HomeMy WebLinkAbout2019 06-24 EDAPE conomic Development
Authority
City Hall - Council Chambers
J une 24, 2019
AGE NDA
1.Call to Order
The City Council requests that attendees turn off cell phones and pagers during the meeting. A
copy of the full C ity Counc il packet, including E D A (E conomic Development Authority ), is
available to the public. The packet ring binder is located at the entrance of the council
chambers.
2.Roll Call
3.Approval of Consent Agenda
The following items are considered to be routine by the Economic Development Authority (E D A)
and will been acted by one motion. There will be no separate disc ussion of these items unless a
Commissioner so requests, in whic h event the item will be removed from the c onsent agenda
and considered at the end of Commission Consideration I tems.
a.Approval of Minutes
- Motion to approve minutes from May 28, 2019
4.Commission Consideration Items
a.Resolution A pproving a Purchase A greement and Conveyance of Certain
Property to Centra Homes L L C
- It is recommended that the Economic Development Authority:
open the public hearing;
take public input;
close the public hearing; and
consider adoption of a resolution approving a purchase agreement
and conveyance of certain to Centra Homes LLC
b.Consideration of a Term S heet between Real E state E quities and the
Economic Development A uthority of Brooklyn Center regarding Tax I ncrement
F inancing
- Motion to direct staff to prepare an agreement consistent with the term
sheet
5.Adjournment
ED A ITEM MEMOR ANDUM
DAT E:6/24/2019
TO :C urt Boganey, C ity Manager
T HR O UG H:Dr. R eggie Edwards , Deputy C ity Manager
F R O M:Barb S uciu, C ity C lerk
S UBJ EC T:Approval of Minutes
Background:
S trategic Priorities and Values:
O perational Exc ellenc e
AT TAC HME N T S:
Desc ription Upload Date Type
May 28, 2019 EDA 6/19/2019 Bac kup Material
05/28/19 -1- DRAFT
MINUTES OF THE PROCEEDINGS OF THE
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF BROOKLYN CENTER
IN THE COUNTY OF HENNEPIN AND THE
STATE OF MINNESOTA
REGULAR SESSION
MAY 28, 2019
CITY HALL – COUNCIL CHAMBERS
1. CALL TO ORDER
The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to
order by President Mike Elliott at 10:05 p.m.
2. ROLL CALL
President Mike Elliott and Commissioners Marquita Butler, April Graves, and Dan Ryan.
Commissioner Kris Lawrence-Anderson was absent and excused. Also present were Executive
Director Curt Boganey, Deputy Executive Director Reggie Edwards, Director of Fiscal &
Support Services Nate Reinhardt, Community Development Director Meg Beekman, Business
and Work Force Development Coordinator Brett Angell, City Attorney Troy Gilchrist, and Mary
Mullen, TimeSaver Off Site Secretarial, Inc.
3. APPROVAL OF AGENDA AND CONSENT AGENDA
Commissioner Ryan moved, and Commissioner Butler seconded to approve the Agenda and
Consent Agenda, and the following item was approved:
3a. APPROVAL OF MINUTES
1. May 13, 2019 – Regular Session
Motion passed unanimously.
4. COMMISSION CONSIDERATION ITEMS
4a. RESOLUTION NO. 2019-11 APPROVING THE ACQUISITION OF CERTAIN
PROPERTY LOCATED AT 6921 BROOKLYN BOULEVARD, BROOKLYN
CENTER, MN
Business and Workforce Development Specialist Brett Angell reviewed the potential purchase of
single-family residential property at 6921 Brooklyn Boulevard. The property is currently zoned
C-1 Commercial. The property owner died in January 2019, and the City recently agreed on a
purchase agreement with a family member.
05/28/19 -2- DRAFT
Mr. Angell stated TIF District #3 funds would be used for the purchase of this property, and the
closing will occur in mid-June 2019. The City will be responsible for the removal of personal
belongings and items left in the home, at an estimated cost of $4,000-5,000.
Mr. Angell stated the home on the property would be demolished, and the property combined
with three EDA-owned properties to the north. He added these combined properties have the
potential to be an attractive redevelopment location.
Councilmember Graves asked whether any of the homeowner’s personal property could be
donated. Mr. Angell stated City Staff would look into the possibility of donating any reusable
items.
Commissioner Ryan moved, and Commissioner Graves seconded to adopt RESOLUTION NO.
2019-11 Approving the Acquisition of Certain Property Located at 6921 Brooklyn Boulevard,
Brooklyn Center, MN.
Motion passed unanimously.
6. ADJOURNMENT
Commissioner Graves moved, and Commissioner Butler seconded adjournment of the Economic
Development Authority meeting at 10:14 p.m.
Motion passed unanimously.
ED A ITEM MEMOR ANDUM
DAT E:6/24/2019
TO :C urt Boganey, C ity Manager
T HR O UG H:Meg Beekman, C ommunity Development Director
F R O M:Brett Angell, Bus iness and Workforce Development S pecialist
S UBJ EC T:R esolution Approving a P urchas e Agreement and C onveyance of C ertain P roperty to C entra
Homes LLC
Background:
Eas tbrook Estates 2nd Addition c ompris es a 6-parc el area of land totaling approximately 6.43 ac res . T he
properties are loc ated just southwest of 69th Avenue and Highway 252. T he properties are c urrently zoned and
guided for s ingle family residential use. S urrounding uses to the properties includes high-density res idential to
the north, low-dens ity residential to the south, Highway 252 to the eas t, and low-density res idential to the west.
T he EDA ac quired the parc els between 2004 through 2012, with the intent to redevelop the area into single-
family res idential homes .
At the O ctober 8th C ity C ouncil meeting, the C ouncil heard three proposals from builders to develop the
properties. T he C ounc il selec ted a proposal from C entra Homes for the c onstruc tion of 35 single-family
detac hed homes, with the developer res ponsible for ac quiring additional adjac ent privately owned land. T he
propos ed single family homes would be two-s tory homes and have a median pric e of $332,000. C entra
Homes is res ponsible for the cons truction and installation of public infras tructure inc luding utilities and
roadways .
C entra Homes received a P reliminary Development Agreement (P DA) for the properties at the December 10th,
2018 meeting allowing C entra exc lusive development rights to the property and additional time to create
building plans, c onduct tes ting or surveying of the property, complete a purc hase agreement, and rec eive the
nec es s ary land use approvals for development. At the April 8th meeting, C entra Homes received an extens ion
to the P DA with slight adjus tments to their c onc eptual plan, inc luding a reduced acquis ition pric e and a
reduc tion in the total number of homes to be cons tructed from 35 to 30.
A P urc hase Agreement for the properties has been c reated by the C ity for the s ale and c onveyance of the
property to C entra Homes . T he P urc hase Agreement for the properties is attached for review. T he total
purc hase price for the properties is $115,000. Upon execution of the P urchas e Agreement by both parties ,
C entra Homes will be required to pay $6,000 in earnest money which will be deduc ted from the total purchas e
price at the time of closing. C ontingencies of the P urchase Agreement include testing to be conducted by the
Buyer at their sole cost, the buyer obtaining financing, a commitment of title, and land use approvals by the City.
Any contingencies must be exercised by written notice to the City on or before August 30, 2019. U pon approval
of the P urchase Agreement by the E D A, closing of the properties shall happen on or before September 30th,
2019.
P er the P urc hase Agreement, the EDA will be required to pay any spec ial assessments on the properties . T his
will be a total c os t of approximately $15,276. T he properties are c urrently tax exempt and there will not be
prorated taxes that the EDA will need to pay prior to the s ale.
Additionally, the P urchas e Agreement inc ludes a R everter claus e whic h if C entra Homes fails to s ubstantially
complete c onstruc tion of s ite grading within twelve (12) months following the c los ing date, and s uc h failure is
not c ured within thirty (30) days following written notice from the C ity, then the C ity shall have the right to re-
enter and take pos s es s ion of the P roperty and to terminate and reves t in the C ity the estate conveyed by the
deed.
Budget Issues:
P roceeds from the s ale will be returned to the T I F # 3 District Hous ing F und.
S trategic Priorities and Values:
Targeted R edevelopment
AT TAC HME N T S:
Desc ription Upload Date Type
R esolution 6/19/2019 R es olution Letter
P urchas e Agreement 6/19/2019 Exhibit
Commissioner introduced the following resolution
and moved its adoption:
EDA RESOLUTION NO. 2019-______
RESOLUTION APPROVING A PURCHASE AGREEMENT AND
CONVEYANCE OF CERTAIN PROPERTY TO CENTRA HOMES LLC
BE IT RESOLVED by the Board of Commissioners (“Board”) of the Economic
Development Authority of the City of Brooklyn Center, Minnesota (“Authority”) as follows:
Section 1. Recitals.
1.01. The Authority is authorized pursuant to Minnesota Statutes, Sections 469.090 to
469.1081 (the “EDA Act”), to acquire and convey real property and to undertake certain
activities to facilitate the development of real property by private enterprise.
1.02. To facilitate development of certain property in the City of Brooklyn Center,
Minnesota (the “City”), the Authority proposes to enter into a Purchase Agreement (the “Contract”)
between the Authority and Centra Homes LLC (“Buyer”), under which, among other things, the
Authority will convey the property located in the City legally described on the attached Exhibit A
(the “Property”) to Buyer to construct 30 single family homes on the Property.
1.03. The Authority has on this date conducted a duly noticed public hearing regarding the
sale of the Property to Buyer, at which all interested persons were given an opportunity to be heard.
1.04. The Authority finds and determines that conveyance of the Property to Buyer is in
the public interest and will further the objectives of its general plan of economic development,
because it will provide an opportunity for increased housing opportunities in the City and serve as
an impetus for further development.
Section 2. Authority Approval; Further Proceedings.
2.01. The Board hereby approves the Contract in substantially the form presented to the
Board, including conveyance of the Property to Buyer, subject to modifications that do not alter the
substance of the transaction and that are approved by the President and Executive Director, provided
that execution of the Contract by those officials shall be conclusive evidence of their approval.
2.02. Authority staff and officials are authorized to take all actions necessary to perform
the Authority’s obligations under the Contract as a whole, including without limitation execution of
any documents to which the Authority is a party referenced in or attached to the Contract, and any
deed or other documents necessary to convey the Property to Buyer, all as described in the Contract.
2
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.
3
EXHIBIT A
Legal Description of the Property
PARCEL 1:
Tract A:
That part of Lot 24, Auditor’s Subdivision Number 310, shown as Parcel 17 on Minnesota
Department of Transportation Right of Way No. 27-20 as the same is on file and of record in the
office of the County Recorder in and for Hennepin County, Minnesota;
Tract B:
Lots 25, 26 and the south 112 feet of Lot 27, Auditor's Subdivision Number 310, Minnesota;
which lies westerly of the following-described Line 1:
Commencing at Right of Way Boundary Corner B35 as shown on said Plat No. 27-20; thence
westerly on an azimuth of 269 degrees 35 minutes 20 seconds along the boundary of said plat for
195.49 feet to the point of beginning of Line 1 to be described; thence on an azimuth of 345
degrees 58 minutes 30 seconds for 268.52 feet; thence on an azimuth 89 degrees 35 minutes 20
seconds for 129.14 feet; thence on an azimuth of 355 degrees 02 minutes 49 seconds for 112.35
feet to the Right of Way Boundary Corner B40 as shown on said Plat No. 27-20 and there
terminating;
Tract C:
That part of Lot 27, Auditor’s Subdivision Number 310, Hennepin County, Minnesota, described as
follows: Beginning at a point on the North line of said Lot 27 distant 257.13 feet West from the
Northeast corner thereof; thence continuing west along said North line a distance of 75 feet; thence
South 246.5 feet to a point which is distant 332.61 feet West from point in the East line of Lot 27
distant 246.48 feet South from Northeast corner thereof; thence Easterly along the last described
line a distance of 75 feet; thence Northerly 246.5 feet to the point of beginning.
PARCEL 2:
The Westerly 100 feet of Lot 27, Auditor’s Subdivision Number 310, Hennepin County,
Minnesota.
PARCEL 3:
Outlot A, Ditzler Addition, Hennepin County, Minnesota.
PARCEL 4:
Outlot A, Eastbrook Estates, Hennepin County, Minnesota.
PARCEL 5:
4
Lot 2, Block 1, Swanco Terrance, Hennepin County, Minnesota.
PARCEL 6:
Lot 30, Auditor’s Subdivision No. 310, Hennepin County, Minnesota.
586580v1BR305-158
PURCHASE AGREEMENT
1. PARTIES. This Purchase Agreement (this “Agreement”) is made on this _____
day of ___________, 2019 (the “Effective Date”), by and between the Economic Development
Authority of Brooklyn Center, Minnesota, a Minnesota body corporate and politic (the “Seller”)
and Centra Homes LLC, a Minnesota limited liability company, or its permitted assigns (the
“Buyer”).
2. SALE OF PROPERTY. The Seller agrees to sell to the Buyer and the Buyer
agrees to buy from the Seller, the real estate described on the attached Exhibit A (the
“Property”).
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.1. Purchase Price. The Buyer shall pay the Seller $115,000 for the Property (the
“Purchase Price”).
3.2. Earnest Money. Upon approval and execution of this Agreement by the Buyer
and the Seller, the Buyer shall pay to _________ (the “Title Company”) $6,000 in
earnest money and in part payment therefor (the “Earnest Money”). Said Earnest
Money shall be deducted from the Purchase Price at Closing. The Earnest Money
shall be refunded to Buyer only if (a) all of the contingencies are not removed or
waived by the Buyer and closing does not occur or (b) in the event of an uncured
Seller default, as set forth herein. If all the contingencies are removed and the
Buyer fails to close this transaction, the Seller’s remedy shall be limited to
receiving the Earnest Money as liquidated damages as is more fully described i n
Section 15.2. The balance of said Purchase Price less the Earnest Money shall be
paid by the Buyer to the Seller on or before the Closing Date, as described in
Section 6 herein, at which time the Seller’s deed to the Property shall be delivered
to the Buyer.
4. OBLIGATIONS OF THE SELLER. The Seller shall provide the following
documentation:
4.1. Representations and Warranties. The representations and warranties of the Seller
contained in this Agreement must be true now and on the Closing Date in all
material respects as if made on the Closing Date and the Seller shall have
delivered to the Buyer on the Closing Date, a certificate dated the Closing Date,
signed by an authorized representative of the Seller, certifying that such
representations and warranties are true as of the Closing Date in all material
respects (the “Closing Certificate”).
4.2. Title. Title shall have been found marketable, or been made marketable, in
accordance with the requirements and terms of Section 8 below.
4.3. Performance of the Seller’s Obligations. The Seller shall have performed all of
the obligations required to be performed by the Seller under this Agreement in all
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586580v1BR305-158
material respects. Included within the obligations of the Seller under this
Agreement shall be the following:
4.3.1. The Seller agrees to cooperate with the Buyer as reasonably necessary to
permit the Buyer to investigate the Property. The Seller shall make
available to the Buyer and the Buyer’s agents copies of any surveys,
reports, records, and permits in the Seller’s possession relating to the
Property.
4.3.2. The Seller shall deliver to the Buyer the Title Evidence required in Section
8 on or before 10 days from the Effective Date.
5. CONTINGENCIES WHICH MUST BE EXERCISED BY WRITTEN
NOTICE TO THE SELLER ON OR BEFORE AUGUST 30, 2019 (THE
“CONTINGENCY DATE”):
5.1. Buyer’s Contingencies.
5.1.1. Testing. The Buyer shall have determined that it is satisfied with the
results of, and matters disclosed by, any environmental site assessments,
soil tests, engineering inspections, hazardous substances and
environmental reviews of the Property, all such tests, assessments,
inspections and reviews to be obtained at the Buyer’s sole cost and
expense.
a. The Buyer shall pay all costs and expenses of such investigation
and testing and shall promptly repair and restore any damage to the
Property caused by the Buyer’s testing and return the Property to
substantially the same condition as existed prior to entry. The
Buyer shall indemnify, defend, and hold the Seller harmless from
any claim for damage to person or property arising from any
investigation or inspection of the Property conducted by the Buyer,
its agents or contractors, including the cost of attorneys’ fees,
provided, however, that Buyer shall not be responsible for any pre-
existing conditions that are discovered by Buyer or its consultants
so long as, following discovery, Buyer or its consultants do not
materially exacerbate such conditions through their actions.
b. Copies of any final written reports, studies, or test results obtained
by the Buyer in connection with its inspection of the Property or
investigation relating to the Property shall be delivered to the
Seller promptly upon receipt of the same at no cost to the Seller.
5.1.2. Financing. The sale of the Property shall be contingent upon the Buyer
obtaining financing acceptable to the Buyer, in its sole discretion, for the
acquisition of the Property at terms that are acceptable to the Buyer. In
the event this financing contingency is not satisfied and released by the
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586580v1BR305-158
Buyer by the Contingency Date, the Earnest Money and all interest earned
thereon will be returned to the Buyer.
5.1.3. Title Report. The Buyer’s obligation to close hereunder is subject to its
approval of a commitment of title for the Property to be ordered by the
Buyer immediately upon execution of this Agreement, and as is more fully
described in Section 8.
5.1.4. Land Use Approvals. The Buyer having received all land use approvals
from the City of Brooklyn Center and any other governmental entities or
agencies deemed necessary by the Buyer for its intended use of the
Property, including, but not limited to, site plan approval, and preliminary
and final plat approval.
If, on or before the Contingency Date or if required earlier by this Agreement, if the Buyer
determines that any of its contingencies listed in this Section have not been satisfied in its sole
discretion, then this Agreement may be terminated by written notice from the Buyer to the Seller,
which notice must given no later than the Contingency Date. If the Buyer does not give written
notice of termination on or before the Contingency Date, all of such contingencies will be
deemed to have been satisfied and the parties shall proceed to close this transaction in
accordance with the terms of this Agreement. If this Agreement is terminated by the Buyer in
accordance with this Section, the Title Company shall return the Earnest Money to the Buyer and
neither party shall have any further rights or obligations regarding this Agreement or the
Property. All of the contingencies set forth in this Agreement are specifically stated and agreed
to be for the sole and exclusive benefit of the Buyer and the Buyer shall have the right to
unilaterally waive any of its contingencies by written notice to the Seller.
6. CLOSING. The closing of the purchase and sale contemplated by this
Agreement (the “Closing”) shall occur on or before September 30, 2019 or such date on which
the parties may agree (the “Closing Date”). The closing shall occur at the offices of the Seller,
unless otherwise agreed to by the parties. The Seller agrees to deliver possession of the Property
to the Buyer on the Closing Date.
6.1. Seller’s Closing Documents. On the Closing Date, the Seller shall execute and
deliver to the Buyer the following (collectively, “Seller’s Closing Documents”),
all in form and content reasonably satisfactory to the Seller and the Buyer:
6.1.1. Deed. A quit claim deed conveying the Property to the Buyer.
6.1.2. Seller’s Affidavit. A seller’s affidavit as required by the Title Company to
issue an owner’s policy of title insurance with the standard exceptions
waived.
6.1.3. Original Documents. Original copies of any surveys, reports, permits, and
records in the Seller’s possession.
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586580v1BR305-158
6.1.4. FIRPTA Affidavit. A non-foreign affidavit, properly executed, containing
such information as is required by the Internal Revenue Code Section
1445(b)(2) and its regulations.
6.1.5. Other Documents. Any other documents reasonably required in order to
complete the transaction contemplated by this Agreement.
6.2. Buyer’s Closing Documents. On the Closing Date, the Buyer shall execute, as
appropriate and deliver to the Seller the following (collectively, “Buyer’s Closing
Documents”):
6.2.1. Purchase Price. The Purchase Price in good funds (certified or cashier’s
check or wire transfer).
6.2.2. Other Documents. Such affidavits of the Buyer, certificates of value, or
other documents as may be reasonably required in order to complete the
transaction contemplated by this Agreement.
7. PRORATIONS. The Seller and the Buyer agree to the following prorations and
allocation of costs regarding this Agreement:
7.1. Title Insurance and Closing Costs. The Seller shall pay the cost to record any
document required to establish marketable title in the Seller; any fees incurred for
updating title, including the cost of preparing the Title Commitment and title
search and examination fees; any state deed tax, conservation fee, or other federal,
state, or local documentary or revenue stamps or transfer tax with respect to the
deed to be delivered by the Seller. The Buyer shall pay the cost of all premiums
required for the issuance of a title insurance policy and any endorsements; the
fees of any soil tests, surveys, environmental assessments, inspection reports,
appraisals, or other tests or reports ordered by the Buyer; recording fees and
charges related to the recording of the deed; and its own legal and accounting fees
associated with this transaction. All closing fees charged by the Title Company
and any escrow fees charged by any escrow agent engaged by the parties in
connection with this Agreement shall be split equally between the Buyer and the
Seller.
7.2. Real Estate Taxes and Special Assessments. The Seller shall pay, on or before the
Closing Date, all levied special assessments, constituting a lien against the
Property as of the effective date, including, without limitation, any installments of
special assessments that are payable with general real estate taxes in the year in
which Closing occurs. The Property is currently tax-exempt, but in the event that
there are any general real estate taxes payable in any year prior to the year in
which the Closing occurs, they shall be paid by the Seller. Any general real estate
taxes payable in the year in which Closing occurs shall be prorated between the
Buyer and the Seller as of the Closing Date.
8. TITLE EXAMINATION. Title Examination shall be conducted as follows:
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586580v1BR305-158
8.1. Seller’s Title Evidence. No later than July 10, 2019, the Seller shall furnish the
following (collectively, “Title Evidence”) to the Buyer:
8.1.1. Title Commitment. A title commitment for the Property (the “Title
Commitment”).
8.1.2. Survey. A copy of any existing land survey of the Property that is in the
Seller’s possession or control. The Buyer, at its option, also may obtain,
at its expense, an updated survey of the Property (the “Updated Survey”).
Any Updated Survey shall be certified and delivered to the Seller as well
as the Buyer and any other parties that the Buyer may designate.
8.2 Buyer’s Objections. No later than 15 days after receiving the Title Commitment,
the Buyer must make written objections (“Objections”) to the marketability of
title to the Property based on the Title Evidence. If the Buyer elects to obtain an
Updated Survey, objections based upon the Updated Survey must be made within
seven (7) days after receipt of said Updated Survey but in no event later than the
Contingency Date. The Buyer’s failure to make Objections within such time
period will constitute a waiver of Objections. However, any matter which is not
referenced in the Title Commitment and is first recorded, discovered, or disclosed
after the effective date of the Title Commitment may be objected to by the Buyer
in the manner described herein. Any matter shown on such Title Evidence and
not objected to by the Buyer shall be a “Permitted Encumbrance” hereunder.
Within seven (7) days after receipt of the Buyer’s Objections, the Seller shall
notify the Buyer in writing if the Seller elects not to cure the Objections. If such
notice is given within said seven (7) day period, the Buyer may either waive the
Objections or terminate this Agreement by giving written notice of termination to
the Seller within ten (10) days after the Seller’s notice is given to the Buyer. If
written notice by the Seller is not given within the ten (10) day period, the Seller
shall use commercially reasonable efforts to correct any Objections within thirty
(30) days after the expiration of the ten (10) day period (“Cure Period”). If the
Title Company is willing to issue a title insurance policy to the Buyer that does
not except from title insurance coverage an item the Buyer has objected to, the
objection relating to such item shall be deemed cured. If the Objections are not
cured within the Cure Period, the Buyer shall have the option to do any of the
following:
8.2.1. Terminate this Agreement by giving written notice to the Seller within ten
(10) days after the expiration of the Cure Period and neither the Seller nor
the Buyer shall have further rights or obligations hereunder. In such event
the Title Company shall return all Earnest Money to the Buyer.
8.2.2. Waive the objections and proceed to close without reduction in the
Purchase Price.
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586580v1BR305-158
The Buyer shall make its election within ten (10) days after expirati on of the
Seller’s Cure Period. A failure to make an election within such period shall be
deemed an election to proceed to close pursuant to subsection 8.2.2.
9. REPRESENTATIONS AND WARRANTIES BY THE SELLER. The
following representations made by the Seller are limited to the actual knowledge of Cornelius
Boganey, the Executive Director. The Seller represents and warrants to the Buyer that the
following are true in all material respects now and, as modified by any changes about which the
Seller notifies the Buyer in writing following after the date hereof, will be true in all material
respects on the Closing Date:
9.1. Authority. The Seller is a Minnesota body corporate and politic, duly created
under and subject to the laws of the State of Minnesota; the Seller has the
requisite power and authority to enter into and perform this Agreement and those
Seller Closing Documents signed by it; such documents have been or will be duly
authorized by all necessary action on the part of the Seller and have been or will
be duly executed and delivered; such execution, delivery, and performance by the
Seller of such documents does not conflict with or result in a violation of any
judgment, order, or decree of any court or arbiter to which the Seller is a party;
such documents are valid and binding obligations of the Seller, and are
enforceable in accordance with their terms, subject to bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights and remedies of
creditors generally and principles of equity.
9.2. Rights of Others to Purchase the Property. The Seller has not entered into any
other contracts for the sale of the Property, nor are there any rights of first refusal
or options to purchase the Property or any other rights of others that might prevent
the sale of the Property contemplated by this Agreement.
9.3. Use of the Property. To the best of the Seller’s knowledge without investigation,
the Property is usable for its current uses without violating any federal, state,
local, or other governmental building, zoning, health, safety, platting, subdivision,
or other law, ordinance, or regulation, or any applicable private restriction, and
such use is a legal conforming use.
9.4. Proceedings. There is no action, litigation, investigation, condemnation, or
proceeding of any kind pending or, to the best of the Seller’s knowledge without
investigation, threatened against any portion of the Property.
9.5. Wells. To the best of the Seller’s knowledge, no wells exist on the Property.
9.6. Sewage Treatment Systems. To the best of the Seller’s knowledge, no sewage
treatment system exists on the Property.
9.7. Title. The Seller owns fee title to the Property.
9.8. Notices. The Seller has not received any written notice of noncompliance with
any applicable federal, state, municipal, or county environmental laws, statutes, or
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586580v1BR305-158
ordinances from any governmental authority having jurisdiction over the
Property, other than the records provided to the Buyer.
9.9. Use. While this Agreement is in effect, the Seller shall not transfer the Property,
or any portion thereof, except to an entity or individual affiliated with the Seller,
or create on the Property any easements, liens, leasehold interests, encumbrances,
or other interests or take any other actions that would affect the Property or the
Seller’s ability to comply with the terms of this Agreement. Additionally, while
this Agreement is in effect, the Seller shall operate and maintain the Property in
the same manner as it has been operated and maintained heretofore, free from
waste and neglect, reasonable wear and tear excepted.
9.10. Insurance. While this Agreement is in effect, the Seller shall maintain or cause to
be maintained, in full force and effect, all liability and other commercially
reasonable insurance upon and with respect to the Property against such hazards
and in such amounts as exist on the date hereof.
9.11. Approvals. No consent, authorization, license, permit, registration, or approval
of, or exemption or other action by, any other governmental or public body,
commission, or authority is required in connection with the execution, delivery,
and performance by the Seller of this Agreement.
The Seller’s representations shall be true, accurate, and complete as of the date of this
Agreement, in all material respects and, as modified by any notices given by the Seller to the
Buyer, on the Closing Date in all material respects. If any time prior to Closing, the Bu yer shall
determine that any representation herein made by the Seller was not true in all material respects
when made, the Buyer’s sole remedy shall be to terminate this Agreement by giving notice to the
Seller and seeking any applicable remedies for breach from the Seller. The Earnest Money paid
by the Buyer shall be returned to the Buyer.
Notwithstanding the above paragraph, all representations and warranties shall terminate
six (6) months following the Closing Date. Any claim by the Buyer not made by written notice
delivered to the Seller before such date the representation or warranty terminates shall be deemed
waived.
10. “AS IS, WHERE IS.” The Buyer acknowledges that it has inspected or has had
the opportunity to inspect the Property and agrees to accept the Property “AS IS” with no right of
set off or reduction in the Purchase Price. Such sale shall be without representation of
warranties, express or implied, either oral or written, made by the Seller or any official,
employee or agent of the Seller with respect to the physical condition of the Property, including,
but not limited to, the existence of or absence of petroleum, asbestos, lead, hazardous substances,
pollutants, or contaminants in, on, or under, or affecting the Property. Other than as expressly
stated herein, or expressly stated in any closing document delivered by Seller at Closing, Buyer
acknowledges and agrees that the Seller has not made and does not make any representations,
warranties, or covenants of any kind or character whatsoever, whether expressed or implied, with
respect to warranty of income potential, operating expenses, uses, habitability, tenant ability, or
suitability for any purpose, merchantability, or fitness of the Property for a particular purpose, all
8
586580v1BR305-158
of which warranties the Seller hereby expressly disclaims, except as stated above. The Buyer
expressly assumes, at closing, all environmental and other liabilities with respect to the Property.
Except for the representations herein, the Buyer is solely relying upon information and
knowledge obtained from its own investigation, experience, and knowledge obtained from its
own investigation, experience, or personal inspection of the Property. The foregoing provision
shall survive Closing and shall not be deemed merged into any instrument of conveyance
delivered at Closing.
11. REPRESENTATIONS AND WARRANTIES BY THE BUYER. The Buyer
represents and warrants to the Seller that the Buyer is a Minnesota limited liability company; that
the Buyer has the requisite capacity, power and authority to enter into this Agreement and the
Buyer’s Closing Documents signed by it; such documents have been or will be duly authorized
by all necessary action on the part of the Buyer and have been or will be duly executed and
delivered; delivery and performance by the Buyer of such documents does not conflict with or
result in a violation of any judgment, order, or decree of any court or arbiter to which the Buyer
is a party; such documents are valid and binding obligations of the Buyer, and are enforceable in
accordance with their terms.
12. CONDEMNATION. If, prior to the Closing, eminent domain proceedings are
commenced against all or any material part of the Property, the Seller shall immediately give
notice to the Buyer of such fact and at the Buyer’s option (to be exercised within 15 days after
the Seller’s notice), this Agreement shall terminate, in which event neither party will have further
obligations under this Agreement. The Earnest Money paid by the Buyer shall be returned to t he
Buyer. If the Buyer fails to give such notice, then there shall be no reduction in the Purchase
Price, and the Seller shall assign to the Buyer at the Closing all of the Seller’s right, title, and
interest in and to any award made or to be made in the condemnation proceedings. Prior to the
Closing, the Seller shall not designate counsel, appear in, or otherwise act with respect to the
condemnation proceedings without the Buyer’s prior written consent. For purposes of this
section, the words “a material part” means a part if acquired by a condemning authority would
materially hinder Buyer’s operations on the Property.
13. COMMISSIONS. Both the Buyer and the Seller represent that they have not
entered into a contract with any real estate broker, whereby the broker is entitled to a
commission resulting from the transaction contemplated by this Agreement. Each party agrees
to indemnify, defend, and hold harmless the other party against any claim made by a real estate
broker for a commission or fee based on alleged acts or agreements with the indemnifying party.
14. REMEDIES.
14.1. Buyer’s Remedies. The Seller shall not be considered in default under this
Agreement unless and until: (i) the Seller has failed to materially comply with or
satisfy any of the Seller’s obligations in this Agreement; (ii) the Buyer has
provided the Seller with written notice of such default (the “Default Notice”),
which Default Notice shall specify the date on which the default occurred, the
nature of the default and the Buyer’s proposed cure; and (iii) the Buyer has
allowed the Seller five (5) business days (the “Cure Period”), after the Seller
receives such Default Notice, to cure the default. If the Seller is in default under
9
586580v1BR305-158
this Agreement for any cause other than the default of the Buyer, the Buyer may
at its sole option and remedy, elect, in writing to the Seller (the “No tice of
Election”), within thirty (30) days after the Cure Period, to: (a) rescind this
Agreement and receive the Earnest Money, after which, neither party shall have
any further obligations to the other, except those obligations which survive
termination; (b) proceed with this Agreement and take the Property “AS IS”; or
(c) file an action seeking specific performance (but not damages except for fees
and costs associated with such action). In the event the Buyer does not timely
deliver a Notice of Election to the Seller, it shall be deemed that the Buyer waives
all previous defaults by the Seller and elects to proceed with this Agreement
under option (b) above. The Buyer specifically waives any right to make a claim
against the Seller for compensatory or consequential damages or any other type of
monetary claim, except for the indemnity obligations and claims for fees and
costs as set forth in this Agreement.
14.2. Seller’s Remedy. If the Buyer fails to consummate this Agreement for any reason
except the Seller’s default or the termination of this Agreement pursuant to a right
to terminate given herein, the Seller’s sole and exclusive remedy shall be to
terminate this Agreement by giving 30 days’ written notice to the Buyer, pursuant
to Minnesota Statutes Section 559.21, as amended from time to time, in which
case the Earnest Money shall be tendered to the Seller.
15. ASSIGNMENT. The Buyer may not assign its rights under this Agreement,
without prior written consent of the Seller. Notwithstanding the foregoing, the Seller
acknowledges that the Buyer will be establishing a new limited liability company for purposes of
taking title to the Property. Bu yer shall have the right to assign its rights and obligations under
this Agreement to such new entity, without prior consent of Seller, provided, however, that (a)
Buyer must give Seller written notice of such assignment, and (b) such assignment shall not
relieve Buyer from any of its obligations (including indemnification obligations) hereunder.
16. SURVIVAL. All of the terms of this Agreement and warranties and
representations herein contained shall survive and be enforceable after the Closing.
17. NOTICES. Any notice required or permitted hereunder shall be given by
personal delivery upon an authorized representative of a party hereto; or if mailed by United
States mail postage prepaid; or if transmitted by facsimile copy followed by mailed notice; or if
deposited cost paid with a nationally recognized, reputable overnight courier, properly addressed
as follows:
If to the Seller: Economic Development Authority of
Brooklyn Center
Attn: Cornelius Boganey
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
With a copy to: Sarah J. Sonsalla
Kennedy & Graven, Chartered
10
586580v1BR305-158
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
If to the Buyer: Centra Homes LLC
Attn: ___________
11460 Robinson Drive NW
Minneapolis, MN 55433
With a copy to: ________________________
________________________
________________________
Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit, as
aforesaid; provided, however, that if notice is given by deposit, the time for response to any
notice by the other party shall commence to run one business day after any such deposit. Any
party may change its address for the service of notice by giving notice of such change ten (10)
days prior to the effective date of such change.
18. CAPTIONS. The paragraph headings or captions appearing in this Agreement
are for convenience only, are not a part of this Agreement and are not to be considered in
interpreting this Agreement.
19. ENTIRE AGREEMENT, MODIFICATIONS. This written Agreement
constitutes the complete agreement between the parties and supersedes any prior oral or written
agreements between the parties regarding the Property. There are no verbal agreements that
change this Agreement and no waiver of any of its terms will be effective unless in a writing
executed by the parties.
20. BINDING EFFECT. This Agreement binds and benefits the parties and their
successors and assigns.
21. CONTROLLING LAW. This Agreement has been made under the substantive
laws of the State of Minnesota, and such laws shall control its interpretation.
22. REVERTER. If the Buyer fails to substantially complete construction of the
following improvements (“substantial completion” being defined as completion, subject only to
minor “punch list” items agreed upon between Buyer and Seller): site grading within twelve (12)
months following the Closing Date; and such failure is not cured within thirty (30) days
following written notice from the Seller, then the Seller shall have the right to re-enter and take
possession of the Property and to terminate and revest in the Seller the estate conveyed by the
Deed to the Buyer, it being agreed that the Deed shall contain a condition subsequent to the
effect that in the event of noncompliance with this Section 22 on the part of the Buyer, the Seller
at its option may declare a termination in favor of the Seller of the title, and of all the rights and
interests in and to the Property conveyed to the Buyer, and that such title and all rights and
interests of the Buyer, and any assigns or successors in interest to and in the Property, shall
11
586580v1BR305-158
revert to the Seller. If no Buyer default has occurred hereunder, then the Seller shall e xecute and
deliver to Buyer, a quit claim deed, releasing any right of reverter.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will, for all purposes, be deemed to be an original, and all of which
are identical. This Agreement may be further evidenced by facsimile and email scanned
signature pages.
586580v1BR305-158
BUYER
CENTRA HOMES LLC
By:
Its:
13
586580v1BR305-158
SELLER
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN
CENTER
By:
Michael Elliott
Its: President
By:
Cornelius Boganey
Its: Executive Director
586580v1BR305-158
EXHIBIT A
Legal Description of the Property
PARCEL 1:
Tract A:
That part of Lot 24, Auditor’s Subdivision Number 310, shown as Parcel 17 on Minnesota
Department of Transportation Right of Way No. 27-20 as the same is on file and of record in the
office of the County Recorder in and for Hennepin County, Minnesota;
Tract B:
Lots 25, 26 and the south 112 feet of Lot 27, Auditor's Subdivision Number 310, Minnesota;
which lies westerly of the following-described Line 1:
Commencing at Right of Way Boundary Corner B35 as shown on said Plat No. 27-20; thence
westerly on an azimuth of 269 degrees 35 minutes 20 seconds along the boundary of said plat for
195.49 feet to the point of beginning of Line 1 to be described; thence on an azimuth of 345
degrees 58 minutes 30 seconds for 268.52 feet; thence on an azimuth 89 degrees 35 minutes 20
seconds for 129.14 feet; thence on an azimuth of 355 degrees 02 minutes 49 seconds for 112.35
feet to the Right of Way Boundary Corner B40 as shown on said Plat No. 27 -20 and there
terminating;
Tract C:
That part of Lot 27, Auditor’s Subdivision Number 310, Hennepin County, Minnesota, described as
follows: Beginning at a point on the North line of said Lot 27 distant 257.13 feet West from the
Northeast corner thereof; thence continuing west along said North line a distance of 75 feet; thence
South 246.5 feet to a point which is distant 332.61 feet West from point in the East line of Lot 27
distant 246.48 feet South from Northeast corner thereof; thence Easterly along the last described
line a distance of 75 feet; thence Northerly 246.5 feet to the point of beginning.
PARCEL 2:
The Westerly 100 feet of Lot 27, Auditor’s Subdivision Number 310, Hennepin County,
Minnesota.
PARCEL 3:
Outlot A, Ditzler Addition, Hennepin County, Minnesota.
PARCEL 4:
Outlot A, Eastbrook Estates, Hennepin County, Minnesota.
2
586580v1BR305-158
PARCEL 5:
Lot 2, Block 1, Swanco Terrance, Hennepin County, Minnesota.
PARCEL 6:
Lot 30, Auditor’s Subdivision No. 310, Hennepin County, Minnesota.
ED A ITEM MEMOR ANDUM
DAT E:6/24/2019
TO :C urt Boganey, C ity Manager
T HR O UG H:N/A
F R O M:Meg Beekman. C ommunity Development Director
S UBJ EC T:C ons ideration of a Term S heet between R eal Estate Equities and the Economic Development
Authority of Brooklyn C enter regarding Tax Inc rement F inanc ing
Background:
O n May 28, 2019, R eal Estate Equities rec eived approval from the C ity C ounc il for P lanning C ommission
Application 2019-006 for a P lanned Unit Development and S ite P lan to cons truct two multi-family buildings at
5801 Xerxes Avenue North. O ne building would be dedic ated to 127 workforce hous ing units . T he other
building would c onsist of 143 affordable independent s enior units. T he entire projec t would be affordable to
thos e earning 50-70% of the area median income. T he approval als o included a rezoning of the property to
P UD-TO D and to remove the property from the C entral C ommerc e O verlay District.
T he developer initially presented a c onc ept of the project to the C ity C ounc il in January 2019. At that meeting
they dis cus s ed their development plan, site layout and financ ial feasibility analys is . As part of their due
diligence, the developer anticipated the need for Tax Increment F inancing as part of their financ ial proforma. At
the time of their c onc ept review, the developer pres ented a s ourc es and us es whic h anticipated that the primary
s ourc e of financing for the development would be 4% Low Income Housing Tax C redits (LI HT C ) and tax
exempt bonds and that the total projec t costs would be estimated to be $58,850,074. T he developer initially
anticipated a total projec t gap of $4,547,750 in T I F, which would have had to have been paid bac k over the full
26 year life of a hous ing T I F dis tric t.
T he developer has since s ubmitted an application for public s ubsidy, along with their financ ial proforma and
analys is . Due to the way Minnesota Hous ing F inanc e Agency issues tax exempt bonds , the two buildings have
been s eparated for the purpose of the bonding application. T he workforce hous ing building has rec eived its
bonding allocation and the developer is requesting approval of a term sheet now and T I F agreement in order to
move forward with the rest of their financ ing. T he developer will apply for bonding in the sec ond round of
funding in August for the independent senior building and will return to the EDA at that time for approval of
their T I F plan and agreement for that building at that time.
T he C ity's financial cons ultant reviewed the financ ial information provided by the developer related to their
project and is recommending a $1.63 Million PAYG O T I F Note with a term not to exceed 16 years . A more
detailed explanation of their analysis is attac hed to this report.
A term s heet has been prepared outlining the terms of the future T I F plan and is attac hed to this report. T he
terms are in line with industry s tandards . T he EDA would be able to pool up to 10% of the inc rement for
administrative c os ts plus any additional inc rement towards the c reation or pres ervation of affordable hous ing.
In addition, the term s heet indicates that the T I F district would remain open for the full 26 years . T his would
mean that the income requirements required by s tate law under hous ing T I F dis tric ts would apply to the
property for the duration of the T I F dis tric t, even after their T I F note was paid off. It also would mean that
onc e the T I F note was paid, the EDA c ould pool 100% of the increment towards affordable hous ing. T he C ity
would have the option to close the district early at that point if it c hose as well.
Budget Issues:
T here are no budget is s ues to cons ider at this time.
S trategic Priorities and Values:
Targeted R edevelopment
AT TAC HME N T S:
Desc ription Upload Date Type
Memo from S tac ie Kvilvang, Ehlers dated June 24, 2019 6/19/2019 Bac kup Material
Term S heet 6/19/2019 Bac kup Material
Memo
To: Meg Beekman – Community Development Director
From: Stacie Kvilvang - Ehlers
Date: June 24, 2019
Subject: Real Estate Equities TIF Request
The City of Brooklyn Center requested that Ehlers review the development pro forma and
Tax Increment Financing (TIF) request from Real Estate Equities (the “Developer”) for their
proposal to construct a 127-unit workforce apartment on a portion of the former Jerry’s Food
site. All of the units would be affordable to households at or below 60% of area median
income (AMI) and would be both rent and income restricted as noted below:
This memo is intended to review the need for TIF assistance based on our analysis of the
Developer’s project budget and projections, generally known as a pro forma and provide a
summary of the terms for the TIF Agreement.
The Developer requested that the City provide them 26 years of tax increment on a pay-as-
you-go (PAYGO) basis (PAYGO is the typical City TIF financing structure for these types of
projects). With this type of structure, the City does not provide up-front funding. The
developer seeks the funding either through their first mortgage or a second mortgage for the
TIF amount. Therefore, the risk of the TIF being generated is borne by the developer, not
the City. If the TIF is inadequate to repay the TIF Note in full, the City has no obligation to
make up the shortfall.
We have reviewed the project based on general industry standards for construction, land,
and project costs; affordable rental rates and operating expenses; developer fees;
underwriting criteria; project cash flow, and the request for TIF assistance. The table on the
following page depicts the proposed sources and uses for the project:
Household Size Income Limit Unit Size Rent Limit Proposed Rents
1 $42,000 Studio $1,050 N/A
2 $48,000 1 $1,125 $1,047
3 $54,000 2 $1,350 $1,255
4 $60,000 3 $1,560 $1,447
Income Limit by Household Size Rent Limit by Unit Size
As noted in the table above, the TIF assistance is 5% of the total project costs, which is in
line with what we typically see in these types of projects (typically up to 10%). In addition,
the Developer if deferring 67% of their developer fee, which is more than we typically see
(up to 50%).
Generally, this project meets the expectations of tax credit, non-age restricted apartments
with regards to the financing structure, on-going operational costs and developer fee.
Following are our findings relating to the analysis completed for the development:
1. Financing. The Developer has maximized the first mortgage and 4% low-income
housing tax credits (LIHTC). Both the First Mortgage and the TIF Mortgage require debt
coverage of 115% to provide the lender the comfort that the revenues generated will be
adequate to repay the mortgages. In review of their coverage on both mortgages, they
have approximately 117% coverage. If for whatever reason the development falls below
the required coverage, the Developer is still able to make the payments, they just
receive less cash flow. If the coverage falls below 100%, typically their financing
parameters are full recourse, meaning that the Developer has to make the payment
from other sources, regardless.
2. Acquisition Cost : Total acquisition cost is $2,200,000 or $17,000/unit. This is higher
than the typical costs we see for apartments of $7,500 to $15,000.
3. Developer Fee : The Developer included a 10% developer fee, which is within industry
standard for a LIHTC project. They are deferring 67% of the fee. This fee would
typically be paid out in installments through the final construction draw, but the deferral
portion will be paid out of cash flow and it is anticipated it will take approximately twelve
(12) years for them to be repaid.
SOURCES
Amount Pct. Per Unit
First Mortgage 17,652,597 54% 138,997
TIF Note 1,630,000 5% 12,835
Low Income Housing Tax Credits 10,395,864 32% 81,857
GIC Income 686,943 2% 5,409
Deferred Developer Fee (67% of Total Fee) 2,121,459 7% 16,704
TOTAL SOURCES 32,486,863 100% 255,802
USES
Amount Pct. Per Unit
Acquisition Costs 2,200,000 7% 17,323
Construction Costs 21,336,000 66% 168,000
Professional Services 1,452,745 4% 11,439
Financing Costs 892,600 3% 7,028
Developer Fee 3,154,916 10% 24,842
Cash Accounts/Escrows/Reserves 3,450,602 11% 27,170
TOTAL USES 32,486,863 100% 255,802
4. Residential Total Development Cost (TDC) : The TDC is approximately $255,000
per/unit. This is in line with industry standards of $200,000 to $300,000.
5. Rents . Rents are slightly below the required threshold, which will provide a more
competitive product.
6. Management Fee . Management fees of 3.82% of gross revenue is within the typical
range of 3% to 6%.
7. Operating Expenses . Operating expenses of approximately $3,475/unit (before taxes,
management fees, and reserves) is within industry standards for projects of this size
(typical range is $3,400 to $4,000).
8. Vacancy . Vacancy is underwritten at 7% which is required by MHFA for LIHTC
projects.
Recommendation
We recommend providing the Developer with a $1.63 Million PAYGO Note with a term of 16
years. Even though the term of the TIF Note is 16 years, the Developer is required to keep
the property affordable at the rent and income for persons at or below 60% of the AMI for a
26-year term (length of the TIF District).
Please contact me at 651-697-8506 with any questions.
584830v5BR291-395
TERM SHEET
This Term Sheet is dated as of this ____ day of __________, 2019 and is intended to set
forth the general terms upon which the Developer (as defined below) and the Economic
Development Authority of Brooklyn Center, Minnesota (the “EDA”) may be willing to enter into
a Development Agreement (the “Development Agreement”). Except for Section 11 below
(which shall be binding upon Developer) this Term Sheet shall not be deemed conclusive or
legally binding upon either the Developer or the EDA, and neither the Developer nor the EDA
shall have any obligations regarding the property defined below, unless and until a definitive
Development Agreement is approved by the EDA board and executed by both the Developer and
the EDA.
1. Developer: Brooklyn Center AH I, LLLP (or a limited partnership or other entity to be
formed by or affiliated with Real Estate Equities, Inc.)
2. Property: portions of PID 03-118-21-14-0024 (southern portion of the property at 5801
Xerxes Avenue North in the City)
3. Developer Conditions:
a. Execution of Development Agreement
b. Securing necessary financing, including issuance of conduit revenue bonds by the
City
c. Site Control
4. EDA Conditions:
a. Establishment of a new Housing TIF District subject to approval after all
proceedings required by law
b. EDA approval of Construction Plans
c. Execution of a Development Agreement
5. Minimum Improvements: Improvements to the Property will include the construction of
an approximately 127-unit workforce rental housing facility and related amenities.
6. Construction Schedule: Commence construction by December 31, 2019, and complete
by June 30, 2021. For the purpose hereof, “Commence” shall mean beginning of
physical improvement to the Property, including grading, excavation, or other physical
site preparation work; and “Completed” shall mean that the Minimum Improvements are
sufficiently complete for the issuance of a Certificate of Occupancy for all rental housing
units on the Property. Upon Completion the EDA shall issue, if requested by the
Developer, a “Certificate of Completion” in recordable form.
7. Public Assistance: Subject to all terms and conditions of the Development Agreement,
EDA will reimburse Developer for Qualified Costs equal of the Minimum Improvements
in an amount not to exceed $1,630,000. “ Qualified Costs ” shall mean site improvement
and infrastructure costs, and other costs eligible in accordance with applicable law,
incurred in connection with the construction of the Minimum Improvements on the
portion of the Property located in the new TIF District. Payments will be made
semiannually commencing August 1, 2021, on a pay-as-you-go basis from 90% of
available increments generated by the Property over a 16-year term, with interest at a rate
584830v5BR291-395
equal to the lesser of 4.75% per annum or the rate per annum on the Developer’s
financing for the construction of the Project until the note is fully paid.
8. Minimum Improvements Value: No Minimum Assessment Agreement.
9. Affordable Housing: The Property will be subject to a Declaration of Restrictive
Covenants requiring income limitations (20% of units at 50% of area median income or
40% of units at 60% of area median income) for the 26-year statutory duration of the TIF
District.
10. Jobs: Job creation is not a goal of this project.
11. Fees: The Developer has deposited with the EDA the sum of $10,000.00 to pay for the
reasonable out-of-pocket legal, financial consultant and administrative fees associated
with this transaction. Unexpended funds will be returned to the Developer and if
additional funds are needed to pay such expenses the Developer will deposit such
additional funds upon request by the EDA.
12. Miscellaneous:
a. Transfer of the Property located in the new TIF District or of the Development
Agreement or TIF Note Payments will be subject to EDA consent except for
certain limited exceptions including mortgage financing.
b. Developer covenants to pay property taxes and maintain customary insurance.
6/28/2019
1
Consideration of a Term Sheet between Real Estate Equities and EDA
EDA Meeting, June 24, 2019
Meg Beekman, Community Development Director1
2
Background
•January 28, 2019 ‐ City Council considered Concept Plan
•April 11, 2019 ‐ Planning Commission considered Concept Plan
•May 16, 2019 ‐ Planning Commission held public hearing regarding
PUD and made recommendation (4‐2) for approval
•May 28, 2019 – City Council voted (3‐1) to approve PUD and held first
reading of the ordinance to rezone to PUD
•June 10, 2019 – City Council voted (5‐0) to approve second reading of
ordinance to rezone to PUD and voted (4‐1) to approve PUD
Agreement
6/28/2019
2
Site Plan
3
•2, multi‐family buildings
•270‐units
•Mix of affordable 143
independent senior units and
127 workforce units
•Mix of 1, 2, and 3‐bedroom
units
•Affordable to those making
50‐70% AMI
Financing
4
•Current Market Value: $1,617,000
•Current property tax: $69,120
•Est. Market Value: $33,375,000
•Est. property tax: $359,967
6/28/2019
3
Financing
Estimate for Total Project
5
Acquisition $ 2,200,000
Construction $ 42,052,500
Soft Costs $ 2,411,025
Financing Costs $ 1,259,476
Interest & Reserves $ 5,886,908
Developer Fee $ 5,010,166
Total Development Costs $ 58,820,074
Tax Exempt Bonds $ 28,381,009
TIF $ 4,547,750
LIHTC Equity $ 21,519,466
GIC Income $ 1,234,828
Deferred Developer Fee $ 3,137,021
Total Sources of Funds $ 58,820,074
Financing
Actual for Workforce Building
6
Acquisition $ 2,200,000
Construction $ 21,336,000
Soft Costs $ 1,452,745
Financing Costs $ 892,600
Interest & Reserves $ 3,450,602
Developer Fee $ 3,154,916
Total Development Costs $ 32,486,863
First Mortgage $ 17,652,597
TIF $ 1,630,000
LIHTC Equity $ 10,395,864
GIC Income $ 686,9432
Deferred Developer Fee $ 2,121,459
Total Sources of Funds $ 32,486,863
6/28/2019
4
Terms
7
•127‐unit workforce building
•26‐year Housing TIF District
•$1.63 million PAY GO note
•Paid from 90% of increment over 16‐year term at 4.75% interest
•EDA retains 10% for Admin and Housing pooling
•Income limits for life of TIF District
•Developer to pay all fees associated with set up of district
•City can decertify district at note payoff or keep open to fund other
affordable housing projects
8
Requested Council Action
‐ Motion to direct staff to prepare an agreement consistent with the term sheet