 40% or less of area Median Income and
rents for such units shall not exceed 30% of 40% of Median Income in accordance with Sectio n
42 of the Code (“40% Qualifying Tenants”); (C) 64 of the resident units in the Project shall be
occupied (or treated as occupied as provided herein) or held vacant and available for occupancy
by persons or families whose income is 50% or less of area Median Income and rents for such
units shall not exceed 30% of 50% of Median Income in accordance with Section 42 of the Code
(“50% Qualifying Tenants”); and (D) 59 of the residential units in the Project shall be occupied
(or treated as occupied as provided herein) or held vacant and available for occupancy by persons
or families whose income is 60% or less of area Median Income and rents for such units shall not
exceed 30% of 60% of Median Income in accordance with Section 42 of the Code (“60%
Qualifying Tenants”); provided that the rental rates of units for which project-based federal
assistance payments are made are deemed to be within the rent limitations of this clause to the
extent the amount paid by the tenant does not exceed such rent limitation. 100% of the residential
units be occupied or treated as occupied as provided herein) or held vacant and available for
occupancy by Qualifying Tenants. “Qualifying Tenants” means collectively, as applicable, 30%
Qualifying Tenants, 40% Qualifying Tenants, 50% Qualifying Tenants and 60% Qualifying Tenants;
for purposes of this definition, the occupants of a residential unit will not be deemed to be Qualifying
Tenants if all the occupants of such residential unit at any time are “students,” as defined in Section
152(f)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), not entitled to an
exemption under the Code. The determination of whether an individual or family is of low or
moderate income will be made at the time the tenancy commences and on an ongoing basis thereafter,
determined at least annually. If during their tenancy a Qualifying Tenant’s income exceeds 140% of
the maximum income qualifying for a family of its size and applicable Occupancy Restriction, the
next available residential unit (determined in accordance with the Code and applicable regulations)
(the “Next Available Unit Rule”) must be leased to a Qualifying Tenant or held vacant and available
for occupancy by a Qualifying Tenant qualifying under the applicable Occupancy Restriction. If the
Next Available Unit Rule is violated, the affected unit will not continue to be treated as occupied by
a Qualifying Tenant.
{01995856;1} F-4
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(b) Certification of Tenant Eligibility. As a condition to initial and continuing occupancy,
each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver
to the Developer a Certification of Tenant Eligibility substantially in the form attached as EXHIBIT
2 hereto, or in any other form as may be approved by the EDA (the “Eligibility Certification”), in
which the prospective Qualifying Tenant certifies as to having a qualifying low or moderate income.
In addition, the Qualifying Tenant will be required to provide whatever other information, documents,
or certifications are deemed necessary by the EDA to substantiate the Eligibility Certification, on an
ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant within the
meaning of Section 3(a) hereof. Eligibility Certifications will be maintained for the duration of the
Qualified Project Period on file by the Developer with respect to each Qualifying Tenant who resides
in a residential unit or resided therein during the Qualified Project Period.
(c) Lease. The form of lease to be utilized by the Developer in renting any residential
units in the Project to any person who is intended to be a Qualifying Tenant will provide for
termination of the lease and consent by the person to immediate eviction for failure to qualify as a
Qualifying Tenant as a result of any material misrepresentation made by the person with respect to
the Eligibility Certification. The Developer covenants and agrees that during the Qualified Project
Period it will not increase the rent charged to any tenant of a rental unit within the Project during such
tenant’s lease term and, at any rate, will not increase the rent charged to any tenant more than once in
any 12-month period.
(d) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the EDA on or before May 1 of each year, a certificate
substantially in the form of EXHIBIT 3 hereto, executed by the Developer, (a) identifying the
tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including
the percentage of the residential units of the Project which were occupied by Qualifying Tenants (or
held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding
the date of the certificate; (b) describing all transfers or other changes in ownership of the Project or
any interest therein; and (c) stating, that to the best knowledge of the person executing the certificate
after due inquiry, all the residential units were rented or available for rental on a continuous basis
during the year to members of the general public and that the Developer was not otherwise in default
under this Declaration during the year.
(e) Notice of Non-Compliance. The Developer will immediately notify the EDA if at any
time during the term of this Declaration fewer dwelling units in the Project than the numbers of units
set forth in Section 3(a) above are occupied or available for occupancy by Qualifying Tenants as
required by the terms of this Declaration.
4. Transfer Restrictions. Except as provided in 1(b), the Developer covenants and agrees
that the Developer will cause or require as a condition precedent to any conveyance, transfer,
assignment, or any other disposition of the Project prior to the termination of the Occupancy
Restrictions provided herein (the “Transfer”) that the transferee of the Project pursuant to the Transfer
assume in writing, in a form acceptable to the EDA, all duties and obligations of the Developer under
this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior
to expiration of the Occupancy Restrictions provided herein (the “Assumption Agreement”). The
Developer will deliver the Assumption Agreement to the EDA prior to the Transfer.
{01995856;1} F-5
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5. Enforcement.
(a) The Developer will permit, during normal business hours and upon reasonable notice,
any duly authorized representative of the EDA to inspect any books and records of the Developer
regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Developer will submit any other information, documents or certifications
requested by the EDA which the EDA deems reasonably necessary to substantiate the Developer’s
continuing compliance with the provisions specified in this Declaration.
(c) The Developer acknowledges that the primary purpose for requiring compliance by
the Developer with the restrictions provided in this Declaration is to ensure compliance of the property
with the housing affordability covenants set forth in Section 3.3 of the TIF Assistance Agreement,
and by reason thereof, the Developer, in consideration for assistance provided by the EDA under the
TIF Assistance Agreement that makes possible the construction of the Project (as defined in the TIF
Assistance Agreement) on the Property, hereby agrees and consents that the EDA will be entitled, for
any breach of the provisions of this Declaration, and in addition to all other remedies provided by law
or in equity, to enforce specific performance by the Developer of its obligations under this Declaration
in a state court of competent jurisdiction. The Developer hereby further specifically acknowledges
that the EDA cannot be adequately compensated by monetary damages in the event of any default
hereunder.
(d) The Developer understands and acknowledges that, in addition to any remedy set forth
herein for failure to comply with the restrictions set forth in this Declaration, the EDA may exercise
any remedy available to it under Article IV of the TIF Assistance Agreement in accordance with the
terms thereof.
6. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless, the EDA from and against all liabilities, losses, damages, costs, expenses (including
attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of
any nature arising from the consequences of a legal or administrative proceeding or action brought
against them, or any of them, on account of any failure by the Developer to comply with the terms of
this Declaration, or on account of any representation or warranty of the Developer contained herein
being untrue.
7. Agent of the EDA. The EDA will have the right to appoint an agent to carry out any
of its duties and obligations hereunder, and will inform the Developer of any agency appointment by
written notice.
8. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
9. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
{01995856;1} F-6
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designate in writing. The Developer and the EDA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the EDA:
Economic Development Authority of Brooklyn Center, Minnesota
Brooklyn Center City Hall
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Attn: Nathan Reinhardt, Finance Director
To the Developer: The Crest Apartments, LLC
901 North Third Street, Suite 150
Minneapolis, MN, 55401
Attn: Leslie Roering
10. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
11. Attorneys’ Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the
Developer agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred
by the EDA in connection with the action.
12. Declaration Binding. This Declaration and the covenants contained herein will run
with the real property comprising the Project and will bind the Developer and its successors and
assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to
the EDA and its successors and assigns until the Termination Date of this Declaration as provided in
Section 1(b) hereof.
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BR291-414-764376.v3
IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
THE CREST APARTMENTS, LLC, a Minnesota
limited liability company
By: ________________
Its: __________________
STATE OF MINNESOTA )
) SS.
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this _______________, 2021, by
____________, the _______ of The Crest Apartments, LLC, a Minnesota limited liability
company.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (JSB)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
{01995856;1} F-8
BR291-414-764376.v3
This Declaration is acknowledged and consented to by:
ECONOMIC DEVELOPMENT AUTHORITY OF
BROOKLYN CENTER, MINNESOTA
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____________, 2021, by
_____________________________, the President of the Economic Development Authority of
Brooklyn Center, Minnesota a public body corporate and politic organized under the laws of the
State of Minnesota, on behalf of said EDA.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____________, 2021, by
____________________, the Executive Director of the Economic Development Authority of
Brooklyn Center, Minnesota, a public body corporate and politic organized under the laws of the
State of Minnesota, on behalf of said EDA.
Notary Public
{01995856;1} F-9
BR291-414-764376.v3
EXHIBIT 1 TO DECLARATION OF RESTRICTIVE COVENANTS
[To add].
{01995856;1} F-10
BR291-414-764376.v3
EXHIBIT 2 TO DECLARATION OF RESTRICTIVE COVENANTS
Certification of Tenant Eligibility
TENANT INCOME CERTIFICATION
Initial Certification Recertification Other
_______________
Effective Date: _________________________
Move-in Date: __________________________
(MM/DD/YY): _________________________
PART I. DEVELOPMENT DATA
Property Name:
The Crest Apartments
Address:
___________________, Brooklyn Center, Minnesota
County:
Hennepin
Unit Number: ________________
BIN #:
_______________
# Bedrooms:
___________
PART II. HOUSEHOLD COMPOSITION
HH
Br #
Last Name
First Name &
Middle Initial
Relationship to
Head of
Household
Date of Birth
(MM/DD/YY)
F/T Student
(Y or N)
Social Security
or Alien Reg.
No.
1 HEAD
2
3
4
5
6
PART III. GROSS ANNUAL INCOME (USE ANNUAL AMOUNTS)
HH
Br #
(A)
Employment or Wages
(B)
Soc. Security / Pensions
(C)
Public Assistance
(D)
Other Income
TOTAL $ $ $ $
Add totals from (A) through (D) above TOTAL INCOME (E): $
{01995856;1} F-11
BR291-414-764376.v3
PART IV. INCOME FROM ASSETS
HH
Mbr#
(F)
Type of Asset
(G)
C/I
(H)
Cash Value of Asset
(I)
Annual Income from Asset
TOTALS: $ $
Enter Column (H) Total Passbook Rate
if over $5,000 $________________ x 2.00 % = (J) Imputed Income
Enter the greater of the total column I, or J: imputed income TOTAL INCOME FROM ASSETS (K)
$
$
(L) Total Annual Household Income from all sources [Add (E) + (K)] $
HOUSEHOLD CERTIFICATION & SIGNATURES
The information on this form will be used to determine maximum income eligibility. I/we have provided for each
person(s) set forth in Part II acceptable verification of current anticipated annual income. I/we agree to notify the
landlord immediately upon any member of the household moving out of the unit or any new member moving in. I/we
agree to notify the landlord immediately upon any member becoming a full -time student.
Under penalties of perjury, I/we certify that the information presented in this Certification is true and accurate to the
best of my/our knowledge and belief. The undersigned further understands that providing false representations herein
constitutes an act of fraud. False, misleading or incomplete information may result in the terminati on of the lease
agreement.
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
PART V. DETERMINATION OF INCOME ELIGIBILITY
TOTAL ANNUAL HOUSEHOLD
INCOME FROM ALL SOURCES
From Item (L) on page 1
Current Income Limit per Family Size: $
_________________
Household Income at Move-in
$__________________
Household Meets
Income Restriction
at:
60% 50%
40% 30%
___%
RECERTIFICATION ONLY:
Current Income Limit x 140%
$
__________________________________
Household income exceeds 140% at
recertification:
Yes No
Household Size at Move-in:
_____________
$
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BR291-414-764376.v3
PART VI. RENT
Tenant Paid Rent $ _________________
Utility Allowance $ _________________
GROSS RENT FOR UNIT:
Tenant paid rent plus Utility
Allowance and other non-optional
charges
Maximum Rent Limit for this unit: $ _________________
Rent Assistance: $ ______________________
Other non-optional charges: $ ______________________
Unit Meets Rent Restriction at:
60% 50% 40% 30% ___%
PART VII. STUDENT STATUS
ARE ALL OCCUPANTS FULL-TIME
STUDENTS?
yes no
If yes, enter student explanation**
(also attach documentation)
Student explanation:
1. TANF assistance
2. Job training program
3. Single parent/dependent child
4. Married/joint return*
*Exception for married/joint return is the only exception available for units necessary to qualify tax -exempt bonds.
PART VIII. PROGRAM TYPE
Mark the program(s) listed below (a. through e.) for which this household ’s unit will be counted toward the property’s occupancy
requirements. Under each program marked, indicate the household ’s income status as established by this certification/recertification
a. Tax Credit b. HOME c. Tax Exempt d. AHDP e. ____________
(Name of Program)
See Part V above.
Income Status
Income Status
Income Status
Income Status
≤ 50% AMGI
≤ 60% AMGI
≤ 80% AMGI
≤ 0I **
50% AMGI
60% AMGI
80% AMGI
0I **
≤ 50% AMGI
≤ 80% AMGI
≤ 0I **
__________
__________
≤ 0I **
** Upon recertification, household was determined over income (OI) according to eligibility requirements of the program(s) marked
above.
SIGNATURE OF OWNER / REPRESENTATIVE
Based on the representations herein and upon the proofs and documentation required to be submitted, the
individual(s) named in Part II of this Tenant Income Certification is/are eligible under the provisions of Section 42
of the Internal Revenue Code, as amended, and the Regulatory Agreement (if applicable), to live in a unit in this
Project.
________________________________________________ ________________
SIGNATURE OF OWNER / REPRESENTATIVE DATE
Enter
1-4
$
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BR291-414-764376.v3
INSTRUCTIONS FOR COMPLETING
TENANT INCOME CERTIFICATION
This form is to be completed by the owner or an authorized representative.
Part I – Development Data
Check the appropriate box for Initial Certification (move-in), Recertification (annual
recertification), or Other. If Other, designate the purpose of the recertification (i.e., a unit transfer,
a change in household composition, or other state-required recertification).
Move-in Date Enter the date the tenant has or will take occupancy of the unit.
Effective Date Enter the effective date of the certification. For move-in, this should be the
move-in date. For annual recertification, this effective date should be no
later than one year from the effective date of the previous (re)certification.
Property Name Enter the name of the development.
County Enter the county (or equivalent) in which the building is located.
BIN # Enter the Building Identification Number (BIN) assigned to the building
(from IRS Form 8609).
Address Enter the unit number.
Unit Number Enter the unit number.
# Bedrooms Enter the number of bedrooms in the unit.
Part II – Household Composition
List all occupants of the unit. State each household member’s relationship to the head of the
household by using one of the following coded definitions:
H Head of household S Spouse
A Adult co-tenant O Other family member
C Child F Foster child
L Live-in caretaker N None of the above
Enter the date of birth, student status, and Social Security number or alien registration number for
each occupant.
If there are more than seven occupants, use an additional sheet of paper to list the remaining
household members and attach it to the certification.
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BR291-414-764376.v3
Part III – Annual Income
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income,
including acceptable forms of verification.
From the third party verification forms obtained from each income source, enter the gross amount
anticipated to be received for the 12 months from the effective date of the (re)certification.
Complete a separate line for each income-earning member. List the respective household member
number from Part II.
Column (A) Enter the annual amount of wages, salaries, tips, commissions, bonuses, and
other income from employment; distributed profits and/or net income from
a business.
Column (B) Enter the annual amount of Social Security, Supplemental Security Income,
pensions, military retirement, etc.
Column (C) Enter the annual amount of income received from public assistance (i.e.,
TANF, general assistance, disability, etc.)
Column (D) Enter the annual amount of alimony, child support, unemployment benefits,
or any other income regularly received by the household.
Row (E) Add the totals from columns (A) through (D) above. Enter this amount.
Part IV – Income from Assets
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income from
assets, including acceptable forms of verification.
From the third party verification forms obtained from each asset source, list the gross amount
anticipated to be received during the 12 months from the effective date of the certification. List
the respective household member number from Part II and complete a separate line for each
member.
Column (F) List the type of asset (i.e., checking account, savings account, etc.)
Column (G) Enter C (for current, if the family currently owns or holds the asset), or I
(for imputed, if the family has disposed of the asset for less than fair market
value within two years of the effective date of (re)certification).
Column (H) Enter the cash value of the respective asset.
Column (I) Enter the anticipated annual income from the asset (i.e., savings account
balance multiplied by the annual interest rate).
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BR291-414-764376.v3
TOTALS Add the total of Column (H) and Column (I), respectively.
If the total in Column (H) is greater than $5,000, you must do an imputed calculation of asset
income. Enter the Total Cash Value, multiply by 2% and enter the amount in (J), Imputed Income.
Row (K) Enter the Greater of the total in Column (I) or (J)
Row (L) Total Annual Household Income from All Sources Add (E) and (K) and
enter the total
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BR291-414-764376.v3
EXHIBIT 3 TO DECLARATION OF RESTRICTIVE COVENANTS
Certificate of
Continuing Program Compliance
Date: ___________________
The following information with respect to the Project located at __________________,
Brooklyn Center, Minnesota (the “Project”), is being provided by The Crest Apartments, LLC (the
“Owner”) to the Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”),
pursuant to that certain Declaration of Restrictive Covenants, dated December __, 2021 (the
“Declaration”), with respect to the Project. Any undefined terms used herein shall have the meanings
as defined in the Declaration.
(A) The total number of residential units which are available for occupancy is 171.
The total number of these units occupied is _________________. The total number of these
units occupied or held open for occupancy by 30% Qualifying Tenants is
_________________ (at least 11 units); the total number of these units occupied or held open
for occupancy by 40% Qualifying Tenants is _________________ (at least 37 units); total
number of these units occupied or held open for occupancy by 50% Qualifying Tenants is
_________________ (at least 64 units); and the total number of these units occupied or held
open for occupancy by 60% Qualifying Tenants is _________________ (at least 59 units).
(B) The vacancy rate at the Project in the last 12 months is ___%.
(C) The following residential units which are included in (D) below, have been
re-designated as residential units for Qualifying Tenants since _______________, 20___, the
date on which the last “Certificate of Continuing Program Compliance” was filed with the
EDA by the Owner:
Unit
Number
Previous Designation
of Unit (if any)
Replacing
Unit Number
___________ _________________ _________________
___________ _________________ _________________
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BR291-414-764376.v3
(D) The following residential units are considered to be occupied by Qualifying
Tenants based on the information set forth below (for a total of at least 171 units):
Unit
Number
Last
Name of
Tenant
Number
of
Persons
Residing
in the
Unit
Number
of
Bedrooms
Total
Adjusted
Gross
Income
Income/Rent
Qualification
Level (30%,
40%, 50%,
60%)
Date of
Initial
Occupancy
Date
Vacated and
Held for
Qualifying
Tenants, if
Applicable
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
[expand to cover 171 units]
(E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form
provided as EXHIBIT 2 to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant named
in (D) above who signed such a Certification since ______________, 20___, the date on
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BR291-414-764376.v3
which the last “Certificate of Continuing Program Compliance” was filed with the EDA by
the Owner.
(F) In renting the residential units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants); and none of the units listed in (D) above have been rented for occupancy
entirely by students, no one of which is entitled to file a joint return for federal income tax
purposes. All of the residential units in the Project have been rented pursuant to a written
lease, and the term of each lease is at least 12 months.
(G) The information provided in this “Certificate of Continuing Program
Compliance” is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
“Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate or
incomplete in any respect.
(H) The following transfers or other changes in ownership of the Project or any
interest therein have occurred in the last 12 months: [None] or
[describe___________________]
(I) To the best knowledge of the person executing this certificate after due
inquiry, all the residential units were rented or available for rental on a continuous basis during
the year to members of the general public.
(J) The Owner certifies that as of the date hereof ___% of the residential dwelling
units in the Project are occupied or held open for occupancy by Qualifying Tenants, as defined
and provided in the Declaration.
(K) The Project is in continuing compliance with the Declaration.
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on
____________________, 20__.
THE CREST APARTMENTS, LLC, a Minnesota
limited liability company
By: _________________
Its: _________________
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EXHIBIT G
PERMITTED ENCUMBRANCES
The liens, charges and encumbrances on title to the Development Property listed on Schedule B to
the title policy issued on the date hereof by Commercial Partners Title, LLC.
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BR291-414-764376.v3
EXHIBIT H
CERTIFICATE OF COMPLETION OF PROJECT
__________, 20___
WHEREAS, the ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN
CENTER, MINNESOTA a public body corporate and politic organized under the laws of the State
of Minnesota (the “EDA”), and The Crest Apartments, LLC, a Minnesota limited liability
company (the “Developer”) have entered into a TIF Assistance Agreement (the “TIF Assistance
Agreement”), dated December __, 2021; and
WHEREAS, the TIF Assistance Agreement requires the Developer to construct a Project
(as that term is defined in the TIF Assistance Agreement);
WHEREAS, the Developer has constructed the Project in a manner deemed sufficient by
the EDA to permit the execution of this certification in accordance with Section 3.9 of the TIF
Assistance Agreement;
NOW, THEREFORE, this is to certify that the Developer has constru cted the Project in
accordance with the TIF Assistance Agreement. The remaining covenants of the Developer under
the TIF Assistance Agreement are not intended to run with title to the Development Property or
bind successors in title to the Development Property.
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BR291-414-764376.v3
The EDA has, as of the date and year first above written, set its hand hereon.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER,
MINNESOTA
By ____________________________
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of ___________,
20__, by ____________________, the Executive Director of the Economic Development
Authority of Brooklyn Center, Minnesota, a public body corporate and politic organized under the
laws of the State of Minnesota.
_________________________________
Notary Public