HomeMy WebLinkAbout2020 02-24 EDAPE conomic Development
Authority
City Hall Council Chambers
February 24, 2020
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 the minutes for:
January 13, 2020
b.Resolution A pproving a T I F Development Agreement for the R E E X erxes
Avenue S enior Housing P roject
- Motion to adopt a resolution approving a TIF Development Agreement
(REE Xerxes Avenue Senior Housing Project)
c.Resolution A dopting a Business Subsidy Policy
Motion to adopt a resolution adopting a policy and criteria for granting business
subsidies.
4.Commission Consideration Items
a.Resolution A pproving a Preliminary Development A greement with J O
Properties
- Motion to approve a resolution adopting a Preliminary Development
Agreement between the Economic Development Authority of Brooklyn
Center and J O Properties.
5.Adjournment
Economic Development Authority
DAT E:2/24/2020
TO :C ity C ouncil
F R O M:C urt Boganey, City Manager
T H R O U G H :D r. Reggie Edwards, D eputy C ity M anager
BY:Barb S uciu, C ity C lerk
S U B J E C T:A pproval of Minutes
B ackground:
I n accordance with M innesota S tate S tatute 15.17, the official records of all mee4ngs must be documented
and approved by the governing body.
S trategic Priories and Values:
O pera4onal Excellence
AT TA C H M E N TS :
D escrip4on U pload D ate Type
J anuary 13 E DA 2/17/2020 Backup M aterial
01/13/20 -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
JANUARY 13, 2020
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 9:03 p.m.
2. ROLL CALL
President Mike Elliott and Commissioners Marquita Butler, April Graves, Kris Lawrence-
Anderson, and Dan Ryan. Also present were Executive Director Curt Boganey, Community
Development Director Meg Beekman, Police Chief Tim Gannon, and City Attorney Troy
Gilchrist.
3. APPROVAL OF AGENDA AND CONSENT AGENDA
Commissioner Ryan moved, and Commissioner Graves seconded to approve the Agenda and
Consent Agenda, and the following items were approved:
3a. APPROVAL OF MINUTES
1. December 2, 2019, meeting minutes
2. December 9, 2019, meeting minutes
3b. RESOLUTION NO. 2020-01 AUTHORIZING AN INTERFUND LOAN
FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH A TAX
INCREMENT FINANCING DISTRICT
Motion passed unanimously.
4. COMMISSION CONSIDERATION ITEMS
4a. RESOLUTION NO. 2020-02 ELECTING OFFICERS FOR THE ECONOMIC
DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN
CENTER
01/13/20 -2- DRAFT
Executive Director Curt Boganey requested that the Commissioner’s names be inserted into the
Resolution document. He added these include Mayor/President, President Pro Tem/Vice
President, Treasurer, and Secretary.
Commissioner Graves moved, and Commissioner Lawrence-Anderson seconded to adopt
RESOLUTION NO. 2020-02 Electing Officers for the Economic Development Authority in and
for the City of Brooklyn Center.
Motion passed unanimously.
4b. RESOLUTION NO. 2020-03 OPTING NOT TO WAIVE LIMITED TORT
LIABILITY FOR 2O20
Commissioner Ryan moved, and Commissioner Graves seconded to adopt RESOLUTION NO.
2020-03 Opting not to Waive Limited Tort Liability for 2020.
Motion passed unanimously.
5. ADJOURNMENT
Commissioner Graves moved, and Commissioner Ryan seconded adjournment of the Economic
Development Authority meeting at 9:07 p.m.
Motion passed unanimously.
Economic Development Authority
DAT E:2/24/2020
TO :C ity C ouncil
F R O M:C urt Boganey, City Manager
T H R O U G H :N/A
BY:M eg Beekman, C ommunity D evelopment D irector
S U B J E C T:Res olu*on A pproving a T I F D evelopment A greement for the R E E Xerxes Avenue S enior
H ous ing P roject
B ackground:
O n July 8, 2019, the C ity created Tax I ncrement F inancing D is trict No. 8, and adopted a T I F plan w hich
provides for the use of tax increment financing in connec*on with certain development within the T I F
D istrict. The City also authorized the dra:ing of a T I F D evelopment A greement between the E DA and the
developer.
T I F D is trict No. 8 is a hous ing district that was created to s upport a 270-unit s enior and workforce
development in two mul*-family buildings at 5801 Xerxes Avenue N. Real Estate Equi*es is the developer.
The firs t T I F reques t and financing was related to 127 units of w orkforce hous ing in to facilitate the
cons truc*on of the ini*al building. The developer is now seeking this second request related to the s econd
s enior building, w hich is an*cipated to commence cons truc*on this s pring.
A@ached to this report is a T I F A s s is tance A greement, dra:ed by the City A@orney, w hich encompasses the
terms and condi*ons under which the City approved the crea*on of T I F D istrict No. 8. The terms and
condi*ons are s ubs tan*ally in conformance w ith thos e iden*fied in the term s heet, approved by the E DA on
June 24, 2019.
The general terms of the agreement are as follows:
1 . D eveloper: Brooklyn C enter A H I I , L L L P (or a limited partnership or other en*ty to be formed by
or affiliated with Real Estate Equi*es , I nc.)
2 . P roperty: por*ons of P I D 03-118-21-14-0024 (northern por*on of the property at 5801 Xerxes
Avenue North in the C ity)
3. D eveloper C ondi*ons:
a. Execu*on of D evelopment A greement
b. S ecuring necessary financing, including is s uance of conduit revenue bonds by the C ity
c. S ite C ontrol
d. D elivery of Construc*on P lans
4. E DA C ondi*ons:
a. E DA approval of C ons truc*on P lans
b. Execu*on of a D evelopment A greement
I s s uance of Cer*ficate of Comple*on
5 . M inimum I mprovements: I mprovements to the P roperty will include the cons truc*on of an
approximately 143-unit w ork force rental hous ing facility and related ameni*es as approved by the
City.
6 . Construc*on S chedule: C ommence cons truc*on by A pr il 30, 2 0 2 0 , and complete by J anuary 31,
2022. For the pur pos e her eof, “C ommence” s hall mean beginning of phys ical improvement to the
P roperty, including gr ading, excava*on, or other physical s ite prepara*on w ork; and “C ompleted”
s hall mean that the M inimum I mpr ovements are s ufficiently complete for the issuance of a C er*ficate
of O ccupancy for all rental hous ing units on the P roperty. U pon Comple*on the E DA s hall issue, if
requested by the D eveloper, a “Cer*ficate of Comple*on” in recordable form.
7 . P ublic A s s is tance: S ubject to all terms and condi*ons of the D evelopment A greement, E DA will
reimburs e D eveloper for Q ualified C os ts equal of the M inimum I mprov ements in an amount not to
exceed $1,850,000. “Q ualifi ed C osts” s hall mean s ite improvement and infr as tr ucture cos ts , and
other cos ts eligible in accordance w ith applicable law, incurred in connec*on with the cons truc*on of
the M inimum I mprovements on the por*on of the P roperty located in the new T I F D istrict. Payments
w ill be made s emiannually, on a pay-as-you-go bas is from 90% of available increments generated by
the P roperty ov er a 16-y ear term, with interest at a r ate equal to the les s er of 4.25% per annum or
the rate per annum on the D ev eloper ’s financing for the cons truc*on of the P roject un*l the note is
fully paid.
8. M inimum I mprovements Value: No Minimum A sses s ment A greement.
9 . A ffordable H ous ing: The P roperty is intended for occupancy by persons or families of low and
moderate income. The proj ect w ill be s ubj ect to a D eclara*on of Res tric*ve C ovenants requiring
income limita*ons (2 0 % of units at 5 0 % of area median income or 40% of units at 6 0 % of area median
income in accordance w ith s tatue s tatute) for the 26-year s tatutory dura*on of the T I F D istrict.
10. J obs : J ob crea*on is not a goal of this project.
11. Fees : T he D eveloper has deposited w ith the E DA the sum of $10,000.00 to pay for the reasonable
out-of-pocket legal, financial cons ultant and adminis tra*ve fees as s ociated w ith this trans ac*on.
Unexpended funds w ill be returned to the D eveloper and if addi*onal funds ar e needed to pay such
expens es the D eveloper w ill deposit such addi*onal funds upon request by the E DA .
12. M is cellaneous:
a. Trans fer of the P r oper ty located in the new T I F D is trict or of the D evelopment A greement
or T I F N ote Payments w ill be s ubject to E DA consent except for certain limited excep*ons
including mortgage financing.
b. D eveloper covenants to pay property taxes and maintain customary insurance.
B udget I ssues:
There are no budget is s ues to consider at this *me.
S trategic Priori es and Values:
Targeted Redevelopment
AT TA C H M E N TS :
D escrip*on U pload D ate Type
T I F A s s is tance A greement v4 2/19/2020 Backup M aterial
Res olu*on D evelopment A greement 2/19/2020 Resolu*on Le@er
635425v4BR291-400
TIF ASSISTANCE AGREEMENT
BETWEEN
ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA
AND
BROOKLYN CENTER AH II, LLLP
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
(P) 612-337-9300
(F) 612-337-9310
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ............................................................................................................2
Section 1.1. Definitions..............................................................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES ..........................................................6
Section 2.1. Representations and Warranties of the EDA .........................................6
Section 2.2. Representations and Warranties of the Developer .................................6
ARTICLE III UNDERTAKINGS BY DEVELOPER AND EDA..................................................8
Section 3.1. Total Development Costs and Public Costs. ..........................................8
Section 3.2. TIF Note. ................................................................................................8
Section 3.3. Income Restrictions .............................................................................10
Section 3.4. Developer to Pay EDA’s Fees and Expenses ......................................11
Section 3.5. Compliance with Environmental Requirements. .................................11
Section 3.6. Construction Plans. ..............................................................................11
Section 3.7. Commencement and Completion of Construction ...............................12
Section 3.8. Certificate of Completion. ...................................................................13
Section 3.9. Encumbrance of the Development Property. .......................................13
Section 3.10. Business Subsidy Act ...........................................................................14
Section 3.11. Right to Collect Delinquent Taxes. ......................................................14
Section 3.12. Review of Taxes. .................................................................................14
Section 3.13. Project Rents ........................................................................................15
ARTICLE IV EVENTS OF DEFAULT ........................................................................................16
Section 4.1. Events of Default Defined. ..................................................................16
Section 4.2. Remedies on Default ............................................................................16
Section 4.3. No Remedy Exclusive..........................................................................17
Section 4.4. No Implied Waiver ..............................................................................17
Section 4.5. Indemnification of EDA. .....................................................................17
Section 4.6. Reimbursement of Attorneys’ Fees. ....................................................18
ARTICLE V ADDITIONAL PROVISIONS ................................................................................19
Section 5.1. Restrictions on Use ..............................................................................19
Section 5.2. Reports .................................................................................................19
Section 5.3. Limitations on Transfer and Assignment. ............................................19
Section 5.4. Conflicts of Interest..............................................................................20
Section 5.5. Titles of Articles and Sections .............................................................21
Section 5.6. Notices and Demands ..........................................................................21
Section 5.7. No Additional Waiver Implied by One Waiver ...................................22
Section 5.8. Counterparts .........................................................................................22
Section 5.9. Law Governing ....................................................................................22
Section 5.10. Term; Termination ...............................................................................22
Section 5.11. Provisions Surviving Rescission, Expiration or Termination ..............22
Section 5.12. Superseding Effect ...............................................................................22
Section 5.13. Relationship of Parties .........................................................................22
Section 5.14. Venue ...................................................................................................22
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EXHIBIT A DESCRIPTION OF TIF DISTRICT .................................................................... A-1
EXHIBIT B LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY ..............................B-1
EXHIBIT C PUBLIC DEVELOPMENT COSTS ......................................................................C-1
EXHIBIT D FORM OF TAXABLE TIF NOTE ....................................................................... D-1
EXHIBIT E TOTAL DEVELOPMENT COSTS ....................................................................... E-1
EXHIBIT F DECLARATION OF RESTRICTIVE COVENANTS .......................................... F-1
EXHIBIT G PERMITTED ENCUMBRANCES ...................................................................... G-1
EXHIBIT H CERTIFICATE OF COMPLETION OF PROJECT ............................................ H-1
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TIF ASSISTANCE AGREEMENT
THIS AGREEMENT, made as of the ____ day of April, 2020, by and between the
Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”), a public body
corporate and politic under the laws of the State of Minnesota, and Brooklyn Center AH II, LLLP,
a Minnesota limited liability limited partnership (the “Developer”).
WITNESSETH:
WHEREAS, the EDA was created pursuant to Minnesota Statutes, Sections 469.090 to
469.1081, as amended (the “EDA Act”) and was authorized to transact business and exercise its
powers by a resolution (the “Enabling Resolution”) of the City Council of the City of Brooklyn
Center (the “City”); and
WHEREAS, under the EDA Act and the Enabling Resolution, the EDA has all the powers
of a housing and redevelopment authority under Minnesota Statutes, Sections 469.001 to 469.047,
as amended (the “HRA Act”); and
WHEREAS, pursuant to the EDA Act and the HRA Act, the EDA has undertaken a
program to promote the development and redevelopment of land which is underutilized or
characterized by blight within the City, and in connection therewith created the Housing and
Redevelopment Project No. 1 (the “Project Area”) and adopted a Redevelopment Plan (the
“Redevelopment Plan”); and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through
469.1794, as amended, (the “TIF Act”), the City and the EDA have created, within the Project
Area, the Tax Increment Financing District No. 8: Real Estate Equities (a housing district)
qualified as a housing tax increment financing district (the “TIF District”), the legal description of
which is attached hereto as Exhibit A, and has adopted a tax increment financing plan therefor
approved by the City Council of the City on July 8, 2019 (the “TIF Plan”) which provides for the
use of tax increment financing in connection with certain development within the Project Area and
TIF District; and
WHEREAS, the Developer proposes the acquisition, construction and equipping of an
approximately 143-unit senior rental housing facility and related amenities to be located at 5803
Xerxes Avenue North in the City (formerly the northern portion of the property at 5801 Xerxes
Avenue North) within the TIF District (the “Project”); and
WHEREAS, the Developer has requested that the EDA use tax increment financing to
assist the Developer with certain costs thereof in order to fill the gap between the Total
Development Costs (as hereinafter defined) and the funds available to pay such costs;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein
shall have the following meanings unless a different meaning clearly appears from the context:
Administrative Costs has the meaning set forth in Section 3.4;
Affiliate means a corporation, partnership, joint venture, association, business trust or
similar entity organized under the laws of the United States of America or a state thereof which is
directly controlled by or under common control with the Developer or any other Affiliate. For
purposes of this definition, control means the power to direct management and policies through
the ownership of at least a majority of its voting securities, or the right to designate or elect at least
a majority of the members of its governing body by contract or otherwise;
Agreement means this TIF Assistance Agreement, as the same may be from time to time
modified, amended or supplemented;
Architect means Kaas Wilson Architects, LLC, in Minneapolis, Minnesota as the architect
for the Project;
Business Day means any day except a Saturday, Sunday or a legal holiday or a day on
which banking institutions in the EDA are authorized by law or executive order to close;
Certificate of Completion means a Certificate of Completion with respect to the Project
executed by the EDA pursuant to Section 3.9;
City means the City of Brooklyn Center, Minnesota;
Completion Date means the date on which the Certificate of Completion with respect to
the Project is executed by the EDA pursuant to Section 3.9;
Construction Costs means the capital costs of the construction of the Project, including the
costs of labor and materials; construction management and supervision expenses; insurance and
payment or performance bond premiums; architectural and engineering fees and expenses;
property taxes; usual and customary fees or costs payable to the EDA, the City or any other public
body with regulatory authority over construction of the Project (e.g. building permits and
inspection fees); the developer fee; and all other costs chargeable to the capital account of the
Project under generally accepted accounting principles;
Construction Documents means the following documents, all of which shall be in form and
substance acceptable to the EDA: (a) Evidence satisfactory to the EDA showing that the Project
conforms to applicable zoning, subdivision and building code laws and ordinances, including a
copy of the building permit for the Project; (b) A copy of the executed standard form of agreement
between owner and architect for architectural services for the Project, if any, and (c) A copy of the
executed General Contractor’s contract for the Project, if any;
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Construction Lender means U.S. Bank National Association, a national banking
association, and its successors and assigns;
Construction Phase has the meaning given in the Construction Phase Financing
Agreement;
Construction Phase Financing Agreement means the Construction Phase Financing
Agreement dated April 1, 2020 among Construction Lender, Permanent Lender, and Federal Home
Loan Mortgage Corporation;
Construction Plans means the plans, specifications, drawings and related documents for the
construction of the Project, which shall be as detailed as the plans, specifications, drawings and
related documents which are submitted to the building inspector of the City;
Conversion Date has the meaning defined in the Indenture;
County means Hennepin County, Minnesota;
Declaration means the Declaration of Restrictive Covenants in substantially the form
attached hereto as Exhibit F;
Design Drawings means the floor plans, renderings, elevations and material specifications
for the Project prepared by the Architect;
Developer means Brooklyn Center AH II, LLLP, a Minnesota limited liability limited
partnership, and its authorized successors and assigns;
Development Property means the real property legally described in Exhibit B attached to
this Agreement;
EDA means the Economic Development Authority of Brooklyn Center, Minnesota
Event of Default means any of the events described in Section 4.1 hereof;
Final Payment Date means the earlier of (i) the date on which the entire principal and
accrued interest on the TIF Note has been paid in full; or (ii) February 1, 2037; or (iii) any earlier
date this Agreement or the TIF Note is cancelled in accordance with the terms hereof or deemed
paid in full; or (iv) the February 1 following the date the TIF District is terminated in accordance
with the TIF Act; or (v) the date the EDA cancels the TIF Note upon a written request for
termination from the Developer and a determination in the EDA’s sole discretion that such
termination will not limit or interfere with the EDA’s ability to pool Tax Increments generated by
the TIF District for affordable housing in accordance with the TIF Act (provided that there shall
be no payment of any Tax Increments on such date unless it is a regular Payment Date);
General Contractor means Big-D Construction Midwest, LLC, a Minnesota limited
liability company;
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Indenture means the Trust Indenture, dated as of April 1, 2020, by and between the City
and U.S. Bank National Association, a national banking association (the “Trustee”);
Mortgage Lender means: (i) during the Construction Phase, the Construction Lender and
(ii) during the Permanent Phase, the Permanent Lender;
Mortgage Lender Collateral Assignment means (i) during the Construction Phase, a
Collateral Assignment of Development Agreement, Tax Increment Financing Note and Available
Tax Increment given by the Developer in favor of the Construction Lender, together with any
amendments thereto and (ii) during the Permanent Phase, a Collateral Assignment of Tax
Increment Financing Note and Available Tax Increment given by the Developer in favor of the
Permanent Lender, together with any amendments thereto;
Payment Date means August 1, 2021 and each February 1 and August 1 thereafter to and
including the Final Payment Date; provided, that if any such Payment Date should not be a
Business Day, the Payment Date shall be the next succeeding Business Day;
Permanent Lender means Northmarq Capital, LLC, and its successors and assigns;
Permanent Phase means the period from and after the Conversion Date;
Permitted Encumbrances means those encumbrances set forth in Exhibit G;
Pledged Tax Increments means for any six month period, 90% of the Tax Increments
received by the EDA since the previous Payment Date;
Project means the construction of an approximately 143 unit senior rental housing facility
and related amenities and improvements to be located at 5803 Xerxes Avenue North in the City
(formerly the northern portion of the property at 5801 Xerxes Avenue North) within the TIF
District;
Public Development Costs means the Public Development Costs of the Project identified
on Exhibit C attached hereto and any other cost incurred by the Developer, or its assigns, that the
EDA determines is eligible for reimbursement with Pledged Tax Increments;
Reimbursement Amount means the lesser of (i) $1,850,000 or (ii) the Public Development
Costs actually incurred and paid by the Developer;
Site Plan means the site plan prepared for the Development Property approved by the City;
State means the State of Minnesota;
Tax Credit Investor means U.S. Bancorp Community Development Corporation;
Tax Increments means the tax increments derived from the Development Property and the
improvements thereon which have been received and are permitted to be retained by the EDA in
accordance with the TIF Act including, without limitation, Minnesota Statutes, Section 469.177;
469.176, Subd. 4h; and 469.175, Subd. 1a, as the same may be amended from time to time; for
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635425v4BR291-400
purposes of this definition, “derived from the Development Property and the improvements
thereon” means the portion of Tax Increment actually received by the EDA from the TIF District
determined by the EDA, in its sole determination, to have been derived from the Development
Property;
Termination Date means the earlier of: (i) the date the TIF District is terminated in
accordance with the TIF Act; or (ii) the date the TIF Note is paid in full; or (iii) the date the EDA
cancels the TIF Note upon a written request for termination from the Developer and a
determination in the EDA’s sole discretion that such termination will not limit or interfere with
the EDA’s ability to pool Tax Increments generated by the TIF District for affordable housing in
accordance with the TIF Act;
TIF Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended;
TIF District means the Tax Increment Financing District No. 8: Real Estate Equities (a
housing district) consisting of the property legally described in Exhibit A attached hereto, which
was established as a housing district under the TIF Act;
TIF Note means the Taxable Tax Increment Revenue Note (REE Xerxes Avenue Senior
Housing Project) to be executed by the EDA and delivered to the Developer pursuant to Article III
hereof, a form of which is attached hereto as Exhibit D;
TIF Plan means the tax increment financing plan approved for the TIF District;
Total Development Costs means the costs of the Project as set forth on Exhibit E;
Unavoidable Delays means delays, outside the control of the party claiming their
occurrence, which are the direct result of strikes, other labor troubles, prolonged adverse weather,
acts of God, acts of war or terrorism, fire or other casualty to the Project, litigation commenced by
third parties which, by injunction or other similar judicial action or by the exercise of reasonable
discretion, directly results in delays, or acts of any federal, state or local governmental unit (other
than the City or EDA) which directly result in delays, acts of the public enemy or acts of terrorism
and discovery of unknown hazardous materials or other concealed site conditions or delays of
contractors due to such discovery.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the EDA. The EDA makes the following
representations and warranties:
(1) The EDA is a public body corporate and politic organized and existing under the
Constitution and laws of the State of Minnesota and has the power to enter into this Agreement
and carry out its obligations hereunder.
(2) The EDA has taken the actions necessary to establish the TIF District as a “housing
district” within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11.
(3) The development contemplated by this Agreement is in conformance with the
development objectives set forth in the Redevelopment Plan and the TIF Plan.
(4) The EDA makes no representation or warranty, either express or implied, as to the
Development Property or its condition, or that the Development Property shall be suitable for the
Developer’s purposes or needs.
(5) No member of the Board of Commissioners, or officer of the EDA, has either a
direct or indirect financial interest in this Agreement, nor will any member of the Board of
Commissioners, or officer of the EDA, benefit financially from this Agreement within the meaning
of Minnesota Statutes, Sections 412.311 and 471.87.
Section 2.2. Representations and Warranties of the Developer. The Developer makes
the following representations and warranties:
(1) The Developer is a Minnesota limited liability limited partnership duly and validly
organized and existing in good standing under the laws of the State, and has power and authority
to enter into this Agreement and to perform its obligations hereunder and is not in violation of any
provision of the laws of the State.
(2) The construction of the Project would not be undertaken by the Developer, and in
the opinion of the Developer would not be economically feasible within the reasonably foreseeable
future, without the assistance and benefit to the Developer provided for in this Agreement.
(3) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provision of any contractual restriction, evidence of indebtedness,
agreement or instrument of whatever nature to which the Developer is now a party or by which it
is bound, or constitutes a default under any of the foregoing.
(4) The Developer understands that the EDA or the City may subsidize or encourage
the development of other developments in the City, including properties that compete with the
Development Property and the Project, and that such subsidies may be more favorable than the
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terms of this Agreement, and that neither the EDA nor the City has informed the Developer that
development of the Development Property will not be favored over the development of other
properties.
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ARTICLE III
UNDERTAKINGS BY DEVELOPER AND EDA
Section 3.1. Total Development Costs and Public Costs.
(1) The Developer’s estimate of the Total Development Costs of the Project and
sources of revenue to pay such costs are set forth on Exhibit E attached hereto.
(2) Based on the Developer’s representation that the Total Development Costs for the
Project are approximately $33,563,476, that the sources of revenue available to pay such costs,
excluding the tax increment assistance contemplated herein, is $31,713,476, and that the
Developer is unable to obtain additional private financing for the estimated Total Development
Costs, the EDA has agreed to provide tax increment financing subject to the terms and conditions
as hereinafter set forth. The Developer must provide the EDA copies of all executed financing
documents related to financing the Total Development Costs of the Project.
(3) The parties agree that the Public Development Costs to be incurred by the
Developer are essential to the successful completion of the Project. The Developer anticipates that
the Public Development Costs for the Project which are identified on Exhibit C attached hereto
will be at least $1,850,000.
(4) As of January 2, 2021, the estimated market value of the Development Property, as
improved, is expected to be at least $___________.
(5) The Developer has acquired or has entered into a purchase agreement pursuant to
which it will acquire fee title to the Development Property, and will cause the Project to be
constructed in accordance with the terms of this Agreement, the Redevelopment Plan, and all local,
state and federal laws and regulations including, but not limited to, environmental, zoning, energy
conservation, building code and public health laws and regulations.
(6) The Developer will obtain, or cause to be obtained, in a timely manner, all required
permits, licenses and approvals, and will meet, in a timely manner, all requirements of all
applicable local, state, and federal laws and regulations which must be obtained or met for the
construction and operation of the Project.
(7) The Total Development Costs shall be paid by the Developer, and the EDA shall
reimburse the Developer for the Public Development Costs in the Reimbursement Amount solely
through the issuance of the TIF Note as provided herein.
Section 3.2. TIF Note.
(1) The TIF Note will be originally issued to the Developer, as provided in Section
3.2(2), in a principal amount equal to the Reimbursement Amount and shall be dated as of its date
of issuance. The principal of the TIF Note and interest thereon shall be payable on a pay-as-you-
go basis solely from the Pledged Tax Increments as provided below.
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(2) The TIF Note shall be issued, in substantially the form attached hereto as Exhibit
D and interest will commence to accrue on the TIF Note only when: (A) the Developer shall have
submitted written proof and other documentation as may be reasonably satisfactory to the EDA of
the exact nature and amount of the Public Development Costs incurred by the Developer, together
with such other information or documentation as may be reasonably necessary and satisfactory to
the EDA to enable the EDA to substantiate the Developer’s tax increment expenditures per Exhibit
C and/or to comply with its tax increment reporting obligations to the Commissioner of Revenue,
the Office of the State Auditor or other applicable official; (B) the EDA shall have received
evidence that the Declaration has been recorded against the Development Property; (C) the
Developer shall have obtained from the City a certificate of occupancy for all residential units in
the Project and a Certificate of Completion as provided in this Agreement; (D) the Developer shall
have paid all of the EDA’s Administrative Costs required to have been paid as of such date in
accordance with Section 3.4 hereof; and (E) the Developer is in material compliance with each
term or provision of this Agreement required to have been satisfied as of such date. The
documentation provided in accordance with Section 3.2(2)(A) shall include specific invoices for
the particular work from the contractor or other provider and shall include paid invoices, copies of
remittances and/or other suitable documentary proofs of the Developer’s payment thereof.
(3) Subject to the provisions thereof, the TIF Note shall bear simple, non-compounding
interest at the rate equal to the lesser of 4.25% per annum or the rate per annum on the Permanent
Phase financing for the Project. Interest shall be computed on the basis of a 360 day year consisting
of twelve 30-day months. Principal and interest on the TIF Note will be payable on each Payment
Date; however, the sole source of funds required to be used for payment of the EDA’s obligations
under this Section and correspondingly under the TIF Note shall be the Pledged Tax Increments
received in the 6-month period preceding each Payment Date. The principal amount of TIF Note
shall be the Reimbursement Amount. On each Payment Date the Pledged Tax Increment shall be
credited against the accrued interest then due on the TIF Note and then applied to reduce the
principal. In the event the Pledged Tax Increments are not sufficient to pay the accrued interest,
the unpaid accrued interest shall be carried forward without interest. All Tax Increments in excess
of the Pledged Tax Increments necessary to pay the principal and accrued interest on the TIF Note
are not subject to this Agreement, and the EDA retains full discretion as to any authorized
application thereof. To the extent that the Pledged Tax Increments are insufficient through the
Final Payment Date, to pay all amounts otherwise due on the TIF Note, said unpaid amounts shall
then cease to be any debt or obligation of the EDA whatsoever.
(4) No interest will accrue during any period in which payments have been suspended
pursuant to Section 4.2.
(5) Any interest accruing on Pledged Tax Increments held by the EDA pending
payment to the Developer on the TIF Note shall accrue to the account of the TIF District.
(6) The TIF Note shall be a special and limited obligation of the EDA and not a general
obligation of the City or the EDA, and only Pledged Tax Increments shall be used to pay the
principal of and interest on the TIF Note.
(7) The EDA’s obligation to make payments on the TIF Note on any Payment Date
shall be conditioned upon the requirement that (A) there shall not at that time be an Event of
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Default that has occurred and is continuing under this Agreement that has not been cured during
the applicable cure period, and (B) this Agreement shall not have been terminated pursuant to
Section 4.2, and (C) all conditions set forth in Section 3.2(2) have been satisfied as of such date.
(8) The TIF Note shall be governed by and payable pursuant to the additional terms
thereof, as actually executed, in substantially the form set forth in Exhibit D. In the event of any
conflict between the terms of the TIF Note and the terms of this Section 3.2, the terms of the TIF
Note shall govern. The issuance of the TIF Note is pursuant and subject to the terms of this
Agreement.
Section 3.3. Income Restrictions. The Developer hereby represents, covenants and
agrees as follows:
(1) The Project is intended for occupancy by persons or families of low and moderate
income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National
Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing
Act of 1949, as amended, any other similar present or future federal, state or municipal legislation,
or the regulations promulgated under any of those acts; and
(2) No more than 20% of the square footage of any building of the Project financed
with the proceeds of the TIF Note will consist of commercial, retail or other non-residential uses;
and
(3) In accordance with the Declaration, commencing on the Completion Date and
continuing until the Termination Date, at least 40% of the residential units shall be occupied by or
available for rent to persons whose income does not exceed 60% of the area-wide median family
income for the standard metropolitan statistical area which includes Brooklyn Center, Minnesota,
as that figure is determined and announced from time to time by HUD, as adjusted for family size
(“Median Income”);
(4) Alternatively, the Developer may elect to satisfy the foregoing affordability
requirements by substituting “20% of the residential units” in place of “40% of the residential
units” in the preceding paragraph if, for such purposes, the term “Qualifying Tenants” means those
persons and families who are determined from time to time by the Developer to have combined
adjusted income that does not exceed 50% of the Median Income; and
(5) The Developer will provide the EDA an annual certification in the form attached
as Exhibit 3 to the Declaration (the “Compliance Certificate”) evidencing compliance with the
requirements of paragraph (3) above, and the income verifications from tenants used to meet such
requirements. The annual certification shall also include the vacancy rate for the preceding
calendar year. The annual certification shall be provided on or before July 1 of each year
commencing July 1, 2022, and shall cover the preceding calendar year.
(6) The provisions of this Section 3.3 shall be incorporated into the Declaration in
substantially the form attached as Exhibit F, and recorded against the Development Property prior
to the issuance of the TIF Note.
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Section 3.4. Developer to Pay EDA’s Fees and Expenses. The Developer will pay all of
the EDA’s reasonable Administrative Costs (as defined below) and must pay such costs to the
EDA within 30 days after receipt of a written invoice from the EDA describing the amount and
nature of the costs to be reimbursed. For the purposes of this Agreement, the term “Administrative
Costs” means out of pocket costs incurred by the EDA together with staff and consultant (including
reasonable legal, financial advisor, etc.) costs of the EDA, all attributable to or incurred in
connection with the establishment of the TIF District and the TIF Plan and review, negotiation and
preparation of this Agreement (together with any other agreements entered into between the parties
hereto contemporaneously therewith) and review and approvals of other documents and
agreements in connection with the Project. In addition, certain engineering, environmental advisor,
legal, land use, zoning, subdivision and other costs related to the development of the Development
Property are required to be paid, or additional funds deposited in escrow, as provided in accordance
with the City’s planning, zoning, and building fee schedules. The parties agree and understand
that Developer deposited with the EDA $10,000 toward payment of the EDA’s Administrative
Costs. If such costs exceed such amount, then at any time, but not more often than monthly, the
EDA will deliver written notice to Developer setting forth any additional fees and expenses,
together with suitable billings, receipts or other evidence of the amount and nature of the fees and
expenses, and Developer agrees to pay all fees and expenses within 30 days of EDA’s written
request. Any unused amount of such deposit shall be returned to the Developer.
Section 3.5. Compliance with Environmental Requirements.
(1) The Developer shall comply with all applicable local, state, and federal
environmental laws and regulations, and will obtain, and maintain compliance under, any and all
necessary environmental permits, licenses, approvals or reviews.
(2) The EDA makes no warranties or representations regarding, nor does it indemnify
the Developer with respect to, the existence or nonexistence on or in the vicinity of the
Development Property or anywhere within the TIF District of any toxic or hazardous substances
or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde,
the group of organic compounds known as polychlorinated biphenyls, petroleum products
including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous
substance as defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (“CERCLA”), 42 U.S.C. §§ 961-9657, as amended) (collectively, the “Hazardous
Substances”).
(3) The Developer agrees to take all necessary action to remove or remediate any
Hazardous Substances located on the Development Property to the extent required by and in
accordance with all applicable local, state and federal environmental laws and regulations.
Section 3.6. Construction Plans.
(1) Prior to the commencement of construction of the Project, the Developer will
deliver to the EDA the Construction Plans, Construction Documents and a sworn construction
cost statement certified by the Developer and the General Contractor (the “Sworn Construction
Cost Statement”) all in form and substance acceptable to the EDA. The Construction Plans for the
Project shall be consistent with the Redevelopment Plan, this Agreement, and all applicable State
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and local laws and regulations and the Site Plan and Design Drawings previously submitted to the
EDA. The City’s building official and the Executive Director of the EDA, on behalf of the EDA
shall promptly review any Construction Plans upon submission and deliver to the Developer a
written statement approving the Construction Plans or a written statement rejecting the
Construction Plans and specifying the deficiencies in the Construction Plans. The City’s building
official and the Executive Director of the EDA on behalf of the EDA shall approve the
Construction Plans if: (i) the Construction Plans substantially conform to the terms and conditions
of this Agreement; (ii) the Construction Plans are consistent with the goals and objectives of the
Redevelopment Plan and the TIF Plan; (iii) the Construction Plans comply with the Site Plan and
Design Drawings; and (iv) the Construction Plans do not violate any applicable federal, State or
local laws, ordinances, rules or regulations. If the Construction Plans are not approved by the
EDA, then the Developer shall make such changes as the EDA may reasonably require and
resubmit the Construction Plans to the EDA for approval, which will not be unreasonably withheld,
unreasonably conditioned or unreasonably delayed. If the EDA has not rejected the Construction
Plans in writing within 30 calendar days of submission, such Construction Plans shall
automatically be deemed approved by the EDA but only if the Construction Plans provided to the
EDA are complete and final and meet all requirements necessary for the City to issue a building
permit.
(2) No changes shall be made to the Construction Plans for the Project without the
EDA’s prior written approval, unless the aggregate of such changes do not increase or decrease
the Total Development Costs by more than 10%. No changes which materially alter (a) the
Project’s site plan, (b) exterior appearance, (c) construction quality, or (d) exterior materials
included in the final Design Drawings and Construction Plans shall be made without the EDA’s
prior written consent. The approval of the EDA will not be unreasonably withheld, conditioned
or delayed. If an amendment or prior written approval from the EDA is necessary with respect to
a change in the Construction Plans, if the EDA has not rejected such amendment in writing within
30 calendar days of submission of such amendment, the amendment to Construction Plans shall
automatically be deemed approved by the EDA but only if such amendment provided to the EDA
is complete and final and meets all requirements necessary for the City to issue a building permit
or determine compliance with an applicable building permit.
(3) The approval of the Construction Plans, or any proposed amendment to the
Construction Plans, by the EDA does not constitute a representation or warranty by the EDA that
the Construction Plans or the Project comply with any applicable building code, health or safety
regulation, zoning regulation, environmental law or other law or regulation, or that the Project will
meet the qualifications for issuance of a certificate of occupancy, or that the Project will meet the
requirements of the Developer or any other users of the Project. Approval of the Construction
Plans, or any proposed amendment to the Construction Plans, by the EDA will not constitute a
waiver of an Event of Default. Nothing in this Agreement shall be construed to relieve the
Developer of its obligations to receive any required approval of the Construction Plans from any
City department.
Section 3.7. Commencement and Completion of Construction. Subject to the terms and
conditions of this Agreement and to Unavoidable Delays, the Developer will commence
construction of the Project by April 30, 2020 and shall substantially complete the Project by
January 31, 2022. Notwithstanding the foregoing, failure of the Developer to commence
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construction or substantially complete the Project shall not be an Event of Default hereunder unless
the Developer fails to commence construction of the Project by June 30, 2020 or the Developer
fails to obtain a certificate of occupancy for the Project by July 31, 2022. The Project will be
constructed by the Developer on the Development Property in conformity with the Construction
Plans approved by the EDA. Prior to completion, upon the request of the EDA, and subject to
applicable safety rules, the Developer will provide the EDA reasonable access to the Development
Property. “Reasonable access” means at least one site inspection per week during regular business
hours. During construction, marketing and rentals of the Project, the Developer will deliver
progress reports to the EDA from time to time as reasonably requested by the EDA.
Section 3.8. Certificate of Completion. The Developer shall notify the EDA when
construction of the Project has been substantially completed. The EDA shall, within 20 days after
such notification, inspect the Project in order to determine whether the Project has been constructed
in substantial conformity with the approved Construction Plans. If the EDA determines that the
Project has not been constructed in substantial conformity with the approved Construction Plans,
the EDA shall deliver a written statement to the Developer indicating in adequate detail the specific
respects in which the Project has not been constructed in substantial conformity with the approved
Construction Plans and Developer shall have a reasonable period of time to remedy such
deficiencies. The EDA shall re-inspect the Project within a reasonable period of time after
receiving notice that such deficiencies have been remedied in order to determine whether the
Project has been constructed in substantial conformity with the approved Construction Plans and
this Agreement. Within a reasonable period of time after determining that the Project has been
constructed in substantial conformity with the approved Construction Plans, the EDA will furnish
to the Developer a Certificate of Completion substantially in the form attached hereto as Exhibit
H certifying the completion of the Project. The Certificate of Completion issued for the Project
shall conclusively satisfy and terminate the agreements and covenants of the Developer in this
Agreement solely with respect to construction of the Project. The issuance of a Certificate of
Completion under this Agreement shall not be construed to relieve the Developer of any approval
required by any City department in connection with the construction, completion or occupancy of
the Project nor shall it relieve the Developer of any other obligations under this Agreement.
Section 3.9. Encumbrance of the Development Property. Until the Final Payment Date,
without the prior written consent of the EDA, neither the Developer nor any successor in interest
to the Developer will engage in any financing or any other transaction creating any mortgage or
other encumbrance or lien upon the Development Property, or portion thereof, whether by express
agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the
Development Property except for the purpose of obtaining funds only to the extent necessary for
financing or refinancing the acquisition and construction of the Project (including, but not limited
to, land and building acquisition, labor and materials, professional fees, development fees, real
estate taxes, reasonably required reserves, construction interest, organization and other direct and
indirect costs of development and financing, costs of constructing the Project, and an allowance
for contingencies) including without limitation regulatory agreements and land use restriction
agreements in connection with such financings; provided, however, this provision shall not be
considered a waiver of the requirements of Section 5.3 with respect to any Transfer of the TIF
Note in connection with any such financing or refinancing nor shall anything contained in this
Section prohibit the Developer from making transfers in accordance with Section 5.3. The EDA
hereby consents to any mortgages securing the Developer’s construction financing for the Project
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and to the succession of the mortgagee thereunder (or any assignee of the mortgagee) or any
purchasers at or after foreclosure thereof, by the successful bidder at the sale, to title to the
Development Property, and to any other Permitted Encumbrances set forth in Exhibit G; provided,
however, this provision shall not be considered a waiver of the requirements of Section 5.3 with
respect to any Transfer of the TIF Note in connection with any such mortgage. Notwithstanding
the foregoing, the TIF Note shall be terminated by the EDA in the event that any mortgagee (or
any assignee of the mortgagee) or any purchasers at or after foreclosure thereof, by the successful
bidder at the sale, to the title to the Development Property, terminates the Declaration, in
accordance with its terms, or does not otherwise comply with the Declaration.
Section 3.10. Business Subsidy Act. The subsidy granted to the Developer pursuant to
this Agreement is assistance for housing and therefore the provisions of Minnesota Statutes,
Section 116J.993 to 116J.995 do not apply. No portion of the tax increment assistance shall be
used to construct any commercial space.
Section 3.11. Right to Collect Delinquent Taxes. The Developer acknowledges that the
EDA is providing substantial aid and assistance in furtherance of the Project through
reimbursement of Public Development Costs. To that end, the Developer agrees for itself, its
successors and assigns, that in addition to the obligation pursuant to statute to pay real estate taxes,
it is also obligated by reason of this Agreement, to pay before delinquency all real estate taxes
assessed against the Development Property and the Project. The Developer acknowledges that
this obligation creates a contractual right on behalf of the EDA through the Termination Date to
sue the Developer or its successors and assigns, to collect delinquent real estate taxes related to
the Development Property and any penalty or interest thereon and to pay over the same as a tax
payment to the county auditor. In any such suit in which the EDA is the prevailing party, the EDA
shall also be entitled to recover its costs, expenses and reasonable attorney fees.
Section 3.12. Review of Taxes.
(1) The Developer agrees that prior to the Termination Date it will not cause a
reduction in the real property taxes paid in respect of the Development Property through: (i) willful
destruction of the Development Property or any part thereof; or (ii) willful refusal to reconstruct
damaged or destroyed property. The Developer also agrees that it will not, prior to the Termination
Date, apply for an exemption from or a deferral of property tax on the Development Property
pursuant to any law, or transfer or permit transfer of the Development Property to any entity whose
ownership or operation of the property would result in the Development Property being exempt
from real property taxes under State law; provided, however, the Developer may apply for and
obtain designation of the Development Property as low-income rental property classified as “4d”
under Minn. Stat. 273.13, subdivision 25 (“4d Classification”).
(2) Other than 4d Classification, the Developer shall notify the EDA within 10 days of
filing any petition to seek reduction in market value or property taxes on any portion of the
Development Property under any State law (referred to as a “Tax Appeal”). If as of any Payment
Date, any Tax Appeal is then pending, the EDA will continue to make payments on the TIF Note
but only to the extent that the Pledged Tax Increment relates to property taxes paid with respect to
the market value of the Development Property not being challenged as part of the Tax Appeal as
determined by the EDA in its sole discretion and the EDA will withhold the Pledged Tax Increment
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related to property taxes paid with respect to the market value of the Development Property being
challenged as part of the Tax Appeal as determined by the EDA in its sole discretion. The EDA
will apply any withheld amount to the extent not reduced as a result of the Tax Appeal promptly
after the Tax Appeal is fully resolved and the amount of Pledged Tax Increment, as applicable,
attributable to the disputed tax payments is finalized.
(3) If the Development Property qualifies for 4d Classification and Minn. Stat. 273.13,
subdivision 25 or any applicable successor statute is amended to reduce the 4d Classification tax
rate, the Developer acknowledges that the amount of Tax Increments may be negatively impacted.
Section 3.13. Project Rents. The Developer covenants and agrees that during the
Qualified Project Period (as defined in the Declaration) it will not increase the rent charged to any
tenant of a rental unit within the Project during such tenant’s lease term and, at any rate, will not
increase the rent charged to any tenant more than once in any 6-month period.
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ARTICLE IV
EVENTS OF DEFAULT
Section 4.1. Events of Default Defined. The following shall be “Events of Default”
under this Agreement and the term “Event of Default” shall mean whenever it is used in this
Agreement any one or more of the following events:
(1) Failure by the Developer to timely pay any ad valorem real property taxes assessed
with respect to the Development Property.
(2) Subject to Unavoidable Delays, failure by the Developer to commence construction
of the Project by June 30, 2020, and to proceed with due diligence to substantially complete the
construction of the Project pursuant to the terms, conditions and limitations of this Agreement and
obtain a certificate of occupancy from the City by July 31, 2022.
(3) Failure of the Developer to observe or perform any other material covenant,
condition, obligation or agreement on its part to be observed or performed under the Declaration,
or this Agreement, including, without limitation, compliance with the requirements set forth in
Section 3.3 hereof.
(4) If, prior to the Completion Date, the Developer shall
(a) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or
(b) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing
the adjudication of the Developer, as a bankrupt or its reorganization under any present or
future federal bankruptcy act or any similar federal or state law shall be filed in any court
and such petition or answer shall not be discharged or denied within 90 days after the filing
thereof; or a receiver, trustee or liquidator of the Developer, or of the Project, or part
thereof, shall be appointed in any proceeding brought against the Developer, and shall not
be discharged within 90 days after such appointment, or if the Developer, shall consent to
or acquiesce in such appointment.
Notwithstanding anything to the contrary set forth in this Agreement the lenders providing
construction or permanent financing for the Project, the general partner and any limited partner of
the Developer shall have the right, but not the obligation, to cure an Event of Default during the
cure period provided for the Developer.
Section 4.2. Remedies on Default. Whenever any Event of Default referred to in Section
4.1 occurs and is continuing, the EDA, as specified below, may take any one or more of the
following actions after the giving of 30 days’ written notice to the Developer, but only if the Event
of Default has not been cured within said 30 days; provided that if such Event of Default cannot
be reasonably cured within the 30 day period, and the Developer has provided assurances
reasonably satisfactory to the EDA that it is proceeding with due diligence to cure such default,
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such 30 day cure period shall be extended for a period deemed reasonably necessary by the EDA
to effect the cure, but in any event not to exceed 180 days:
(1) The EDA may suspend its performance under this Agreement and the TIF Note
until it receives assurances from the Developer, deemed reasonably adequate by the EDA, that the
Developer will cure its default and continue its performance under this Agreement. Interest on the
TIF Note shall not accrue during the period of any suspension of payment.
(2) The EDA may terminate this Agreement and/or cancel the TIF Note.
(3) The EDA may take any action, including legal or administrative action, in law or
equity, which may appear necessary or desirable to enforce performance and observance of any
obligation, agreement, or covenant of the Developer under this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement the lenders providing
construction or permanent financing for the Project, the general partner and any limited partner of
the Developer shall have the right, but not the obligation, to cure an Event of Default during the
cure period provided for the Developer.
If the EDA has been provided a notice address, the EDA agrees to give the applicable
Mortgage Lender the same notice provided to the Developer of any Event of Default hereunder
that occurs prior to the termination of the applicable Mortgage Lender Collateral Assignment and
opportunity to cure the same, as further set forth in the applicable Mortgage Lender Collateral
Assignment. If the EDA has been provided a notice address, the EDA agrees to give the Tax
Credit Investor the same notice provided to the Developer of any Event of Default hereunder and
opportunity to cure the same.
Section 4.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
EDA is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient.
Section 4.4. No Implied Waiver. In the event any agreement contained in this
Agreement should be breached by any party and thereafter waived by any other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other
concurrent, previous or subsequent breach hereunder.
Section 4.5. Indemnification of EDA.
(1) The Developer releases from and covenants and agrees that the City and the EDA,
and their governing bodies’ members, officers, agents, including the independent contractors,
consultants and legal counsel, servants and employees thereof (for purposes of this Section,
collectively the “Indemnified Parties”) shall not be liable for and agrees to indemnify and hold
harmless the Indemnified Parties against any loss or damage to property or any injury to or death
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of any person occurring at or about or resulting from any defect in the Project, or any other loss,
cost expense, or penalty, except to the extent caused by any willful misrepresentation or any willful
or wanton misconduct of the Indemnified Parties.
(2) Except for any willful misrepresentation or any willful or wanton misconduct of
the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now
and forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand,
suit, action or other proceeding whatsoever by any person or entity whatsoever arising or
purportedly arising from the actions or inactions of the Developer (or if other persons acting on its
behalf or under its direction or control) under this Agreement, or the transactions contemplated
hereby or the acquisition, construction, installation, ownership, and operation of the Project;
including, without limitation, any pecuniary loss or penalty (including interest thereon at the rate
of 5% per annum from the date such loss is incurred or penalty is paid by the EDA or the City) as
a result of the Project failing to cause the TIF District to qualify as a “housing district” under
Section 469.174, Subdivision 11, of the Act, or to violate limitations as to the use of Tax
Increments as set forth in Section 469.176, subd. 4d.
(3) All covenants, stipulations, promises, agreements and obligations of the EDA
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the EDA or the City and not of any governing body member, officer, agent, servant
or employee of the EDA or the City, as the case may be.
Section 4.6. Reimbursement of Attorneys’ Fees. If the Developer shall default under
any of the provisions of this Agreement, and the EDA shall employ attorneys or incur other
reasonable expenses for the collection of payments due hereunder, or for the enforcement of
performance or observance of any obligation or agreement on the part of the Developer contained
in this Agreement, the Developer will within 30 days reimburse the EDA for the reasonable fees
of such attorneys and such other reasonable expenses so incurred.
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ARTICLE V
ADDITIONAL PROVISIONS
Section 5.1. Restrictions on Use. The Developer agrees for itself, its successors and
assigns and every successor in interest to the Development Property, or any part thereof, that the
Developer and such successors and assigns shall operate, or cause to be operated, the Project as an
affordable senior rental housing development in accordance with this Agreement and the
Declaration until the Termination Date.
Section 5.2. Reports. The Developer shall provide the EDA reports in a timely manner
with such information about the Project as the EDA may reasonably request for purposes of
satisfying any reporting requirements imposed by law on the EDA.
Section 5.3. Limitations on Transfer and Assignment.
(1) Except as provided in Sections 3.9 and 5.3(5), the Developer will not sell, assign,
convey, lease or transfer in any other mode or manner (collectively, “Transfer”) this Agreement,
the TIF Note, or the Development Property or the Project, or any interest therein, without the
express written approval of the EDA, which consent will not be unreasonably withheld,
conditioned or delayed. The EDA shall, within 20 days after such a written request for approval of
a Transfer, deliver a written statement to the Developer indicating whether the Transfer is approved
or specifying the additional conditions to be satisfied in accordance with Section 5.3(3). The
provisions of this Section 5.3 apply to all subsequent Transfers by authorized transferees;
(2) Notwithstanding clause (3) below, the EDA hereby consents to (A) the Mortgage
Lender Collateral Assignment to the Construction Lender during the Construction Phase, upon
receipt of (i) an Acknowledgment Regarding TIF Note from the Construction Lender in the form
included in Exhibit 2 to the TIF Note, (ii) an executed copy of Mortgage Lender Collateral
Assignment between Construction Lender and the Developer, and (iii) reasonable legal fees of the
EDA in accordance with clause (4) below and (B) the Mortgage Lender Collateral Assignment to
the Permanent Lender during the Permanent Phase, upon receipt of (i) an Acknowledgment
Regarding TIF Note from the Permanent Lender in the form included in Exhibit 2 to the TIF Note,
(ii) an executed copy of Mortgage Lender Collateral Assignment between Permanent Lender and
the Developer, (iii) a termination and release from the Construction Lender of the Construction
Lender’s Mortgage Lender Collateral Assignment and (iv) reasonable legal fees of the EDA in
accordance with clause (4) below;
(3) The EDA shall be entitled to require, as conditions to any approval of any Transfer
of this Agreement, the Development Property, the Project, or the TIF Note in connection therewith,
which approval will not be unreasonably withheld, conditioned or delayed, that:
(a) Any proposed transferee shall have the qualifications and financial
responsibility, as determined by the EDA, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer;
(b) Any proposed transferee, by instrument in writing satisfactory to the EDA
shall, for itself and its successors and assigns, and expressly for the benefit of the EDA have
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expressly assumed any of the remaining obligations of the Developer under this Agreement
and agreed to be subject to all the conditions and restrictions to which the Developer is
subject;
(c) There shall be submitted to the EDA for review all instruments and other
legal documents involved in effecting transfer, and if approved by EDA, its approval shall
be indicated to the Developer in writing;
(d) Any proposed transferee of the TIF Note shall (i) execute and deliver to the
EDA the Acknowledgment Regarding TIF Note in the form included in Exhibit 2 to the
TIF Note and (ii) surrender the TIF Note to the EDA either in exchange for a new fully
registered note or for transfer of the TIF Note on the registration records for the TIF Note
maintained by the EDA;
(e) The Developer and its transferees shall comply with such other conditions as
are necessary in order to achieve and safeguard the purposes of the Act, the TIF Act and
this Agreement; and
(f) In the absence of a specific written agreement by the EDA to the contrary,
no such transfer or approval by the EDA thereof shall be deemed to relieve the Developer
or any other party bound in any way by this Agreement or otherwise with respect to the
construction of the Project, from any of its obligations with respect thereto.
(4) The Developer agrees to pay all reasonable legal fees and expenses of the EDA,
including fees of the City Attorney’s office and outside counsel retained by the EDA to review the
documents submitted to the EDA in connection with any Transfer.
(5) Nothing contained in this Section shall prohibit the Developer from (i) entering into
leases with tenants in the ordinary course of business, (ii) entering into easements or other
agreements necessary for the operation of the Project, (iii) entering into easements necessary for
the construction of the Project, (iv) admitting or removing limited partners or transferring direct
or indirect limited partner interests in the Developer, or interests in the general partner of the
Developer, or admitting or removing partners in accordance with the applicable organizational
documents, or (v) removing the general partner of the Developer for cause at the direction of the
Tax Credit Investor in accordance with the Developer’s partnership agreement and/or in
accordance with Developer’s financing document with the applicable Mortgage Lender.
Section 5.4. Conflicts of Interest. No member of the governing body or other official of
the EDA shall have any financial interest, direct or indirect, in this Agreement, the Development
Property or the Project, or any contract, agreement or other transaction contemplated to occur or
be undertaken thereunder or with respect thereto, nor shall any such member of the governing body
or other official participate in any decision relating to this Agreement which affects his or her
personal interests or the interests of any corporation, partnership or association in which he or she
is directly or indirectly interested. No member, official or employee of the EDA shall be personally
liable to the EDA in the event of any default or breach by the Developer or successor or on any
obligations under the terms of this Agreement.
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Section 5.5. Titles of Articles and Sections. Any titles of the several parts, articles and
sections of this Agreement are inserted for convenience of reference only and shall be disregarded
in construing or interpreting any of its provisions.
Section 5.6. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by any party to any
other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally, and
(a) in the case of the Developer is addressed to or delivered personally to:
Brooklyn Center AH II, LLLP
579 Selby Avenue
Saint Paul, Minnesota 55102
Attn: Patrick Ostrom
With a copy to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, Minnesota 55402-4629
Attention: Jeffrey Drennan, Esq.
and a copy to: NorthMarq Capital, LLC
3500 American Blvd West, #500
Bloomington, MN 55431
Attn: Servicing Department
and a copy to: U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
St. Louis, MO 63103
Attn: Director of Affordable Housing Asset Management
and a copy to: Applegate & Thorne‐Thomsen
425 S. Financial Place, Suite 1900
Chicago, IL 60605
Attn: Ben Applegate, Esq.
(b) in the case of the EDA is addressed to or delivered personally to the EDA at:
Economic Development Authority of Brooklyn Center, Minnesota
Brooklyn Center City Hall
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Attn: City Finance Director
or at such other address with respect to any such party as that party may, from time to time,
designate in writing and forward to the other, as provided in this Section.
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Section 5.7. No Additional Waiver Implied by One Waiver. If any agreement contained
in this Agreement should be breached by either party and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and shall not be deemed to waive
any other concurrent, previous or subsequent breach hereunder.
Section 5.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 5.9. Law Governing. This Agreement will be governed and construed in
accordance with the laws of the State.
Section 5.10. Term; Termination. Except as provided in the Declaration, and unless this
Agreement is terminated earlier in accordance with its terms this Agreement shall terminate on the
Final Payment Date. Early termination upon a written request from the Developer shall be in the
EDA’s sole discretion and upon a determination that such termination will not limit or interfere
with the EDA’s ability to pool Tax Increments generated by the TIF District for affordable housing
in accordance with the TIF Act. After the Termination Date, if requested by the Developer, the
EDA will provide a termination certificate as to the Developer’s obligations hereunder.
Section 5.11. Provisions Surviving Rescission, Expiration or Termination. Sections 4.5
and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or
arising out of any event, occurrence or circumstance existing prior to the date thereof.
Section 5.12. Superseding Effect. This Agreement reflects the entire agreement of the
parties with respect to the development of the Development Property, and supersedes in all respects
all prior agreements of the parties, whether written or otherwise, with respect to the development
of the Development Property.
Section 5.13. Relationship of Parties. Nothing in this Agreement is intended, or shall be
construed, to create a partnership or joint venture among or between the parties hereto, and the
rights and remedies of the parties hereto shall be strictly as set forth in this Agreement. All
covenants, stipulations, promises, agreements and obligations of the EDA contained herein shall
be deemed to be the covenants, stipulations, promises, agreements and obligations of the EDA and
not of any governing body member, officer, agent, servant or employee of the City or the EDA.
Section 5.14. Venue. All matters, whether sounding in tort or in contract, relating to the
validity, construction, performance, or enforcement of this Agreement shall be controlled by and
determined in accordance with the laws of the State of Minnesota, and the Developer agrees that
all legal actions initiated by the Developer or EDA with respect to or arising from any provision
contained in this Agreement shall be initiated, filed and venued exclusively in the State of
Minnesota, Hennepin County, District Court and shall not be removed therefrom to any other
federal or state court.
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IN WITNESS WHEREOF, the EDA has caused this Agreement to be duly executed in its
name and on its behalf, and the Developer has caused this Agreement to be duly executed in its
name and on its behalf, on or as of the date first above written.
ECONOMIC DEVELOPMENT AUTHORITY
OF BROOKLYN CENTER, MINNESOTA
By _________________________________
Its President
By _________________________________
Its Executive Director
This is a signature page to the TIF Assistance Agreement.
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BROOKLYN CENTER AH II, LLLP, a
Minnesota limited liability limited partnership
By: Brooklyn Center AH II, LLC, a Minnesota
limited liability company
Its: General Partner
By: REE Brooklyn Center AH II, LLC, a
Minnesota limited liability company
Its: Manager
By:
William R. Bisanz
Its: President
This is a signature page to the TIF Assistance Agreement.
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EXHIBIT A
DESCRIPTION OF TIF DISTRICT
The area encompassed by the TIF District shall also include all street or utility right-of-ways
located upon or adjacent to the property described below:
Originally:
Tract B, Registered Land Survey No. 1262, Hennepin County, Minnesota.
Being Registered Land as is evidenced by Certificate of Title No. 1432398
Which has been re-platted as:
Lots 1 and 2, Block 1, Northway Crossing Addition
Being Registered Land as evidenced by Certificates of Title Nos. 1496796 and _______
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EXHIBIT B
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
Lot 1, Block 1, Northway Crossing, according to the recorded plat thereof, Hennepin County,
Minnesota.
Being Registered Land as is evidenced by Certificate of Title No. 1496796.
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EXHIBIT C
PUBLIC DEVELOPMENT COSTS
Land acquisition
Site grading and improvements
Underground and above ground utilities
All rental housing construction costs eligible for reimbursement under the TIF Act
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EXHIBIT D
FORM OF TAXABLE TIF NOTE
No. R-1 [$1,850,000]
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
CITY BROOKLYN CENTER, MINNESOTA
TAXABLE TAX INCREMENT REVENUE NOTE
(REE XERXES AVENUE SENIOR HOUSING PROJECT)
___________, 20___
The Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”),
hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the
amounts hereinafter described (the “Payment Amounts”) to Brooklyn Center AH II, LLLP, a
Minnesota limited liability limited partnership or its registered assigns (the “Registered Owner”),
the principal amount of _______________ and 00/100 Dollars [($1,850,000)], but only in the
manner, at the times, from the sources of revenue, and to the extent hereinafter provided.
This Note is issued pursuant to that certain TIF Assistance Agreement, dated as of April
____, 2020, as the same may be amended from time to time (the “TIF Assistance Agreement”), by
and between the EDA and Brooklyn Center AH II, LLLP (the “Developer”). Unless otherwise
defined herein or unless context requires otherwise, undefined terms used herein shall have the
meanings set forth in the TIF Assistance Agreement.
This Note shall bear simple, non-compounding interest at the rate equal to the lesser of
4.25% per annum or the rate per annum on the Permanent Phase financing for the Project; provided
that no interest shall accrue on this Note during any period that an Event of Default has occurred,
and such Event of Default is continuing, under the TIF Assistance Agreement and EDA has
exercised its remedy under the TIF Assistance Agreement to suspend payment on the Note.
Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
The amounts due under this Note shall be payable on August 1, 2021 and on each February
1 and August 1 thereafter to and including the earliest of (i) the date on which the entire principal
and accrued interest on the TIF Note has been paid in full; or (ii) February 1, 2037; or (iii) any
earlier date the TIF Assistance Agreement or this Note is cancelled in accordance with the terms
of the TIF Assistance Agreement or deemed paid in full; or (iv) the February 1 following the date
the TIF District is terminated in accordance with the TIF Act or (v) the date the EDA cancels the
TIF Note upon a written request for termination from the Developer and a determination in the
EDA’s sole discretion that such termination will not limit or interfere with the EDA’s ability to
pool Tax Increments generated by the TIF District for affordable housing in accordance with the
TIF Act (provided that there shall be no payment of any Tax Increments on such date unless it is
a regular Payment Date) (the “Final Payment Date”) or, if the first should not be a Business Day
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(as defined in the TIF Assistance Agreement) the next succeeding Business Day (collectively, the
“Payment Dates”). On each Payment Date, the EDA shall pay by check or draft mailed to the
person that was the Registered Owner of this Note at the close of the last business day preceding
such Payment Date an amount equal to 90% of the Tax Increments (as hereinafter defined)
received by the EDA during the 6-month period preceding such Payment Date (“Pledged Tax
Increments”).
“Tax Increments” are the tax increments derived from the Development Property (as
defined in the TIF Assistance Agreement) and the improvements thereon which have been received
and are permitted to be retained by the EDA in accordance with the Minnesota Statutes, Sections
469.174 through 469.1794, as the same may be amended or supplemented from time to time (the
“TIF Act”) including, without limitation, Minnesota Statutes, Section 469. 469.177; 469.176,
Subd. 4h; and 469.175, Subd. 1a, as the same may be amended from time to time; for purposes of
this definition, “derived from the Development Property and the improvements thereon” means
the portion of Tax Increment actually received by the EDA from the TIF District determined by
the EDA, in its sole determination, to have been derived from the Development Property.
Payments on this Note shall be payable solely from the Pledged Tax Increments. All
payments made by the EDA under this Note shall first be applied to accrued interest and then to
principal. If Pledged Tax Increments are insufficient to pay any accrued interest due, such unpaid
interest shall be carried forward without interest.
This Note shall terminate and be of no further force and effect following the Final Payment
Date defined above, or any date upon which the EDA shall have terminated the TIF Assistance
Agreement under Section 4.2 thereof or on the date that all principal and interest payable hereunder
shall have been or deemed paid in full, whichever occurs earliest. This Note may be prepaid in
whole or in part at any time without penalty.
The EDA makes no representation or covenant, express or implied, that the Pledged Tax
Increments will be sufficient to pay, in whole or in part, the amounts which are or may become
due and payable hereunder. There are risk factors in the amount of Tax Increments that may
actually be received by the EDA and some of those factors are listed on the attached Exhibit 1.
The Registered Owner acknowledges these risk factors and understands and agrees that payments
by the EDA under this Note are subject to these and other factors.
The EDA’s payment obligations hereunder shall be further subject to the conditions that
(i) no Event of Default under Section 4.1 of the TIF Assistance Agreement shall have occurred
and be continuing at the time payment is otherwise due hereunder, including without limitation
failure to obtain the Compliance Certificate in accordance with Section 3.3 of the TIF Assistance
Agreement and deliver the Declaration (as defined therein), and (ii) the TIF Assistance Agreement
shall not have been terminated pursuant to Section 4.2, and (iii) all conditions set forth in Section
3.2(2) of the TIF Assistance Agreement have been satisfied as of such date. Any such suspended
and unpaid amounts shall become payable, without interest accruing thereon in the meantime, if
this Note has not been terminated in accordance with Section 4.2 of the TIF Assistance Agreement
and said Event of Default shall thereafter have been cured in accordance with Section 4.2. If
pursuant to the occurrence of an Event of Default under the TIF Assistance Agreement the EDA
elects, in accordance with the TIF Assistance Agreement to cancel and rescind the TIF Assistance
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Agreement and/or this Note, the EDA shall have no further debt or obligation under this Note
whatsoever. Reference is hereby made to all of the provisions of the TIF Assistance Agreement,
for a fuller statement of the rights and obligations of the EDA to pay the principal of this Note and
the interest thereon, and said provisions are hereby incorporated into this Note as though set out in
full herein.
THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION AND NOT A
GENERAL OBLIGATION OF THE CITY OF BROOKLYN CENTER, MINNESOTA
(THE “CITY”) OR THE EDA AND IS PAYABLE BY THE EDA ONLY FROM THE
SOURCES AND SUBJECT TO THE QUALIFICATIONS STATED OR REFERENCED
HEREIN. THIS NOTE IS NOT A GENERAL OBLIGATION OF THE CITY OR THE
EDA, AND THE FULL FAITH AND CREDIT AND TAXING POWERS OF THE CITY
AND THE EDA ARE NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR
INTEREST ON THIS NOTE AND NO PROPERTY OR OTHER ASSET OF THE CITY
OR THE EDA, SAVE AND EXCEPT THE ABOVE-REFERENCED PLEDGED TAX
INCREMENTS, IS OR SHALL BE A SOURCE OF PAYMENT OF THE EDA’S
OBLIGATIONS HEREUNDER.
The Registered Owner shall never have or be deemed to have the right to compel any
exercise of any taxing power of the EDA or the City or of any other public body, and neither the
EDA nor any person executing or registering this Note shall be liable personally hereon by reason
of the issuance or registration thereof or otherwise.
This Note is issued by the EDA in aid of financing a project pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including the TIF Act.
This Note may be assigned only as provided in Section 5.3 of the TIF Assistance
Agreement and subject to the assignee executing and delivering to the EDA the Acknowledgment
Regarding TIF Note in the form included in Exhibit 2. Additionally, in order to assign the Note,
the assignee shall surrender the same to the EDA either in exchange for a new fully registered note
or for transfer of this Note on the registration records maintained by the EDA for the Note. Each
permitted assignee shall take this Note subject to the foregoing conditions and subject to all
provisions stated or referenced herein.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required
by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be
performed precedent to and in the issuance of this Note have been done, have happened, and have
been performed in regular and due form, time, and manner as required by law; and that this Note,
together with all other indebtedness of the EDA outstanding on the date hereof and on the date of
its actual issuance and delivery, does not cause the indebtedness of the EDA to exceed any
constitutional or statutory limitation thereon.
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IN WITNESS WHEREOF, the Economic Development Authority of Brooklyn Center,
Minnesota by its Board of Commissioners has caused this Note to be executed by the manual
signatures of its President and Executive Director and has caused this Note to be issued on and
dated as of the date first written above.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER,
MINNESOTA
By____________________________
Its President
By____________________________
Its Executive Director
Signature Page for Tax Increment Revenue Note (REE Xerxes Avenue Senior Housing Project)
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CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on the date first written above,
was on said date registered in the name of Brooklyn Center AH II, LLLP, a Minnesota limited
liability limited partnership, and that, at the request of the Registered Owner of this Note, the
undersigned has this day registered the Note in the name of such Registered Owner, as indicated
in the registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF
EXECUTIVE DIRECTOR
Brooklyn Center AH II, LLLP
579 Selby Avenue
Saint Paul, Minnesota 55102
Attn: Patrick Ostrom
_________, 20__
___________________
____________________
____________________
____________________
____________________
_________, 20__
___________________
____________________
____________________
____________________
____________________
_________, 20__
___________________
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Exhibit 1
to Taxable TIF Note
RISK FACTORS
Risk factors on the amount of Tax Increments that may actually be received by the EDA
include but are not limited to the following:
1. Value of Project. If the contemplated Project (as defined in the TIF Assistance
Agreement) constructed in the tax increment financing district is completed at a lesser level of
value than originally contemplated, they will generate fewer taxes and fewer tax increments than
originally contemplated.
2. Damage or Destruction. If the Project is damaged or destroyed after completion,
their value will be reduced, and taxes and tax increments will be reduced. Repair, restoration or
replacement of the Project may not occur, may occur after only a substantial time delay, or may
involve property with a lower value than the Project, all of which would reduce taxes and tax
increments.
3. Change in Use to Tax-Exempt. The Project could be acquired by a party that
devotes it to a use which causes the property to be exempt from real property taxation. Taxes and
tax increments would then cease.
4. Depreciation. The Project could decline in value due to changes in the market for
such property or due to the decline in the physical condition of the property. Lower market
valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes, either
in whole or in part, the lack of taxes received will cause a lack of tax increments. The Minnesota
system of collecting delinquent property taxes is a lengthy one that could result in substantial
delays in the receipt of taxes and tax increments, and there is no assurance that the full amount of
delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale
following a tax forfeiture of the property are not tax increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to decreased
municipal levies, taxes and tax increments will be reduced. Reasons for such reduction could
include lower local expenditures or changes in state aids to municipalities. For instance, in 2001
the Minnesota Legislature enacted an education funding reform that involved the state increasing
school aid in lieu of the local general education levy (a component of school district tax levies).
7. Reductions in Tax Capacity Rates. The taxable value of real property is determined
by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by
certain categories of property; for example, the tax capacity rates for residential homesteads are
currently less than the tax capacity rates for commercial and industrial property. In 2001 the
Minnesota Legislature enacted property tax reform that lowered various tax capacity rates to
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635425v4BR291-400
“compress” the difference between the tax capacity rates applicable to residential homestead
properties and commercial and industrial properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax increment
financing district is the lower of the current local tax rate or the original local tax rate for the tax
increment financing district. In the event that the Current Local Tax Rate is higher than the Original
Local Tax Rate, then the “excess” or difference that comes about after applying the lower Original
Local Tax Rate instead of the Current Local Tax Rate is considered “excess” tax increment and is
distributed by Hennepin County to the other taxing jurisdictions and such amount is not available
to the EDA as tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws affecting real
property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as
affected by state aid to municipalities.
10. Affordable Housing Declaration. The TIF District will cease to qualify as a housing
tax increment financing district and the TIF Note will terminate if the Project ceases to be operated
in accordance with the Declaration required by and defined in the TIF Assistance Agreement
defined in the attached Note.
11. Hennepin County’s Sharing Factor. In determining the amount of tax increment
generated by the development property, Hennepin County uses a Sharing Factor when there are
multiple parcels of land in the tax increment financing district. This may result in a lower amount
of tax increment attributable to the development property than if the development property was
the only parcel in the district. In addition, the Sharing Factor is not consistent with the method
that the EDA will use to determine Pledged Tax Increments.
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Exhibit 2
to Taxable TIF Note
ACKNOWLEDGMENT REGARDING TIF NOTE
The undersigned, ______________ a ___________ (“Note Holder”), hereby certifies and
acknowledges that:
A. On the date hereof the Note Holder has [acquired from]/[made a loan (the “Loan”)
[to/for the benefit] of] Brooklyn Center AH II, LLLP (the “Developer”) [secured in part by] the
Taxable Tax Increment Revenue Note (REE Xerxes Avenue Senior Housing Project), a pay-as-
you-go tax increment revenue note (the “Note”) in the original principal amount of $1,850,000
[dated __________, 20___ of]/[to be issued by] the Economic Development Authority of Brooklyn
Center, Minnesota (the “EDA”).
B. The Note Holder has had the opportunity to ask questions of and receive from the
Developer all information and documents concerning the Note as it requested, and has had access
to any additional information the Note Holder thought necessary to verify the accuracy of the
information received. In determining to [acquire the Note]/[make the Loan], the Note Holder has
made its own determinations and has not relied on the EDA or information provided by the EDA.
C. The Note Holder represents and warrants that:
1. The Note Holder is acquiring [the Note]/[an interest in the Note as collateral
for the Loan] for investment and for its own account, and without any view to resale or
other distribution.
2. The Note Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of acquiring [the
Note]/[an interest in the Note as collateral for the Loan].
3. The Note Holder understands that the Note is a security which has not been
registered under the Securities Act of 1933, as amended, or any state securities law, and
must be held until its sale is registered or an exemption from registration becomes
available.
4. The Note Holder is aware of the limited payment source for the Note and
interest thereon and risks associated with the sufficiency of that limited payment source.
5. The Note Holder is [a bank or other financial institution] / [the owner of the
property from which the tax increments which are pledged to the Note are generated].
D. The Note Holder understands that the Note is payable solely from certain tax
increments derived from certain properties located in a tax increment financing district, if and as
received by the EDA. The Note Holder acknowledges that the EDA has made no representation
or covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to pay,
in whole or in part, the principal and interest due on the Note. Any amounts which have not been
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635425v4BR291-400
paid on the Note on or before the final maturity date of the Note shall no longer be payable, as if
the Note had ceased to be an obligation of the EDA. The Note Holder understands that the Note
will never represent or constitute a general obligation, debt or bonded indebtedness of the City of
Brooklyn Center, Minnesota (the “City”), the EDA, the State of Minnesota, or any political
subdivision thereof and that no right will exist to have taxes levied by the City, the EDA, the State
of Minnesota or any political subdivision thereof for the payment of principal and interest on the
Note.
E. The Note Holder understands that the Note is payable solely from certain tax
increments, which are taxes received on improvements made to certain property (the “Project”) in
a tax increment financing district from the increased taxable value of the property over its base
value at the time that the tax increment financing district was created, which base value is called
“original net tax capacity”. There are risk factors in relying on tax increments to be received,
which include, but are not limited to, the following:
1. Value of Project. If the contemplated Project constructed in the tax
increment financing district are completed at a lesser level of value than originally
contemplated, they will generate fewer taxes and fewer tax increments than originally
contemplated.
2. Damage or Destruction. If the Project is damaged or destroyed after
completion, their value will be reduced, and taxes and tax increments will be reduced.
Repair, restoration or replacement of the Project may not occur, may occur after only a
substantial time delay, or may involve property with a lower value than the Project, all of
which would reduce taxes and tax increments.
3. Change in Use to Tax-Exempt. The Project could be acquired by a party
that devotes it to a use which causes the property to be exempt from real property taxation.
Taxes and tax increments would then cease.
4. Depreciation. The Project could decline in value due to changes in the
market for such property or due to the decline in the physical condition of the property.
Lower market valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes,
either in whole or in part, the lack of taxes received will cause a lack of tax increments.
The Minnesota system of collecting delinquent property taxes is a lengthy one that could
result in substantial delays in the receipt of taxes and tax increments, and there is no
assurance that the full amount of delinquent taxes would be collected. Amounts distributed
to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax
increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to decreased
municipal levies, taxes and tax increments will be reduced. Reasons for such reduction
could include lower local expenditures or changes in state aids to municipalities. For
instance, in 2001 the Minnesota Legislature enacted an education funding reform that
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involved the state increasing school aid in lieu of the local general education levy (a
component of school district tax levies).
7. Reductions in Tax Capacity Rates. The taxable value of real property is
determined by multiplying the market value of the property by a tax capacity rate. Tax
capacity rates vary by certain categories of property; for example, the tax capacity rates for
residential homesteads are currently less than the tax capacity rates for commercial and
industrial property. In 2001 the Minnesota Legislature enacted property tax reform that
lowered various tax capacity rates to “compress” the difference between the tax capacity
rates applicable to residential homestead properties and commercial and industrial
properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax
increment financing district is the lower of the current local tax rate or the original local
tax rate for the tax increment financing district. In the event that the Current Local Tax
Rate is higher than the Original Local Tax Rate, then the “excess” or difference that comes
about after applying the lower Original Local Tax Rate instead of the Current Local Tax
Rate is considered “excess” tax increment and is distributed by Hennepin County to the
other taxing jurisdictions and such amount is not available to the EDA as tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws
affecting real property taxes, particularly as they relate to tax capacity rates and the overall
level of taxes as affected by state aid to municipalities.
10. Affordable Housing Declaration. The TIF District will cease to qualify as
a housing tax increment financing district and the TIF Note will terminate if the Project
ceases to be operated in accordance with the Declaration required by and defined in the
TIF Assistance Agreement defined below.
11. Hennepin County’s Sharing Factor. In determining the amount of tax
increment generated by the development property, Hennepin County uses a Sharing Factor
when there are multiple parcels of land in the tax increment financing district. This may
result in a lower amount of tax increment attributable to the development property than if
the development property was the only parcel in the district. In addition, the Sharing Factor
is not consistent with the method that the EDA will use to determine Pledged Tax
Increments.
F. The Note Holder acknowledges that the Note was issued as part of a TIF Assistance
Agreement between the EDA and the Developer dated April ____, 2020 (“TIF Assistance
Agreement”), and that the EDA has the right to suspend payments under this Note and/or terminate
the Note upon an Event of Default under the TIF Assistance Agreement.
G. The Note Holder acknowledges that the EDA makes no representation about the
tax treatment of, or tax consequences from, the Note Holder’s acquisition of [the Note]/[an interest
in the Note as collateral for the Loan].
WITNESS our hand this ___ day of _______, 20__.
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635425v4BR291-400
Note Holder:
_________________________
By ________________________
Name: __________________
Its ________________________
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EXHIBIT E
TOTAL DEVELOPMENT COSTS
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EXHIBIT F
DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated April ____, 2020 (the
“Declaration”), by BROOKLYN CENTER AH II, LLLP, a Minnesota limited liability limited
partnership (the “Developer”), is given for the benefit of the ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a public body corporate and politic
organized under the laws of the State of Minnesota (the “EDA”).
RECITALS
WHEREAS, the EDA and the Developer entered into that certain TIF Assistance Agreement,
dated April ____, 2020, (the “Contract”); and
WHEREAS, pursuant to the Contract, the Developer is obligated to cause construction of an
approximately 143-unit senior rental housing facility and related amenities (the “Project”) to be
located on the property described in EXHIBIT 1 hereto (the “Property”), and to cause compliance
with certain affordability covenants described in Section 3.3 of the Contract; and
WHEREAS, Section 3.3 of the Contract requires that the Developer cause to be executed an
instrument in recordable form substantially reflecting the covenants set forth in Section 3.3 of the
Contract; and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set
forth herein will be and are covenants running with the Property for the term described herein and
binding upon all subsequent owners of the Property for the term described herein, and are not merely
personal covenants of the Developer; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract
unless otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Developer agrees as follows:
1. Term of Restrictions.
(a) Occupancy Restrictions. The term of the Occupancy Restrictions set forth in Section
3 of this Declaration will commence on the date a certificate of occupancy is issued by the City for
all residential units on the Property and continue through the Termination Date defined below (the
“Qualified Project Period”).
(b) Termination of Declaration. This Declaration shall terminate upon the earlier of (i)
December 31, 2046, or (ii) the date the TIF District is terminated in accordance with the TIF Act, or
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635425v4BR291-400
(iii) the date (A) the TIF Note is paid in full or the EDA cancels the TIF Note upon a written request
for termination from the Developer and (B) the EDA determines, in its in sole discretion, that such
termination will not limit or interfere with the EDA’s ability to pool Tax Increments generated by the
TIF District for affordable housing in accordance with the TIF Act.
In addition, in the event of foreclosure or transfer of title by deed in lieu of foreclosure, upon
completion of the foreclosure and expiration of the applicable redemption period, or recording of a
deed in lieu of foreclosure, any mortgagee (or any assignee of the mortgagee) or any purchasers at or
after foreclosure thereof, by the successful bidder at the sale, to the title to the Development Property,
may terminate this Declaration, by providing written notice to the EDA and by filing a termination
document in the applicable real property records in Hennepin County, and thereafter this Declaration
shall be of no further force and effect; provided, however, that the preceding provisions of this
sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time
subsequent to the termination of this Declaration as the result of the foreclosure, or the delivery of a
deed in lieu of foreclosure, or a similar event, the Developer or any related person (within the meaning
of Section 1.103-10(e) of the Treasury Regulations) obtains an ownership interest in the Project for
federal income tax purposes.
Each of the events set forth in the first two paragraphs of this Section 1(b) are referred to
individually and collectively herein as the “Termination Date”. The Developer acknowledges, on
behalf of itself and its successors and assigns that, upon any termination of this Declaration prior to
the payment in full of the TIF Note, the EDA will terminate the TIF Note.
(c) Removal from Real Estate Records. After the Termination Date of this Declaration,
the EDA will, upon request by the Developer or its assigns, file any document appropriate to remove
this Declaration from the real estate records of Hennepin County, Minnesota.
2. Project Restrictions.
(a) The Developer represents, warrants, and covenants that all leases of residential units
to Qualifying Tenants (as defined in Section 3(a)(i) hereof) will contain clauses, among others,
wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed will be
deemed a substantial and material obligation of the lessee’s tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Developer or the EDA, and that
the lessee’s failure or refusal to comply with a request for information with respect
thereto will be deemed a violation of a substantial obligation of the lessee’s tenancy.
(b) The Developer will permit any duly authorized representative of the EDA to inspect
the books and records of the Developer pertaining to the income of Qualifying Tenants residing in
the Project.
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635425v4BR291-400
3. Occupancy Restrictions. The Developer represents, warrants, and covenants that:
(a) Qualifying Tenants. Throughout the Qualified Project Period, at least 40% of the
residential units will be occupied (or treated as occupied as provided herein) or held vacant and
available for occupancy by Qualifying Tenants. “Qualifying Tenants” means those persons and
families who are determined from time to time by the Developer to have combined adjusted income
that does not exceed 60% of the median income for the standard metropolitan statistical area which
includes Brooklyn Center, Minnesota, as that figure is determined and announced from time to time
by HUD, as adjusted for family size (the “Median Income”) for the applicable calendar year. For
purposes of this definition, the occupants of a residential unit will not be deemed to be Qualifying
Tenants if all the occupants of such residential unit at any time are “students,” as defined in Section
152(f)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), not entitled to an
exemption under the Code. The determination of whether an individual or family is of low or
moderate income will be made at the time the tenancy commences and on an ongoing basis thereafter,
determined at least annually. If during their tenancy a Qualifying Tenant’s income exceeds 140% of
the Median Income, the next available residential unit (determined in accordance with the Code and
applicable regulations) (the “Next Available Unit Rule”) must be leased to a Qualifying Tenant or
held vacant and available for occupancy by a Qualifying Tenant. If the Next Available Unit Rule is
violated, the residential unit will not continue to be treated as a Qualifying Unit.
Alternatively, the Developer may elect to satisfy the foregoing affordability requirements by
substituting “20% of the residential units” in place of “40% of the residential units” in the preceding
paragraph if, for such purposes, the term “Qualifying Tenants” means those persons and families who
are determined from time to time by the Developer to have combined adjusted income that does not
exceed 50% of the Median Income.
(b) Certification of Tenant Eligibility. As a condition to initial and continuing occupancy,
each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver
to the Developer a Certification of Tenant Eligibility substantially in the form attached as EXHIBIT
2 hereto, or in any other form as may be approved by the EDA (the “Eligibility Certification”), in
which the prospective Qualifying Tenant certifies as to having a qualifying low or moderate income.
In addition, the Qualifying Tenant will be required to provide whatever other information, documents,
or certifications are deemed necessary by the EDA to substantiate the Eligibility Certification, on an
ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant within the
meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on file by the Developer
with respect to each Qualifying Tenant who resides in a residential unit or resided therein during the
immediately preceding calendar year.
(c) Lease. The form of lease to be utilized by the Developer in renting any residential
units in the Project to any person who is intended to be a Qualifying Tenant will provide for
termination of the lease and consent by the person to immediate eviction for failure to qualify as a
Qualifying Tenant as a result of any material misrepresentation made by the person with respect to
the Eligibility Certification.
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635425v4BR291-400
(d) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the EDA on or before July 1 of each year, a certificate
substantially in the form of EXHIBIT 2 hereto, executed by the Developer, (a) identifying the
tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including
the percentage of the residential units of the Project which were occupied by Qualifying Tenants (or
held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding
the date of the certificate; (b) describing all transfers or other changes in ownership of the Project or
any interest therein; and (c) stating, that to the best knowledge of the person executing the certificate
after due inquiry, all the residential units were rented or available for rental on a continuous basis
during the year to members of the general public and that the Developer was not otherwise in default
under this Declaration during the year.
(e) Notice of Non-Compliance. The Developer will immediately notify the EDA if at any
time during the term of this Declaration fewer dwelling units in the Project than the percentage set
forth in Section 3(a) above are occupied or available for occupancy as required by the terms of this
Declaration.
4. Transfer Restrictions. Except as provided in 1(b), the Developer covenants and agrees
that the Developer will cause or require as a condition precedent to any conveyance, transfer,
assignment, or any other disposition of the Project prior to the termination of the Occupancy
Restrictions provided herein (the “Transfer”) that the transferee of the Project pursuant to the Transfer
assume in writing, in a form acceptable to the EDA, all duties and obligations of the Developer under
this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior
to expiration of the Occupancy Restrictions provided herein (the “Assumption Agreement”). The
Developer will deliver the Assumption Agreement to the EDA prior to the Transfer.
5. Enforcement.
(a) The Developer will permit, during normal business hours and upon reasonable notice,
any duly authorized representative of the EDA to inspect any books and records of the Developer
regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Developer will submit any other information, documents or certifications
requested by the EDA which the EDA deems reasonably necessary to substantiate the Developer’s
continuing compliance with the provisions specified in this Declaration.
(c) The Developer acknowledges that the primary purpose for requiring compliance by
the Developer with the restrictions provided in this Declaration is to ensure compliance of the property
with the housing affordability covenants set forth in Section 3.3 of the Contract, and by reason thereof,
the Developer, in consideration for assistance provided by the EDA under the Contract that makes
possible the construction of the Project (as defined in the Contract) on the Property, hereby agrees
and consents that the EDA will be entitled, for any breach of the provisions of this Declaration, and
in addition to all other remedies provided by law or in equity, to enforce specific performance by the
Developer of its obligations under this Declaration in a state court of competent jurisdiction. The
Developer hereby further specifically acknowledges that the EDA cannot be adequately compensated
by monetary damages in the event of any default hereunder.
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635425v4BR291-400
(d) The Developer understands and acknowledges that, in addition to any remedy set forth
herein for failure to comply with the restrictions set forth in this Declaration, the EDA may exercise
any remedy available to it under Article IV of the Contract.
6. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless, the EDA from and against all liabilities, losses, damages, costs, expenses (including
attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of
any nature arising from the consequences of a legal or administrative proceeding or action brought
against them, or any of them, on account of any failure by the Developer to comply with the terms of
this Declaration, or on account of any representation or warranty of the Developer contained herein
being untrue.
7. Agent of the EDA. The EDA will have the right to appoint an agent to carry out any
of its duties and obligations hereunder, and will inform the Developer of any agency appointment by
written notice.
8. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
9. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
designate in writing. The Developer and the EDA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the EDA:
Economic Development Authority of Brooklyn Center, Minnesota
Brooklyn Center City Hall
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Attn: Finance Director
To the Developer: Brooklyn Center AH II, LLLP
579 Selby Avenue
Saint Paul, Minnesota 55102
Attn: Patrick Ostrom
10. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
11. Attorneys’ Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the
Developer agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred
by the EDA in connection with the action.
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635425v4BR291-400
12. Declaration Binding. This Declaration and the covenants contained herein will run
with the real property comprising the Project and will bind the Developer and its successors and
assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to
the EDA and its successors and assigns until the Termination Date of this Declaration as provided in
Section 1(b) hereof.
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635425v4BR291-400
IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
BROOKLYN CENTER AH II, LLLP, a
Minnesota limited liability limited partnership
By: Brooklyn Center AH II, LLC, a Minnesota
limited liability company
Its: General Partner
By: REE Brooklyn Center AH II, LLC, a
Minnesota limited liability company
Its: Manager
By:
William R. Bisanz
Its: President
STATE OF MINNESOTA )
) SS.
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this _______________, 2020, by
____________, the _______ of Brooklyn Center AH II, LLLP, a Minnesota limited liability
limited partnership.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
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635425v4BR291-400
This Declaration is acknowledged and consented to by:
ECONOMIC DEVELOPMENT AUTHORITY OF
BROOKLYN CENTER, MINNESOTA
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____________, 2020, by
_____________________________, the President of the Economic Development Authority of
Brooklyn Center, Minnesota a public body corporate and politic organized under the laws of the
State of Minnesota, on behalf of said EDA.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____________, 2020, by
____________________, the Executive Director of the Economic Development Authority of
Brooklyn Center, Minnesota, a public body corporate and politic organized under the laws of the
State of Minnesota, on behalf of said EDA.
Notary Public
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EXHIBIT 1 TO DECLARATION OF RESTRICTIVE COVENANTS
Lot 1, Block 1, Northway Crossing, according to the recorded plat thereof, Hennepin County, Minnesota.
Being Registered Land as is evidenced by Certificate of Title No. 1496796.
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EXHIBIT 2 TO DECLARATION OF RESTRICTIVE COVENANTS
Certification of Tenant Eligibility
TENANT INCOME CERTIFICATION
Initial Certification Recertification Other
_______________
Effective Date: _________________________
Move-in Date: __________________________
(MM/DD/YY): _________________________
PART I. DEVELOPMENT DATA
Property Name:
____________ Apartments
Address:
___________________, Brooklyn Center, Minnesota
County:
Hennepin
Unit Number: ________________
BIN #:
_______________
# Bedrooms:
___________
PART II. HOUSEHOLD COMPOSITION
HH
Br #
Last Name
First Name &
Middle Initial
Relationship to
Head of
Household
Date of Birth
(MM/DD/YY)
F/T Student
(Y or N)
Social Security
or Alien Reg.
No.
1 HEAD
2
3
4
5
6
PART III. GROSS ANNUAL INCOME (USE ANNUAL AMOUNTS)
HH
Br #
(A)
Employment or Wages
(B)
Soc. Security / Pensions
(C)
Public Assistance
(D)
Other Income
TOTAL $ $ $ $
Add totals from (A) through (D) above TOTAL INCOME (E): $
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635425v4BR291-400
PART IV. INCOME FROM ASSETS
HH
Mbr#
(F)
Type of Asset
(G)
C/I
(H)
Cash Value of Asset
(I)
Annual Income from Asset
TOTALS: $ $
Enter Column (H) Total Passbook Rate
if over $5,000 $________________ x 2.00 % = (J) Imputed Income
Enter the greater of the total column I, or J: imputed income TOTAL INCOME FROM ASSETS (K)
$
$
(L) Total Annual Household Income from all sources [Add (E) + (K)] $
HOUSEHOLD CERTIFICATION & SIGNATURES
The information on this form will be used to determine maximum income eligibility. I/we have provided for each
person(s) set forth in Part II acceptable verification of current anticipated annual income. I/we agree to notify the
landlord immediately upon any member of the household moving out of the unit or any new member moving in. I/we
agree to notify the landlord immediately upon any member becoming a full-time student.
Under penalties of perjury, I/we certify that the information presented in this Certification is true and accurate to the
best of my/our knowledge and belief. The undersigned further understands that providing false representations herein
constitutes an act of fraud. False, misleading or incomplete information may result in the termination of the lease
agreement.
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
_________________________
Signature
____________________
(Date)
PART V. DETERMINATION OF INCOME ELIGIBILITY
TOTAL ANNUAL HOUSEHOLD
INCOME FROM ALL SOURCES
From Item (L) on page 1
Current Income Limit per Family Size: $
_________________
Household Income at Move-in
$__________________
Household Meets
Income Restriction
at:
60% 50%
40% 30%
___%
RECERTIFICATION ONLY:
Current Income Limit x 140%
$
__________________________________
Household income exceeds 140% at
recertification:
Yes No
Household Size at Move-in:
_____________
$
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635425v4BR291-400
PART VI. RENT
Not Applicable
PART VII. STUDENT STATUS
ARE ALL OCCUPANTS FULL-TIME
STUDENTS?
yes no
If yes, enter student explanation**
(also attach documentation)
Student explanation:
1. TANF assistance
2. Job training program
3. Single parent/dependent child
4. Married/joint return*
*Exception for married/joint return is the only exception available for units necessary to qualify tax-exempt bonds.
PART VIII. PROGRAM TYPE
Mark the program(s) listed below (a. through e.) for which this household’s unit will be counted toward the property’s occupancy
requirements. Under each program marked, indicate the household’s income status as established by this certification/recertification
a. Tax Credit b. HOME c. Tax Exempt d. AHDP e. ____________
(Name of Program)
See Part V above.
Income Status
Income Status
Income Status
Income Status
≤ 50% AMGI
≤ 60% AMGI
≤ 80% AMGI
≤ 0I **
50% AMGI
60% AMGI
80% AMGI
0I **
≤ 50% AMGI
≤ 80% AMGI
≤ 0I **
__________
__________
≤ 0I **
** Upon recertification, household was determined over income (OI) according to eligibility requirements of the program(s) marked
above.
SIGNATURE OF OWNER / REPRESENTATIVE
Based on the representations herein and upon the proofs and documentation required to be submitted, the
individual(s) named in Part II of this Tenant Income Certification is/are eligible under the provisions of Section 42
of the Internal Revenue Code, as amended, and the Regulatory Agreement (if applicable), to live in a unit in this
Project.
________________________________________________ ________________
SIGNATURE OF OWNER / REPRESENTATIVE DATE
Enter
1-4
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INSTRUCTIONS FOR COMPLETING
TENANT INCOME CERTIFICATION
This form is to be completed by the owner or an authorized representative.
Part I – Development Data
Check the appropriate box for Initial Certification (move-in), Recertification (annual
recertification), or Other. If Other, designate the purpose of the recertification (i.e., a unit transfer,
a change in household composition, or other state-required recertification).
Move-in Date Enter the date the tenant has or will take occupancy of the unit.
Effective Date Enter the effective date of the certification. For move-in, this should be the
move-in date. For annual recertification, this effective date should be no
later than one year from the effective date of the previous (re)certification.
Property Name Enter the name of the development.
County Enter the county (or equivalent) in which the building is located.
BIN # Enter the Building Identification Number (BIN) assigned to the building
(from IRS Form 8609).
Address Enter the unit number.
Unit Number Enter the unit number.
# Bedrooms Enter the number of bedrooms in the unit.
Part II – Household Composition
List all occupants of the unit. State each household member’s relationship to the head of the
household by using one of the following coded definitions:
H Head of household S Spouse
A Adult co-tenant O Other family member
C Child F Foster child
L Live-in caretaker N None of the above
Enter the date of birth, student status, and Social Security number or alien registration number for
each occupant.
If there are more than seven occupants, use an additional sheet of paper to list the remaining
household members and attach it to the certification.
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635425v4BR291-400
Part III – Annual Income
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income,
including acceptable forms of verification.
From the third party verification forms obtained from each income source, enter the gross amount
anticipated to be received for the 12 months from the effective date of the (re)certification.
Complete a separate line for each income-earning member. List the respective household member
number from Part II.
Column (A) Enter the annual amount of wages, salaries, tips, commissions, bonuses, and
other income from employment; distributed profits and/or net income from
a business.
Column (B) Enter the annual amount of Social Security, Supplemental Security Income,
pensions, military retirement, etc.
Column (C) Enter the annual amount of income received from public assistance (i.e.,
TANF, general assistance, disability, etc.)
Column (D) Enter the annual amount of alimony, child support, unemployment benefits,
or any other income regularly received by the household.
Row (E) Add the totals from columns (A) through (D) above. Enter this amount.
Part IV – Income from Assets
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income from
assets, including acceptable forms of verification.
From the third party verification forms obtained from each asset source, list the gross amount
anticipated to be received during the 12 months from the effective date of the certification. List
the respective household member number from Part II and complete a separate line for each
member.
Column (F) List the type of asset (i.e., checking account, savings account, etc.)
Column (G) Enter C (for current, if the family currently owns or holds the asset), or I
(for imputed, if the family has disposed of the asset for less than fair market
value within two years of the effective date of (re)certification).
Column (H) Enter the cash value of the respective asset.
Column (I) Enter the anticipated annual income from the asset (i.e., savings account
balance multiplied by the annual interest rate).
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635425v4BR291-400
TOTALS Add the total of Column (H) and Column (I), respectively.
If the total in Column (H) is greater than $5,000, you must do an imputed calculation of asset
income. Enter the Total Cash Value, multiply by 2% and enter the amount in (J), Imputed Income.
Row (K) Enter the Greater of the total in Column (I) or (J)
Row (L) Total Annual Household Income from All Sources Add (E) and (K) and
enter the total
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EXHIBIT 3 TO DECLARATION OF RESTRICTIVE COVENANTS
Certificate of
Continuing Program Compliance
Date: ___________________
The following information with respect to the Project located at __________________,
Brooklyn Center, Minnesota (the “Project”), is being provided by Brooklyn Center AH II, LLLP (the
“Owner”) to the Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”),
pursuant to that certain Declaration of Restrictive Covenants, dated April __, 2020 (the
“Declaration”), with respect to the Project:
(A) The total number of residential units which are available for occupancy is 143.
The total number of these units occupied is _________________.
(B) The vacancy rate at the Project in the last 12 months is ___%.
(C) The following residential units which are included in (B) above, have been
re-designated as residential units for Qualifying Tenants since _______________, 20___, the
date on which the last “Certificate of Continuing Program Compliance” was filed with the
EDA by the Owner:
Unit
Number
Previous Designation
of Unit (if any)
Replacing
Unit Number
___________ _________________ _________________
___________ _________________ _________________
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(D) The following residential units are considered to be occupied by “Qualifying
Tenants,” as the term is defined in the Declaration based on the information set forth below
(for a total of at least 56 units):
Unit
Number
Last
Name of
Tenant
Number
of
Persons
Residing
in the
Unit
Number
of
Bedrooms
Total
Adjusted
Gross
Income
Date of
Initial
Occupancy
Date
Vacated and
Held for
Qualifying
Tenants, if
Applicable
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
[expand to cover 56 units]
(E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form
provided as EXHIBIT 2 to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant named
in (D) above who signed such a Certification since ______________, 20___, the date on
F-18
635425v4BR291-400
which the last “Certificate of Continuing Program Compliance” was filed with the EDA by
the Owner.
(F) In renting the residential units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants); and none of the units listed in (D) above have been rented for occupancy
entirely by students, no one of which is entitled to file a joint return for federal income tax
purposes. All of the residential units in the Project have been rented pursuant to a written
lease, and the term of each lease is at least 12 months.
(G) The information provided in this “Certificate of Continuing Program
Compliance” is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
“Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate or
incomplete in any respect.
(H) The following transfers or other changes in ownership of the Project or any
interest therein have occurred in the last 12 months: [None] or
[describe___________________]
(I) To the best knowledge of the person executing this certificate after due
inquiry, all the residential units were rented or available for rental on a continuous basis during
the year to members of the general public.
(J) The Owner certifies that as of the date hereof ___% of the residential dwelling
units in the Project are occupied or held open for occupancy by Qualifying Tenants, as defined
and provided in the Declaration.
(K) The Project is in continuing compliance with the Declaration.
F-19
635425v4BR291-400
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on
____________________, 20__.
BROOKLYN CENTER AH II, LLLP, a
Minnesota limited liability limited partnership
By: Brooklyn Center AH II, LLC, a Minnesota
limited liability company
Its: General Partner
By: REE Brooklyn Center AH II, LLC, a
Minnesota limited liability company
Its: Manager
By:
William R. Bisanz
Its: President
G-1
635425v4BR291-400
EXHIBIT G
PERMITTED ENCUMBRANCES
The liens, charges and encumbrances on title to the Development Property listed on Schedule B to
the title policy issued on the date hereof by Guaranty Commercial Title, Inc., as issuing agent for
Old Republic National Title Insurance Company
H-1
635425v4BR291-400
EXHIBIT H
CERTIFICATE OF COMPLETION OF PROJECT
__________, 20___
WHEREAS, the ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN
CENTER, MINNESOTA a public body corporate and politic organized under the laws of the State
of Minnesota (the “EDA”), and Brooklyn Center AH II, LLLP, a Minnesota limited liability
limited partnership (the “Developer”) have entered into a TIF Assistance Agreement (the “TIF
Assistance Agreement”), dated April ____, 2020; and
WHEREAS, the TIF Assistance Agreement requires the Developer to construct a Project
(as that term is defined in the TIF Assistance Agreement);
WHEREAS, the Developer has constructed the Project in a manner deemed sufficient by
the EDA to permit the execution of this certification in accordance with Section 3.9 of the TIF
Assistance Agreement;
NOW, THEREFORE, this is to certify that the Developer has constructed the Project in
accordance with the TIF Assistance Agreement. The remaining covenants of the Developer under
the TIF Assistance Agreement are not intended to run with title to the Development Property or
bind successors in title to the Development Property.
H-2
635425v4BR291-400
The EDA has, as of the date and year first above written, set its hand hereon.
ECONOMIC DEVELOPMENT
AUTHORITY OF BROOKLYN CENTER,
MINNESOTA
By ____________________________
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of ___________,
20__, by ____________________, the Executive Director of the Economic Development
Authority of Brooklyn Center, Minnesota, a public body corporate and politic organized under the
laws of the State of Minnesota.
_________________________________
Notary Public
633928v2BR291-400
Commissioner _____________________ introduced the following resolution and
moved its adoption:
EDA RESOLUTION NO.______________
RESOLUTION APPROVING A TIF DEVELOPMENT AGREEMENT
(REE XERXES AVENUE SENIOR HOUSING PROJECT)
WHEREAS, the EDA has received a proposal from Brooklyn Center AH II, LLLP (the
“Developer”) that the EDA assist the Developer in the construction of an approximately 143-unit
senior rental housing facility and related amenities (the “Project”) to be located on the northern
portion of the property at 5803 Xerxes Avenue North in the City (formerly the northern portion of
the property at 5801 Xerxes Avenue North), within Tax Increment Financing District No. 8: Real
Estate Equities (a housing district) (the “TIF District”); and
WHEREAS, the EDA has caused to be prepared the TIF Assistance Agreement for the Project
by and between the EDA and the Developer (the “Development Agreement”) setting forth the terms
and conditions under which the EDA will provide assistance for the Project.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the “Board”) of
the Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”), as follows:
Section 1. EDA Approval; Further Proceedings.
1.01. The EDA hereby approves the Development Agreement substantially in accordance
with the terms set forth in the form presented to the Board, together with any related documents
necessary in connection therewith, including without limitation all documents, exhibits, certifications
or consents referenced in or attached to the Development Agreement including without limitation the
TIF Note as defined therein (collectively, the “Development Documents”) and hereby authorizes the
President and Executive Director to negotiate the final terms thereof and, in their discretion and at
such time as they may deem appropriate, to execute the Development Documents on behalf of the
EDA, and to carry out, on behalf of the EDA, the EDA’s obligations thereunder when all conditions
precedent thereto have been satisfied.
1.02. The approval hereby given to the Development Documents includes approval of such
additional details therein as may be necessary and appropriate and such modifications thereof,
deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal
counsel to the EDA and by the officers authorized herein to execute said documents prior to their
execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The
execution of any instrument by the appropriate officers of the EDA herein authorized shall be
conclusive evidence of the approval of such document in accordance with the terms hereof. This
Resolution shall not constitute an offer and the Development Documents shall not be effective until
the date of execution thereof as provided herein.
EDA RESOLUTION NO._______________
2
633928v2BR291-400
1.03. 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. Upon execution and delivery of the
Development Documents, the officers and employees of the EDA are hereby authorized and directed
to take or cause to be taken such actions as may be necessary on behalf of the EDA to implement the
Development Documents, including without limitation the issuance of the pay-as-you-go tax
increment revenue note thereunder, when all conditions precedent thereto have been satisfied, and
reserving funds for the payment thereof in the applicable tax increment accounts.
1.04. The Board hereby determines that the execution and performance of the Development
Documents will help realize the public purposes of the Act.
February 24, 2020
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.
Economic Development Authority
DAT E:2/24/2020
TO :C ity C ouncil
F R O M:C urt Boganey, City Manager
T H R O U G H :M eg Beekman, C ommunity D evelopment D irector
BY:J immy L oyd, Economic D evelopment Coordinator
S U B J E C T:Res olu+on A dop+ng a Busines s S ubs idy Policy
B ackground:
The C ity has an exis +ng Busines s S ubs idy Policy; however, it is narrow in scope and does not include many
elements that can be useful in guiding policy decis ions about the us e of public subsidy for development
projects, and significant busines s s ubs idy reques ts .
I n order to develop a more robus t, useful, and clear Bus iness S ubsidy Policy, staff has asked Ehlers and
A s s ociates , the City's public finance cons ultant, to take the C ity C ouncil through a series of dis cus s ions that
w ill iden+fy clear parameters for the use of public s ubs idy.
The firs t dis cus s ion took place in M arch and included a brief presenta+on from Ehlers , which provided
background informa+on and an overview of public finance policies . Ehlers introduced homework at that
mee+ng, w hich they asked each member of the City Council to complete.
The second dis cus s ion took place in A pril at a City Council work ses s ion and involved a more in-depth
dis cus s ion among the Council members regarding their res pons es to the homew ork and their values around
the use of public s ubs idy. Based on that convers a+on, Ehlers prepared a dra; policy for the us e of busines s
s ubs idies which conforms to state statutes and also responds to the s pecific needs of Brooklyn C enter.
The third dis cus s ion w as in S eptember and was an opportunity for Ehlers to pres ent the dra; Busines s
S ubs idy Policy w hich res ponded to the Council's direc+on from the previous mee+ng. The C ouncil gave
feedback on the policy, w hich has since been modified based on that discussion.
S tatute requires the adop+on of the bus iness subsidy policy by both the C ity C ouncil and E DA . The C ity
Council is required to hold a public hearing prior to adop+on, which was formally no+ces and scheduled for
February 24, 2020. Following clos e of the public hearing, the City Council can take formal ac+on. Following
adop+on by the City Council the E DA may take ac+on on the plan.
A<ached to this memo is the Bus iness S ubsidy Policy for cons idera+on.
B udget I ssues:
There are no budget is s ues to consider at this +me.
S trategic Priori es and Values:
Resident Economic S tability, Targeted Redevelopment, O pera+onal Excellence
AT TA C H M E N TS :
D escrip+on U pload D ate Type
M emo from Ehlers dated February 14, 2020 2/17/2020 Backup M aterial
F inal P ublic S ubsidy Policy 2/14/2020 Exhibit
Res olu+on 2/17/2020 Resolu+on Le<er
Memo
To: Meg Beekman, AICP – Community Development Director
From: Jason Aarsvold and Stacie Kvilvang, Ehlers
Date: February 14, 2020
Subject: Public Hearing and Adoption of Business Subsidy & Public Financing Policy
On April 8, 2019 the Council met in a work session to review and discuss the key provisions that
would serve as the basis for the City’s Business Subsidy Policy and Public Financing Criteria.
The goal was to have a policy in place the meets state statutory requirements, but also reflects
desired City-specific requirements for the use of public assistance tools.
Using the feedback received from City Council members, Ehlers worked with City staff to
develop a draft policy for Council consideration. The City Council reviewed a draft of this policy
in September 2019 and provided additional direction and feedback for revisions.
Attached to this memorandum is a final policy that incorporates Brooklyn Center’s specific
objectives and qualifications as well as standard best practice language. The City Council is
required to hold a public hearing to formally adopt the policy. Upon formal approval, Ehlers will
submit the policy to the Department of Employment and Economic Development (DEED) as
required by Statute.
Approval of the policy does not mean any projects are entitled to receive City assistance. Every
future project defined as a business subsidy will require a Business Subsidy Agreement. The
Business Subsidy Agreement outlines the amount and public purpose of the subsidy, job and
wage goals, requirements for continued operation, and recapture requirements (if goals are not
met). These business subsidy agreements must be reviewed and approved by the City Council
using this policy as a guide in giving consideration. For that reason, the policy is set up to
provide flexibility and not to be overly prescriptive.
Please contact either of us at 651-697-8500 with any questions.
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 1
City of Brooklyn Center and
Brooklyn Center Economic Development Authority
Business Subsidy & Public Financing Policy
November 2019
INTRODUCTION:
This Policy is adopted for purposes of the business subsidies act, pursuant to Minnesota
Statutes, Sections 116J.993 through 116J.995 (the “Statutes”). Terms used in this Policy
are intended to have the same meanings as used in Statutes. Subdivision 3 of the
Statutes specifies forms of financial assistance that are not considered a business
subsidy. This list contains exceptions for several activities, including redevelopment,
pollution clean-up, and housing, among others. By providing a business subsidy, the city
commits to holding a public hearing, as applicable, and reporting annually to the
Department of Employment and Economic Development (“DEED”) on job and wage goal
progress.
1. PURPOSE AND AUTHORITY
A. The purpose of this document is to establish criteria for the City of Brooklyn
Center (“City”) and the Brooklyn Center Economic Development Authority
(“EDA”) for the granting of business subsidies and public financing for
private development within the City. As used in this Policy, the term “City”
shall be understood to include the EDA. These criteria shall be used as a
guide in processing and reviewing applications requesting business
subsidies and/or City public financing.
B. The City's ability to grant business subsidies is governed by the limitations
established in the Statutes. The City may choose to apply its Business
Subsidy Criteria to other development activities not covered under this
statute. City public financing may or may not be considered a business
subsidy as defined by the Statutes.
C. Unless specifically excluded by the Statutes, business subsidies include
grants by state or local government agencies, contributions of personal
property, real property, infrastructure, the principal amount of a loan at rates
below those commercially available to the recipient of the subsidy, any
reduction or deferral of any tax or any fee, tax increment financing (TIF),
abatement of property taxes, loans made from City funds, any guarantee of
any payment under any loan, lease, or other obligation, or any preferential
use of government facilities given to a business.
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 2
D. These criteria are to be used in conjunction with other relevant policies of
the City. Compliance with the Business Subsidy Criteria and City Public
Financing Guidelines shall not automatically mean compliance with such
separate policies.
E. The City, at its sole discretion, may deviate from the job and wage goals
criteria outlined in Sec. 5, Subd. D, E, and F below by documenting in writing
the reason(s) for the deviation. The documentation shall be submitted to
DEED with the next annual report.
F. The City may amend this document at any time. Amendments to these
criteria are subject to public hearing requirements contained in the Statutes.
2. CITY’S OBJECTIVE FOR THE USE OF PUBLIC FINANCING
A. As a matter of adopted policy, the City may consider using public financing
which may include tax increment financing (TIF), tax abatement, bonds, and
other forms of public financing as appropriate, to assist private development
projects. Such assistance must comply with all applicable statutory
requirements and accomplish one or more of the following objectives:
1. Remove blight and/or encourage redevelopment in designated
redevelopment/development area(s) per the goals and visions
established by the City Council and EDA.
2. Expand and diversify the local economy and tax base.
3. Encourage additional unsubsidized private development in the area,
either directly or indirectly through secondary “spin-off” development.
4. Offset increased costs for redevelopment over and above the costs
that a developer would incur in normal urban and suburban
development (determined as part of the But-For analysis).
5. Facilitate the development process and promote development on
sites that could not be developed without this assistance.
6. Retain local jobs and/or increase the number of diverse quality jobs.
7. Reduce the unemployment rate within the City and encourage
created jobs are filled by local residents.
8. Provide opportunities for small businesses and/or entrepreneurs and
promote resident economic stability.
9. Meet other uses of public policy, as adopted by the City Council or
EDA from time to time, including but not limited to promotion of
quality urban design, quality architectural design, energy
conservation, sustainable building practices, and decreasing the
capital and operating costs of local government.
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 3
3. PUBLIC FINANCING PRINCIPLES
A. The guidelines and principles set forth in this document pertain to all
applications for City public financing regardless of whether they are
considered a Business Subsidy as defined by the Statutes. The following
general assumptions of development/redevelopment shall serve as a guide
for City public financing:
1. All viable requests for City public financing assistance shall be
reviewed by staff, and, if staff so designates, a third party financial
advisor who will inform the City of its findings and recommendations.
This process, known as the “But For” analysis is intended to establish
the project would not be feasible but for the City assistance.
2. The City shall establish mechanisms within the development
agreement to ensure that adequate checks and balances are
incorporated in the distribution of financial assistance where feasible
and appropriate, including but not limited to:
a. Third party “but for” analysis
b. Establishment of “look back provisions”
c. Establishment of minimum assessment agreements
3. TIF and abatement will be provided on a pay-as-you-go-basis. Any
request for upfront assistance will be evaluated on its own merits and
may require security to cover any risks assumed by the City.
4. The City will set up TIF districts in accordance with the maximum
number of statutory years allowable. However, this does not mean
that the developer will be granted assistance for the full term of the
district.
5. The City shall elect to have the fiscal disparities contribution come
from inside applicable TIF district(s) to eliminate any impact to the
existing tax payers of the community.
6. Public financing will not be used to support speculative commercial,
office or housing projects. In general the developer should be able
to provide market data, tenant letters of commitment or finance
statements which support the market potential/demand for the
proposed project.
7. Public financing will generally not be used to support retail
development. The City may consider projects that include a retail
component provided they meet a Desired Qualification as identified
in Sec. 4.2 Subd. C of this policy.
8. Public financing will not be used in projects that would give a
significant competitive financial advantage over similar projects in
the area due to the use of public subsidies. Developers should
provide information to support that assistance will not create such a
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 4
competitive advantage. Priority consideration will be given to
projects that fill an unmet market need.
9. Public financing will not be used in a project that involves a land
and/or property acquisition where the price is in excess of the fair
market value.
10. TIF and Abatement will not be utilized for the construction of
Warehouse/distribution, commercial storage, discount motel or
Fortune 1,000 companies.
11. The developer shall pay all applicable application fees and pay for
the City and EDA’s fiscal and legal advisor time as stated in the City’s
Public Assistance Application.
12. The City may consider waiving fees including, but not limited to, park
dedication fees, and SAC charges. The City may consider using
SAC credits, to the extent they are available, to off-set a project’s
SAC expenses.
13. The developer shall proactively attempt to minimize the amount of
public assistance needed through the pursuit of grants, innovative
solutions in structuring the deal, and other funding mechanisms.
14. All developments are subject to execution and recording of a
Minimum Assessment Agreement.
4. PROJECTS WHICH MAY QUALIFY FOR PUBLIC FINANCING ASSISTANCE
A. All new applications for public financial assistance that are considered by
the City must meet each of the following minimum qualifications. However,
it should not be presumed that a project meeting these qualifications will
automatically be approved for assistance. Meeting the qualifications does
not imply or create contractual rights on the part of any potential developer
to have its project approved for assistance.
4.1 MINIMUM QUALIFICATIONS/REQUIREMENTS:
A. In addition to meeting the applicable requirements of State law, the project
shall meet one or more of the public financing objectives outlined in Sec. 2.
B. The developer must demonstrate to the satisfaction of the City that the
project is not financially feasible “but for” the use of tax increment or other
public financing.
C. The project is, or will be through the City approval processes, consistent
with the City’s Comprehensive Plan and Zoning Ordinances, Design
Guidelines or any other applicable land use documents.
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 5
D. Prior to approval of a financing plan, the developer shall provide any
requested market and financial feasibility studies, appraisals, soil boring,
private lender commitment, and/or other information the City or its financial
consultants may require in order to proceed with an independent evaluation
of the proposal.
E. The developer must provide adequate financial guarantees to ensure the
repayment of any public financing and completion of the project. These
may include, but are not limited to, assessment agreements, letters of
credit, personal deficiency guarantees, guaranteed maximum cost contract,
etc.
F. Any developer requesting public financial assistance must be able to
demonstrate a previous capability for successful development, as well as
specific capability regarding the type and size of the development proposed,
unless for a use specified in Sec. 4.2 Subd. C (9-10). Public financing shall
not be used when the developer’s credentials, in the sole judgment of the
City, are inadequate due to previous history relating to completion of
projects, general reputation, and/or bankruptcy, or other problems or issues
considered relevant to the City.
G. The developer, or its contractual assigns, shall retain ownership of any
portion of the project long enough to complete it, stabilize its occupancy,
establish project management and/or needed mechanisms to ensure
successful operation.
4.2 DESIRED QUALIFICATIONS:
A. Projects providing a high ratio of private investment to City public
investment shall receive priority consideration. Private investment includes
developer cash, government and bank loans, conduit bonds, tax credit
equity, and land if already owned by the developer.
B. Proposals that significantly increase the amount of property taxes paid after
redevelopment will receive priority consideration.
C. Proposals that encourage the following will receive priority consideration:
1. Implements the City’s vision and values for a City-identified
redevelopment area
2. Provides significant improvement to surrounding land uses,
neighborhoods, and/or the City
3. Attracts or retains an employer within the City providing over 50 jobs
4. Provides increased quality and higher paying jobs
5. Promotes multi-family housing investment that meets the following
City goals:
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 6
a. Increase housing choice within the community; diversify existing
housing stock; and provide options that do not currently exist
b. Provide clean, safe, and affordable housing units
c. Include housing as part of City special purpose projects, such as
the Opportunity Site, or other priority City redevelopment areas.
d. Multi-family housing with high-amenities considered luxury and/or
market rate
6. Provides opportunity for the attraction and retention of sit-down
restaurants
7. Fulfils workforce needs by hiring local residents and partnering with
the City and local community organizations for targeted recruitment
of residents, job training and mentorship programs.
8. Offers employment opportunities for local residents with safe working
conditions and access to comprehensive benefit packages
9. Provides opportunities for small businesses and/or entrepreneurs
10. Projects that promote resident economic stability
11. Redevelops a blighted, contaminated and/or challenged area
12. Preserves and/or stabilizes a major commercial or industrial node
13. Adds needed public infrastructure such as roads or structured
parking
5. BUSINESS SUBSIDY PUBLIC PURPOSE, JOBS AND WAGE REQUIREMENT
A. All business subsidies must meet a public purpose with measurable benefit
to the City as a whole.
B. Job retention may only be used as a public purpose in cases where job loss
is specific and demonstrable. The City shall document the information used
to determine the nature of the job loss.
C. The creation of tax base shall not be the sole public purpose of a subsidy.
D. Unless the creation of jobs is removed from a particular project pursuant to
the requirements of the Statutes, the creation of jobs is a public purpose for
granting a subsidy. Creation of at least 1 Full Time, or Full Time Equivalent
(FTE) jobs is a minimum requirement for consideration of assistance. For
purposes of this Policy, FTE jobs must be permanent positions with set
hours, and be eligible for benefits.
E. Part-Time Equivalent jobs may receive a partial credit and be counted
toward the job goals.
Brooklyn Center Business Subsidy Criteria and Public Financing Policy Page 7
F. The wage floor for wages to be paid for the jobs created shall be not less
than 150% of the State of MN Minimum Wage. The City will seek to create
jobs with higher wages as appropriate for the overall public purpose of the
subsidy. Wage goals may also be set to enhance existing jobs through
increased wages, which increase must result in wages higher than the
minimum under this Section.
G. After a public hearing, if the creation or retention of jobs is determined not
to be a goal, the wage and job goals may be set at zero.
6. SUBSIDY AGREEMENT
A. In granting a business subsidy, the City shall enter into a subsidy agreement
with the recipient that provides the following information: wage and job goals
(if applicable), and recourse for failure to meet goals required by the
Statutes.
B. The subsidy agreement may be incorporated into a broader development
agreement for a project.
C. The subsidy agreement will commit the recipient to providing the reporting
information required by the Statutes.
7. PUBLIC FINANCING PROJECT EVALUATION PROCESS
A. The following methods of analysis for all public financing proposals will be
used:
1. Project is deemed consistent with City’s Goals and Objectives
2. Consideration of project meeting minimum qualifications
3. Consideration of project meeting desired qualifications
4. Project meets “but-for” analysis and/or statutory qualifications
Please note that the evaluation methodology is intended to provide a
balanced review. Each area will be evaluated individually and collectively
and in no case should one area outweigh another in terms of importance to
determining the level of assistance.
Commissioner introduced the following resolution and moved its
adoption:
EDA RESOLUTION NO. 2020-
RESOLUTION ADOPTING A POLICY AND CRITERIA FOR GRANTING
BUSINESS SUBSIDIES
WHEREAS, The Economic Development Authority of the City of Brooklyn Center (the
“Authority”), Minnesota has determined that it is necessary and appropriate to adopt a business
subsidy policy and criteria pursuant to the Statutes; and
WHEREAS, Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Statutes")
require the adoption of a policy and criteria for the granting of business subsidies as defined in
the Statutes; and,
WHEREAS, The City has performed all actions required by law to be performed prior to
the adoption and approval of the proposed business subsidies, including the City Council of the
City of Brooklyn Center holding of a public hearing on February 24, 2020 upon published notice
as required by law on February 13, 2020.
BE IT RESOLVED By the Economic Development Authority of the City of Brooklyn
Center, Minnesota that the business subsidy policy and criteria, contained in Exhibit A of this
resolution are hereby approved, ratified, established, and adopted and shall be placed on file at
City Hall.
BE IT FURHTER RESOLVED by the Authority that the City Manager is authorized and
directed to file a copy of the business subsidy criteria, along with annual reports, to the
Minnesota Department of Employment and Economic Development, pursuant to the Statutes.
February 24, 2020
Date President
ATTEST:
City Clerk
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.
Economic Development Authority
DAT E:2/24/2020
TO :C ity C ouncil
F R O M:C urt Boganey, City Manager
T H R O U G H :M eg Beekman, C ommunity D evelopment D irector
BY:J immy L oyd, Economic D evelopment Coordinator
S U B J E C T:Res olu+on A pproving a P reliminary D evelopment A greement w ith J O P roper+es
B ackground:
O n J anuary 27th J O C o mpanies c o ncept plan was presented to the C ity C o uncil for C o ncept Review. T he
proposal was fo r a development on f o ur E DA-owned proper+es located at the northwest corner o f 61st Avenue
N orth and B rooklyn B oulevard, which total a combined 1.79 acres.
T he configuration proposed on the proposed site plan contemplates the redevelopment of the northwest
corner of 61st Avenue North and Brooklyn Boulevard into a four story, 83-unit apartment building,
although the developer (J O Companies, L LC) has indicated the potential for up to 88 units of housing.
T he building would run lengthwise along 61st Avenue North and, as proposed in the concept review,
provide 53 surface parking stalls and 76 indoor parking stalls for a total of 129 on-site parking stalls.
T his is a ratio of 1.55 parking stalls per unit (83 units) or 1.47 stalls per unit (88 units).
As proposed, 51-percent of the units in the development would be three-bedrooms, which is unique
given that one and two-bedroom units are the norm in Brooklyn Center. As such, the project would
address a gap in larger rental units in the community. As the project is intended to provide housing
options to those making 50 to 60% AMI (Area Median Income), the larger three-bedroom units would be
attractive for families looking for rental options in Brooklyn Center. T he developer is also seeking
project-based Section 8 vouchers for up to 25 percent of the building, which if received would provide
housing options at even more deeply affordable rents.
T he building amenities being contemplated would include a fitness center, business/community center,
as well as in-unit washers and dryers and balconies. T he building would also be pet-friendly. T he
developer is exploring opportunities to leverage a direct connection to Wangstad Park, which is located
immediately to the west, as well as utilize partnerships with neighboring properties to allow space for
community gardens or other community-based amenities.
The City of Brooklyn C enter issued a le8er of support to accompany J O C ompanies ' H ennepin County G rant
applica+ons, w hich w ere submi8ed on February 6th.
The developer s ubmi8ed an ini+al proforma which indicates a total project cos t of approximately $22.5
million. The proforma indicates that there will be a gap in the financing and the developer an+cipates
applying for public s ubs idy to make the project feas ible. The project as propos ed would meet the
affordability requirements for a housing T I F district, which is the type of T I F district that the property
currently is in. A ny request for public s ubs idy would go through the C ity's formal review proces s , including
review by the City's public finance cons ultant.
A Ber review ing the concept propos al the City Council indicated an opennes s to the project. The developer is
now reques+ng a P reliminary D evelopment A greement to allow them +me to conduct a review of the
property, obtain financing for the project, prepare appropriate plans , obtain neces s ary C ity approvals for
the development, and nego+ate with the E DA on an agreement for the s ale of the P roperty. The P reliminary
D evelopment A greement w ould expire on February 28, 2021.
O nce the P DA is executed, the next step w ould be for the developer to s ubmit an applica+on for public
s ubs idy, which would trigger the C ity and E DA 's formal review process. The E DA and developer will als o
need to nego+ate a purchas e agreement for the property, w hich w ould also require a public hearing and
approval from the E DA prior to execu+on.
B udget I ssues:
There are no budget is s ues to consider at this +me.
S trategic Priori es and Values:
Targeted Redevelopment
AT TA C H M E N TS :
D escrip+on U pload D ate Type
P reliminary D evelopment A greement 2/17/2020 Backup M aterial
J O Le8er of S upport 2/14/2020 Exhibit
J O Companies Concept P lan 2/14/2020 Exhibit
Res olu+on 2/18/2020 Resolu+on Le8er
638311v1BR305-1
PRELIMINARY DEVELOPMENT AGREEMENT
PRELIMINARY DEVELOPMENT AGREEMENT dated this _____ day of February,
2020, by and between the Economic Development Authority of Brooklyn Center, a Minnesota
body corporate and politic, 6301 Shingle Creek Parkway, Brooklyn Center, MN 55430 (the
“Authority”) and JO Companies, LLC, a Minnesota limited liability company, 12678 74th
Avenue North, Maple Grove, MN 55369 (the “Developer”).
WHEREAS, the Authority is the fee owner of property located in the City of Brooklyn
Center (the “City”) at 6101, 6107 Brooklyn Blvd and 3600 61st Ave North (the “Property”)
which Property the Authority is willing to consider selling for purposes of development of an
approximately 83-88 unit multi-family affordable housing apartment building (the
“Development”);
WHEREAS, the Developer desires to explore the possibility of acquiring the Property
together with additional adjoining private property (“Additional Property”) to combine with the
Property (together, the “Property” and “Additional Property” are referred to herein as the
“Development Property”) for development of the Development;
WHEREAS, the Authority’s Board of Commissioners has reviewed the Development
concept and is interested in development of the Property as proposed by the Developer;
WHEREAS, if the Developer is successful in obtaining the necessary financing and
commitments to construct the Development and agrees to construct the Development, then the
Authority would be willing to enter into an agreement with the Developer for the conveyance of
the Property and construction of the Development at a mutually agreed upon price together with
other negotiated conditions for conveyance of the Development Property;
WHEREAS, Developer has requested that the Authority execute this Preliminary
Development Agreement (“PDA”) agreeing to work solely with Developer during the term
hereof on negotiations for acquisition of the Development Property by Developer to provide
Developer with time to conduct review of the Development Property, obtain financing for the
proposed Development, prepare appropriate plans for the Property, obtain necessary City
approvals for the Development, and negotiate with the Authority on an agreement for the sale of
the Development Property;
WHEREAS, the Authority is willing to enter into this PDA for such purposes upon the
terms and conditions provided herein.
NOW THEREFORE the parties agree as follows:
1. In consideration of the processing of the Development under the terms of this
PDA, the Authority agrees that it will negotiate and work solely with Developer on negotiations
for sale of the Property to Developer for Developer’s proposed Development until February 28,
2021 (“Term”).
638311v1BR305-1 2
2. During the Term of this PDA, Developer agrees to use its best efforts to:
a. make application for Low Income Housing Tax Credits to Minnesota Housing
Finance Agency to obtain financing for the development;
b. complete site planning and site engineering;
c. complete architectural concept plans;
d. submit application for a Business Subsidy request to the City and all necessary
financial documentation needed for review;
e. submit application, and receive all necessary City approvals related to the
subdivision and development of the Development Property;
f. secure construction financing necessary to construct a project consistent with the
terms of this PDA;
g. negotiate a Purchase Agreement with the Authority for acquisition and
development of the Development Property and construction of an approved
Development.
3. During the Term of this PDA, Developer and the Authority agree to use their best
efforts to resolve property acquisition issues related to the Development Property and to attempt
to bring fruition to the proposed Development through conveyance of the Property and
development of the Development Property; provided, however, that the Developer acknowledges
that the Authority will not exercise the power of eminent domain with respect to the acquisition
of any property in connection with the Development or this PDA.
4. Developer may assign this PDA to an affiliate or Authority approved successor
upon written notification and approval by the City.
5. The Developer will provide the Authority with a written progress report on the
status of the goals identified in Paragraphs 2 and 3 every 30 days following the date of this PDA.
6. This PDA represents the entire understanding of the parties regarding the
Development Area and any amendment to this PDA shall be in writing and be executed by both
parties.
7. Both Parties are aware of and acknowledge that contingencies and unknowns
presently exist, any one or more of which could make the Development cost prohibitive, and that
both parties are expending sums of money and time with full knowledge of the risks involved
and that neither party shall be liable for any of the other party’s expenses in any event, except (i)
as otherwise provided pursuant to a separate agreement between the parties, (ii) in connection
with an application for a Public Subsidy, or (iii) pursuant to required fees or costs related to
applications made to the City or under City Code.
8. The parties agree that this PDA is not intended to bind the parties to enter into an
agreement for the sale and acquisition of the Property, but is merely intended to set forth the
parties’ intent to proceed with the process of (i) negotiating an agreement for the sale of the
Development Property and development of the Development Property and (ii) resolving certain
pre-development issues related to the Development Property and Development.
638311v1BR305-1 3
9. No approval given by the Authority hereunder or in connection herewith shall be
deemed to constitute an approval of the Development for any purpose other than as stated herein
and the process outlined in this Agreement shall not be deemed to supersede any concept review,
conditional use permit, vacation, subdivision, or other zoning or planning approval process of the
Authority or the City relative to the development of real estate.
10. This PDA may be amended by mutual written agreement of the parties.
11. This Agreement may be terminated by the Developer at any time. The Authority
may terminate this Agreement if it determines that the Developer is not using their best efforts to
progress the Development and bring it to fruition. In either case, notice to terminate shall be
provided in writing to the other party.
12. If any portion of this Agreement is held invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining portion of this
Agreement.
13. Notice, demand, or other communication from one party to the other shall be
deemed effective if sent by certified mail, postage prepaid, return receipt requested or delivered
personally to a party at its address in the first paragraph of this Agreement, or at such other
address as such party may designate in writing to the other party.
14. The Authority and Developer agree that this Agreement is intended to be
preliminary in nature and will be superseded by one or more definitive contracts, mutually
satisfactory to the Authority and the Developer, which shall be negotiated, approved and
executed by the Authority and the Developer and no obligation regarding the conveyance of
property or provision of any Public Subsidy shall exist with respect to the Development prior the
approval and execution of such definitive contract(s).
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly
executed in its name and behalf and the Developer has caused this Agreement to be duly
executed in its name and behalf on or as of the date first above written
638311v1BR305-1 4
ECONOMIC DEVELOPMENT AUTHORITY
OF BROOKLYN CENTER, MINNESOTA
By__________________________________
Its President
By__________________________________
Its Executive Director
JO COMPANIES, LLC
By__________________________________
Its _________________________________
638314v1BR305-1
Commissioner _________________ introduced the following resolution and moved its adoption:
EDA RESOLUTION NO. 2020-____
RESOLUTION APPROVING A PRELIMINARY DEVELOPMENT
AGREEMENT WITH JO COMPANIES, LLC
WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota (the
“Authority”) has received a proposal from JO Companies, LLC, a Minnesota limited liability
company (the “Developer”) regarding the development of land owned by the Authority for the
creation of a multifamily affordable housing apartment building, which proposal contemplates the
Authority's conveyance of the property located at 6101, 6017 Brooklyn Boulevard and 3600 61st
Avenue North (the “Authority Property”) to the Developer; and
WHEREAS, the Authority’s Board of Commissioners has reviewed the Developer’s
development concept and has caused to be prepared a Preliminary Development Agreement to
allow the Developer to negotiate the purchase of the Authority Property, conduct due diligence,
obtain the necessary financing and commitments to construct the development, apply for, and gain
approval from the City for the development and any necessary public subsidy; and
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic
Development Authority of Brooklyn Center, Minnesota (the “Board”), as follows:
1. The EDA hereby approves the Preliminary Development Agreement substantially in
accordance with the terms set forth in the form presented to the Board, together with any related
documents necessary in connection therewith (collectively, the “Preliminary Development
Documents”) and hereby authorizes the President and Executive Director to negotiate the final
terms thereof and, in their discretion and at such time as they may deem appropriate, to execute
the Preliminary Development Documents on behalf of the Authority, and to carry out, on behalf of
the Authority, the Authority’s obligations thereunder.
2. The approval hereby given to the Preliminary Development Documents includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by legal counsel to the Authority 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 Authority. The execution of any instrument by the
appropriate officers of the Authority 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.
3. Upon execution and delivery of the Preliminary Development Documents, the officers
and employees of the Authority are hereby authorized and directed to take or cause to be taken
such actions as may be necessary on behalf of the Authority to implement the Preliminary
638314v1BR305-1
Resolution No. 2020-________
4. The Board hereby determines that the execution and performance of the Preliminary
Development Documents will help realize the public purposes of the Economic Development
Authority Act.
February 24, 2020 _________________________________
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.