HomeMy WebLinkAbout2012 10-08 EDAP Regular Session EDA MEETING
City of Brooklyn Center
October 8,2012 AGENDA
1. Call to Order
—The EDA requests that attendees turn off cell phones and pagers during the meeting. A copy of
the full City Council packet, including EDA (Economic Development Authority), is available to
the public. The packet ring binder is located at the front of the Council Chambers by the
Secretary.
2. Roll Call
3. Approval of Agenda and Consent Agenda
—The following items are considered to be routine by the Economic Development Authority
(EDA) 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
1. September 10,2012—Regular Session
4. Commission Consideration Items
a. Resolution Approving First Amendment to Purchase Agreement and First Amendment to
Development Agreement(Shingle Creek Crossing)
Requested Commission Action:
—Motion to adopt resolution.
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b. Consideration of Approval of Grant Applications for Additional Contamination Cleanup
of the Former Lifetime Fitness Located at 4001 Lake Breeze Ave. in Brooklyn Center
1. Resolution Authorizing Submission of a Grant Application to the Metropolitan
Council for the Tax Base Revitalization Account(Lifetime Fitness Site)
Requested Commission Action:
—Motion to adopt resolution.
2. Resolution Authorizing the Economic Development Authority of Brooklyn Center,
Minnesota to Apply for a Contamination Cleanup Grant from the Minnesota
Department of Employment and Economic Development(Lifetime Fitness Site)
Requested Commission Action:
—Motion to adopt resolution.
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3. Resolution Approving Application for a Hennepin County Environmental Financial
Grant
Requested Commission Action:
—Motion to adopt resolution.
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C. Resolution Approving the First Look Program Acquisition Agreement with the Twin
Cities Community Land Bank LLC for NSP3
Requested Commission Action:
—Motion to adopt resolution.
5. Adjournment
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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
SEPTEMBER 10, 2012
CITY HALL—COUNCIL CHAMBERS
1. CALL TO ORDER
The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to
order by President Tim Willson at 9:20 p.m.
2. ROLL CALL
President Tim Willson and Commissioners Carol Kleven, Kay Lasman, Lin Myszkowski, and
Dan Ryan. Also present were Executive Director Curt Boganey, Director of Business and
Development Gary Eitel, Assistant City Manager/Director of Building and Community
Standards Vickie Schleuning, City Attorney Charlie LeFevere, and Carla Wirth, Timesaver Off
Site Secretarial, Inc.
3. APPROVAL OF AGENDA AND CONSENT AGENDA
Commissioner Ryan moved and Commissioner Myszkowski seconded approval of the Agenda
and Consent Agenda, and the following item was approved:
3a. APPROVAL OF MINUTES
1. August 27, 2012—Regular Session
Motion passed unanimously.
4. COMMISSION CONSIDERATION ITEMS
4a. RESOLUTION NO. 2012-14 APPROVING AND AUTHORIZING THE
EXECUTION OF SUB-GRANT AGREEMENTS FOR ENVIRONMENTAL
CLEANUP (REAL ESTATE RECYCLING—TWIN LAKES BUSINESS CENTER
IV)
Executive Director Curt Boganey introduced the item.
Director of Business and Development Gary Eitel reviewed the purpose of the resolution and
advised that the three grants were collectively enough for the environmental clean up of this site
at no cost to the City.
09/10/12 -1- DRAFT
The EDA indicated it was pleased that the State through DEED, the Metropolitan Council, and
Hennepin County have supported this project through grants.
Commissioner Lasman moved and Commissioner Myszkowski seconded adoption of
RESOLUTION NO. 2012-14 Approving and Authorizing the Execution of Sub-Grant
Agreements for Environmental Cleanup.
Motion passed unanimously.
5. ADJOURNMENT
Commissioner Lasman moved and Commissioner Ryan seconded adjournment of the Economic
Development Authority meeting at 9:26 p.m.
Motion passed unanimously.
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09/10/12 -2- DRAFT
EDA Agenda Item No. 4a
EDA ITEM MEMORANDUM
DATE: October 2, 2012
TO: Curt Boganey, City Manage
FROM: Gary Eitel, Director of Business & Development AE_.
SUBJECT: Resolution Approving a First Amendment to Purchase Agreement and a First
Amendment to Development Agreement (Shingle Creek Crossing).
Recommendation:
It is recommended that the Economic Development Authority consider approval/adoption of the
Resolution Approving a First Amendment to Purchase Agreement and a First Amendment to
Development Agreement (Shingle Creek Crossing).
Background:
On May 23, 2011, the City Council approved the Planned Unit Development of Shingle Creek,
the Final Plat of Shingle Creek Crossing, and the EDA approved the Shingle Creek Crossing Tax
Increment Development Agreement.
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The Tax Increment Agreement identified the Tax Increment Assistance that would be available
for the development of the Shingle Creek PUD and included provisions for the completion of the
following minimum improvements by December 31, 2012:
- (i) the demolition of the existing Brookdale Mall, excluding the Sears department store
and the Food Court Building,the "reskinning" of the Food Court Building,
- (ii) the partial day-lighting of Shingle Creek;
- (iii)the construction by the Developer of the Phase I Streets and Streetscaping; and
- (iv) the construction of the storm water detention and/or retention areas by the Developer
on the Development Property, all consistent with the PUD and any approved
development plans.
The developer has completed the minimum improvements, with the exception of the reskinning
(exterior renovation) of the Food Court Building, and is requesting an amendment that would
extend the completion date of these improvements to September 30, 2013, to allow additional
time to complete the interior space planning and ongoing negotiations with a potential tenant for
a substantial portion of the building.
The agreement also provided for the completion of Additional Improvements that the Developer
will construct (or, in the case of the Food Court Building, renovate) and obtain certificate of
occupancy permits for not less than 239,000 sq.ft. of buildings on the Phase II Parcels within 5
years of the execution of the agreement (May 23, 2016).
The amendment provides for a correction to the legal description of the Phase 11 parcels to
include the lot containing the Food Court building.
Mission:Ensuring an attractive,clean,safe,inclusive conunujd>y that enhances the qualitp of life
for all people and preserves the public trust
EDA ITEM MEMORANDUM
The agreement also included provisions associated with the conveyance of the EDA parcel,
(former Boulevard/Ground Round Restaurant Site), and an incentive to the Developer should the
Midas site be included in the Shingle Creek Crossing PUD...
On June 27, 2011 the EDA held a public hearing on the potential conveyance of the EDA parcel
(former Ground Round Restaurant Site), and upon making the necessary findings of public
interest, the EDA approved the execution of the Purchase agreement providing for the future
conveyance of the EDA parcel.
The terms of the Purchase Agreement included the following:
- The purchase price was set at the current appraised value of$355,000,
- The term of the purchase agreement is 5 years from the date of the execution of the
Tax Increment Agreement.
- The EDA's approval of site and development plans for this lot is required before the
conveyance of the parcel,
- The developer has agreed to the following minimum development parameters for
this lot; 8,000 sq.ft. retail building or a 4,000 sq.ft. dine -in restaurant.
- The agreement has the required Right of Re-entry provisions,which state that
barring any unavoidable delays,the developer shall commence construction of the
improvements on this lot within 12 months of the conveyance of the property or the
process of reverting the property back to the EDA will commence.
The Developer is requesting that the term of the purchase agreement be extended for one
additional year (an extension from May 23, 2016 to May 23, 2017).
Attached for your reference is a copy of the May 23, 2011 staff memorandum and a Phasing
Exhibit from the PUD Declaration and Covenants agreement, which illustrates the Phase I
Improvements.
Amendment to Tax Increment and Purchase Agreement:
The City Attorney has prepared the attached First Amendment to the Tax Increment Agreement,
which addresses the provisions relating to the satisfaction of the minimum improvements,
extends the completion date for the improvements associated with the reskinning of the Food
Court Building until September 30, 2013, and corrects the Exhibit which identifies the Phase II
lots for Additional Improvements relating to 239,000 sq.ft. of certificate of occupancy permits.
The amendment is being requested by the Developer to avoid the potential of a default in the Tax
Increment Agreement, which if determined to constitute an Event of Default, could result in the
EDA taking one or more of the following actions as identified in Section 9.4 of the Tax
Increment Agreement:
(a) Suspend performance under the Agreement and the TIF Note until it receives
assurances from the Developer, deemed adequate by the Authority, that the
Mission:Ensuring an attractive,elean,safe,inclusive community that enhances the quality of life
for all people and preserves the public trust
EDA ITEM MEMORANDUM
Developer will cure its default and continue its performance under this Agreement.
(b) Withhold the Certificate of Completion for the Minimum Improvements.
(c) The Authority may cancel and terminate the Agreement and the TIF Note.
(d) Take whatever action at law or in equity may appear necessary or desirable to the
Authority to collect any payments due under this Agreement or to enforce
performance and observance of any obligation, agreement, or covenant of the
Authority under this Agreement.
Additional securities held by the EDA include the following:
1. The $1.4 M Forgivable Note for the minimum improvements is secured by the EDA
holding a first mortgage on Lots 15 and 16, Block 1 Shingle Creek Crossing
(approximately 4 acres adjacent to the daylighting of Shingle Creek).
2. The $1M Forgivable Note for completions of 239,000 sq.ft. of business certificate of
occupancies is secured by a second mortgage on the 6.83 acre Kohl's lot.
3. The $2.3M TIF Pay-As-You-Go Note requires that the Developer substantially
completed the Minimum Improvements before it can be issued.
Amendment to the Purchase Agreement:
The City Attorney has also prepared the attached First Amendment to the Purchase Agreement
which extends the required closing date from June 30, 2016 until June 30, 2017.
The Developer has indicated that the sluggish market conditions for dine-in restaurants, which
meet the minimum development standards for this lot, is the reason for the requested one year
extension to the Agreement of Purchase and Sale. This agreement also includes Default
provisions and should the property not close on or before the closing date, the agreement
terminates and has no further force.
Budget Issues:
There are no budget issues to consider.
(The developer is responsible for all legal costs associated with the Tax Increment Agreement)
Council Goals:
Strategic:
1. We will proceed aggressively with implementation of City's redevelopment plans
Mission:Ensuring an attractive,cleat,safe,inchisive community,that enhances the quality of life
for all people and preserves the public trust
Commissioner introduced the following resolution and
moved its adoption:
EDA RESOLUTION NO.
RESOLUTION APPROVING A FIRST AMENDMENT TO PURCHASE
AGREEMENT AND A FIRST AMENDMENT TO DEVELOPMENT
AGREEMENT
BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic
Development Authority of the City of Brooklyn Center("EDA") as follows:
Section 1. Recitals.
1.01. Shingle Creek, LLC (the "Developer") has heretofore entered into a Development
Agreement by and between the EDA and the Developer dated June 17, 2011 (the "Development
Agreement").
1.02. The Development Agreement requires completion of the Minimum Improvements(as
defined in the Development Agreement),including the"reskinning"of the Food Court Building(as
defined in the Development Agreement), by December 31, 2012 and the Developer has requested
that EDA extend the required completion date for the"reskinning" of the Food Court Building (as
defined in the Development Agreement)to September 30, 2013.
1.03. The EDA and the Developer have proposed to amend the Development Agreement to
provide, among other things, for the later completion of the "reskinning" of the Food Court
Building(the "Development Agreement Amendment").
1.04. The Developer has heretofore entered into a Purchase Agreement by and between the
EDA and the Developer dated June 28, 2011 (the "Purchase Agreement").
1.05. The Purchase Agreement requires closing on the acquisition of the Land(as defined
in the Purchase Agreement),no later than June 30, 2016 and the Developer has requested that EDA
extend the required closing date to no later than June 30, 2017.
1.06 The EDA and the Developer have proposed to amend the Purchase Agreement to
provide for the later closing date (the "Purchase Agreement Amendment" and, together with the
Development Agreement Amendment, the "Amendments").
Section 2. EDA Approval; Further Proceedings.
2.01. The Amendments as presented to the Board are hereby in all respects approved, in
substantially the forms submitted, together with any related documents necessary in connection
therewith including but not limited to a satisfaction of mortgage (collectively, the "Amendment
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Documents") and the President and the Executive Director are hereby authorized and directed to
execute the Amendment Documents on behalf of the EDA.
2.02 The approval hereby given to the Amendment 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. 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 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.
Approved by the Economic Development Authority of the City of Brooklyn Center.
October 8, 2012
Date President
The motion for the adoption of the foregoing resolution was duly seconded by Commissioner
and upon vote being taken thereon,the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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FIRST AMENDMENT TO
DEVELOPMENT AGREEMENT
By and Between
ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
AND
SHINGLE CREEK, LLC
Dated as of: June 17,2011
First Amendment Dated as of: October 2012
This document was drafted by:
KENNEDY& GRAVEN, CHARTERED (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
409919v2 JSB BR291-304
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FIRST AMENDMENT TO
DEVELOPMENT AGREEMENT
THIS FIRST AMENDMENT, made on or as of the day of October, 2012, by and
between the ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER,
MINNESOTA, a body corporate and politic organized and existing under the laws of the State of
Minnesota (the "Authority"), and SHINGLE CREEK, LLC, a Minnesota limited liability
company(the"Developer").
WITNESSETH:
WHEREAS, the Authority and the Developer heretofore entered into a Development
Agreement by and between the Authority and the Developer dated June 17, 2011 and recorded in
the Office of the Hennepin County Registrar of Titles on June 30, 2011 as Document No.
T4868196 (the "Original Agreement") in connection with the construction of certain
Minimum Improvements (as defined therein) in the Authority's Tax Increment
Financing District No. 5 (A Renewal and Renovation District). The Original
Agreement was recorded against title to Lots 2 through 17, Block 1, Lot 2, Block 2
and Outlot A, SHINGLE CREEK CROSSING, Hennepin County, Minnesota
according to the recorded plat thereof, except that part formally described as Tract
A, Registered Land Survey 1649, Hennepin County, Minnesota (the "Developer
Property"); and
WHEREAS, the Original Agreement requires completion of the Minimum Improvements
(as defined in the Development Agreement), including the "re-skinning" of the Food Court
Building (as defined in the Development Agreement), by December 31, 2012 and the Developer
has requested that EDA extend the required completion date for the "re-skinning" of the Food
Court Building (as defined in the Development Agreement)to September 30, 2013; and
WHEREAS, THE DEVELOPER and the Authority have proposed to amend the Original
Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, the parties agree as follows:
1. The initial paragraph of the Original Agreement is amended in its entirety to read
as follows:
"THIS DEVELOPMENT AGREEMENT is made and entered into this
17th day of June, 2011, by and between the ECONOMIC
DEVELOPMENT AUTHORITY OF BROOKLYN CENTER,
MINNESOTA, a body corporate and politic organized and existing under
the laws of the State of Minnesota (the "Authority"), and SHINGLE
CREEK, LLC, a Delaware limited liability company (the "Developer").
The Parties intend for the covenants and restrictions set forth in this
Agreement to run with title to all of the Developer Property until such time
409919v2 JSB BR291-304
as the Developer is entitled to receive the Primary Certificate of
Completion described in Section 4.9. From and after the time the
Developer is entitled to receive the Primary Certificate of Completion
described in Section 4.9, the Parties intend for the covenants and
restrictions set forth in this Agreement to run with title to Lot 3, Block 1,
SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according
to the recorded plat thereof(the "Food Court Parcel") and to only run with
title to the Food Court Parcel until such time as the Developer is entitled to
receive the Food Court Certificate of Completion described in Section 4.9.
Notwithstanding that this Development Agreement may cease to run with
title to all or any portion of the Developer Property as set forth above, the
covenants and restrictions set forth in this Agreement remain the personal
obligation of the Developer and any successor in title to all or any portion
of the Developer Property to whom the Developer expressly assigns the
Developer's obligations under this Agreement in accordance with Section
8.2(b)(ii). This Agreement does not run with title to the Walmart Parcel
and is not binding on the owner of the Walmart Parcel."
2. Section 1.1 of the Original Agreement is amended to delete the definition of
"Completion Date".
3. The definition of "Certificate of Completion" set forth in Section 1.1 of the
Original Agreement is hereby deleted in its entirety and replaced with the following:
"`Certificate of Completion' means, collectively, the Primary Certificate of
Completion in substantially the form attached hereto as Exhibit B-1 and the
Food Court Certificate of Completion in substantially the form attached
hereto as Exhibit B-2."
4. Section 1.1 of the Original Agreement is amended to add the definition of"Food
Court Parcel" as follows:
"`Food Court Parcel' means Lot 3, Block 1, SHINGLE CREEK
CROSSING, Hennepin County, Minnesota, according to the recorded plat
thereof."
5. Section 1.1 of the Original Agreement is amended to add the definition of"Food
Court Parking and Streetscaping" as follows:
"`Food Court Parking and Streetscaping' means construction of
interior roadways, parking lots and sidewalks on or adjacent to the Food
Court Parcel, and the installation of pedestrian/street lighting and
landscaping of the Food Court Parcel to achieve a "Town Center" look, all
consistent with the Site Plan and Phasing Exhibit approved as a part of the
PUD."
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6. The definition of "Phase H Parcels" set forth in Section 1.1 of the Original
Agreement is hereby deleted in its entirety and replaced with the following:
"`Phase H Parcels' means the real property legally described in Exhibit I
hereto."
7. Section 2.2(1) of the Original Agreement is amended in its entirety to read as
follows:
"(1) The Developer expects that the construction of the Minimum
Improvements will begin on or before July 1, 2011 and, barring
Unavoidable Delays, will be substantially completed not later than
December 31, 2012 other than the "re-skinning" of the Food Court
Building, which together with the Food Court Parking and
Streetscaping, barring Unavoidable Delays, the Developer expects will be
substantially completed not later than September 30, 2013."
8. Section 4.1 of the Original Agreement is amended in its entirety to read as
follows:
"Section 4.1 Planned Unit Development. Developer has obtained City
approval of a planned unit development for the Development Property, the
Midas Parcel and the EDA Parcel (as amended from time to time, the
"PUD") and a preliminary plat and final plat of the Development Property,
the Midas Parcel and the EDA Parcel and has or is, contemporaneously
with Developer's execution of this Agreement, entering into a development
agreement (as amended from time to time, the "PUD Agreement") that
addresses planning and land use requirements."
9. Section 4.4(a) of the Original Agreement is amended in its entirety to read as
follows:
"(a) Subject to the terms and conditions of this Agreement, the
Developer will commence construction of the Minimum Improvements by
July 1, 2011 and, barring Unavoidable Delays, will cause the Minimum
Improvements to be substantially completed not later than December 31,
2012 other than the "re-skinning" of the Food Court Building, which
together with the Food Court Parking and Streetscaping, barring
Unavoidable Delays, the Developer will cause to be substantially
completed not later than September 30, 2013. The term "commence"
means the making of visible improvements, including without limitation
asbestos abatement and subsurface excavation but excluding mere surface
grading."
409919v2 JSB BR291-304 3
10. Section 4.4(b) of the Original Agreement is amended in its entirety to read as
follows:
"(b) The Developer will construct, or cause to be constructed, the
Minimum Improvements on the Development Property in substantial
conformity with the Construction Plans approved by the Authority and the
PUD. Prior to delivery of the Primary Certificate of Completion referred to
in Section 4.9 hereof, upon the request of the Authority, the Developer will
provide the Authority reasonable access to the Development Property.
Prior to delivery of the Food Court Certificate of Completion referred to in
Section 4.9 hereof, upon the request of the Authority, the Developer will
provide the Authority reasonable access to the Food Court Parcel.
"Reasonable access" means at least one site inspection per week during
regular business hours. During construction of the Minimum
Improvements, the Developer will deliver quarterly progress reports to the
Authority."
11. Section 4.9 of the Original Agreement is amended in its entirety to read as
follows:
"Section 4.9 Certificates of Completion.
(a) The Developer shall notify the Authority when the construction of
the Minimum Improvements, other than the "re-skinning" of the Food
Court Building, has been completed. The Authority shall, within 14 days
after such notification, inspect the Minimum Improvements, other than the
"re-skinning" of the Food Court Building, to determine whether those
Minimum Improvements have been constructed in substantial conformity
with the approved Construction Plans. If the Authority determines that
those Minimum Improvements have not been constructed in substantial
conformity with the approved Construction Plans, the Authority shall,
within 28 days after the Developer's notification of completion of
construction, deliver a written statement to the Developer indicating in
adequate detail the specific respects in which those Minimum
Improvements have not been constructed in substantial conformity with the
approved Construction Plans and the Developer shall promptly remedy
such deficiencies, or cause such deficiencies to be remedied. If the
Authority determines that the Minimum Improvements other than the "re-
skinning" of the Food Court Building have been constructed in substantial
conformity with the applicable approved Construction Plans, the Authority
shall furnish to the Developer a certificate of completion in the form
attached hereto as Exhibit B-1 (the "Primary Certificate of Completion")
certifying the completion of the Minimum Improvements other than the
"re-skinning" of.the Food Court Building. The Primary Certificate of
Completion issued for the Minimum Improvements other than the "re-
skinning" of the Food Court Building shall conclusively satisfy and
409919v2 JSB BR291-304 4
terminate the agreements and covenants of the Developer in this
Agreement to construct the Minimum Improvements other than the "re-
skinning" of the Food Court Building only. The issuance of the Primary
Certificate of Completion 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 Minimum Improvements nor
shall it relieve the Developer of any other obligations under this
Agreement.
(b) The Developer shall notify the Authority when the "re-skinning"
of the Food Court Building and the Food Court Parking and Streetscaping
have been completed. The Authority shall, within 14 days after such
notification, inspect the Food Court Building to determine whether the re-
skinning" and the Food Court Parking and Streetscaping have been
completed in substantial conformity with the approved Construction Plans
and PUD. If the Authority determines that the "re-skinning" and the Food
Court Parking and Streetscaping have not been completed in substantial
conformity with the approved Construction Plans and the PUD, the
Authority shall, within 28 days after the Developer's notification of
completion of construction, deliver a written statement to the Developer
indicating in adequate detail the specific respects in which the "re-
skinning" and/or the Food Court Parking and Streetscaping have not been
completed in substantial conformity with the approved Construction Plans,
and the Developer shall promptly remedy such deficiencies, or cause such
deficiencies to be remedied. If the Authority determines that the "re-
skinning" of the Food Court Building and the Food Court Parking and
Streetscaping have been completed in substantial conformity with the
applicable approved Construction Plans and the PUD, the Authority shall
furnish to the Developer a certificate of completion in the form attached
hereto as Exhibit B-2 (the "Food Court Certificate of Completion")
certifying the completion of the "re-skinning" of the Food Court Building
and the Food Court Parking and Streetscaping. The Food Court Certificate
of Completion issued for the "re-skinning" of the Food Court Building and
the Food Court Parking and Streetscaping shall conclusively satisfy and
terminate the agreements and covenants of the Developer in this
Agreement to re-skin the Food Court Building and construct the Food
Court Parking and Streetscaping only. The issuance of the Food Court
Certificate of Completion 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 Minimum Improvements nor
shall it relieve the Developer of any other obligations under this
Agreement."
12. Notwithstanding anything to the contrary set forth in the Original Agreement or
the Minimum Improvements Forgivable Loan Promissory Note, the Authority hereby determines
and agrees that the Developer has met the conditions for the deemed payment of the Minimum
409919v2 JSB BP291-304 5
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Improvements Forgivable Loan pursuant to Section 5.2(c) of the Original Agreement. The
Developer acknowledges that the Authority has delivered the cancelled Minimum Improvements
Forgivable Note and a satisfaction of mortgage with respect to the Lots 15 and 16 Mortgage.
13. Section 5.3(a) of the Original Agreement is amended in its entirety to read as
follows:
"(a) the TIF Note shall be dated, issued in a principal amount equal to
the Reimbursement Amount and delivered to the Developer when the
Developer shall have demonstrated in writing to the reasonable satisfaction 'I
of the Authority that (A) the Developer has satisfied all of the conditions
set forth in Section 5.2(c); (B) construction of the Walmart Store has been
substantially completed; (C) the Developer has substantially completed the
Minimum Improvements other than the "re-skinning" of the Food Court
Building; and (D) the Developer has submitted signed settlement
statements showing the cost of the Development Property and submitted
paid invoices for any other Eligible Costs not previously reimbursed in an
amount not less than the Reimbursement Amount."
14. Section 5.4(c) of the Original Agreement is amended in its entirety to read as
follows:
"(c) If, on or before the Additional Improvements Note Maturity Date,
the Developer (i) constructs (or, in the case of the Food Court Building,
renovates) and obtains certificates of occupancy for not less than 239,000
square feet of buildings constituting Additional Improvements on the Phase
II Parcels, and (ii) no Event of Default exists hereunder, the principal of
and interest on the Additional Improvements Forgivable Loan shall be
deemed paid in full and the Authority shall satisfy and release the Kohl's
Parcel Mortgage on such date."
15. Section 5.4(d) of the Original Agreement is amended in its entirety to read as
follows:
"(d) If, on or before the Additional Improvements Note Maturity Date,
the Developer (i) constructs (or, in the case of the Food Court Building,
renovates) and obtains certificates of occupancy for less than 239,000
square feet of buildings constituting Additional Improvements on the Phase
II Parcels, and (ii) no Event of Default exists hereunder, the principal of
and interest on the Additional Improvements Forgivable Loan shall be
deemed paid on the Additional Improvements Note Maturity Date in an
amount determined by multiplying the principal amount of the Additional
Improvements Forgivable Loan by a fraction, the numerator of which is the
square footage of Additional Improvements for which the Developer has
obtained certificates of occupancy by the Additional Improvements Note
Maturity Date and the denominator of which is 239,000. The Developer
409919v2 JSB BR291-304 6
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shall repay the remaining balance of the Additional Improvements
Forgivable Note plus accrued interest thereon on the Additional
Improvements Note Maturity Date and the Authority shall satisfy and
release the Kohl's Parcel Mortgage upon receipt of such payment."
16. The introductory clause of Section 7.1(b) of the Original Agreement is amended
in its entirety to read as follows:
"(b) Upon completion of construction of the Additional Improvements
the Developer owns and prior to the Additional Improvements Note
Maturity Date, the Developer shall maintain, or cause to be maintained, at
its cost and expense, and from time to time at the request of the Authority
shall furnish proof of the payment of premiums on, insurance as follows:"
17. Section 9.2(a) of the Original Agreement is amended in its entirety to read as
follows:
"(a) the Developer shall fail to begin construction of the Minimum
Improvements or, subject to Unavoidable Delays, to proceed with due
diligence to complete the Minimum Improvements as provided in Section
4.4, as amended, and by the dates set forth therein, or the Developer shall
default in or violate its obligations with respect to the construction of the
Minimum Improvements (including the nature thereof) and such failure,
default, or violation, shall not be cured within 30 days after written notice
to do so. Notwithstanding the foregoing, if the default reasonably requires
more than 30 days to cure, such default shall not constitute an Event of
Default, provided that the curing of the default is promptly commenced
upon receipt by the Developer of the notice of the default, and with due
diligence is thereafter continuously prosecuted to completion and is
completed within a reasonable period of time, and provided that Developer
keeps the Authority well informed at all times of its progress in curing the
default; provided in no event, other than as a result of Unavoidable Delays,
shall such additional cure period extend beyond 180 days;"
18. Section 9.4(b) of the Original Agreement is amended in its entirety to read as
follows:
"(b) Withhold the Primary Certificate of Completion for the Minimum
Improvements other than the "re-skinning" of the Food Court Building,
withhold the Food Court Certificate of Completion or withhold both the
Primary Certificate of Completion and the Food Court Certificate of
Completion."
19. Except as hereby amended, all other terms and conditions of the Original
Agreement shall remain in full force and effect.
409919v2 JSB BR291-304 7
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IN WITNESS WHEREOF, the Authority has caused this First Amendment to be duly
executed in its name and behalf and its seal to be hereunto duly affixed and the Developer has
caused this Agreement to be duly executed in its name and behalf on or as of the date first above
written.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
By
President
By
Executive Director
Signature pages to First Amendment to Development Agreement
409919v2 JSB BU91-304 S-I
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SHINGLE CREEK, LLC,
a Minnesota limited liability company
By:
Its:
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Signature pages to First Amendment to Development Agreement
409919v2 JSB BR291-304 S-2
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EXHIBIT B-1
PRIMARY CERTIFICATE OF COMPLETION
WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota,
Minnesota (the "Authority"), a body corporate and politic subdivision of the State of Minnesota
and Shingle Creek, LLC, a Delaware limited liability company (the "Developer") have entered
into a Development Agreement dated June 17, 2011 (the "Development Agreement") and filed
for record June 30, 2011, as Document Number T4868190, in the Office of the Hennepin County
Registrar of Titles; and
WHEREAS, the Development Agreement requires the Developer to construct certain
Minimum Improvements (as that term is defined in the Development Agreement);
WHEREAS, the Developer has constructed the Minimum Improvements other than the
"re-skinning" of the Food Court Building (as those term are defined in the Development
Agreement) in a manner deemed sufficient by the Authority to permit the execution of this
certification and the release of Lot 2, Block 1; Lots 4 through 17, Block 1; Lot 2, Block 2; and
Outlot A, SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according to the
recorded plat thereof, except that part formally described as Tract A, Registered Lands Survey
1649, Hennepin County, Minnesota (the "Released Property") from the terms and conditions of
the Development Agreement;
NOW, THEREFORE,this is to certify that the Developer has constructed the Minimum
Improvements other than the "re-skinning" of the Food Court Building. As a result, the
Authority hereby releases the Released Property from the terms of the Development Agreement
and the Development Agreement shall no longer run with title to the Released Property or bind
successors in title to the Released Property. It is the intention of the Authority and the Developer
that after this Primary Certificate of Completion is memorialized on the Certificates of Title to
the Released Property, the Hennepin County Registrar of Titles will omit the memorial of the
Development Agreement and the memorial of this Primary Certificate of Completion from future
certificates of title for all or any portion of the Released Property. Notwithstanding the
Authority's release of the Released Property from the terms and conditions of the Development
Agreement, the covenants and restrictions set forth in the Development Agreement remain the
personal obligation of the Developer and any successor in title to all or any portion of the
Developer Property, as defined in the Development Agreement, to whom the Developer
expressly assigns the Developer's obligations under the Development Agreement in accordance
with Section 8.2(b)(ii) of the Development Agreement.
409919v2 JSB BR291-304 B-1-1
IN WITNESS WHEREOF, the Authority has caused this Certificate of Completion to
be executed with by its duly authorized officer as of the day of 20_.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
By
President
By
Executive Director
STATE OF MINNESOTA)
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of ,
20_, by , the President and , the Executive Director
of the Economic Development Authority of Brooklyn Center, Minnesota, a municipal
corporation and politic subdivision organized and existing under the Constitution and laws of the
State of Minnesota, on behalf of said Authority.
Notary Public
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409919v2 JSB BR291-304 B-1-2
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EXHIBIT B-2
FOOD COURT CERTIFICATE OF COMPLETION
WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota,
Minnesota (the "Authority"), a body corporate and politic subdivision of the State of Minnesota
and Shingle Creek, LLC, a Delaware limited liability company (the "Developer") have entered
into a Development Agreement dated June 17, 2011 (the "Development Agreement") and filed
for record June 30, 2011, as Document Number T4868190, in the Office of the Hennepin County
Registrar of Titles; and
WHEREAS, the Development Agreement requires the Developer to "re-skin" the Food
Court Building and complete the Food Court Parking and Streetscaping (as those terms are
defined in the Development Agreement);
WHEREAS, the Developer has "re-skinned" the Food Court Building and completed the
Food Court Parking and Streetscaping (as those terms are defined in the Development
Agreement) in a manner deemed sufficient by the Authority to permit the execution of this
certification and the release of Lot 3, Block l; SHINGLE CREEK CROSSING, Hennepin
County, Minnesota according to the recorded plat thereof, except that part formally described as
Tract A, Registered Lands Survey 1649, Hennepin County, Minnesota (the "Released Property")
from the terms and conditions of the Development Agreement;
NOW, THEREFORE, this is to certify that the Developer has completed the "re-
skinning" of the Food Court Building and completed the Food Court Parking and Streetscaping.
As a result, the Authority hereby releases the Released Property from the terms of the
Development Agreement, and the Development Agreement shall no longer run with title to the
Released Property or bind successors in title to the Released Property. It is the intention of the
Authority and the Developer that after this Food Court Certificate of Completion is
memorialized under the Certificates of Title to the Released Property, the Hennepin County
Registrar of Titles will omit the memorial of the Development Agreement and the memorial of
this Food Court Certificate of Completion from future certificates of title for all or any portion of
the Released Property. Notwithstanding the Authority's release of the Released Property from
the terms and conditions of the Development Agreement, the covenants and restrictions set forth
in the Development Agreement remain the personal obligation of the Developer and any
successor in title to all or any portion of the Developer Property, as defined in the Development
Agreement, to whom the Developer expressly assigns the Developer's obligations under the
Development Agreement in accordance with Section 8.2(b)(ii) of the Development Agreement.
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409919v2 JSB BR291-304 B-1-1
IN WITNESS WHEREOF, the Authority has caused this Certificate of Completion to
be executed with by its duly authorized officer as of the day of 20_.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
By
President
By
Executive Director
STATE OF MINNESOTA)
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of ,
20_, by , the President and , the Executive Director
of the Economic Development Authority of Brooklyn Center, Minnesota, Minnesota, a
municipal corporation and politic subdivision organized and existing under the Constitution and
laws of the State of Minnesota, on behalf of said Authority.
Notary Public
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409919v2 JSB BR291-304 B-1-2
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EXHIBIT I
LEGAL DESCRIPTION OF THE PHASE II PARCELS
Lots 2 through 17, Block 1 and Lot 1, Block 2, SHINGLE CREEK CROSSING,
Hennepin County, Minnesota, according to the recorded plat thereof.
409919v2 JSB BR291-304 I-1
FIRST AMENDMENT TO
PURCHASE AGREEMENT
By and Between
ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
AND
SHINGLE CREEK,LLC
Dated as of: June 28,2011
First Amendment Dated as of: October
2012
This document was drafted by:
KENNEDY& GRAVEN, CHARTERED (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
4110 1 M JSB BR291-304
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FIRST AMENDMENT TO
PURCHASE AGREEMENT
THIS FIRST AMENDMENT, made on or as of the day of October, 2012, by and
between the ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER,
MINNESOTA, a body corporate and politic organized and existing under the laws of the State of
Minnesota (the "Authority"), and SHINGLE CREEK, LLC, a Minnesota limited liability
company(the"Developer").
WITNESSETH:
WHEREAS, the Authority and the Developer heretofore entered into a Purchase
Agreement by and between the Authority and the Developer dated June 28, 2011 (the "Original
Agreement") in connection with the purchase by the Developer from the Authority of
certain property located in the City of Brooklyn Center, Hennepin County,
Minnesota legally described as Lot 1, Block 2, SHINGLE CREEK CROSSING,
Hennepin County, Minnesota, according to the recorded plat thereof, formerly
described as Tract A Registered Land Survey Number 1430, Hennepin County,
Minnesota (the "Land"); and
WHEREAS, the Original Agreement requires closing on the acquisition of the Land no
later than June 30, 2016 and the Developer has requested that EDA extend the required closing
date to later than June 30, 2017; and
WHEREAS, THE DEVELOPER and the Authority have proposed to amend the Original
Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, the parties agree as follows:
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1. The introductory clause of Section 7 of the Original Agreement is amended in its
entirety to read as follows:
"7. Closin . The Parties must meet at the offices of Seller at 6301
Shingle Creels Parkway, Brooklyn Center, Minnesota on the date 60 days
following the Purchaser's delivery of written notice to the Seller that the
Purchaser intends to close on the purchase of the Land, or such other date
as the Parties may establish by written agreement, but in no event later than
June 30, 2017, (the "Date of Closing"), at which time:"
2. Purchaser has closed on the purchase of the Midas Property, as defined in the
Original Agreement and has demolished the automobile repair facility located on the Midas
Property as contemplated in Section 7(b)(i)(2) of the Original Agreement. Therefore, Section
7(b)(i)(2)of the Original Agreement is amended in its entirety to read as follows:
41101M JSB BR291-304
"(2) Deliver to the Seller evidence that, to the best of Purchaser's actual
knowledge, no Event of Default under the Development Agreement, dated
as of June 17, 2011, as the same may be amended from time to time,
between the Seller and the Purchaser (the "Development Agreement")
exists and remains uncured after the period allowed therein; and"
3. The introductory clause of Section 21 of the Original Agreement is amended in its
entirety to read as follows:
"21. Time. Time is of the essence for all provisions of this Agreement.
If Seller and Purchaser have not previously closed pursuant to this
Agreement, this Agreement shall terminate and have no further force or
effect after June 30, 2017."
4. Except as hereby amended, all other terms and conditions of the Original
Agreement shall remain in full force and effect.
(The remainder of this page is intentionally left blank.)
411010v1 JSB BP291-304 2
IN WITNESS WHEREOF, the Authority has caused this First Amendment to be duly
executed in its name and behalf and its seal to be hereunto duly affixed and the Developer has
caused this Agreement to be duly executed in its name and behalf on or as of the date first above
written.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN
CENTER, MINNESOTA
By
President
By
Executive Director
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Signature pages to First Amendment to Purchase Agreement
411010v1 JSB BR291-304 S-1
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SHINGLE CREEK, LLC,
a Minnesota limited liability company
By:
Its:
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Signature pages to First Amendment to Purchase Agreement
411010v1 JSB BR291-304 S-2
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EDA ITEM MEMORANDUM
DATE: May 17, 2011
TO: Curt Boganey, City Manager
FROM: Gary Eitel, Director of Business and Development
SUBJECT: Resolution Approving Development Agreement (Shingle Creek Crossing)
Recommendation:
It is recommended that the Economic Development Authority consider approval/adoption of the
Resolution Approving Development Agreement(Shingle Creek Crossing).
Background:
At the January 24, 2011 Work Session, the City Council received the following updates and
information on the proposed redevelopment of the Brookdale properties:
• Developer Frank Gatlin re-introduced the development concept and vision of
Shingle Creek Crossings to re-establish the commercial presence of this property
through the development of a Town Center development that would include a major
anchor, two or three junior retail boxes, the renovation of a portion of the mall,
several smaller retail buildings and restaurants, and streetscaping that creates the
Town Center look.
The proposal includes day-lighting of Shingle Creek and is expected to be a catalyst
for the rebranding of the city and spurring on development of neighboring
properties. He indicated that costs associated with the demolition, soil corrections,
environmental issues, and the current market conditions required him to seek
economic assistance for the portions of the project that were not related to the
proposed major anchor, WalMart.
• The city's financial consultant provided a presentation on their financial gap
analysis and conclusion that the proposed project would need some level of public
assistance to proceed given the speculative nature of the retail market and marginal
return without assistance.
• City staff presented the three components making up a potential financial assistance
project:
1. $3.3 million for public purpose costs, exclusive of WalMart related costs, to
ensure the timely redevelopment of the site and completion of the features
prioritized by the EDA.
2. A collateralized $1 million forgivable loan having a term of five years with
an interest rate of six percent to provide an incentive for the full project
completion in a reasonable time period. The loan amount would be
Mission:Ensuring an attractive,clear,safe cornmunitp that enhances the quality of life anti preserves the public crust
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EDA ITEM MEMORANDUM
available upon the execution of the Tax Increment Development Agreement
P P g
and would limit the use of these funds to eligible public purpose costs and
acquisitions, exclusive of WalMart related costs.
3. The conditions for sale of the EDA's 1.06 acre lot (former Ground Round
Restaurant site) and inclusion to the Shingle Creek Crossing PUD.
The consensus of the City Council was to move forward with the framework as presented.
On March 28, 2011, the City Council conducted a public hearing on the creation of Tax Increment
District No 5, a 16 year Renewal and Renovation District, for 8 Brookdale Mall parcels associated
with the demolition and redevelopment plans for the Shingle Creek Crossing PUD. Following a
presentation from the City's financial consultant and receiving public comments, the City Council
adopted Resolution No 2011-51, Approving a Modification to the Redevelopment Plan for
Housing Development and Redevelopment Project 1 and Establishing Tax Increment Financing
District No. 5 Therein and Approving a Tax Increment Financing Plan Therefor.
Also at the March 28th Council Work Session, the City Attorney, Jenny Boulton, reviewed the
structuring of the TIF Development Agreement for Shingle Creek Crossing. The Council was also
informed of the following changes to the PUD and project financing:
- The developer has entered into a purchase agreement to acquire the Midas Site and is
revising the PUD plans to incorporate this site into the PUD.
- The developer has agreed to the use of a Pay-As-You-Go Note in lieu of the City issuing a
G.O. Tax Increment Bond associated with the completion of the minimum improvements
of the 1St phase, which includes the internal streetscaping and daylighting of Shingle Creek.
The Financing Plan involves the use of the 2010 Minnesota Jobs Bill which would enable
an inter-fund loan of$2.4M from TIF District 2 to TIF District 5 and a $2.3 M Pay As You
Go Note from the tax increment generated by this development.
On April 12, 2011, the City Council and EDA approved a Spending Plan for Tax Increment
District 2 which enables the EDA to provide the proposed $2.4M inter-fund loan to Tax Increment
District 5.
Proposed Tax Increment Development Agreement.
The major components of this Tax Increment Agreement include the following:
Article III, Conveyance of the EDA Parcel. The conveyance of the FDA's 46,000 sq.ft. vacant lot
(formerly Boulevard Bar & Grill) is subject to the EDA approving a site plan and use for the
property and holding a public hearing on the sale of EDA owned property.
Attached for your reference is a copy of the purchase agreement which includes the provision that
the promissory note shall be deemed paid in full if the Developer has acquired the Midas property,
Tract C, RLS 1469.
Article IV, Construction of Minimum Improvements, provides for the EDA's approval of the
construction plans which are defined as:
Mission:Ensuring an attractive,clean,safe eonununity that enhances the quality of life and preserves the public trust
i
EDA ITEM MEMORANDUM
(i)the demolition of the existing Brookdale Mall, excluding the Sears department store and
the Food Court Building, the "reskinning" of the Food Court Building,
(ii)the partial day-lighting of Shingle Creek;
(iii)the construction by the Developer of the Phase I Streets and Streetscaping; and
(iv) the construction of the storm water detention and/or retention areas by the Developer
on the Development Property, all consistent with the PUD and any approved development
plans.
Section 4.8 includes that in connection with the renovation and construction of Minimum
Improvements and Additional Improvements, defined as the development of the balance of the
PUD ( 15 lots), the developer will either comply with Minnesota Prevailing Wage or contract with
construction companies headquartered in Minnesota and provide in any such contract a Workface
Plan to employ Brooklyn Center residents and unemployed and under employed citizens of north
area of Hennepin County.
Article V, Tax Increment Assistance, provides that the developer will provide Lots 15 and 16,
Block 1, (approx. 4 acres in size) as collateral for the $1.4M Forgivable Loan to the developer for
commencing the construction before July 1, 2011 and completing the Minimum Improvements on
or before December 31, 2012.
Section 5.3 addresses the issuance of a $2.3M TIF Note as part of the Pay As You Go finance plan
which is exclusively repaid by the tax increment generated from portions of this PUD that are
included within TIF 5. These funds will be used to reimburse the developer for eligible
redevelopment costs as defined in the Tax Increment District No. 5 Finance Plan.
Section 5.4 addresses the $1M Forgivable Loan, which is collateralized by a second mortgage on
the Kohl's lot. This loan, identified as the Additional Improvements Forgivable Loan, includes a
promissory note that is proportionately forgiven to the percentage of the phase II development that
are completed within 5 years as outlined in Exhibit E of the TIF Agreement.
Section 5.5, Midas property assistance identifies that the developer would receive financial
assistance of$190,000 for the acquisition of the Midas lot. The amount of financial assistance was
provides for the EDA and Developer equally sharing in the cost difference between the EDA
parcel and the Midas Site, a difference of$380,000 based on the following;
$825,000 the negotiated price of the Midas Business & Site
$445,000 an agreed value of the EDA parcel (current value of$9.67 per sq.ft.)
Section 5.7 identifies that the ERA's ability to use the Available Tax Increment, which is defined
as the 30% of TIF 5 Increment after 2-1-15 that is not pledged for repayment of the TIF Pay-As-
You-Go Note.
Section 5.8 identifies that the costs of site acquisition and site preparation of$13,060,454 exceeds
70% of the Assessor's current year's estimated market value identified as $16,980,000 and
therefore the ERA's assistance for the Development does not constitute a"business subsidy".
That before April 1, 2012, the developer is required to provide invoices for acquisition and site
preparation costs in an amount not less than$11,886,000.
Mission:Ensuring an attractive,clean,safe connnunity that enhances the quality of life and preserves the public trust
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EDA ITEM MEMORANDUM
A copy of the Development Agreement and referenced EDA Parcel purchase agreement are
included with City Council Item No. 10 (d), Resolution Approving Development Agreement
(Shingle Creek Crossing).
Budget Issues:
The Development Agreement is consistent with the EDA's approved Tax Increment District No. 5
Finance Plan and the Tax Increment District No. 2 Spending Plan(Minnesota Jobs Bill).
Council Goals:
Strategic:
2. We will aggressively proceed with implementation of City's redevelopment plans
Ongoing
5. We will improve the image of the City with citizens and others
Mission:Ensuring an attractive,clean,safe community that enhances the quality of life and preserves the public trust
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EDA Agenda Item No. 4b
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EDA ITEM MEMORANDUM
DATE: October 2, 2012
TO: Curt Boganey, City Manager
THROUGH: Gary Eitel, Business and Development Director '
SUBJECT: Consideration of Approval of Grant Applications for Contamination Cleanup of
the Former Lifetime Fitness Located at 4001 Lake Breeze Ave. in Brooklyn
Center.
Recommendation:
It is recommended that the Economic Development Authority of Brooklyn Center, Minnesota
(EDA) consider approval of the following resolutions:
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A. Resolution Authorizing the Economic Development Authority of Brooklyn Center,
Minnesota to Apply for a Contamination Cleanup Grant from the Minnesota Department
of Employment and Economic Development.
B. Resolution Authorizing the Submission of a Grant Application to the Metropolitan
Council for the Tax Base Revitalization Account.
C. Resolution Approving an Application for a Hennepin County Environmental Financial
Grant.
Background:
On October 24, 2011, the EDA adopted the following resolutions authorizing the submittal of
three grant applications for environmental cleanup to facilitate the redevelopment plans by Real
Estate-Recycling for the 8.6 acres located in the southwest quadrant of the France Avenue and
State Highway 100 Interchange:
- Resolution No. 2011-23, a Resolution Authorizing the Economic Development Authority
of Brooklyn Center, Minnesota to Apply for a Contamination Cleanup Grant from the
Minnesota Department of Employment and Economic Development.
- Resolution No. 2011-24, a Resolution Authorizing the Submission of a Grant Application
to the Metropolitan Council for the Tax Base Revitalization Account.
- Resolution No. 2011-25, a Resolution Approving an Application for a Hennepin County
Environmental Response Financial Grant.
In June, 2012, the EDA was notified that the grant applications were funded in the following
amounts and that individual grant agreements would be forth coming:
$ 740,000 from DEED'S Contamination Cleanup Grant Fund,
$ 525,000 from the Metropolitan Council's Tax Revitalization Fund, and
$ 240,000 from Hennepin County's Environmental Response Financial Grant.
During the course of the soil correction, the developer encountered additional soils
contamination that required deeper excavation, dewatering, and additional fill materials.
Mission:Ensuring an attractive,clean,safe,inchlsive community that enhances the quality of life
for all people antipreserves thepublic trust
ED A ITEM M M EMORANDUM
DEED, Metropolitan Council, and Hennepin County were informed of the additional
contaminated soils and the additional corrective actions required. The agencies advised Real
Estate Recycling to process supplementary grant applications as part of the November
Environmental Cleanup grant applications.
Braun Engineering, the soils consultant retained by Real Estate Recycling, has projected that the
additional costs are in the $200,000-$300,000 range..
Budget Issues:
There are no direct budget impacts to consider since Twin Lakes IV, INC. (Real Estate
Recycling) will provide the local match for the DEED grant and there are no local matches
required for the Metropolitan Council Tax Base Revitalization Account or the Hennepin County
Environmental Response Financial Grant.
The indirect budget impact will be staff time necessary to process reimbursement payment
requests to Twin Lakes IV, INC. (Real Estate Recycling) for eligible grant related work and
maintaining the required financial records.
Council Goals:
Strategic:
1. We will proceed aggressively with implementation of City's redevelopment plans
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Mission:Ensuring an attractive,clean,safe,inclusive community that enhances the quality of life
for all people and preserves the public trust
Commissioner introduced the following resolution and moved
its adoption:
EDA RESOLUTION NO.
RESOLUTION AUTHORIZING THE ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER, MINNESOTA TO APPLY FOR A
CONTAMINATION CLEANUP GRANT FROM THE MINNESOTA
DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT
(LIFETIME FITNESS SITE)
WHEREAS, Real Estate Recycling has entered into a purchase agreement to the
acquire the 7.9 acres located at 4001 Lakebreeze Avenue,known as the Lifetime Fitness Site/former
Northwest Racquet Club (the Site); and
WHEREAS,the initial soil testing and environment investigations have discovered
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chemicals which exceed the MPCA standards setup for the cleanup for the former Joslyn site which
was located north of this property; and
WHEREAS,the Economic Development Authority of Brooklyn Center,Minnesota
(EDA) believes it is in the best interest of the City of Brooklyn Center to encourage the
environmental cleanup and redevelopment of the Site; and
WHEREAS,the EDA desires to facilitate the cleanup and redevelopment of the Site
by Real Estate Recylcing; and
WHEREAS,the redevelopment of the Site meets the redevelopment objectives of the
City's modified redevelopment plan (The "Redevelopment Plan") for Housing Development and
Redevelopment Project No. 1 (The "Redevelopment Project Area") as adopted on December 19,
1994 by the EDA; and
WHEREAS,the EDA has the legal authority to apply for financial assistance,and the
institutional, managerial and financial capability to insure adequate project administration.
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NOW,THEREFORE,BE IT RESOLVED by the Economic Development Authority
of Brooklyn Center, Minnesota as follows:
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• The EDA approves the contamination cleanup grant application submitted to
the Department of Employment and Economic Development on November 1,
2011 by the EDA for the Lifetime Fitness site.
• The EDA is authorized to act as the legal sponsor for Project(s)contained in
the Contamination Cleanup Grant Program to be submitted on November 1,
2011 and that the EDA Executive Director is hereby authorized to apply to
the Department of Employment and Economic Development for funding of
this project on behalf of the EDA.
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• The EDA has the legal authority to apply for financial assistance and the
institutional, managerial and financial capability to insure adequate project
administration.
• The sources and amounts of the local match identified in the application are
committed to the Project identified.
• The EDA has not violated any federal,state or local laws pertaining to fraud,
bribery, graft, kickbacks, collusion, conflict of interest or other unlawful
corrupt practices.
• Upon approval of its application by the State, the EDA may enter into an
agreement with the State of Minnesota for the above referenced Project(s)
and that the EDA certifies that it will comply with all applicable laws and
regulations as stated in all contract agreements.
• The EDA Executive Director is hereby authorized to execute such
agreements as are necessary to implement the project on behalf of the
applicant.
October 8, 2012
Date President
The motion for the adoption of the foregoing resolution was duly seconded by commissioner
and upon vote being taken thereon,the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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Commissioner introduced the following resolution and moved
its adoption:
EDA RESOLUTION NO.
RESOLUTION AUTHORIZING THE SUBMISSION OF A GRANT
APPLICATION TO THE METROPOLITAN COUNCIL FOR THE TAX BASE
REVITALIZATION ACCOUNT(LIFETIME FITNESS SITE)
WHEREAS,The City of Brooklyn Center is a participant in the Livable Communities
Acts Local Housing Incentives Account Program for 2010 as determined by the Metropolitan
Council, and is therefore eligible to make application for funds under the Tax Base Revitalization
Account; and
WHEREAS,Real Estate Recycling has entered into a purchase agreement to acquire
the Lifetime Fitness Site,former Northwest Racquet Club,located at 4001 Lakebreeze Avenue(the
Site) and in their initial soil testing and environmental investigation have discovered chemicals
which exceed the MPCA standards established for the cleanup of the former Joslyn site which lies
north; and
WHEREAS, the environmental investigation and development of a development
response action plan for the redevelopment of this 7.9 acre site meets the Tax Base Revitalization
Account's purpose and criteria; and
WHEREAS,the Economic Development Authority of Brooklyn Center,Minnesota
(EDA)has the institutional,managerial and financial capability to insure adequate project and grant
administration; and
WHEREAS, the EDA certifies that it will comply with all applicable laws and
regulations as-stated in the contract grant agreements; and
WHEREAS,the EDA finds that the required contamination investigation and cleanup
will not occur through private or other public investment within the reasonable foreseeable future
without Tax Base Revitalization Account grant funding; and
WHEREAS, the EDA represents that it has undertaken reasonable and good faith
efforts to procure funding for the activities for which Livable Communities Act Tax Base
Revitalization Account funding is sought but was not able to find or secure from other sources
funding that is necessary for cleanup completion and states that this representation is based on the
following reasons and supporting facts: .
• No local funds are available to fund the proposed investigation and/or cleanup activities,
including General Fund and Special Revenue Funds of the City and/or EDA.
• Proposed cleanup activities at the Site do not qualify for Minnesota Petrofund funding.
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• The Site is not located within an existing Tax Increment District.
NOW THEREFORE BE IT RESOLVED by the Economic Development Authority of
Brooklyn Center, Minnesota that it acknowledges it will be the grantee and agrees to act as legal
sponsor administer and be responsible for grant funds expended for the project contained in the Tax
Base Revitalization grant application submitted on November 1, 2012; and
BE IT FURTHER RESOLVED that the EDA Executive Director is hereby authorized
to apply to the Metropolitan Council for this funding on behalf of the Economic Development
Authority for Brooklyn Center, Minnesota and to execute such agreements as are necessary to
implement the Project on behalf of the applicant.
October 8 2012
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.
Commissioner introduced the following resolution and
moved its adoption:
EDA RESOLUTION NO.
RESOLUTION APPROVING AN APPLICATION FOR A HENNEPIN
COUNTY ENVIRONMENTAL FINANCIAL GRANT(Lifetime Fitness Site)
WHEREAS, an application requesting grant funds from the Hennepin County
Department of Environmental Services has been prepared for submission by the Economic
Development Authority of Brooklyn Center, Minnesota(EDA); and
WHEREAS, the grant funds will be used for environmental cleanup of the former
Lifetime Fitness Site
NOW,THEREFORE,BE IT RESOLVED by the Economic Development Authority
of Brooklyn Center, Minnesota (EDA) that the EDA supports the Environmental Financial Grant
Application submitted to the Hennepin County Department of Environmental Services on November
1, 2012, by the EDA for the former Lifetime Fitness Site located at 4001 Lakebreeze Avenue in
Brooklyn Center.
October 8, 2012
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. 4c
EDA ITEM MEMORANDUM
DATE: October 8, 2012
TO: Curt Boganey, City Manager
FROM: Vickie Schleuning,VOsistant City Manager/Director of Building and Community
Standards Department
SUBJECT: Resolution Approving the First Look Program Acquisition Agreement with the
Twin Cities Community Land Bank LLC for NSP 3
Recommendation:
It is recommended that the Economic Development Authority consider adoption of the
Resolution Approving the First Look Program Acquisition Agreement with the Twin Cities
Community Lank Bank LLC for the purchase of NSP 3 properties.
Background:
This agreement will allow the City the option to express interest and purchase NSP 3 eligible
properties listed through the Twins Cities Community Land Bank LLC as part of the First Look
Program. While this agreement does not require the City to purchase properties through the First
Look Program, it does provide an opportunity to use this program for purchase of eligible
properties where beneficial. Currently the City uses traditional property search resources such as
MLS listings in order to find properties that may be eligible for the program.
According to U.S. Department of Housing and Urban Development guidelines,the City must
enter into an agreement with the Twin Cities Community Land Bank prior to the acquisition of
eligible properties in the First Look Program in order for the properties purchased by the City or
its agent, Greater Minneapolis Housing Authority, to retain their eligibility for NSP 3 Funds.
The First Look Program
The First Look Program allows the purchase of vacant and foreclosed homes before they are
publicly listed through traditional REO procedures. Prices are calculated on a discount formula
based on cost savings experienced by the lender, avoiding certain holding and transaction costs.
The price also talces into account the need for below market pricing to enable purchasers to
sustainably renovate houses. TCC Land Bank also has relationships with lenders, credit unions,
holding companies,property management companies, and receivers through which additional
properties are available.
Overview of the Twins Cities Community Land Bank LLC
In 2009 the Family Housing Fund formed the nonprofit limited liability company, Twin Cities
Community Land Bank LLC ("TCC Land Bank"), as a strategic tool for government,
neighborhood organizations, community development corporations, and nonprofit and for-profit
developers to further community-based economic development and affordable housing goals.
Mission:Ensuring an attractive,decor,safe,inclusive community that entrances the quality of life
for all people and preserves the public trust
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EDA ITEM MEMORANDUM
Budget Issues:
There are no budget issues to consider.
Council Goals:
Strategic:
2. We will stabilize and improve residential neighborhoods
Ongoing:
1. We will provide streamlined, cost effective, duality services with limited resources
Attachments:
Attachment I- Resolution Approving Agreement
Attachment II— First Look Program Acquisition Agreement with Exhibits
Attachment III— Memorandum of Understanding with National Community Stabilization Trust
(NCST) and Program Guidelines
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Mission:Ensuring an attractive,clean,safe,inclusive community that enhances the quality of life
for all people and preserves the public trust
Attachment I—Resolution
Commissioner introduced the following resolution and moved its
adoption:
EDA RESOLUTION NO.
ECONOMIC DEVELOPMENT AUTHORITY OF
THE CITY OF BROOKLYN CENTER
COUNTY OF HENNEPIN
STATE OF MINNESOTA
RESOLUTION APPROVING AN NSP 3 FIRST LOOK
PROGRAM ACQUISITION AGREEMENT
BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic
Development Authority of the City of Brooklyn Center("Authority") as follows:
WHEREAS, The City of Brooklyn Center ("City") was the sub-recipient of
Neighborhood Stabilization Program III ("NSP 3") funds from Hennepin County ("County") for
use within certain approved areas within the City of Brooklyn Center. The City authorized the
Authority to act on its behalf to implement the terms of the sub-recipient agreement with the
County and to award NSP 3 program funds to certain developers ("NSP 3 Developers") for the
purposes of purchasing and redeveloping properties that have been demolished or are vacant
("Category E Properties"); and
WHEREAS, The Twin Cities Community Land Bank, a Minnesota nonprofit organization
("TCCLB") and the Authority are parties working with the National Community Stabilization Trust
LLC, a Delaware limited liability company("NCST"),which allows the TCCLB to purchase NSP 3
Category E Properties through NCST prior to these properties being placed on the open market
in order to facilitate a significant purchase price adjustment for the benefit of the TCCLB ("First
Look Program"). Upon the direction of the Authority, TCCLB intends to purchase certain
properties and offer them for sale to the Authority and to the NSP 3 Developers; and
WHEREAS, The TCCLB and the Authority desire to enter into a First Look Program
Acquisition Agreement to satisfy the requirements in 24 CFR 570.203 and the U.S. Department
of Housing and Urban Development's Guidance issued on April 23, 2009 titled "Guidance on
NSP-Eligible Acquisition and Rehabilitation Activities" that clarifies the use of intermediaries
for acquisitions under NSP. Pursuant to this HUD Guidance, the Authority must enter into an
agreement with the TCCLB, an intermediary, prior to the acquisition of eligible properties by the
TCCLB in order for the properties purchased by the Authority or NSP 3 Developers retain their
eligibility for NSP 3 Funds; and
WHEREAS, The Greater Metropolitan Housing Corporation ("GMHC") was among the
companies that submitted applications to participate in the Authority's program to utilize NSP 3
it
Funds and was identified by the Authority as the best suited to meet the Authority's policy
objectives and program goals, and as such is an NSP 3 Developer for the Authority; and
WHEREAS, The Authority proposes to enter into a First Look Program Acquisition
Agreement with TCCLB (the "NSP 3 Acquisition Agreement' and
Authority Approval,Further Proceedings.
WHEREAS, The Amendment and the NSP 3 Acquisition Agreement as presented to the Board
are hereby in all respects approved, subject to modifications that do not alter the substance of the
transaction and that are approved by the City Attorney and the Executive Director of the Authority;
provided that execution of the NSP 3 Acquisition Agreement by the President and the Executive
Director shall be conclusive evidence of approval; and
NOW, THEREFORE,BE IT RESOLVED by the Economic Development
Authority in and for the City of Brooklyn Center,
The Amendment and the NSP 3 Developer Agreement as presented to the Board are
hereby in all respects approved, subject to modifications that do not alter the substance of the
transaction and that are approved by the City Attorney and the Executive Director of the Authority;
provided that execution of the Amendment and the NSP 3 Developer Agreement by the President
and the Executive Director shall be conclusive evidence of approval; and
The President and the Executive Director are hereby authorized to execute the Amendment
and the NSP 3 Developer Agreement on behalf of the Authority and to carry out on behalf of the
Authority's obligations thereunder.
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Brooklyn Center this 8 day of October,2012.
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.
ATTEST:
Secretary
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Attachment II—First Look Program Acquisition Agreement
FIRST LOOK PROGRAM
ACQUISITION AGREEMENT
(NSP 3)
THIS FIRST LOOK PROGRAM ACQUISITION AGREEMENT ("Agreement") is
made as of this eight day of October, 2012 ("Effective Date"), by and between the Twin Cities
Community Land Bank LLC, a Minnesota nonprofit limited liability company ("TCC Land
Bank"), and the Economic Development Authority of the City of Brooklyn Center, a public
body corporate and politic under the laws of the State of Minnesota, having its principal office at
6301 Shingle Creek Parkway, Brooklyn Center, Minnesota("EDA").
RECITALS
A. Title III of Division B of the Housing and Economic Recovery Act of 2008 (Pub. L 110-
289, 1222 Stat. 2654 enacted July 30, 2008), ("HERA"), as amended, and an additional
allocation of funds provided under Section 1497 of the Wall Street Reform and
Consumer Protection Act of 2010 (Pub. L. 111-203, approved July 21, 2010) (the"Dodd-
Frank Act") for additional assistance in accordance with the second undesignated
paragraph under the heading "Community Planning and Development - Community
Development Fund" in Title XII of Division A of the American Recovery and
Reinvestment Act of 2009 (Pub. L. 111-5, approved February 17, 2009) (the "Recovery
Act" and collectively, the "Act") makes available to qualified entities certain qualified
grant funds termed Neighborhood Stabilization Program funds ("NSP 3 Funds") under
the CDBG Neighborhood Stabilization Program 3 ("NSP 3").
B. Hennepin County ("County") received a grant of NSP 3 Funds directly from the United
States Department of Housing and Urban Development ("HUD") and as a recipient of
funds the State of Minnesota Housing Finance Agency ("MHFA") received directly from
HUD,both under the Act.
C. The City of Brooklyn Center ("City") is the sub-recipient of NSP funds from County in
the amount of$1,177,750 ("NSP 3 Award") for use within certain approved areas of the
City ("NSP 3 Eligible Area")plus $25,000 for administrative expenses, as set forth in the
City's agreement with County for the NSP Sub-Recipient Grant approved by the
Hennepin County Board of Commissioners on April 26, 2011, pursuant to County
Resolution 11-0153 and City Resolution 2011-108 ("Subrecipient Agreement").
D. City authorized EDA to act on its behalf to implement the CDBG Neighborhood
Stabilization Program under the terms of the Subrecipient Agreement (City Resolution
2010-32). EDA agreed to undertake City's duties under the Subrecipient Agreement
(EDA Resolution 2010-02).
E. EDA has awarded and/or will award the NSP 3 Award to certain developers ("NSP 3
Developers") under its Foreclosure Recovery Program for the purposes of purchasing and
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redeveloping properties that have been demolished or are vacant ("Category E
Properties"), which constitute an eligible use of NSP 3 Funds pursuant to § 2301(c)(3)(E)
of the Act("Eligible Use Category E").
F. EDA also is undertaking to establish financing mechanisms for the purchase and
redevelopment of foreclosed upon property, which constitute an eligible use of NSP 3
Funds pursuant to § 23 01(c)(3)(A) of the Act.
G. Under NSP 3, properties must have been foreclosed upon to qualify for NSP 3 assistance
under the Act and must have been abandoned or foreclosed upon to qualify for NSP 3
assistance under the Act. Category E Properties shall be individually referred to as an
"Eligible Property" and collectively referred to as "Eligible Properties".
H. On April 23, 2009, HUD issued a document titled "Guidance on NSP 3-Eligible
Acquisition and Rehabilitation Activities" that clarifies the use of intermediaries for
acquisitions under NSP 3 (the"HUD Guidance").
I. The parties shall be working with the National Community Stabilization Trust LLC, a
Delaware limited liability company ("NCST"), and participating sellers under a program
called "First Look" ("First Look Program") which allows TCC Land Bank to purchase
Eligible Properties prior to such Eligible Properties being placed on the open market
using standardized transaction formats. and pricing models to facilitate a significant
purchase price adjustment for the benefit of TCC Land Bank.
J. TCC Land Bank has signed a Memorandum of Understanding dated September 1, 2009
("NCST MOU") with NCST and has agreed to the Acquisition Program Guidelines
issued by NCST,which is attached to this Agreement as Exhibit A.
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K. TCC Land Bank intends to offer for sale certain Eligible Properties it acquires pursuant to
the First Look Program to EDA and NSP 3 Developers, among others, and to retain
certain Eligible Properties it acquires pursuant to the First Look Program for its own
acquisition and rehabilitation program.
L. The purpose of this Agreement is to satisfy the requirements in 24 CFR 570.203 and the
HUD Guidance so that Eligible Properties acquired by TCC Land Bank and purchased by
EDA or NSP 3 Developers retain their eligibility for NSP 3 Funds.
M. Capitalized terns used and not defined in this Agreement shall have the meaning set forth
in that certain NSP 1 Notice published in the Federal Register on October 6, 2008.
AGREEMENT
1. Scope of Work. EDA hereby designates TCC Land Bank as an NSP 3 Subrecipient to
carry out acquisition of Eligible Properties through the First Look Program and in
accordance with the terms and conditions of this Agreement.
2. Term. This Agreement will be effective as of the Effective Date and terminate on
December 31,2014. J
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3. Eligible Areas. The maps attached to this Agreement as Exhibit B identify the areas
determined by EDA to be EDA's areas of greatest need.
4. Other Criteria. EDA shall provide TCC Land Bank with its criteria for Eligible
Properties it would like TCC Land Bank to acquire under the First Look Program and
offer to EDA for rehabilitation under the Foreclosure Recovery Program, such as
location, quality, price and level of needed repairs. It is intended that each of NSP 3
Developers shall provide TCC Land Bank with its criteria for Eligible Properties it would
like TCC Land Bank to acquire under the First Look Program and offer to NSP 3
Developers under the Foreclosure Recovery Program, such as location, quality, price and
level of needed repairs.
5. Timing. Any properties acquired by TCC Land Bank prior to the Effective Date of this
Agreement("Prior Acquired Properties")may be eligible for rehabilitation under Eligible
Use Category E if HUD grants an exception pursuant to HUD Guidance.
6. URA. TCC Land Bank will cause each NSP 3 Developer to comply with applicable
acquisition and relocation requirements in the Uniform Relocation Act ("URA") and
implementing regulations at 49 CFR Part 24, including, without limitation, the voluntary
acquisition provisions at 49 CFR 24.101(b)(1). Among other things, the URA and 49
CFR Part 24 require TCC Land Bank to document delivery of an informational notice in
substantially the form attached to this Agreement as Exhibit C (HUD Guideform: NSP
Voluntary Acquisition of Foreclosed Property) to each property owner. TCC Land Bank
will acquire only unoccupied properties under the NCST Program and shall certify that
its acquisition of any Eligible Property did not cause a tenant displacement (as described
in the URA). Further, with respect to any property foreclosed after February 17, 2009,
TCC Land Bank must obtain certification from the foreclosing lender that it complied
with the new tenant protections in the American Recovery and Reinvestment Act of 2009
and the Protecting Tenants at Foreclosure Act of 2009 in the form attached as Exhibit D
("PTFA Certification").
7. Purchase Discount. TCC Land Bank shall cause each NSP 3 Developer to obtain a URA-
compliant appraisal (49 CFR 24.103) dated within sixty (60) days before the final offer,
which under the NCST MOU is the date of closing of any applicable Eligible Property,
and obtain a discount from the Current Market Appraised Value for each Eligible
Property of at least one percent (1%). If the anticipated value of the Eligible Property is
$25,000 or less and the acquisition is voluntary, review of available data by a person
qualified to make the valuation may be substituted for an appraisal.
8. Environmental Review. Prior to a commitment of NSP 3 funds or "choice-limiting
action" as described in the environmental regulations at 24 CFR Part 58, EDA will
undertake the appropriate environmental review procedures and documentation.
9. Activity Delivery Costs. TCC Land Bank may incur staff and overhead costs directly
related to carrying out the acquisition activities under this Agreement. Such costs may
include but are not limited to the cost of surveys, appraisals, preparation of legal
documents, recording fees and temporarily managing Eligible Properties ("Activity
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Delivery Costs"), provided such costs are necessary and reasonable and otherwise
conform with OMB Circular A-122 Cost Principles for Nonprofit Organizations.
10. Distribution. It is the intent of the parties that Eligible Properties acquired pursuant to
this Agreement will retain their Foreclosed status through any subsequent sales or
transfers to EDA and/or NSP 3 Developers. TCC Land Bank will follow the procedures
attached to this Agreement as Exhibit E (Acquisition Process) and offer the Eligible
Properties in the following manner:
(a) To EDA
(i) Purpose - Eligible Use Category E;
(ii) Eligible Areas -Exhibit B, depending on source of funds;
(iii) Sale Price - Pass through cost of acquisition by TCC Land Bank of the
Eligible Property plus a $1,500.00 transaction fee per Eligible Property,
plus all actual out-of-pocket Activity Delivery Costs incurred by TCC
Land Bank in connection with TCC Land Bank's acquisition and closing
of the purchase of the Eligible Property under the First Look Program;
(iv) Priority - TCC Land Bank will give EDA first priority in the selection of
Eligible Properties off each First Look Program property list provided to
TCC Land Bank for acquisition; and
(v) Purchase Agreement - EDA and TCC Land Bank will enter into a
purchase agreement in substantially the form attached to this Agreement
as Exhibit F (Form Purchase Agreement) for each Eligible Property or
group of Eligible Properties that EDA, from time to time, agrees to acquire
from TCC Land Bank under this Agreement.
(b) To NSP 3 Developers:
(i) Purpose-Eligible Use Category E;
(ii) Eligible Areas -Exhibit B, depending on source of funds;
(iii) Sale Price - Pass through cost of acquisition by TCC Land Bank of the
Eligible Property plus a $1,500.00 transaction fee per Eligible Property
and all actual out-of-pocket Activity Delivery Costs incurred by TCC
Land Bank in connection with TCC Land Bank's acquisition and closing
of the purchase of the Eligible Property under the First Look Program;
(iv) Priority - TCC Land Bank will give NSP 3 Developers who are acquiring
properties from TCC Land Bank for purposes of rehabilitation under the
Foreclosure Recovery Program second priority in the selection of Eligible
Properties off each First Look Program property list provided to TCC
Land Bank for acquisition. If more than one NSP 3 Developer wants to
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acquire or TCC Land Bank desires to retain an Eligible Property, a lottery
system will be used to determine which NSP 3 Developer shall acquire
such Eligible Property or if TCC Land Bank shall retain such Eligible
Property; and
(v) Purchase Agreement - TCC Land Bank shall enter into a purchase
agreement with NSP 3 Developer in substantially the form of the Form
Purchase Agreement for each Eligible Property or group of Eligible
Properties that NSP 3 Developers, from time to time, agree to acquire
from TCC Land Bank.
11. Documentation. TCC Land Bank shall maintain the following records and reports
relating to each Eligible Property acquired pursuant to this Agreement: (a) appraisal, (b)
NSP 3 informational notice offer letter, (c) PTFA Certification, (d) NSP 3 Developer
Access and Indemnity Agreement, (e) environmental reports, (f) purchase agreement, (g)
settlement statement, and (h) deed document number/filing information. TCC Land Bank
shall submit copies of the foregoing documentation, except the NSP 3 Developer Access
and Indemnity Agreement, to EDA with respect to any Eligible Property transferred to
EDA pursuant to this Agreement.
12. Program Income. The parties do not anticipate that TCC Land Bank will receive any
"program income," as defined in 24 CFR 570.500, in connection with the transactions
contemplated by this Agreement. However, if TCC Land Bank ever receives land sale
proceeds in excess of its acquisition costs, including any Activity Delivery Costs, TCC
Land Bank may retain the program income, subject to 24 CFR 570.503 and 570.504.
13. Uniform Administrative Requirements. TCC Land Bank shall comply with all applicable
uniform administrative requirements described at 24 CFR 570.502.
14. Other Program Requirements. TCC Land Bank shall carry out the acquisition activities
under this Agreement in compliance with all federal laws and regulations described at 24
CFR Part 570, subpart K. Notwithstanding anything to the contrary contained herein,
TCC Land Bank expressly does not assume EDA's environmental responsibilities
described in 24 CFR 570.604, and (ii) TCC Land Bank expressly does not assume EDA's
responsibility for initiating the review process under the provisions of 24 CFR Part 52.
TCC Land Bank shall execute the Certification Regarding Lobbying and Certification
Regarding Debarment attached as Exhibit G in conjunction with the execution of this
Agreement.
15. Suspension and. Termination. In accordance with 24 CFR 85.43, suspension or
termination of this Agreement.may occur if TCC Land Bank materially fails to comply
with any term of this Agreement, after notice and the opportunity to cure, and this
Agreement may be terminated for convenience in accordance with 24 CFR 85.44.
16. Reversion of Assets. Upon the expiration or earlier termination of this Agreement, TCC
Land Bank shall transfer to EDA all NSP 3 Awards in TCC Land Bank's control or
possession, if any, and any accounts receivable attributable to the use of NSP 3 Award.
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EXHIBIT C
GUIDEFORM
-NSP VOLUNTARY ACQUISITION OF FORECLOSED PROPERTY-
-Informational Notice-
(Agencies/Persons without Eminent Domain Authority)
Grantee or Agency Letterhead
with a presumption of acquiring only vacant properties
Note to users of this form: If a buyer is negotiating for the purchase of non-
foreclosed, vacant or abandoned properties—also eligible for purchase in NSP
programs—references to foreclosed properties and discounts should be amended.The
HUD form from which this form was adapted can be found at:
http://www.hud/gov/offices/cpd/library/relocation/nsp/ df/nspnoeminent.pdf
A different form must be used in the rare event of a buyer using eminent domain
authority.This form can be found at
http://www.hud.gov/offices/cpd/library/relocation/nsp//pdf/nsl2witheminent.pdf
[DATE]
Dear
Twin Cities Community Land Bank is interested in acquiring property you own at
for a proposed project which may receive funding
assistance from the U.S. Department of Housing and Urban Development (HUD) under the Neighborhood
Stabilization Program(NSP).
Please be advised that Twin Cities Community Land Bank does not have authority to acquire your property by
eminent domain.In the event we cannot reach an amicable agreement for the purchase of your property,we will not
pursue this proposed acquisition.
The subject property is listed for purchase at$ We currently believe$ to be the price
we will pay for the property.
Under the NSP, we are required to purchase foreclosed property at a discount from its current market appraised
value.Depending on the results of our appraisal, our purchase offer may differ fi-om the amounts noted above.
Please contact us at your convenience if you are interested in selling your property. Please note that we are
interested only in acquiring vacant properties,because we do not wish to displace tenants nor take on responsibilities
for complying with the Uniform Relocation Assistance and Real Property Acquisition Policies Act(URA).URA can
apply to our acquisitions because we intend to use federal NSP funds.
In accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA), owner-
occupants who move as a result of a voluntary acquisition are not eligible for relocation assistance. However, a
tenant-occupant who moves as a result of a voluntary acquisition for a federally-assisted project may be eligible for
relocation assistance. Such displaced persons may include not only current lawful occupants,but also former tenants
required to move for any reason other than an eviction for cause in accordance with applicable federal, state, and
local law. If your property is currently tenant-occupied,we need to know immediately,because we have no interest
in purchasing occupied properties. Further, you should not order current occupant(s) to move, or fail to renew a
lease,in order to sell the property to us as vacant.
If you have any questions about this notice or the proposed project,please contact: Rebecca L.Rom,President, 615
First Avenue NE, Suite 410,Minneapolis,Minnesota 55413,(612)238-8213.
Exhibit C-1
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NOTES to NSP Voluntary Acquisition Notice(Agency/person without Eminent Domain authority).
1. The case file must indicate the manner in which this notice was delivered (e.g., certified mail, return receipt
requested)and the date of delivery. (See 49 CFR 24.5 and Paragraph 2-3 J of Handbook 1378)
2. Tenant-occupants displaced as a result of a voluntary acquisition may be entitled to URA relocation assistance
and must be so informed per 49 CFR 24.2(a)(15)(iv) — Initiation of negotiations, and 49 CFR 24 Appendix A -
24.2(a)(15)(iv).
3. See 49 CFR 24.206 regarding eviction for cause.
4. This guideform may only be used if all of the requirements of 49 CFR 24101(b)(2)(i) and (ii) or 49 CFR
24.101(b)(3)are met.
5.This is a guideform.It should be revised to reflect the circumstances
Exhibit C-2
TEXT BELOW SHOWN FOR REFERENCE BUT SHOULD BE DELETED FOR THE
FINAL CERTIFICATION FORM
NOTES TO SELLER'S OCCUPANCY CERTIFICATION UNDER
THE PROTECTING TENANTS AT FORECLOSURE ACT
1. A bona fide tenant is a tenant under a bona fide lease. A"bona fide"lease is considered
a bona fide lease only if:
(a) the mortgagor(or the child, spouse, or parent of the mortgagor)under the contract
(lease) is not the tenant;
(b) the lease or tenancy was the result of an aims-length transaction; and
(c) the lease or tenancy requires the receipt of rent that is not substantially less than
fair market rent for the property or the unit's rent is reduced or subsidized due to a
Federal, State, or local subsidy. PTFA Section 702(b) (Note the Bridge Notice
provides for a slightly different definition at 1 (a)).
2. Generally, the PTFA requires that the initial successor in interest (typically the Seller)
provide a 90-day notice to vacate to a bona fide tenant of the foreclosed property j
acquired by the successor in interest. If the tenant has an existing bona fide lease, the
tenant may occupy the premises until the remaining term of the lease or 90 days after
receipt of the 90-day notice,whichever is longer. However,the successor in interest may
terminate the tenant's lease (even a lease for a greater remaining term than 90 days) if the
successor in interest sells the unit to a purchaser who will occupy the unit as a primary
residence, and the successor in interest provides 90-day notice to the tenant. PTFA
Section 702 (a)(2).
3. Notice given under the PTFA is notice given as required by state law.
4. The effective date of the requirements of PTFA are May 20, 2009, however the original
requirements for protection of tenants was found in the so called Stimulus Bill("ARRA")
which had an effective date of February 17, 2009.
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Exhibit D-2
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EXHIBIT E
ACQUISITION PROCESS
Brooklyn Center NSP 3 Development Partner Acquisitions for NSP 3 Program
with Twin Cities Community Land Bank as Intermediate Buyer
Step NCST
No. Timeline
1. Foreclosure redemption period ends. Over the next 2-4 weeks, Lender-Owner ensures house is vacant Day 1
and secured. No properly should be purchased if a bona fide tenant will be displaced as a direct result of
acquisition for an NSP-assisted activity. Lender must certify compliance with tenant protections under
ARRA. 24 CFR 42.305 -42.350,42 USC 5304(d),49 CFR 24.2(a)(15)
2. Lender e-mails the foreclosed property addresses to NCST. NCST provides list of properties in zip
codes identified by the buyer in REO Match.Each developer has been assigned a login and password for
REO Match.
3. Developers must indicate interest in inspecting the property within 24 hours from the time a new
property is listed in REO Match.
( 5 days
4. Developer coordinates access to the property through Lender's REO Manager/Agent listed in REO
Match.
y
5. After inspection, but within 5 business days of date property is posted, the interested Developer is
required to return to REO Match and indicate if it wants to receive pricing for each inspected property.
6. NOTE: Developers are responsible for final verification that properties selected for pricing are within
NSP 3 eligible areas or will qualify for any other development programs for which they currently have
funding.
7. Lender obtains FMV estimate and makes appropriate adjustments to equal Lenders Adjusted Price. Day 6
NCST posts Lender's Adjusted Price to REO Match.
8. Each Developer has 24 hours from the time pricing is posted to accept pricing. In the event more than 1 Day 7
Developer is interested in a property, priority will be as follows: 1) Brooklyn Center Building and
Community Standards Department 2)Nonprofit developers 3)Private developers 4)Nonprofit developer
buying for a Private developer. If more than one Developer in any category is interested in a property. A
lottery system will be used to determine what order the development partners will be given priority in
purchasing the property. Developer must also send an email to inf6mnpls@tcclandbank.org to confirm
acceptance of pricing. This email is binding.
9. At the time of e-mail acceptance of Lender/seller's price, Developer sends assignment to the appraiser, Day 8
along with a URA scope of work(An appraisal is needed even if the parcel will be donated.But note: If
the anticipated value does not exceed $25,000,review of available data by a person qualified to make
the valuation may be substituted for an appraisal. If Lender already has a URA appraisal meeting NSP
requirements, another appraisal is not required so long as the NCST Purchase Agreement will be signed
within 60 days from the Lender's appraisal date.)
Exhibit E
Step NCST
No. Timeline
10. At the time of e-mail acceptance of Lender/seller's price, Developer is responsible for completing the
NSP Initial Property Set-up form and submitting it to Tonja West-Hafner at tonia.k.west-
hafner@hennepin.co.mn.us (cc: Jesse Anderson at jandeison @ci.brooklyn-center.mn.us). Ms. West-
Hafner will order the appraisal,environmental review,and lead paint inspection(pre-1978 homes).
11. Developer receives and reviews URA appraisal and determines whether or not to buy property at
Lender's Adjusted Price which cannot exceed URA appraisal value less (minimum) 1 percent discount.
If approval from State Historic Preservation Office staff has not been received at this point, offer must
be conditional.
12. TCCLB receives executed NCST Purchase Agreement and signed Seller's Occupancy Certificate from Day 10
Lender.
13. At the time of e-mail acceptance of Lender/seller's price, TCCLB obtains title work and verifies that
Lender will pass marketable title. Developer to send earnest money to Land Title within 1 business day
TCCLB schedules concurrent purchase and resale closings with Title Company. Title Company sends
confirmation closings are scheduled to all parties.
14. TCCLB processes resale purchase agreement and forwards to Developer for review and signature.
15. Lender and Land Title prepare NCST closing package. TCCLB and Land Title prepare resale closing Day 18
package.
16. Upon verification of receipt of all required documentation, including SHPO approvals, scheduled
closing date is confirmed with Title Company and TCCLB and Developer proceed to purchase and
resale closings.
17. Upon verification of receipt of all required documentation, including SHPO approvals, scheduled Day 20
closing date is confirmed with Title Company and TCCLB and Developer proceed to purchase and
resale closings.
18. Developer now owns selected property. Day 30
DEFINITIONS OF ABBREVIATIONS
FMV Fair Market Value
NCST National Community Stabilization Trust
NSP Neighborhood Stabilization Program
SHPO State Historic Preservation Office
TCCLB Twin Cities Community Land Bank LLC
URA Uniform Relocation Act
i
Exhibit E
i
EXHIBIT F
FORM PURCHASE AGREEMENT
NSP 3 PURCHASE AGREEMENT
(Rehabilitation and Redevelopment Programs)
See Attachment IV
EXHIBIT G
I. CERTIFICATION REGARDING LOBBYING
Before EDA releases any of the funds covered by this Agreement, TCC Land Bank shall
sign the following certification statement in accordance with the requirements of 24 CFR
570.611, 24 CFR 85.36, and 24 CFR 84.42:
The undersigned hereby certifies,to the best of his or her knowledge and belief,that:
(1) NO FEDERAL APPROPRIATED FUNDS HAVE BEEN PAID, OR WILL BE PAID,
BY -OR ON BEHALF OF THE UNDERSIGNED, TO ANY PERSON FOR
INFLUENCING OR ATTEMPTING TO INFLUENCE AN OFFICER OR EMPLOYEE
OF AN AGENCY, A MEMBER OF CONGRESS, AN OFFICER OR AN EMPLOYEE
OF CONGRESS, OR AN EMPLOYEE OF A MEMBER OF CONGRESS IN
CONNECTION WITH THE AWARDING OF ANY FEDERAL CONTRACT, THE
MAKING OF ANY FEDERAL GRANT, THE MAKING OF ANY FEDERAL LOAN,
THE ENTERING INTO OF ANY COOPERATIVE AGREEMENT, AND THE
EXTENSION, CONTINUATION, RENEWAL, AMENDMENT, OR MODIFICATION
OF ANY FEDERAL CONTRACT, GRANT, LOAN, OR COOPERATIVE
AGREEMENT.
(2) IF ANY FUNDS OTHER THAN FEDERAL APPROPRIATED FUNDS HAVE BEEN
PAID OR WILL BE PAID TO ANY PERSON FOR INFLUENCING OR
ATTEMPTING TO INFLUENCE AN OFFICER OR EMPLOYEE OF AN AGENCY,
A MEMBER OF CONGRESS, AN OFFICER OR AN EMPLOYEE OF CONGRESS,
OR AN EMPLOYEE OF A MEMBER OF CONGRESS IN CONNECTION WITH
THIS FEDERAL CONTRACT, GRANT, LOAN, OR COOPERATIVE AGREEMENT,
THE UNDERSIGNED SHALL COMPLETE AND SUBMIT STANDARD FORM LLL,
"DISCLOSURE FORM TO REPORT LOBBYING," IN ACCORDANCE WITH ITS
INSTRUCTIONS.
(3) THE UNDERSIGNED SHALL REQUIRE THAT THE LANGUAGE OF THIS
CERTIFICATION BE INCLUDED IN THE AWARD DOCUMENTS ALL SUB-
AWARDS AT ALL TIERS (INCLUDING SUB-CONTRACTS, SUB-GRANTS, AND
CONTRACTS UNDER GRANTS, LOANS, AND COOPERATIVE AGREEMENTS)
AND THAT ALL SUB-RECIPIENTS SHALL CERTIFY AND DISCLOSE
ACCORDINGLY.
This certification is a material representation of fact upon which reliance was placed
when this transaction was made or entered into. Submission of this certification is a
prerequisite for making or entering into this transaction imposed by section 1352, title
31,U.S. Code. Any person who fails to file the required certification shall be subject to a
civil penalty of not less than$10,000 and not more than$100,000 for each such failure.
IN WITNESS WHEREOF, I have set my hand this
(date)
By:
Name:
Title:
FOR: Twin Cities Community Land Bank LLC ("TCC Land Bank")
(organization)
II. CERTIFICATION REGARDING DEBARMENT
Before EDA releases any of the funds covered by this Agreement, TCC Land Bank shall
sign the following certification statement:
Certification Regarding Debarment, Suspension, and
Other Responsibility Matters Primary Covered Transactions
This certification is required by the regulations implementing Executive Order 12549,
Debarment and Suspension, 29 CFR Part 98, § 98.510, Participants' responsibilities. The
regulations were published as Part VIII of the May 26, 1988 Federal Register (pages
19160— 19211).
AS THE DULY AUTHORIZED REPRESENTATIVE OF THE APPLICANT, I CERTIFY, TO
THE BEST OF MY KNOWLEDGE AND BELIEF, THAT NEITHER THE APPLICANT
NOR ANY OF THE PRINCIPALS:
(1) ARE PRESENTLY DEBARRED, SUSPENDED, PROPOSED FOR DEBARMENT,
DECLARED INELIGIBLE, OR VOLUNTARILY EXCLUDED FROM COVERED
TRANSACTIONS BY ANY FEDERAL DEPARTMENT OR AGENCY.
(2) HAS, WITHIN A THREE-YEAR PERIOD PRECEDING THIS APPLICATION, BEEN
CONVICTED OF, OR HAD A CIVIL JUDGMENT ENTERED AGAINST THEM FOR
COMMISSION OF FRAUD OR OTHER CRIMINAL OFFENSE IN CONNECTION
WITH OBTAINING, ATTEMPTING TO OBTAIN, OR PERFORMING A PUBLIC
(FEDERAL, STATE OR LOCAL) TRANSACTION OR CONTRACT UNDER A
PUBLIC TRANSACTION; VIOLATION OF FEDERAL OR STATE ANTITRUST
STATUTES OR COMMISSION OF EMBEZZLEMENT, THEFT, FORGERY,
BRIBERY, FALSIFICATION OR DESTRUCTION OR RECORDS, MAKING FALSE
STATEMENTS, OR RECEIVING STOLEN PROPERTY.
(3) IS PRESENTLY INDICTED FOR OR OTHERWISE CRIMINALLY OR CIVILLY
CHARGED BY A GOVERNMENTAL ENTITY (FEDERAL, STATE OR LOCAL)
WITH COMMISSION OF ANY OF THE OFFENSES ENUMERATED IN
PARAGRAPH (2) (B) OF THIS CERTIFICATION.
i
i
(4) HAS NOT, WITHIN A THREE-YEAR PERIOD PRECEDING THIS APPLICATION,
HAD ONE OR MORE PUBLIC TRANSACTIONS (FEDERAL, STATE OR LOCAL)
TERMINATED FOR CAUSE OR DEFAULT.
(5) WHERE THE APPLICANT IS UNABLE TO CERTIFY TO ANY OF THE
STATEMENTS IN THIS CERTIFICATION, HE OR SHE SHALL ATTACH AN
EXPLANATION TO THIS APPLICATION.
(6) THE UNDERSIGNED SHALL REQUIRE THAT THE LANGUAGE OF THIS
CERTIFICATION BE INCLUDED IN ALL SUBCONTRACT AWARDS PURSUANT
TO THIS CONTRACT AND AGREES TO REQUIRE ANY SUCH SUB-
CONTRACTORS TO SIGN A DEBARMENT CERTIFICATION.
(Name and Title of Authorized Representative)
(Signature) 1
Attachment III—Memorandum of Understanding with NCST
rNational Community
Stabilization Trust
132543 Street,NVI,Sulta 900 • Washing ton,DC 20005.3100 • p:(202) 2202300 • f;(202) 376-2600
lifentoranduin of Understanding
August 28,2009
INVin Cities Community Land Bank LLC
515.1"Avemic,NE
Minneapolis,Minnesota 55413
Attn:Thomas Fulton
Re.- National Community Stabilization Trust,LLC("Stabilization 1,:ust")
Memorandum of Understanding Relating to REO Acquisition Program
("Acquisition Program")—Buyer Community Coordinator
Dcar Mr.Fulton:
We are pleased to forward to you the attached Acquisition Program Guidelines under
which you, as buyer C'Buyer" and for the purposes of this MOU, you shall be also
referred to as the "Conununity Coordinato•) have agreed to particilmto with the
Stabilization Trust as a qualified buyer in the Acquisition Program outlined more
Completely in the attached Acquisition Program Guidelines. no purpose of this letter is
to express our appreciation with your agreement to work N,.ith the Stabilization Trust in
this Acquisition Program,
Although the document Indicates"Doft"Jit shall serve es our agreement.We anticipate
that the terms of the Acquisition Program Guidelines will be ultimately incorporated into
an agrmnerit of understanding,as may be necessary in the future.
Preliminarily, however, it is our hope that you will aclatowled-C,O the terms of the
Acquisition Program Guidelines with the Stabilization Trust by signing the aeceplance
below.
As we discussed,upon your acceptance,we will immediately commence our involvement
with you as an eligible Buyer under the First Look Purchase Program outlined in
Appendix I in the attached Acquisition Program Guidelines as well as under the Targeted
I of3
National Community
Stabilization Trust
1325 0 Siroot,NW,Suilo 800 WDAIngton,DC 20005,3100 • pt(2021 220.23DO (2021 '376.2600
BA Purchase ProV=.We also understand that you will be acting as the Community
Coordinator,on behalf of certain buyers you represent or v4th whom you are affiliated in
connection Nvith the Acquisition Program,("Community Partners)and to whom you will
be selling propc[ties you intend to acquire pursuant to the Program Guidelines. A
description of the duties and rights of the Conununity Coordinator are set forth on
Appendix H,"Description of Community Coordinator Role'.
You have also Indicated to us that you may assign and delegate tc the Connitunity
Partners certain obligations under the ProVarn Guidelines relating to inspection and due
diligence work. This assigrunent and delegation and any subsequent sale shall at all
tunes be consistent with and in according to the terms of the Program Guidelines and
shall not In any way release you from your responsibilities under this MOU or the under
the Program Guidelines.
71is agreentent may be executed in any number of counterparts,each of which shall be
deemed to be an original,but all of which shall constitute one and the same instrumcat,
Delivery of an executed counterpart of a signature page of this agreement by facsimile
transmission or electronic transtnission(e.g.,"pdf'or"tit I shall be effective as delivery
of an original executed counterpart of this agreement.Upon request,by us or by you an
original executed counterpart of this agreement will be sent to the party requesting it.
We look fonvard to out association NNith,you in this very Important effort in helping to
stabilize our neighborhoods.
Very lady yours,
National Coaunimity Stabilization Trust,
LLC,a Dclaware limited liability Company
By: s-A M
Its,
2 of 3
/
`
Na*"on—' _—.
—, _—'ty
Stabilization Trust
mx5ms`sm`^NW,ev|mono , uma,/"$.w�occomm'x1uo " p:(202) 220-2300 ~ k( V ) 376-26376-2600 o �oo
ACCEPTANCE:
The do with the t*onu of the ntmchxed Acquisition
Program (3u(dnDuoo and agrees to proceed xitk and eouae all Community Paduom to
comply and pu*eud with the 8cguioh|uu yxo8m/u 0o\dolkmo in connection NNiUh all
Eligible Properties and(lie Mi 'WcSellers-
Date:
Twin Cities Community Land Bank LUC
u Minnesota non-profit limited liability
company
By.
1110MUN P.Fulton
Its, Chair
'
<
3of3
(
|
�
National Community
Stabilization Trust
1325 G Street,NW,Suite 800 • V1t-Woston,DC 200094100 • p:(202) 220.2300 • is(202) 376.2600
APPMIX I
PROGRAM GWDELIN'ES
i
.APPENDIX I-I
National Community Stabilization Trust
REO Acquisition Program Guidelines for Buyers
Discussion Draft
Disclaimer: The foPotving Term Sheet is provided for convenience only and does not constitute a
commitment to purchase or soli any property and shall not create o binding o0egally enforceable
obligollon on the Nollonal Community Stabilization Trust(the"Stobllizotion Trust'`')or any other potty in
any way,unless otherwise agreed to by the parties, The terms contained herein are of a summary nature
and are not all-inclusive.The activities and polities of the Stobi/izolion Trust will be governed by the legal
documents to be execured by padles to the Stabilization Trust and reference is made to such documents
for definitive descriptions of the Stabilization Trust and its activities.
Ovcrvlcm, This Term Sheet outlines the foreclosed property J real estate owned
("REO")Acquisition Program(the"Acquisition Program")of the National
Community Stabilization Trust("NCST"or the"Stabllizatlon Trust"). The
purpose of the Acquisition Program is to provide an efficient and cost-
effective mechanism for transferring vacant and foreclosed properties
from lenders,servitors and Investors and GSEs qualified under the terms
of the Acquisition Program Guidelines (the "Sellers"), to potential
purchasers qualified under the terms of the Acquisition Program
Guidelines applicable(the"Buyers"), who may Witting on behalf of a
local collaborative effort including local or state community
development corporations or other non-profit entities,local government
agencies(municipalities,counties and states),for profit developers and
Individuals, as appropriate working to stabilize targeted communities
(the "local Programs"). By creating a single source structure toe the
transfer of property, the Stabilizatlon Trust provides a pipeline of
properties based on criteria provided by the Buyers on behalf of their
total Programs,
The Acquisition Program provides Buyers with either(a)a tight of first
offer to purchase REO properties on an ongoing•basis located in targeted
communities from Sellers prior to their being listed through traditional
REO sale procedures (the "First look Program")or (b)a bulk purchase
program for purchasing significant numbers of currently-listed
ptOpertlei located In communities heavily affected by the foreclosure
crisis(the"Targeted Hulk Purchase Program"). The Acquisition Program
will provide efficient ways to transfer dusters of properties In vulnerable
communities for rehabiiltation as part of a comprehensive neighborhood
stabiligWon strategy. Procedures, policies and agreements for both
programs are described herein.
The Stabilization Trust has developed a standardized transfer mechanism
for offering, selling, and closing vacant REO properties with accepted
procedures,limeframes,and documents.
The Acquisition Program establishes the basis for fair and transparent
prlclirig between the Buyers and the Sellers, mitigating,a critical Issue
associated with the transfer of properties In targeted areas -- the
valuation of REO and otherwise distressed properties In volatile and
declining housing markets.
The Acquisition Program provides a standardized mechanism for the
Page 1 of 11
expedited and flekibie transfer of distressed properties. The
Stabilization Trust has both a high level of execution expertise and
established relationships with Sellers. Through the participation in the
Acquisition Program, Buyers gain the benefit of dealing with a single
entity on a national level to develop a format and pipeline for purchasing
properties in multiple communities. Furthermore the Acquisition
Program has established standardized procedures, documents, and
closing proceduros with multiple Sellers,creating an efficient structure,
allowing the Buyers and Local Programs to focus their resources within
their respective communities.
The Acquisition Program is a general framework wrhiclt Is used for an
ongoing series of transactions In states and communities across the
country.
The Acquisition ProF..ram has been designed to meet the requirements of
and to be used in combination with monles that may be available to
states and localities through the HUD Neighborhood Stabilization
Program ("NSP") and related Housing and Economic Recovery Act of
2W8 (H.R. 3221), and the Stabilization Trust has been working closely
with HUD on Implementation of the NSP program.
The Stabilization Trust expects to continue to enter into Memoranda of
Understanding with additional Buyers for implementation of the
Acquisition Program to support their Local Programs pursuant to the
terms de-scrlbed herein. 'the Stabilization Trust works closely with its
sponsor organizations (Enterprise Community Partners, the Local
Initiatives Support Corporation/LiSC,the Housing Partnership Network
E and NeighborWorks America)in Implementing the Acquisition Program
with Buyers to support their Local Programs.
Role of the_St abitization Trust _ The SiablGzation Trust w111 l provide services to assist selec'i-e Buyers and
In the Acquisition Program sellers in arranging the transfer of properties. Such services will Include
but not be limited to:
establishment of pro and post purchase procedures;
coordination of offers for the sale/purchase of REO properties;
consolidation and distribution of Information;
assistance with coordination of closing processes;and
In some cases,providing the financing necessary for the purchase of
certain properties.
The Stabilization Trust Is In the process of refining the Acquisition
Program end the services It will provide,and setting a timeline for the
implementation of various services, The Stabilization Trust will provide
assistance In coordinating the prmss but will not act as a retail broker
for Individual transactions orwlth end users/owner-occupants.
Local Programs and their The Stabilization Trust's Acquisition Program will be operated with Local
Eliglble lvryers Programs who are generally comprised of a coordinated group of
community development housing organizations, public-private
partnerships, units of local government, of other qualified entities,
which may include collaborations of non-profit developers and other
chathable organizations, "mission.driven" for-profit developers,private
Page 2 of 11
contractors, and local governmental organizations In their Local
Programs that:
are located in targeted communities particularly hard-hit by the
foreclosure crisis. Such areas display high Concentrations of
REO properties, Increaft vacancy rates, slow absorption of
homes on the market, declining home values, Increasing signs
of blight,and increasing evidence of abandonment;
currently have sufficient capacity to handle the acquisition of
portfolios of REO properties;and
have the ability to determine market pricing on an on-going basis.
The local Program, in coordination with the Stabilization Trust's
Sponsors as appropriate, will be responsible for determining which
entitles are ,appropriate for participation within each targeted
community. Additionally,the local Program,in coordination with the
Stabilization Trust's Sponsors as appropriate,will Identify a single buyer
in a targeted community who will be responsible for acquiring properties
on behalf of the local Program through the Trust Acquisition Programs.
The Buyer of a Local Program will oftentimes convey propertles they
acquired on behalf of the other participants in the total Program
through a second transaction.
Buyers will be required to be p(e-qualified by the Stabilization Trust and
the Stabilization Trust Sponsor to participate In the Acquisition Program.
�.__W-..:=______.�._._. .—tru– —_-
Requirements afbuyers: Buyers will be required to implement the necessary infrastructure within
Acquisition Capacity their Local Program fcr the successful participation in the Stabilization
Trust's Acquisition Program.
This Includes ensuring the buyers on behalf of their Local Programs have
sufficient capacity for the evaluation and purchase of multiplo properties
through both the First Look Program and Targeted Bulk Purchase
Program. This Capacity includes the ability to perform property
inspections and valuations, and to complete the transfer of the
properties pursuant to the Acquisition Program buyer agreements,etc.
Requirements of buyers: The Buyer will be responsible for the establishment of a baseline
Local Markets understanding of their respective local real estate and property market,
to include but not limited to:
determining what local legal and tax considerations will be relevant
for transactions will)the Acquisition Program;anti
determining historic,current and projected local residential market
trends.
The Buyer w111 be responsible for the ongoing monitoring of local
markets and for the provision and review of local market reports to the
Stabilization Trust.
Requirements of Buyors: The Buyer will updates
Pipeline through the Stabilization Trust's pipeline reports on a periodic basis.
These reports shall contain but not be limited to:
expectation of periodic volume of properties anticipated to be
Page 3 of it
acquired by the Buyer on behalf of their local Programs;and
general requirements of property tharactedstics.
Requlrernents of 6 try ers; The Buyer will be required to establish the necessary infrastructure
Disposition Capacity vrithin their Local Program for the successful participation In the
Acquisition Program.This includes:
ensuring the applicable Local Program within the targeted
community 'has the necessary Infrastructure for the
management of a large volume of properties, Including
rehabilitation, disposition strategies, property sales and
marketing,asset management,etc.;and
knowledge of local affordable housing markets including,affordable
financing programs, redevelopment and rehabilitation
programs and resources necessary to move purchased REO
properties from vacancy to rehabilitated occupied properties,
Eligible Sobers The kcqulsition Program works with any Sellers that have or anticipate
having:
concentrations of REO properties In targeted communities;and
the ability to sell properties under such terms and conditions that
meet the requirements of the HUD NSP Property Acquisition
Guidelines.
The participating Sellers will;
agree to participate with the Stabliization Trust in the Acquisition
Program and regularly, offer properties pursuant to the
Acquisition Program Guidelines applicable to their agreement
vrth the Stabilization Trust;
supply all Stabilization Trust-requested Information on REO
properties offered for sale and disclose any known conditions of
the properties as required by law;and I
provide estimates to the Stabilization Trust of the anticipated
volume of properties that may enter foreclosure in the targeted
communities In order to assist the Stabilization Trust In planning
activities and program volume in connection with or relating to
the Acquisition Program.
Eligible Property In general,vacant and foreclosed property with clear and marketable
title will be purchased by the Buyei on an as-15 basis.
The Buyer wall be required to provide the Stabilization Trust with
descriptions of property and portfolio characteristics Including both
those that are threshold minimum requirements and those that are
desirable. Such characteristics Will Include but not be limited to:
location,size,condition,Value range,proximity to other REO properties,
etc. The StAllization Trust will coordinate with the Sellers on behalf of
the Buyer regarding;,these characterlstics.
As a part of the sales process,Sellers will be required to fully disclose
property characteristics requested by the Buyer and provide updates,as
appropriate.
Page 4 of 11
The Stabilization Trust will identify exceptions to the Olgibie property
criteria and,on a case by case basis, consider property that does not
meet the criteria(i.e,,occupied,title issues,foreclosure in process,etc.).
Valuation Procedures and a part of the Acquisition Program,Buyers and Sellers will agree to use
Pricing standardized valuation procedures.in order to promote quick and
efficient transactions, The desire for expedited transactions requires
that the valuation process be open and transparent. Buyers and Sellers
will share information regarding the properties in question. Sellers will
grant access to properties for Inspection by Buyers or their agents. Both
Buyers and Sellers will also share information about property history,
property conditions,and local market conditions.
In ndditlon to agreeing to an open valuation process,Buyers and Sellers
will agree that pikes should reflect a number of factors beyond standard
appraisals. Prices should reflect current total market conditions,
Including such possible conditions as declIning home values,long holding
periods, and increased vacancies, Prides should also be adjusted for
required rehabiiitation costs, the cost of capital Invested In the
,i
properties, and other holding costs, such as taxes and insurance,
maintenance, and administrative overhead during a potentially
prolonged holding period.
Prfangandtonsidcratlon In general, Buyers are expected to purchase property on an ail-rash
basis.
Closing it is anticipated that Buyers will execute direct purchase contracts with
Sellers.
The Stabilization Trust has established standard form purchase
agreements for the Acquishion Program.
Buyers may acquire properties through the Acquisition Program for
other entities within their Local Program, and may have subsequent
transactions to transfer these properties,
[the Stabilization Trust may contract with a national title company to
coordinate efficient closings.)
[Scilers may represent and warrant clean title(marketable or Insurable)
to expedite the dosing date,)
First Look.Program Appendix i outlines the details of the First Look Program to govem
transactions between Buyers and Sellers. The First Look Program will
give Buyers the opportunity to purchase foreclosed properties before
they are listed for sate through traditional mechanisms. The First Look
Program gives Buyers the ability to purchase foreclosed properties In
targeted communities immediately after the completion of the
foreclosure process, with purchase prices that reflect savings on
expenses associated with holding periods and other Seller expenses.
Targeted Bulk Purchase Appendix Il outlines the details of the Targeted Bulk Purchase Program
Program to govern transactions between Buyers and Sellers. The Targeted Bulk
Purchase Program vAll give Buyers the opportunity to purchase
groupings of listed aged properties In targeted communities. This
program allows Buyers to acquire properties In areas with high
concentrations of RE4 properties.
Page 5 of 11
National Community Stabilization Trust
REO Acquisition Program--First Look Program
Appendix 1
Objective and Overvie-rr of the The First Look Program is designed to expedite the transfer process of
First Look Program REO properties. This program will facilitate efficient transactions by
establishing a transparent price offer and acceptance process that will
reduce and eliminate unnecessarily lengthy negotiations.
Under the First Look Program,Sellers will exclusively offer for sale to
Buyers, via the Stabilisation Trust (substantially all of) the eligible
properties within the Identified geographical area meeting the Criteria
provided by the Buyers via the Stabilization Trust for an agreed upon
period. The Buyers will be provided the opportunity to accept an offer
on a foreclosed property after the foreclosure process is complete(and
any redemption period Its expired) and the property is vacated, but
before the Seller lists the property through a traditional mechanism(the
"First took Period"),
During,this First Look Period,the Seller will provide the Buyer(a)physical
access to the property for inspection,and(b)the offer of a sale price for
the property,which the Buyer will promptly accept,decline or counter.
Additionally,the three parties(the Seller the Buyer and the Stabilization
Trust)will,prior to consummating transactions on individual properties
within a specific market J target area, establish a common
understanding of the local property market(s).
It Is intended that the transparency created by sharing pricing
methodologies and establishing a common understanding of the local
property market(s) will reduce the length of negotiations for the two
parties (the Seller and the Buyer) to alloy for a greater volume of
transactions In as short a time as possible.
Pre. is uses by Stabilization Pie-qualify Buyersfor First Look Program participation and enter
Trust and its Stabilization into an agreement with Buyers establishing the terms and
Trust Sponsors Prior to offer conditions of the Stabilization Trust's services and Buyers'
from Sellers under First Look obligations,
Program Certification of the Buyers' financial capacity to complete the
transfer.
In the case of acqulsition financing provided by the Stabilization
Trust, approval of the Buyers as an eligible recipient of
financing.
Provide information to Sellers including:
i
Geographic areas of concentration and focus of the Buyers
through the Stabilization Trust (e.g. zip codes, census
tracts,etc.). '
Criteria for selection of property in each selected
geography(e.g.SFH,vacancy status,etc.).
Expected volume and capacity by area,
Page 6 of 11
It is expected that the Stabilization Trust will play a role In
facilitating the ongoing data exchange,and may assist in
further refining the property criteria on behalf of the
Seller and Buyer(i.e.Buyer's target area may be set by
boundaries Incongruous with zip code boundaries),
t.ocalization of this program's standardized procedures,documents,
and closing procedures for applicable local market practices,
laws and regulations.
- � -________..- - � _ _-_..__n.._..�_-
Procedures for 5ulter Offering 'the Seiler will provide an ongoing fisting of t+valiabio properties
of REO Properties and Buyer within(•)days of the eligible vacant property being secured by
Responding to Offer the Seiler. This will include addresses, available Inspection
dates and other available upfront property Information.
The Seller will grant access to the property for Inspection by the
Buyer In accordance with standard offering procedures for a
period of (5) business dayY. This access will typically be
provided once the vacant property has been secured by the
Seller,and will occur concurrently with the Seller's agents(i.e.
property appraisers, etc.} accessing the property for the
purposes of determining the property value.
The Buyer will be responsible(or any preliminary property reviews
Including formal or Informal Inspections during this property
Inspection period. `the Buyer will be responsible for their own
determination of property values,This should be completed in
anticipation of the Seller's first offer.
In establishing Its offer price('Offer Price")to the Buyer through the
Stabilization Trust, the Seiler will provide the following
Information:
Seller's Eselmote of Fair Market Votue of the Property as of
the dole of the offering. Seller will provide Its Estimated
Fair Market Value,the methodology used to derive the
estimate (Le.,BPD, full appralsal, AVtvI, etc.), and the
date of the last update to said estimate. Such Seller's
estimate would be the price that the Seller would have
listed the properties for sale through traditional sales
methods. Seller will provide a reasonable level of
Information to the Stabilization Trust on the basis of the
Seller's estimate.
Seller's 0#,cr Price for the Property os of the dote of the
offering, The Stabilization Trust anticipates that the
Offer Price will represent an odlustment to the price that
Incorporates several factors. The first factor is the
savings associated with using this transaction type
instead of a traditional market listing Including: (1)
reduced sales and marketing costs,(2)avoided property
rehabilitation and maintenance costs,(3) avoided taxes
and insurance expenses,and(a)any other one-time and
holding costs avoided.The second factor is the benefit of
an expeditious sale in the specific local market (which
depending on the local market conditions may be a
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volatile and declining market with indeterminate holding
periods). The third factor Is the Impact on net present
value of receiving cash payments earlier than an
expected safe through traditional means.
Buyer understands that some calculations outlined above
may be proprietary and that the Seller may not be able to
disclose all adjustments to the Offer Price in an explicit
manner. The Seller will,at a minimum,Indicate:(1)the
Estimated Pair Market Value, (2) the total of any
adjustments made to the sales price (and explicitly
outline which adjustments were and were not included),
(3)the estimated holding time had a traditional market
listing been utilized, and (4) the corresponding Total
Adjusted Sales Price.
Upon receipt of an-offer from the Seller, the Buyer, through the
Stabilization Trust,veil I promptly respond [same day or next
business day)with an acceptance,counter offer,or declination.
The Seller will make a best effort to respond to any reasonable
counter offers during the First look Period.
Upon acceptance of an offer from the Buyer through the
f
Stabilization Trust, Seller will sign the Stabilization Trust's
standard form of purchase contract and provide reasonable
assistance to move diligently to closing(within 15 to 30 days).
It Is anticipated that the acceptance of any offer made by the
Buyer through the Stabilization Trust will be to purchase the
property on an all cash basis,
Assuming the Buyer confirms Its Interest in the property and meets the
timelines associated with property inspection and response to offers,
the Seller will hold the property off the market and will not offer for sale
the properly through any other sales channel.
As the Seller's Offer Price (as outlined above) will be less than the
Setli-i's Estimate of Fair Market Value,Seller will explicitly represent that
the Seller's Offer Price Is consistent with the provisions of the HUD NSP
Property AuAuisition Guidelines (although the Buyer will need to
determine if the level of price adjustment Is compliant with the
guidelines for their total program).
if the ouy&s response to the Seller's Offer Price(as outlined above)is a
counter offer, the Buyer wiil provide detailed information on the
rationale of such counter offer,which may Include,(1)the information
associated with due diligence performed by the Buyer --for example,
the Buyer's property inspection may have Identified a structural Issue
with the property(e.g, fault with foundation,etc.)that may have been
overlooked by the Seller's property inspection, and (2) any material
differences In the property's value relativie to comparables Identified by
a third-party valuation commissioned by the Buyer.
Page 8 of 11
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National Community Stabilization Trust
RECI Acquisition Program—Targeted Bulk Purchase Program
Appendix 11
Objective and Overview of the The Targeted Bulk Purchase Program seeks to facilitate the site of
Targeted Bulk Purchase significant numbers of REO properties in targeted areas that are
Program currently for sale but hativ remained on the market for an extended
period or are otherwise distressed. Targeted Bulk transactions offer the
Buyers the benefit of reduced sales-associated costs as compared with
traditional Market sales on a one-off basis.
Under the Targeted Bulk Purchase Program,Sellers will offer for sale to
Buyers,via the Stabilization Trust eligible properties within the identified
geographical area meeting the ctiteda prohded by the Buyers through
the Stabilization Trust,
The Seller will provide the Buyer(a)physical access to the property for
Inspection,and(b)the offer of a Sale price for the property,which the
Buyer will promptly accept,decline or counter,
Additionally, the three parties (the Seller, the Boyer, and the
Stabilization Trust)whit,prior to consummating transactions on individual
properties within a specific market/,target area, establish a common
understanding of the local property market(s).
Procedures by Siabilizatlon (same as first took Program in Appendix i of the Acquisition Program
Trust and Its Stabilization Guidelines)
Trust Sponsors Prior to Offer
from Sellers under Targeted
Bulk Purchase Program
Procedures for Seller Offering The Seller will provide current fisting of available properties within
of REO Properties and Buyer (•I days of request from the Buyer via the Stabilization T(ust.
Responding to Offer This will Include addresses,available Inspection dates and other
available upfront property information.
The Buyer will Indicate which of these properties they will move
forward with for Inspection within 11-2 business days)of having
received the current listing of available properties.
The Seiler Will grant access to the properties for inspection by the
Buyer in accordance with standard offering procedures for a
period of 15I business days. This access will typically be
provided by the Seller's agents. The Buyer will confirm which
properties they would like to receive an offer for from the Seller
by the end of the property Inspection period.
The Buyer will be responsible for any preliminary property reviews
Including formal or Informal Inspections during this property
Inspection period. Buyer will be responsible for their own
determination of property values.This should be completed in
anticipation of the Seller's first offer.
In establishing its offer price(*Offer Price")to the Buyer through the
Stablfization Trust, the Seller will provide the folloveing
Page 9 of 11
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information:
1. Srlkr's Estimate of fair Market Value of the Property os
of the date of the offering. Seller will provide Its
Estimated Pair Market Value, the methodology used to
derive the estimate(I.e.,BPO,full appraisal,AVIA,etc.),
and the date of the last update to said estimate.
11. Sellers Offer Price for the Property as of the date of the
offering. The Stabilization Trust anticipates that the
Offer Price will represent an adjustment to the price that
Incorporates several factors. The first factor Is the
savings associated with using this transaction type
Instead of a continued market listing Including: (1)
reduced sales and marketing costs(if any), (2)avoided
property rehabilitation and maintenance costs, (3)
avoided taxes and insurance expenses,and(4)any other
one-time and holding costs avoided.The second factor is
the benefit of an expeditious sale In the specific local
market(which depending on the local market conditions
may be a volatile and declining market with
Indeterminate holding periods). The third factor is the
Impact on net present value of receiving cash payments
earlier than an expected sale through traditional means.
III. Buyer understands that some calculations outlined above
may be proprietary and that the Seller may not be able
to disclose ail adjustments to the Offer Price in an explicit
manner. The Seller will,at a minimum,indicate:(1)the
Estimated fair Market Value, (2) the total of any
adjustments made to the sales price (and explicitly
outline which adjustments were and were not Included),
(3)the esilmated holding time had a traditional market
listing been utilized, and (4) the corresponding Total
Adjusted Sales Price.
i
upon receipt of an offer from the Seller, the Buyer, through the
Stabilitation Trust,vrill pro mptiy respond (same day or next
business day)vAth an acceptance,counter offer,or declination.
Seller will make a best effort to respond to any reasonable
counteroffers.
Upon acceptance of an offer from the Buyer through the
Stabilization Trust, Seller,will sign the Stabilization Trust's
standard form of purchase contract and provide reasonable
assistance to move diligently to closing(viithln 15 to 30 days).
it Is anticipated that the acceptance of any offer trade by the
Buyer through the Stabilization Trust will be to purchase the
properties on an all cash basis.
ihC Seller will typically not be able to hold the property off the market
until after confirming the receipt of an accepted offer from the Buyer,
As the Seller's Offer Price tas outlined above) will be less than the
Seller's Estimate of Pair Market Value,Seller will explicitly represent that
the Seller's Offer Price Is consistent with the provisions of the HUD NSP
i
Page 10 of 11
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Property Acquisition Guidelines(although Buyer wilt need to determine
If the level of price adjustment Is compliant with the guidelines for their
local program),
If the Buyer's response to the Seller's Offer Price(as outlined above)is a
counteroffer,Buyer will provide detailed Information on the rationale of
such counter offer, which may include.(1)the information associated
with duo diligence performed by the Buyer—for example,the Buyer's
property Inspection may have identified a structural issue with the
property je.a, fault vrith foundation, etc.) that may have been
overlooked by the Seller's property Inspection, and (2) any material
differences in the property's value relative to comparables Identified by
a third-party valuation commissioned by the Buyer,
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