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HomeMy WebLinkAbout2012 12-10 EDAP Regular SessionEDA MEETING City of Brooklyn Center December 10, 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. October 8, 2012— Regular Session 4.Commission Consideration Items a. Resolution Approving a Collateral Assignment of Purchase Agreement and a Subordination Agreement (Shingle Creek Crossing) Requested Council Action: —Motion to approve resolution. Resolution Approving the Final Budget for the City of Brooklyn Center Economic Development Authority for Fiscal Year 2013 Requested Council Action: —Motion to approve resolution. 5. Adjournment EDA Agenda Item No. 3a MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION OCTOBER 8, 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 7:53 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 Lasman seconded approval of the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. September 10, 2012— Regular Session Motion passed unanimously. 4.COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2012-15 APPROVING FIRST AMENDMENT TO PURCHASE AGREEMENT AND FIRST AMENDMENT TO DEVELOPMENT AGREEMENT (SHINGLE CREEK CROSSING) Director of Business and Development Gaiy Eitel introduced the item, discussed the history, and stated the purpose of the proposed resolution to approve an amendment to the purchase agreement and development agreement for Shingle Creek Crossing. Mr. Eitel presented the amendment requests by the developer that included a one-year extension (from December 31, 2012, to September 30, 2013) to reskin the Food Court building. 10/08/12 1 DRAFT It was noted the requested amendments serve to provide the necessary flexibility as the developer is in final negotiations with a desirable tenant. In addition, it allows the reskinning to be done correctly to identify tenants. The EDA acknowledged the presence of Walmart provides a high value improvement and draw for other tenants to develop spaces within the Shingle Creek Crossing. It also generates tax increment to cash flow the project. With regard to Building N, Mr. Eitel explained it was removed to provide parking and expand the Food Court. He confirmed that utilities will not be extended to that lot because it will be permanently incorporated into the Food Court building. Commissioner Lasman moved and Commissioner Ryan seconded adoption of RESOLUTION NO. 2012-15 Approving First Amendment to Purchase Agreement and First Amendment to Development Agreement (Shingle Creek Crossing). Motion passed unanimously. 4b. CONSIDERATION OF APPROVAL OF GRANT APPLICATIONS FOR ADDITIONAL CONTAMINATION CLEANUP OF THE FORMER LIFETIME FITNESS LOCATED AT 4001 LAKEBREEZE AVENUE IN BROOKLYN CENTER Mr. Eitel introduced the item, discussed the history, and stated the purpose of the proposed resolution to approve grant applications for additional contamination cleanup of the former Lifetime Fitness Center. He acknowledged the attendance of Mr. Hyde, representing Real Estate Recyling. President Willson noted all jurisdictions are helping with this project and he is hopeful those entities will provide the grant dollars so the project can move forward. 1.RESOLUTION NO. 2012-16 AUTHORIZING SUBMISSION OF A GRANT APPLICATION TO THE METROPOLITAN COUNCIL FOR THE TAX BASE REVITALIZATION ACCOUNT (LIFETIME FITNESS SITE) Commissioner Lasman moved and Commissioner Myszkowski seconded adoption of RESOLUTION NO. 2012-16 Authorizing the Submission of a Grant Application to the Metropolitan Council for the Tax Base Revitalization Account (Lifetime Fitness Site). Motion passed unanimously. 2.RESOLUTION NO. 2012-17 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) -2- DRAFT10/08/12 Commissioner Lasman moved and Commissioner Myszkowski seconded adoption of RESOLUTION NO. 2012-17 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). Motion passed unanimously. 3. RESOLUTION NO. 2012-18 APPROVING APPLICATION FOR A HENNEPIN COUNTY ENVIRONMENTAL FINANCIAL GRANT (LIFETIME FITNESS SITE) Commissioner Kleven moved and Commissioner Ryan seconded adoption of RESOLUTION NO. 2012-18 Approving an Application for a Hennepin County Environmental Financial Grant (Lifetime Fitness Site). President Willson stated the City's appreciation to Paul Hyde for his successful work in cleaning contaminated sites in Brooklyn Center. Paul Hyde, representing Real Estate Recycling, provided an update on contamination remediation and indicated they are finalizing costs at this time for the grant application. If the grants are fully funding, it will pay the additional costs to address the deep seam of contaminates that had been found. The EDA discussed the location and types of contamination that had been found. Mr. Hyde provided an update on the high activity for showings and expected tenancy of this property. Motion passed unanimously. 4c. RESOLUTION NO. 2012-19 APPROVING AN NSP 3 FIRST LOOK PROGRAM ACQUISITION AGREEMENT Assistant City Manager/Director of Building and Community Standards Vickie Schleuning introduced the item, discussed the history, and stated the purpose of the proposed resolution to allow the City to participate in the First Look Program for Neighborhood Stabilization. The EDA acknowledged that neighborhood stabilization efforts have proven to be beneficial and leverages the City's limited resources to maintain a favorable ratio of single-family home ownership to rental occupancy. Commissioner Lasman moved and Commissioner Ryan seconded adoption of RESOLUTION NO. 2012-19 Approving an NSP 3 First Look Program Acquisition Agreement. Motion passed unanimously. 10/08/12 -3- DRAFT 5. ADJOURNMENT Commissioner Lasman moved and Commissioner Ryan seconded adjournment of the Economic Development Authority meeting at 8:28 p.m. Motion passed unanimously. 10/08/12 -4- DRAFT EDA Agenda Item No. 4a EDA ITEM MEMORANDUM DATE: December 4, 2012 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development AL. SUBJECT: Resolution Approving a Collateral Assignment of Purchase Agreement and a Subordination Agreement (Shingle Creek Crossing). Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of the Resolution Approving a Collateral Assignment of Purchase Agreement and a Subordination 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. The Development Agreement included the following components: •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: 1.The demolition of the existing Brookdale Mall, excluding the Sears department store and the Food Court Building, the "reskinning" of the Food Court Building, 2.The partial day-lighting of Shingle Creek; 3.The construction by the Developer of the Phase I Streets and Streetscaping; and 4.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. Addressed 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). •Addressed 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. Attached for your reference is a copy of the May 23, 2011 staff memorandum which accompanied the EDA Resolution Approving the Development Agreement and the Phasing Mission: Ensuring an attractive, clean, stye, inclusive conununity that enhances the quality of life Jr a// people and preserves the public trust EDA ITEM MEMORANDUM Exhibit from the PUD Declaration and Covenants agreement, which illustrates the Phase I Improvements. On October 8, 2012, the EDA adopted Resolution No. 2012-15, A Resolution Approving First Amendment to the Purchase Agreement and First Amendment to the Development Agreement. (Single Creek Crossing) which addressed the following: -The closing date for the EDA parcel was extended from June 30, 2016 until June 30, 2017. The completion date for the reskinning of the Food Court Building was extended from December 31, 2012 to September 30, 2013. The legal description for Phase II parcels was corrected to include the Food Court Building (Lot 2, Block 1, Shingle Creek Crossing). Resolution Approving a Collateral Assignment of Purchase Agrement and a Subordination Agreement. The attached resolution was prepared by the City Attorney with the following comments on the developer's forms for assignment and subordination: The Assignment of Purchase Agreement would allow Ladder Capital Finance to acquire the EDA parcel under the same terms as Shingle Creek LLC if Ladder declared an event of default under their loan documents. In this document the EDA: •consents to the assignment, •states that the Purchase Agreement is still in effect & there are no defaults, •agrees to copy Ladder on any notices under the Purchase Agreement and •agrees not to amend the Purchase Agreement without Ladder's consent. The Subordination Agreement is a provision that the EDA agreed to provide to construction lenders pursuant to Section 6.5 of the Development Agreement. This provision provides that the Authority agrees to execute a subordination agreement in form and substance acceptable to the Authority and the applicable construction lender. 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, clean, safe, inclusive conununity 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 COLLATERAL ASSIGNMENT OF PURCHASE AGREEMENT AND A SUBORDINATION 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, as amended, by and between the EDA and the Developer dated June 17, 2011 (the "Development Agreement"). 1.02. In accordance with Section 6.5 of the Development Agreement the Developer has requested that the EDA subordinate the provisions of the Development Agreement to the documents executed in connection with the Construction Loan pursuant to that certain Subordination Agreement, dated on or after the date hereof, by and among the Developer, Ladder Capital Finance, LLC (the "Lender") and the EDA (the "Subordination Agreement"). 1.03. The Developer has heretofore entered into a Purchase Agreement by and between the EDA and the Developer dated June 28, 2011, as amended (the "Purchase Agreement"). 1.04. As a condition to making the Construction Loan, the Lender has required the Developer to assign its rights under the Purchase Agreement to the Lender pursuant to a Collateral Assignment of Purchase Agreement dated on or after the date hereof by and among the Developer, the Lender and the EDA (the "Assignment"). Section 2. EDA Approval; Further Proceedings. 2.01. The Assignment and the Subordination Agreement 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 and the President and the Executive Director are hereby authorized and directed to execute the Assignment and the Subordination Agreement on behalf of the EDA. EDA RESOLUTION NO. 2.02 The approval hereby given to the Assignment and the Subordination Agreement 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 Board of Commissioners of the Economic Development Authority of the City of Brooklyn Center this 10th day of December, 2012. December 10, 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. COLLATERAL ASSIGNMENT OF PURCHASE AND SALE AGREEMENT 1.Parties. The parties to this Collateral Assignment of Purchase and Sale Agreement (the "Agreement") are Shingle Creek, LLC, a Delaware limited liability company ("Borrower") and Ladder Capital Finance, LLC, a Delaware limited liability company ("Lender"). The Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA") is joining in and executing this Collateral Assignment of Purchase and Sale Agreement to confirm that this Collateral Assignment is a permitted assignment under Section 18 of the Agreement of Purchase and Sale, as defined below and to confirm certain agreements made on the part of the EDA, as more particularly set forth below. 2.Recitals. 2.1 Recital One. Borrower and the EDA are parties to that certain Agreement of Purchase and Sale dated June 28, 2011 as amended by that certain First Amendment to Purchase Agreement dated November 13, 2012 (collectively, the "Purchase Agreement") pertaining to the purchase of the land described on Exhibit 1 attached hereto (the "Land"). 2.2 Recital Two. Borrower and Lender are parties to those certain loan documents pursuant to which Lender has loaned $15,000,000.00 to Borrower (the "Loan"). Borrower intends to use a portion of the proceeds of the Loan to refinance a prior construction loan, the proceeds of which Developer used to construct certain "Minimum Improvements," and to construct certain "Additional Improvements," both as defined in the Development Agreement between the EDA and Borrower, dated June 17, 2011 and recorded in the office of the Hennepin County Registrar of Titles on June 30, 2011 as Document No. T4868190 and are parties to that certain First Amendment to Development Agreement dated November 13, 2012 and recorded in the office of the Hennepin County Registrar of Titles on November 27, 2012 as Document No. T5017704 (collectively, the "Development Agreement") and intends to use a portion of the proceeds to construct the remaining "Minimum Improvements," to construct additional "Additional Improvements" or both. 2.3 Recital Three. As security for the Loan, Borrower has inter alia granted Lender a mortgage on the real property legally described on the attached Exhibit 2 (the "Mortgage Property"). 2.4 Recital Four. As a condition of the Loan, Lender has required that Borrower collaterally assign Borrower's rights under the Purchase Agreement to Lender so that if Lender exercises Lender's remedies under the Loan Documents, Lender may assume Borrower's rights and obligations pursuant to the Purchase Agreement. 3. Collateral Assignment. As additional collateral security for the Loan and the observance and performance by Borrower of the terms, covenants and conditions of the Mortgage, Borrower hereby transfers, sets over and assigns to Lender all of Borrower's right, title and interest in and to the Purchase Agreement. Lender shall have the right, but not the obligation, from and after an Event of Default under the Mortgage, to elect in a writing delivered to the EDA to assume the obligations of Borrower under the Purchase Agreement. 502200814 4.Authorization to EDA. The Developer hereby irrevocably authorizes and directs the EDA to recognize the claims of the Lender without investigating the reason for any action taken or the validity of or the amount of indebtedness owing to the Lender or the existence of any Event of Default under the Mortgage. The sole signature of the Lender shall be sufficient for the exercise of any rights under this Assignment. The Lender acknowledges that the EDA's rights and remedies against the Developer under the Purchase Agreement are unaffected by this Agreement. 5.Assignment. Lender may assign its rights and obligations under this Agreement to (a) any assignee or designee of the Mortgage; (b) any purchaser of all or any portion of the Mortgage Property at a Sheriff's Sale; or (c) any party acquiring title to the Mortgage Property from Borrower pursuant to a deed in lieu of foreclosure. 6. Notice and Cure Rights (a)The EDA shall send to Lender copies of any written notices given by the EDA under the Purchase Agreement regarding termination or cancellation of the Purchase Agreement or of any default of breach thereunder. Any notice of a breach or default in the performance of the Purchase Agreement on the part of Borrower hereinafter referred to as a "Default Notice". (b)Lender shall have the right to cure any breach or default by Borrower under the terms of the Purchase Agreement, and the EDA shall not take any action to cancel or otherwise terminate the Purchase Agreement unless Lender shall elect in writing not to cure such breach or default or shall fail to cure such breach or default, in either instance, within the time periods and upon the terms set forth in the Purchase Agreement. (c)If a breach or default by Borrower under the terms of the Purchase Agreement has occurred and Lender has opted in writing to perform such cure, then Lender shall perform any act or thing reasonably necessary and proper to be done in the observance of the terms of the Purchase Agreement to effect such cure (d)Nothing set forth herein shall obligate Lender to cure any default of Borrower, provided that in the event Lender shall fail to cure any such default in accordance with and subject to the terms set forth above, the EDA shall be entitled (subject to the provisions of the Purchase Agreement) to execute such remedies as may be provided for under the Purchase Agreement. 7. EDA Representations and Warranties. The EDA certifies, covenants, represents and warrants as follows: (a) Attached hereto as Exhibit C is a true and correct copy of the Purchase Agreement and that the Purchase Agreement constitutes the only agreement between Borrower and the EDA pertaining to the purchase of the Land. The EDA covenants and agrees not to tetininate, amend, modify or alter the Purchase Agreement in any manner without the prior written consent of Lender and any failure to obtain such consent shall render any such termination, amendment, modification or alteration null and void. 5022008v4 (b)The Purchase Agreement is in full force and effect and is a binding and enforceable obligation of the EDA. (c)As of the date hereof, the knowledge of the undersigned, the EDA is not in any respect in default in the performance of the terms and provisions of the Purchase Agreement (nor to the knowledge of the undersigned is there now any fact or condition which, with notice or lapse of time or both, will become such a default). (d)As of the date hereof, to the knowledge of the undersigned, Borrower is not in any respect in default under the terms and provisions of the Purchase Agreement (nor to the knowledge of the undersigned is there any fact or condition which, with notice or lapse of time or both, will become such a default. (e)The EDA has not assigned or encumbered its interest under the Purchase Agreement. 8. Borrower Representations and Warranties. Borrower certifies, covenants, represents and warrants as follows: (a)During the term of this Assignment: (i) Borrower shall fulfill and perform each and every term, covenant and provision of the Purchase Agreement to be fulfilled or performed by Borrower thereunder, if any, (ii) Borrower shall, in the manner provided for in this Agreement, give prompt notice to Lender of any notice received by Borrower under the Purchase Agreement, together with a complete copy of any such notice, (iii) Borrower shall enforce, the performance and observance of each and every term, covenant and provision of the Purchase Agreement to be performed or observed, if any and (iv) Borrower shall not terminate, modify, alter or amend any of the terms or provisions of the Purchase Agreement and any failure to obtain such consent shall render any such termination, amendment, modification or alteration null and void. (b)The Purchase Agreement is in full force and effect and is a binding and enforceable obligation of the Borrower; (c)The Borrower is not in any respect in default in the performance of the terms and provisions of the Purchase Agreement (nor is there now any fact or condition which, with notice or lapse of time or both, will become such a default); (d)As of the date hereof, the EDA has not advanced any funds to Borrower pursuant to the terms of the Purchase Agreement; (e)The EDA is not in any respect in default under the terms and provisions of the Purchase Agreement (nor is there any fact or condition which, with notice or lapse of time or both, will become such a default. (f)Borrower has not assigned or encumbered its interest under the Purchase Agreement. 5022008v4 9. Notices. All notices, demands, requests and other communications (the "Notices") required or permitted to be given under this Agreement must be in writing and sent by certified mail, return receipt requested, or by nationally recognized overnight delivery service that provides evidence of the date of delivery, with all charges prepaid (for next morning delivery if sent by overnight delivery service), addressed to the appropriate party at its address listed below: To Borrower: With a copy to: To Lender: With a copy to: To the EDA: With a copy to: e/o Gatlin Development Company 888 E. Las Olas Boulevard, Suite 600 Fort Lauderdale, FL 33301 Attention: Mr. Chad Williard Briggs and Morgan, P.A. 2200 IDS Center 80 South Eighth Street Minneapolis, Minnesota 55402-2157 Attention: Thomas L. Bray Ladder Capital Finance LLC 345 Park Avenue, 8th Floor New York, New York 10154 Attention: Pamela McCormack Paul Hastings LLP 75 East 55th Street New York, New York 10021 Attention: Eric Allendorf 6301 Shingle Creek Parkway Brooklyn Center, Minnesota 55430-2199 Attn: City Administrator Kennedy & Graven Chartered 200 S. Sixth St. #470 Minneapolis, MN 55402-1458 Attention: Jenny Boulton All Notices given in accordance with the provisions of this Section will be deemed to have been received three (3) working days after having been deposited in any mail depository regularly maintained by the United State Postal Service, if sent by certified mail, or one (1) working day after having been deposited with a nationally recognized overnight delivery service, if sent by overnight delivery. 10. Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the EDA and Borrower covenant and agree to execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform its obligations under this Agreement and the transactions contemplated hereby. 5022008v4 11. Titles of Articles and Sections. Any titles of the Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 12.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 13.Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 14. Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. 15.Modification; Waiver; Successors and Assigns. No provision of this Agreement may be modified, waived or terminated, except in accordance with a written instrument executed by the party against whom enforcement of such modification, waiver or termination is sought. This Agreement shall be binding on, and shall inure to the benefit of, the parties' successors and assigns. 16.Authority. Each of the parties hereto represents and warrants as to themselves only that they have the power and authority to enter into this Agreement, and that the individuals signing below on behalf of each of the parties hereto have the authority to enter into this Agreement on behalf of their respective entities. Dated: December , 2012 SHINGLE CREEK, LLC By: SHINGLE CREEK MM, INC., its Managing Member By: Franklin C Gatlin, III CEO and Sole Regular Director STATE OF FLORIDA ) ss: COUNTY OF The foregoing instrument was acknowledged before me on this day of December, 2012 by Franklin C. Gatlin, III, the CEO and Sole Regular Director of Shingle Creek MM, Inc., who is personally known to me or who has produced a driver's license as identification, on behalf of Shingle Creek, LLC. Notary Public 5022008v4 Dated: December , 2012 LADDER CAPITAL FINANCE, LLC STATE OF ) ) ss: )COUNTY OF By: Print Name: Its: The foregoing instrument was acknowledged before me on this day of December, 2012 by , the of Ladder Capital Finance, LLC, a Delaware limited liability company, on behalf of the limited liability company. Notary Public 5022008v4 Dated: December , 2012 Economic Development Authority of the City of Brooklyn Center, Minnesota By Its: President and by Its: Executive Director STATE OF MINNESOTA ) SS: COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this day of December, 2012 by and , the President and Executive Director of The Economic Development Authority of the City of Brooklyn Center, Minnesota, a body corporate and politic established pursuant to Minn. Stat. Chapter 469, on behalf of the Authority. Notary Public Drafted by: Briggs & Morgan, P.A. Thomas L. Bray 2200 IDS Center 80 South 8 th Street Minneapolis, MN 55402 612-977-8400 5022008v4 Exhibit 1 Purchase Agreement That Part of Lot 1, Block 2, SHINGLE CREEK CROSSING, embraced within Tract A, Registered Land Survey 1430, Hennepin County, Minnesota 5022008v4 Exhibit 2 Lots 2 through 17, Block 1; Lot 1, except that part embraced within Tract A, Registered Land Survey No. 1430, Block 2; and Outlot A, SHINGLE CREEK CROSSING, Hennepin County, Minnesota 5022008v4 SUBORDINATION AGREEMENT 1.Parties. The parties to this SUBORDINATION AGREEMENT (the "Agreement") are Shingle Creek, LLC, a Delaware limited liability company (the "Developer"); Ladder Capital Finance LLC, a Delaware limited liability company ("Lender") and The Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"). 2.Recitals. 2.1 Recital One. The Developer and the EDA are parties to that certain Development Agreement dated June 17, 2011 and recorded in the office of the Hennepin County Registrar of Titles on June 30, 2011 as Document No. T4868190 and are parties to that certain First Amendment to Development Agreement dated November 13, 2012 and recorded in the office of the Hennepin County Registrar of Titles on November 27, 2012 as Document No. T5017704 (collectively, the "Development Agreement"). 2.2 Recital Two. Lender has loaned $15,000,000.00 to the Developer (the "Loan") pursuant to various loan documents including, but not limited to a Mortgage, Assignment of Leases and Rents and Security Agreement and an Assignment of Leases and Rents. The legal description of the real property that is subject to the Mortgage and the Assignment of Leases and Rents is set forth on the attached Exhibit A (the "Mortgaged Property"). 2.3 Recital Five. Pursuant to Section 6.5 of the Development Agreement, the EDA has agreed to execute a subordination agreement, in form and substance mutually acceptable to the EDA and Lender, to subordinate the provisions of the Development Agreement to the terms of the loan documents. 3.Subordination. The EDA hereby agrees that the Development Agreement, and all of the EDA's rights thereunder are, and shall be in all respects, subordinate and inferior to the liens and security interests created, or to be created, for the benefit of Lender, in that certain Mortgage, Assignment of Leases and Rents and Security Agreement executed by Shingle Creek, LLC in favor of Ladder Capital Finance LLC as of November 21, 2012 and recorded in the office of the Hennepin County Registrar of Titles on November 27, 2012 as Document No. T5017705 and under that certain Assignment of Leases and Rents executed by Shingle Creek, LLC in favor of Ladder Capital Finance LLC as of November 21, 2012 and recorded in the office of the Hennepin County Registrar of Titles on November 27, 2012 as Document No. T5017706, and to any renewals, extensions, modifications, assignments, replacements or consolidations thereof, and to the rights, privileges and powers of Lender thereunder. 4.Titles of Articles and Sections. Any titles of the Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 5048398v3 6.Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 7.Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. 2 5048398v3 Dated: December , 2012 SHINGLE CREEK, LLC, a Delaware limited liability company By: SHINGLE CREEK MM, INC., a Delaware corporation; Managing Member By: Franklin C Gatlin III, Sole Regular Director STATE OF ) ss: COUNTY OF The foregoing instrument was acknowledged before me on this day of December, 2012 by Franklin C. Gatlin III, the Sole Regular Director of SHINGLE CREEK MM, INC., a Delaware corporation, the Managing Member of Shingle Creek, LLC, a Delaware limited liability company on behalf of said limited liability company. Notary Public 5048398v3 Dated: December , 2012 LADDER CAPITAL FINANCE LLC By Print Name: Its: STATE OF COUNTY OF The foregoing instrument was acknowledged before me on this day of December, 2012 by , the of Ladder Capital Finance LLC, a Delaware limited liability company, on behalf of the limited liability company. Notary Public 5048398v3 Dated: December , 2012 ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER, MINNESOTA By Its: President and by Its Executive Director STATE OF MINNESOTA ) ) ss: COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this day of December, 2012 by and , the President and Executive Director of the Economic Development Authority of the City of Brooklyn Center, Minnesota, a body corporate and politic established pursuant to Minn. Stat. Chapter 469, on behalf of the Authority. Notary Public Drafted by: Briggs & Morgan, P.A. Thomas L. Bray 2200 IDS Center 80 South 8 th Street Minneapolis, MN 55402 612-977-8400 5048398v3 EXHIBIT A Legal Description of the Mortgaged Property Lots 2 through 17, Block 1; Lot 1, except that part embraced within Tract A, Registered Land Survey No. 1430, Block 2; and Outlot A, SHINGLE CREEK CROSSING, Hennepin County, Minnesota 5048398v3 EDA ITEM MEMORANDUM DATE: May 17, 2011 TO: Curt Boganey, City Manager FROM: Gary Bite!, 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, clean, safe community that enhances the quail()) of life and preserves the public trust EDA ITEM MEMORANDUM available upon the execution of the Tax Increment Development Agreement 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 28 th 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 comipletion of the minimum improvements of the 1 st 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 EDA'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 community that enhances the quality of life and preserves the public trust 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 EDA'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 EDA'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 community that enhances the quality of life and preserves the public trust 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, sa e connnuni0 dun enhances ihe quality of life and preserves the public trust C, 11191 -C moz '11On 10 ,.360111 on:sota - 20\ 51,1,1 mneAs 0,As s nrnlWO1to LVll 10C- \ 2 , 01,00, .v.00-0 /141.03 va •0 r0pary , 000,a0-• 0.0.04 p It• `0.0 Vva V-. 0 0.00 IV» 04 0,, ,0 00•••• VA 01.010 VA .04.10.0.0 aAid ltlaunpunv V10001Y1 111‘0,11.1,1 NW 2,011130 NA1N002113NISSOU0 >133'80 310 NII-IS 0AV voretexasvm =roiltuoi440PN :111 01 0.0 IV Nv )01100 .0 Komi 0.0“013 11000 1000 Ot AO Z 133HS .1.181HX3 ONISVHd SN■fld IN3INd0-13A3C1 ivnidaalloo EDA Agenda Item No. 4b EDA ITEM MEMORANDUM DATE: 5 December 2012 TO: Curt Boganey, Executive Director FROM: Daniel Jordet, Assistant Treasurer SUBJECT: 2013 Economic Development Authority Budget Recommendation: It is recommended that the Economic Development Authority consider adoption of the attached resolution approving the 2013 operating budget for the EDA. Background: The EDA adopted a preliminary 2013 budget on 10 September 2012. The primary revenue source for EDA operations will be the property tax levied by the HRA and transferred to the EDA. Interest revenue will be negligible in 2013. The total EDA revenue budget is proposed at $ 246,160. Against those revenues, the EDA expenditure budget includes two FTE staff, various legal and professional services, dues to 6 organizations promoting economic development. Total expenditures are projected to be $ 439,109. Budget Issues: The budget result is expenditures in excess of revenues by $ 192,949. This amount will be used from the EDA balance built up over past operating years. With a $ 935,200 balance projected for the end of 2012 this would leave $ 742,251 in the EDA fund balance at the end of 2013. Council Goals: Strategic: 1. We will proceed aggressively with implementation of City's redevelopment plans Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust Member introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION APPROVING THE FINAL BUDGET FOR THE CITY OF BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY FOR FISCAL YEAR 2013 WHEREAS, the Economic Development Authority of City of Brooklyn Center has considered the final budget for Fiscal Year 2013. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of Brooklyn Center, Minnesota that revenues and appropriations for the Economic Development Authority for the 2013 fiscal year are hereby adopted as follows: Economic Development Authority Revenues Other Financing Sources $ 246,160 Total Economic Development Authority $ 246,160 Appropriations EDA Operations $ 439,109 Total Economic Development Authority $ 439,109 December 10, 2012 Date Chair The motion for the adoption of the foregoing resolution was duly seconded by member 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.