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HomeMy WebLinkAbout2001 01-08 EDAP EDA MEETING City of Brooklyn Center January 8, 2001 AGENDA 1. Call to Order 2. Roll Call 3. Approval of Agenda and Consent Agenda -The following items are considered to be routine by the Economic Development Authority and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner so requests, in which event the item will be removed from the consent agenda and considered at the end of Commission Consideration Items. a. Approval of Minutes - Commissioners not present at meetings will be recorded as abstaining from the vote on the minutes. 1. Regular Session — December 11, 2000 2. Special Session — December 21, 2000 4. Commission Consideration Item a. Resolution Electing Officers for the Economic Development Authority In and For the City of Brooklyn Center •Requested Commission Action: - Motion to adopt resolution. b. Resolution Approving and Authorizing Execution of a Development Agreement -This item was tabled at the December 11, 2000, meeting. *Requested Commission Action: - Motion to adoption resolution. 5. Adjournment EDA Agenda Item No. 3a MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION DECEMBER 11, 2000 CITY HALL 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in regular session and was called to order by President Myrna Kragness at 7:03 p.m. 2. ROLL CALL President Myrna Kragness, Commissioners Debra Hilstrom, Kay Lasman, Ed Nelson, and Robert Peppe. Also present: City Manager Michael J. McCauley, Assistant City Manager Jane Chambers, Finance Director Charlie Hansen, Public Works Director Diane Spector, City Attorney Charlie LeFevere, and Deputy City Clerk Maria Rosenbaum. 3. APPROVAL OF AGENDA D SENT AGENDA O GEN AN CON A motion by Commissioner Lasman, seconded by Commissioner Hilstrom to approve the agenda and consent agenda. Motion passed unanimously. 3a. APPROVAL OF MINUTES A motion by Commissioner Lasman, seconded by Commissioner Hilstrom to approve the November 27, 2000, regular session minutes. Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. CONTINUATION OF PUBLIC HEARING REGARDING SALE OF EDA OWNED PROPERTY AT WILLOW LANE AND T.H. 252 - RESOLUTION AUTHORIZING EDA EXECUTIVE DIRECTOR TO EXECUTE DEVELOPMENT AGREEMENT WITH EAGLE CREST NORTHWEST, INC. FOR DEVELOPMENT OF EDA OWNED PROPERTY AT WILLOW LANE AND T.H. 252 12/11/00 -1- DRAFT Executive Director Michael McCauley discussed the EDA opened a Public Hearing on November 13, 2000, and continued the public hearing to allow additional time to complete the development agreement for the sale of the property located at Willow Lane and Highway 252 before outlining the property and development proposed. A motion by Commissioner Hilstrom, seconded by Commissioner Peppe to re -open the Public Hearing. Motion passed unanimously. No one wished to address the Council. A motion by Commissioner Lasman, seconded by Commissioner Nelson to close the Public Hearing. Motion passed unanimously. Commissioner Hilstrom commended the work done on this proposed development. Commissioner Peppe raised a question regarding the construction. Laurie Karnes, Land for Sale, Inc. discussed construction will start immediately after closing and that there would be occupancy in the fall. RESOLUTION NO. 2000-24 Commissioner Hilstrom introduced the following resolution and moved its adoption: RESOLUTION AUTHORIZING EDA EXECUTIVE DIRECTOR TO EXECUTE DEVELOPMENT AGREEMENT WITH EAGLE CREST NORTHWEST, INC. FOR DEVELOPMENT OF EDA OWNED PROPERTY AT WILLOW LANE AND T.H. 252 The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Peppe. Motion passed unanimously. 4b. RESOLUTION APPROVING THE FINAL BROOKLYN CENTER ECONOMIC DEVELOMENT AUTHORITY BUDGET FOR THE YEAR 2001 PURSUANT TO MSA CHAPTER 469.107, SUBDIVSION 1 Mr. McCauley discussed the purpose of having the Economic Development Authority (EDA) meeting prior to the City Council meeting is to have the EDA approve the 2001 Tax Levy and Budget before the City Council approves the budget for 2001. RESOLUTION NO. 2000-25 Commissioner Lasman introduced the following resolution and moved its adoption: 12/11/00 -2- DRAFT is RESOLUTION APPROVING THE FINAL BROOKLYN CENTER ECONOMIC DEVELOMENT AUTHORITY BUDGET FOR THE YEAR 2001 PURSUANT TO MSA CHAPTER 469.107, SUBDIVSION 1 The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Hilstrom. Motion passed unanimously. 4c. RESOLUTION REQUESTING THE CITY OF BROOKLYN CENTER TO LEVY TAXES FOR THE BENEFIT OF THE BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY FOR THE YEAR 2001 RESOLUTION NO. 2000-26 Commissioner Hilstrom introduced the following resolution and moved its adoption: RESOLUTION REQUESTING THE CITY OF BROOKLYN CENTER TO LEVY TAXES FOR THE BENEFIT OF THE BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY FOR THE YEAR 2001 The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Nelson. Motion passed unanimously. 4d. RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH REAL ESTATE RECYCLING FOR ADDITIONAL REDEVELOMENT Mr. McCauley discussed the location had not been finalized and requested to table this resolution to the January 8, 2001, meeting. A motion by Commissioner Hilstrom, seconded by Commissioner Lasman to table resolution to the January 8, 2001, meeting. Motion passed unanimously. 5. ADJOURNMENT A motion by Commissioner Nelson, seconded by Commissioner Lasman to adjourn the meeting at 7:14 p.m. Motion passed unanimously. President 12/11/00 -3- DRAFT MINUTES OF THE PROCEEDINGS OF THE S ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA SPECIAL SESSION DECEMBER 21, 2000 CITY HALL 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in special session and was called to order by President Myrna Kragness at 7:03 p.m. 2. ROLL CALL President Myrna Kragness, Commissioners Debra Hilstrom, Kay Lasman, and Robert Peppe. Commissioner Ed Nelson was absent and excused. Also present: City Manager Michael J. McCauley, Assistant City Manager Jane Chambers, and Deputy City Clerk Maria Rosenbaum. 3. RESOLUTION APPROVING AMENDED AND RESTATED DEVELOPMENT AGREEMENT WITH TALISMAN, LLC Executive Director Michael McCauley discussed that the EDA needs to approve the amended and restated development agreement with Talisman, LLC. The City Council approved a similar resolution with an additional amendment to the language in 6.1 (g) which would read the following: "The development property is at least 75 percent leased to eligible tenants at the time of issuance of the note and the adjacent property shall be occupied with operating department stores by Dayton's, Penny's, Sears, Kohls, and Mervyn's at the time of issuance of the note;. RESOLUTION NO. 2000-27 Councilmember Lasman introduced the following resolution with a revision of 6.1 (g) to read as follows and moved its adoption: 6.1 (g) "The development property is at least 75 percent leased to eligible tenants at the time of issuance of the note and the adjacent property shall be occupied with operating department stores by Dayton's, Penny's, Sears, Kohls, and Mervyn's at the time of issuance of the note; RESOLUTION APPROVING AMENDED AND RESTATED DEVELOPMENT AGREEMENT WITH TALISMAN, LLC The motion for the adoption of the foregoing resolution was duly seconded by Councilmember Peppe. Motion passed unanimously. 12/21/00 -1- DRAFT 5e ADJOURNMENT A motion by Commissioner Hilstrom, seconded by Commissioner Peppe to adjourn the meeting at 7:04 p.m. Motion passed unanimously. President 12/21/00 -2- DRAFT EDA Agenda Item No. 4a Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION ELECTING OFFICERS FOR THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER WHEREAS, Minnesota Statutes Section 469.096 provides that an economic development authority shall elect a president, treasurer, and secretary on an annual basis. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City Council of the City of Brooklyn Center, Minnesota, that the Authority hereby elects the following officers to serve through December 31, 2001, or such later date as their successors are elected and qualified: President /Treasurer: Myrna Kragness Vice - President: Kay Lasman Assistant Treasurer: Bob Sundberg Secretary: G. Brad Hoffman Date President The motion for the adoption of the foregoing resolution was duly seconded by commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. • EDA Agenda Item No. 4b Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WHEREAS, the Brooklyn Center Economic Development Authority (the "Authority ") has caused to be prepared a Development Agreement (the "Development Agreement ") between the Authority and Twin Lakes Business Park, a Minnesota limited liability company (the "Developer ") a form of which Development Agreement has been presented at this meeting; and WHEREAS, pursuant to the Development Agreement the Authority has agreed to provide tax increment assistance from Tax Increment Financing District No. 3 (A Redevelopment District) to the Developer to help pay the cost of the acquisition and clearance of certain land commonly referred to as the Dale Tile Property. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of Brooklyn Center, Minnesota as follows: The EDA hereby approves the Development Agreement in substantially the form submitted, and the Executive Director is hereby authorized and directed to execute the Development Agreement on behalf of the Authority. Date President The motion for the adoption of the foregoing resolution was duly seconded by commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. i 1 memormndm Date: 01/03/2001 To: Michael McCauley City Manager From: Brad Hoffman Community Development Director RE: Phase III Twin Lake Development (Joslyn) The Economic Development Authority will be asked Monday evening to approve a development agreement between the EDA and Twin Lakes III, LLC (Real Estate Recycling). The agreement would conclude the development of the Joslyn Pole Yard site. The third phase of the development is located on the east side of the site and includes the Dale Tile property. Under the terms of the agreement, RER is to acquire, demolish and clean the remainder of the development site. Consistent with our current agreement for the first two phases of the development, the EDA agrees to write down the cost of the land to $2 per square foot. The cost of the land for purposes of determining the EDA write down is the cost of acquisition, demolition and cleanup of the site less any grants received from any agency for the acquisition and clean up. The EDA will provide a write down to the $2 dollar per foot price up to $1,000,000. At $2 per foot, the developer has a fair land value of $211,960. In essence the EDA will pay the gap between the cost of the acquisition, demolition and clean up less all grants and $211,960 not to exceed $1,000,000. The difference between this agreement and the other agreement with RER is that the source of the funding will come from TIF District #3 as opposed to TIF District #4. At the end of year 2000, TIF District 3 will have a fund balance of approximately $1,755,688. These are the funds available to the EDA after its obligations including Brookdale and the 15% housing fund are accounted for. In 2001, the fund balance is projected to be $3,313,000. The ability of TIF #4 to undertake this development is very limited and would be spread over many years. Under the terms of this agreement the obligation of the district would be paid off in three (3) years. At the time the obligation is paid off the EDA would have the ability to return this portion of TIF #4 back to the tax roles or use the cash flow from the development to pay off the district's debt at an accelerated rate. The development site will be approximately seven (7) acres and accommodate a building from 90,000 to 115,000 square feet in area. The development when concluded will have a market value between $4,900,000 and $6,400,000 as opposed to the current $1,200,000 value. It would be my recommendation that the EDA authorize the Executive Director to enter into this agreement with RER. Representatives of RER will be available Monday evening to answer any questions the Council might have. gbh 01/03/2001 1 DEVELOPMENT AGREEMENT BY AND BETWEEN ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA AND TWIN LAKES III, LLC ! This document drafted by: BRIGGS AND MORGAN (MMD) Professional Association 2200 West First National Bank Building St. Paul, Minnesota 55101 ! 1181397.5 TABLE OF CONTENTS Page ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . 3 Section 1.1. Definitions . . . . . . . . . . . . . . . . 3 ARTICLE II - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 6 Section 2.1. Representations and Warranties of the Authority . . . . . . . . . . . . . . . 6 Section 2.2. Representations and Warranties of the Developer . . . . . . . . . . . . . . . 6 ARTICLE III - PAYMENT OF TAX INCREMENT ASSISTANCE . . . . . . . 8 Section 3.1. Preconditions to Issuance of Tax Increment Note . . . . . . . . . . . . ... 8 Section 3.2. Tax Increment Revenue Note . . . . . . . . . 8 Section 3.3. Use of Tax Increments . . . . . . . . . . 10 ARTICLE IV - EVENTS OF DEFAULT . . . . . . . . . . . . . . . 11 Section 4.1. Events of Default Defined . . . . . . . . 11 Section 4.2. Remedies on Default . . . . . . . . . . . 12 Section 4.3. No Remedy Exclusive . . . . . . . . . . . 12 Section 4.4. No Implied Waiver . . . . . . . . . . . . 12 Section 4.5. Agreement to Pay Attorney's Fees and Expenses 13 Section 4.6. Indemnification of Authority and City 13 Section 4.7. Business Subsidy Act. . . . . . . . . . . 13 ARTICLE V - ADDITIONAL PROVISIONS . . . . . . . . . . . . . . 15 Section 5.1. Conflicts of Interest . . . . . . . . . . 15 Section 5.2. Assignment . . . . . . . . . . . . . . . . 15 Section 5.3. Titles of Articles and Sections . . . . . 15 Section 5.4. Notices and Demands . . . . . . . . . . . 15 Section 5.5. Counterparts . . . . . . . . . . . . . . . 16 Section 5.6. Law Governing . . . . . . . . . . . . . . 16 Section 5.7. Expiration . . . . . . . . . . . . . . . . 16 Section 5.8. Provisions Surviving Rescission or Expiration . . . . . . . . . . . . . . . 16 EXHIBIT A - Legal Description of Development Property . . . . A -1 EXHIBIT B - Form of Tax Increment Note . . . . . . . . . . . B -1 • ��R1797 S DEVELOPMENT AGREEMENT THIS AGREEMENT, made as of the day of 2000, by and between the Economic Development Authority of Brooklyn Center, Minnesota (the "Authority "), a body corporate and politic organized and existing under the laws of.the State of Minnesota and Twin Lakes III, LLC, a Minnesota limited liability company (the "Developer "), WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Law "), the Brooklyn Center Housing and Redevelopment Authority (the "HRA") has hereto formed Housing Development and Redevelopment Project No. 1 (the "Redevelopment Project ") and has adopted a redevelopment plan therefor (the "Redevelopment Plan "); and WHEREAS, pursuant to Minnesota Statutes, Section 469.091 to 469.1081, the Authority has the powers of a housing and redevelopment authority under the HRA Law, and has been authorized by the City Council of the City of Brooklyn Center to carry out all powers and administer all projects initiated by the HRA; and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1791, as amended, (hereinafter the "Tax Increment Act "), the Authority has created, within the Redevelopment Project, Tax Increment Financing District 03 (A Redevelopment District) (the "Tax Increment District "), and has adopted a tax increment financing plan therefor (the "Tax Increment Plan ") which provides for the use of tax increment financing in connection with development of certain property within the Redevelopment Project area; and WHEREAS, in order to achieve the objectives of the Redevelopment Plan and particularly to make the land in the Redevelopment Project area available for development by private enterprise in conformance with the Redevelopment Plan, the Authority has determined to assist the Developer with certain acquisition and demolition costs of property commonly referred to as the Dale Tile Property, which property is located within the Redevelopment Project area; and WHEREAS, the Authority believes that the acquisition and demolition of existing structures on certain property in the Redevelopment Project area, and fulfillment of this Agreement are i 1181397.5 in the best interests of the City of Brooklyn Center, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which it will be undertaken. 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: • 1181397.5 2 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 Expenses shall have the meaning given such term in the Tax Increment Act. Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Authoritv means the Economic Development Authority of Brooklyn Center, Minnesota; City means the City of Brooklyn Center, Minnesota; Contract for Private Development means the Contract dated July 24, 19996 between the Authority and Gerald P. Steffens and Judith A. Steffens, d /b /a Sunlite Properties. County means Hennepin County, Minnesota; Developer means Twin Lakes III, LLC, a Minnesota limited liability company, its successors and assigns; Development Property means certain land located within the Redevelopment Project area and legally described on Exhibit B attached hereto; Eligible Costs means the costs of the acquisition of the Development Property, remediation or clean up of hazardous substances, and the demolition of the existing structures located thereon; Event of Default means any of the events described in Section 4.1; Final Pavment Date means the February 1 or August 1 on which the City has made the sixth payment on the Note or the date the Note is paid in full or the date of termination of the Tax Increment District; Grants means any grants received from the Minnesota Department of Trade and Economic Development, the Metropolitan s 1181397.5 3 Council or any other federal, state or local agency or entity for the Eligible Costs; Net Tax Increments means on any Note Payment Date, the Tax Increments received and retained by the Authority during the last 6 months less any Tax Increments needed to pay Administrative Expenses or Pre - Existing Obligations; Note Pavment Date: means February 1 and August 1 of each year commencing the first February 1 or August 1 following the date of issuance of the Note; Pre- Existina Obligations means any payments due or to become due on or prior to the next Note Payment Date on (a) the City's General Obligation Tax Increment Bonds of 1995 and, (b) the pay - as- you -go assistance payable by the City or Authority pursuant to that certain Development Agreement dated February 22, 2000, with Talisman Brookdale, LLC, and that certain Contract for Private Development dated July 29, 1996 between the Authority and Gerald P. Steffens and Judith A. Steffens, d /b /a Sunlit Properties; State means the State of Minnesota; Tax Increment Act means Minnesota Statutes, Sections 469.174 • through 469.1791, as amended; Tax Increment District means Tax Increment Financing District No. 03 (A Redevelopment District) and qualified as a redevelopment district under the Tax Increment Act; Tax Increment Financing Plan means the plan approved for the Tax Increment District; Tax Increment Note or Note means the tax increment note to be issued in substantially the form attached hereto as Exhibit C; Tax Increments means the tax increments derived from the Tax Increment District which have been received and retained by the Authority in accordance with the provisions of Minnesota Statutes, Section 469.177, or otherwise pursuant to the Tax Increment Act; Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable 1181397.5 4 . discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority or the City) which directly result in delays. • 1181397.5 5 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the Authoritv. The Authority makes the following representations and warranties: (1) The Authority is a body corporate and politic of the State of Minnesota and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Increment District is a "redevelopment district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10 and was created, adopted and approved in accordance with the terms of the Tax Increment Act. (3) The development contemplated by this Agreement is in conformance with the objectives set forth in the Redevelopment Plan. (4) The Authority proposes, subject to the further provisions of this Agreement, to issue the Note and apply Tax Increments to reimburse the Developer for Eligible Costs as set forth in Section 3.1 of the Agreement. (5) The Authority represents and warrants that the use of Tax Increments to pay the Note is a legally permitted use under the Tax Increment Act. Section 2.2. Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a limited liability company, duly formed and existing under the laws of the State of Minnesota, is in good standing and duly authorized to conduct its business in the State of Minnesota and all other states where its activities require such authorization, has the power to enter into this Agreement, and by proper corporate action has authorized the execution and delivery of this Agreement. (2) The Developer has heretofore acquired the Development Property and will remove the existing structures by May 1, 2001 in accordance with 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). • 1181397.5 6 (3) The acquisition and clearance of the Development Property 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. (4) 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 before the clearance of the Development Project may be lawfully undertaken. (5) 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 by 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. (6) The Developer will cooperate fully with the City and the Authority with respect to any litigation commenced with respect to the Development Property. (7) Except to the extent the interests of the Developer and the City or Authority are adverse, the Developer will cooperate fully with the City and the Authority in resolution of any traffic, parking, public nuisance, or public safety problems which may arise in connection with the Development Property. i 1181397.5 7 ARTICLE III PAYMENT OF TAX INCREMENT ASSISTANCE Section 3.1. Preconditions to Issuance of Tax Increment Note The Developer will pay the Eligbble Costs, including but not limited to the costs of the acquisition of the Development Property, demolition of the existing structures located thereon and the removal and remediation costs. In order to reimburse the Developer for a portion of the Eligible Costs, the Authority agrees to provide tax increment assistance to the Developer on a pay -as- you -go basis as further set forth in this Agreement. The Authority will reimburse the Developer for the Eligible Costs by the issuance of a Tax Increment Note. The principal amount of the Note shall be the lesser of the following (a) $1,000,000,(b) the actual out -of- pocket costs of the Developer for the Eligible Costs less all Grant proceeds, or (c) an amount which, when deducted from all capital costs paid by the Developer to acquire and prepare the Development Property for development including acquisition, remediation and clean up of hazardous substances, less the proceeds of all Grants, results in the Developer's actual out -of- pocket costs being not less than $211,960. The tax increment assistance shall be paid on the terms and conditions set forth in Section 3.2 below. The Authority shall issue a Tax Increment Note upon satisfaction of the following conditions precedent: (a) The Developer shall be in material compliance with all the terms and provisions of this Agreement; (b) The Developer shall have acquired the Development Property; and (c) The Developer shall have delivered to the Authority evidence acceptable to the Authority that the Developer has entered into binding contracts to incur the Eligible Costs. Section 3.2. Tax Increment Revenue Note. (1) Upon satisfaction of the conditions in Section 3.1(a), (b) and (c) hereof, the Authority will reimburse the Developer for Eligible Costs through the issuance of a Tax Increment Revenue Note in substantially the form attached to this Agreement as Exhibit C. (2) The Note shall be initially issued in the principal amount determined as set forth in 3.1 hereof; provided that, the 1181397.5 8 . Authority and the Developer acknowledge and agree that because the actual costs of the remediation and clean up of hazardous substances on the Development Property may not be known at the time the Note is issued, that portion of the Eligible Costs may be estimated by the Authority for purposes of determining the initial principal amount of the Note to be issued (the "Initial Note "). The Developer agrees to provide the Authority with invoices or other evidence acceptable to the Authority promptly upon payment of all of the Eligible Costs. In the event the final determination of the Eligible Costs results in the principal amount of the Note determined as required under Section 3.1 hereof being different than the principal amount of the Initial Note, then the Developer shall deliver the Initial Note to the Authority in exchange for a new Note issued in a revised principal amount in replacement therefor. The Note shall bear simple, non - compounded interest at the rate of eight per cent (8.00 %) per annum from the date of issuance of the Note. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30 -day months. (3) The Note shall be payable solely from Net Tax Increments; provided that the amount of Net Tax Increments paid on the Note on each Note Payment Date shall be the lesser of (a) 100% of Net Tax Increments, or (b) an amount equal to the accrued ® and unpaid interest on the principal balance of the Note plus one sixth of the original principal amount of the Note. (4) The Note shall be a special and limited obligation of the Authority payable solely from Net Tax Increments and shall not be a general obligation of the Authority. If., on any Note Payment Date, the applicable Net Tax Increments pledged for the payment of the accrued and unpaid interest on the Note are insufficient for such purposes, the difference shall be carried forward and shall be paid if and to the extent that on a future Note Payment Date there are Net Tax Increments in excess of the amounts needed to pay the accrued interest then due on the Note. (5) The Authority's obligation to make payments on the Note on any Note 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 and (B) this Agreement shall not have been terminated pursuant to Section 4.2 (b) . (6) The Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit C. In the event of any conflict between the terms of the Note and the terms of this Section 3.2, the terms of the Note shall govern. The • 1181397.5 9 ,III issuance of the Note pursuant and subject to the terms of this Agreement are hereby authorized and approved by the Authority. Section 3.3. Use of Tax Increments. The Authority and the City shall be free to use the Tax Increments, other than the Net Tax Increments to which the Developer is entitled pursuant to the provisions of Section 3.2 hereof, for any other purpose for which the Tax Increments may lawfully be used pursuant to applicable provisions of the Minnesota law; provided that any future pledge of Net Tax Increments derived from the Tax Increment District after the date of this Agreement shall be subordinate to the pledge of such Net Tax Increments to the payment of the Note. Nothing herein shall be construed to limit the Authority's use of Tax Increment fund balances as long as the accrued interest and principal then due on the Note has been paid. 1181397,5 10 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: (a) A default in the payments of ad valorem real property taxes assessed with respect to any portion of the Development Property; (b) Subject to Unavoidable Delays, failure by the Developer to incur and pay the Eligible Costs by May 1, 2001; (c) Subject to Unavoidable Delays, failure of the Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement; or (d) If 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) make a general assignment for the benefit of its creditors; or (C) admit in writing its inability to pay its debts generally as they become due; or (D) be adjudicated as 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 sixty (60) 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 sixty 1181397.5 1 1 (60) 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 Authority may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer, but only if the Event of Default has not been cured within said thirty (30) days, or, if said Event of Default cannot reasonably be cured within the time, the Developer fails to give assurances reasonably satisfactory to the Authority that the Event of Default will be cured within a period of time reasonably acceptable to the Authority, but in any event not to exceed an additional period of 120 days; (a) The Authority may suspend its performance under this Agreement and the Note until it receives assurances from the Developer, deemed adequate by the Authority, that the Developer will cure its default and continue its performance under this Agreement. (b) The Authority may cancel and terminate the Agreement and the Note. • (c) The Authority may take any action, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the Authority 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. 1181397.5 12 Section 4.5. Agreement to Pav Attornev's Fees and Expenses. Whenever any Event of Default occurs and the Authority or City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it shall, on demand therefor, pay to the Authority or City the reasonable fees of such attorneys and such other expenses so incurred by the Authority or City. Section 4.6. Indemnification of Authority and Citv. (1) The Developer releases from and covenants and agrees that the Authority and the City, their governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (hereinafter, 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 the acquisition, ownership, development and use of the Development Property to the extent not attributable to the negligence 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, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from 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 transactions contemplated hereby or arising from the Developer's acquisition, ownership, development and use of the Development Property; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the Authority in this Agreement. (3) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority or the City, as the case may be. Section 4.7. Business Subsidv Act. The tax increment assistance to be made available to the Developer is for a 1181397.5 13 development of property located within a soils condition tax increment financing district created under Minnesota Statutes, Section 469.174, subdivision 19 (i.e. Tax Increment Financing (Soils Condition) District No. 1) (France Avenue Business Park Project), and therefore the provisions of Minnesota Statutes, Sections 116J.993 and 116J.994 do not apply. 1181397.5 14 ARTICLE V ADDITIONAL PROVISIONS Section 5.1. Conflicts of Interest. No member of the governing body or other official of the Authority or the City shall have any financial interest, direct or indirect, in this Agreement or the Development Property 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 the 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 Authority or the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 5.2. Assignment. The Development Property may be sold or transferred by the Developer without the consent of the City or the Authority. This Agreement is not assignable without the prior written consent of the Authority. The Authority hereby consents to the assignment of the Note to any lender that provides financing for acquisition of the Development, improvements on the Development Property, or for Eligible Costs or any subsequent purchaser of the Development Property. The Developer shall give the Authority notice of any such assignment. Section 5.3. Titles of Articles and Sections. Any titles of the several parts, articles and sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.4. 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 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: Twin Lakes III, LLC Metropolitan Centre - Suite 3060 333 South 7th Street Minneapolis, MN 55402 1181397.5 is (b) in the case of the Authority is addressed to or delivered personally to the Authority at: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, Minnesota 55430 ATTN: Executive 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. Section 5.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 5.6. Law Governina. This Agreement will be governed and construed in accordance with the laws of the State. Section 5.7. Expiration. This Agreement shall expire on the Final Payment Date unless earlier terminated or rescinded in accordance with its terms. Section 5.8. Provisions Survivina Rescission or Expiration. 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. 1181397.5 16 O IN WITNESS WHEREOF, the Authority 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 Executive Director This is a signature page to the Development Agreement dated 2000, by and between the Economic Development Authority of Brooklyn Center, Minnesota, and Twin Lakes III, LLC. • 1181397.5 17 • TWIN LAKES III, LLC By Its This is a signature page to the Development Agreement dated , 2000, by and between the Economic Development Authority of Brooklyn Center, Minnesota, and Twin Lakes III, LLC. 1181397.5 18 EXHIBIT A Legal Description of Development Property Lot 1, Block 1, Dale and Davies 3 rd Addition Parcel ID # 10- 118 -21 -31 -0027 • 1181397.5 A-1 EXHIBIT B Form of Tax Increment Note UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA TAX INCREMENT REVENUE NOTE (DALE TILE PROPERTY) The Economic Development Authority of Brooklyn Center, Minnesota (the "Authority "), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts ") to Twin Lakes III, LLC, a Minnesota limited liability company, or its registered assigns (the "Registered Owner "), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal shall have been paid in whole or in part pursuant to the terms hereof and as provided in that certain Development Agreement, dated as of , 2000, as the same may be amended from time to time (the "Development Agreement "), by and between the Economic Development Authority of Brooklyn Center, Minnesota (the "Authority "), and Twin Lakes III, LLC, a Minnesota limited liability company (the "Company "). The unpaid principal amount hereof shall bear interest from the date of this Note at the simple, non - compounded rate of eight percent (8.00)% per annum. Interest shall be computed on the basis of a 360 -day year of twelve (12) 30 -day months. The amounts due under this Note shall be payable on each February 1 and August 1 of each year, commencing on the first February 1 or August 1 succeeding the date of issuance of the Note and on each and every February 1 and August 1 thereafter through the Final Payment Date (as defined in the Development Agreement) or, if the first should not be a business day the next succeeding business day. On each Payment Date the Authority 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 1181397.5 B_ 1 day preceding such Payment Date an amount of Net Tax Increments equal to the lesser of (a) 100% of the Net Tax Increments, or (b) the accrued interest on the unpaid principal amount of the Note, plus an amount equal to one sixth of the original principal amount of the Note to reduce the principal balance of the Note. The Payment Amounts due hereon shall be payable solely from Net Tax Increments (as defined in the Development Agreement), which the Authority is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.179, as the same may be amended or supplemented from time to time (the "Tax Increment Act "). This Note shall terminate and be of no further force and effect (a) following the Final Payment Date or, (b) on any date upon which the Authority shall have terminated the Development Agreement under Section 4.2(b) thereof, or (c) on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The Authority may prepay the principal amount of this Note in whole or in part at any time without premium. The Authority makes no representation or covenant, express or implied, that the Net Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The Authority's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable, if said Event -of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the Authority elects to cancel and rescind the Development Agreement, the Authority shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, for a fuller statement of the rights and obligations of the Authority 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. This Note is a special, limited revenue obligation and not a general obligation of the Authority and is payable by the City only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the City of Brooklyn Center, Minnesota, and neither the full faith and credit nor the taxing powers of the Authority are pledged to the payment of the principal of or interest on this Note and no 1181397.5 13-2 property or other asset of the Authority, save and except the above - referenced Net Tax Increments, is or shall be a source of payment of the Authority's obligations hereunder. This Note is issued b the Authority in aid of financing Y Y g a project pursuant to and in full conformity with h P 7 P nformi y the Constitution and laws of the State of Minnesota, including the Tax Increment Act. IT IS HEREBY CERTIFIED AND RECITED that all acts, condi- tions, 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 Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional statutory limitation thereon. IN WITNESS WHEREOF, the Economic Development Authority of Brooklyn Center, Minnesota, has caused this Note to be executed by the manual signature of its Executive Director and has caused this Note to be issued on and dated , 2000. ECONOMIC DEVELOPMENT AUTORITY OF BROOKLYN CENTER, MINNESOTA By Its Executive Director • 1181397.5 B -3 CERTIFICATE OF REGISTRATION It is hereby certified that the foregoing Note, as originally issued on , 2000, was on said date registered in the name of Twin Lakes III, 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 DATE OF SIGNATURE OF REGISTERED OWNER REGISTRATION OF SECRETARY Twin Lakes III, LLC 1181397.5 B -4 I