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DEVELOPMENT AGREEMENT
Relating to An of,- S e
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ORONO WOODS APARTMENTS (kS.rvVt 00,(Including Tax Increment Financing District No. 1-1)
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CITY OF ORONO
ORONO HOUSING AND REDEVELOPMENT AUTHORITY
DUNBAR DEVELOPMENT CORPORATION
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and
ORONO SENIOR HOUSING, LLC
This Instrument Drafted by:
Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Telephone: (612) 336-3000
DEVELOPMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this day of June, 2001,
by and among the CITY OF ORONO, a Minnesota municipal corporation having its
principal office at 2750 Kelley Parkway, Orono, Minnesota(the "City"), the ORONO
HOUSING AND REDEVELOPMENT AUTHORITY, a body corporate and politic
having its principal office at 2750 Kelley Parkway, Orono, Minnesota(the "HRA"),
DUNBAR DEVELOPMENT CORPORATION, a Minnesota corporation ("Dunbar")
and ORONO SENIOR HOUSING, LLC, a Minnesota limited liability company (the
"Developer").
WITNESSETH:
WHEREAS, the Developer, the City, the HRA and Dunbar contemplate that
the Developer and Dunbar will develop the property described in Exhibit A hereto
(the "Development Property") as a 62-unit apartment building for seniors (the
"Project"); and
WHEREAS, Dunbar will acquire the Development Property and convey the
Development Property to the Developer under the terms and conditions of Section 3.3
hereof; and
WHEREAS, the HRA will issue its Tax Increment Revenue Note in the form
of Exhibit B hereto (the "TIF Note") in payment of a portion of the costs of acquiring
the Development Property; and
WHEREAS, the balance of the costs of the Project will be financed by the
issuance by the City of its Multifamily Housing Revenue Bonds GNMA
Collateralized Mortgage Loan-Orono Woods Project), Series 2001A (the "Housing
Bonds") and its Subordinate Multifamily Housing Revenue Note (Orono Woods
Project), Series 2001B (the "Subordinate Housing Note") to be issued as described in
Section 3.1 hereof; and
WHEREAS, the HRA has created and established Tax Increment Financing
District No. 1-1 as a housing tax increment financing district (the "TIF District") and
a coterminus Housing Project Area No. 1 pursuant to a development program and a
tax increment financing plan (the "TIF Plan") adopted pursuant to Minnesota Statutes,
Sections 469.001 through 469.047 and Sections 469.174 through 469.179
(collectively, the "Acts"); and
WHEREAS, the Project and the TIF Note are contemplated and authorized by
the TIF Plan; and
WHEREAS, the Project, the Housing Bonds and Subordinated Housing Note
are contemplated and authorized by a Senior Housing Program (the "Housing
Program") adopted by the City Council pursuant to Minnesota Statutes, Chapter
462C; and
WHEREAS, the Project is to be developed as a planned unit development
pursuant to the terms of a Planned Unit Development Agreement No. 2 for
, dated as of June_, 2001, between the City and the Developer(the
"PUD Agreement").
WHEREAS, the proposed Project qualifies as a"housing development
project" within the meaning of Minnesota Statutes, Sections 469.002, Subd. 15 and
469.017, and will promote and carry out the objectives of the Housing Program and
the TIF Plan, will be in the vital best interests of the City and will promote the health,
safety, morals and welfare of its residents, and are in accord with the public purposes
and provisions of the applicable state and local laws.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations of the HRA, the City and the Developer, the parties hereby represent,
covenant and agree as follows:
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ARTICLE I.
DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION
Section 1.1 Definitions. In this Agreement, the following terms have the
following respective meanings unless the context hereof clearly requires otherwise:
(a) Acts. Minnesota Statutes, Sections 469.001 through 469.047 and
469.174 through 469.179.
(b) Certificate of Completion. The certificate of completion set forth in
Exhibit C hereto.
(c) City. The City of Orono, Hennepin County, Minnesota.
(d) Completion Year. The earlier of(1)the year 2002 and (2) the year (if
any) in which the Certificate of Completion for the Improvements is issued.
(e) Developer. Orono Senior Housing, LLC, a Minnesota limited liability
company, its successors and assigns.
(f) Development. The Development Property and the Improvements to be
constructed thereon by the Developer in accordance with the terms of this Agreement,
as they may at any time exist.
(g) Development Property. The real property which is the site of the
Improvements, as legally described in Exhibit A hereto.
(h) Event of Default. An Event of Default, as defined in Section 7.1.
(i) Financing Documents. The following documents to be executed and
delivered in connection with the issuance and sale of the Housing Bonds and the
Subordinate Housing Note:
(j) Housing Bonds. The Multifamily Housing Revenue Bonds GNMA
Collateralized Mortgage Loan - Orono Woods Project), Series 2001 to be issued
pursuant to Section 3.1 hereof and the Financing Documents.
(k) Housing Plan. The development program for the HRA's Housing
Project Area No. 1, which contains the TIF District.
(1) HRA. The Orono Housing and Redevelopment Authority, and any
successor to its functions.
(m) Improvements. The 62-unit apartment building and appurtenant
facilities described in the PUD Agreement.
(n) Mortgage and Holder. The term "Mortgage" shall include the mortgage
referenced in Article V of this Agreement and any other instrument creating an
encumbrance or lien upon the Development or any part thereof as security for a loan.
The term "Holder" in reference to a Mortgage includes any insurer or guarantor (other
than the Developer) of any obligation or condition secured by such Mortgage or deed
of trust.
(o) Permitted Encumbrances. The encumbrances on the Development
Property which are permitted to exist, which encumbrances shall consist only of
and such other encumbrances as the City and HRA may
approve in writing.
(p) Project. The Development Property and the Improvements to be
constructed thereon pursuant to this Agreement.
(q) Project Costs. Project Costs means:
(a) Costs incurred directly or indirectly for or in connection with the
acquisition, construction, installation or equipping of the Project, including
other costs incurred in respect of the Project for preliminary planning and
studies; architectural, legal, engineering, account, consulting, development,
supervisory and other services; land, labor, services and materials and
recording of documents and title work.
(b) Premiums attributable to any surety bonds and insurance
required to be taken out and maintained during the construction period with
respect to the Development Property and the Improvements.
(c) Taxes, assessments and other governmental charges in respect of
the Project that may become due and payable during the construction period.
(d) Costs incurred directly or indirectly in seeking to enforce any
remedy against any contractor or subcontractor in respect of any actual or
claimed default under any contract relating to the Improvements.
(e) Financial, legal, accounting, printing and engraving fees,
charges and expenses and all other such fees, charges and expenses incurred in
connection with the authorization, sale, issuance and delivery of the Housing
Bonds and Subordinate Housing Note including, without limitation, the fees
and expenses of the City and HRA and the fees and expenses of the trustee, the
paying agent, the registrar and the authenticating agent properly incurred under
the Financing Documents that may become due and payable during the
construction period.
(f) Any other costs, expenses, fees and charges properly chargeable
to the cost of acquisition, construction, installation and equipping of the
Project.
(r) PUD Agreement. The Planned Unit Development Agreement No. 2 for
, dated , 2001, between the Developer and the City relating
to development of the Development Property and an adjacent parcel as a planned unit
development.
(s) Subordinate Housing Note. The Subordinate Multifamily Housing
Note (Orono Woods Project), Series 2001 to be issued pursuant to Section 3.1 hereof
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and the financing Documents.
(t) Tax Increment Financing District(TIF District). Tax Increment
Financing District No. 1-1 consisting of the Development Parcel, created by the HRA
pursuant to the TIF Act and described in the TIF Plan adopted therefor.
(u) Tax Increment Financing Plan (TIF Plan). The plan for development of
the TIF District adopted by the HRA pursuant to the TIF Act.
(v) Tax Increment Note or TIF Note. The Note to be issued by the HRA
pursuant to Section 6.1 hereof and which is substantially in the form of Exhibit B
hereto.
(w) Term. The period beginning on the date of this Agreement and ending
on the February 1, 2022; provided, however, that the Term shall not extend beyond
the termination date of the TIF District under the TIF Act or the date, if any, of
cancellation or recission of this Agreement under Section 7.2(a) hereof.
(x) TIF Act. Minnesota Statutes, Sections 469.174 through 469.179.
(y) Unavoidable Delays. Delays which are the direct result of strikes, fire,
war, material shortage, causes beyond the party's control or other casualty, or acts of
any federal, state or local government unit, except those acts anticipated or
contemplated under this Agreement.
Section 1.2 Exhibits. The following Exhibits are attached to and by reference
made a part of this Agreement:
A. Development Property
B. Tax Increment Note
C. Certificate of Completion
D. Form of Income Certification
E. Investor Letter
Section 1.3 Rules of Interpretation.
(a) This Agreement shall be interpreted in accordance with and governed
by the laws of the state of Minnesota.
(b) The words "herein" and"hereof' and words of similar import, without
reference to any particular section or subdivision refer to this Agreement as a whole
rather than any particular section or subdivision hereof.
(c) References herein to any particular article, section or subdivision hereof
are to the article, section or subdivision of this Agreement as originally executed.
(d) Any titles of the several parts, articles and sections of this Agreement
are inserted for convenience and reference only and shall be disregarded in construing
or interpreting any of its provisions.
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ARTICLE II.
REPRESENTATIONS AND COVENANTS
Section 2.1 By the Developer. The Developer makes the following
representations and covenants:
(a) The Developer has the legal authority and power to enter into this
Agreement.
(b) The Developer reasonably expects to obtain financial resources which,
when combined with the assistance hereunder, will be sufficient to enable the
completion of the Improvements.
(c) The Developer will, subject to the provisions of Article IV hereof,
construct, operate and maintain the Improvements in accordance with the terms of this
Agreement, the PUD Agreement, the Housing Plan, the TIF Plan and all local, state
and federal laws and regulations, and will construct or pay the costs of construction of
any site improvements, utilities, parking facilities, or landscaping improvements
which are necessary in connection with the construction and operation of the
Improvements.
(d) At such time or times as may be required by law, the Developer will
have complied with all local, state and federal environmental laws and regulations,
will have obtained any and all necessary environmental reviews, licenses or
clearances under, and will be in compliance with the requirements of the National
Environmental Policy Act of 1969, the Minnesota Environmental Policy Act, and the
Critical Area Act of 1973.
(e) The Developer will obtain, in a timely manner, all required permits,
licenses and approvals, and will meet, in a timely manner, all requirements of all
local, state and federal laws and regulations which must be obtained or met before the
Improvements may be constructed.
(f) The Developer acknowledges that the TIF District is a"housing
district," as defined in Section 469.174, Subdivision 11, of the TIF Act and, as such,
is subject to the limitations provided in Minnesota Statutes, Section 469.174,
Subdivision 11 and Section 469.1761, Subdivision 3 (together, the "TIF
Restrictions"). The Developer covenants that it will, with respect to the
Improvements, observe and comply, and that it will cause and require any of its
permitted successors and assigns to observe and comply with such TIF Restrictions.
In particular, and without limitation, the Developer covenants that at no time prior to
the expiration of the Term shall the fair market value (determined using cost of
construction, capitalized income, or other appropriate method of estimating market
value) of any portion of the Improvements which are, within the meaning of Section
469.174, Subdivision 11, constructed for commercial uses or for uses other than low
and moderate income housing constitute more than 20% of the total fair market value
of the Improvements. The Developer represents and covenants that throughout the
Term the TIF District shall continue to qualify as "housing district" under the TIF
Act; specifically, that not less than 20% of the rental housing units of the
Improvements shall be rented to persons/families that at occupancy have annual
income less than 50% of area median gross income. The Developer further represents
and covenants that throughout the Term the housing units shall be used only as
multifamily rental housing and that the units shall be rented only to persons 62 years
of age or older (the "Senior Housing Restriction"). In addition the Developer shall
give preference in the rental of units to persons who are residents or former residents
of the City, persons whose children are residents of the City and persons who have at
any time been full time employees of the City or an agency or department of the City
(the "Orono Preference Requirement"). The Senior Housing Restriction shall apply to
all units. The Orono Preference Requirement shall apply only if there is a waiting list
for available units. At least annually, the Developer agrees to provide evidence
reasonably satisfactory to the HRA of compliance with the applicable income and age
limitations, including without limitation the total number of rental units during any
reporting period and income and age verifications substantially in the form of the
attached Exhibit E respecting units rented to tenants meeting those limits.
(g) It is intended and agreed that the covenants provided in this Section 2.1
shall remain in effect throughout the Term and shall be covenants running with the
land. Except as expressly set forth in Section 5.5 hereof, the obligations under such
provisions shall not be subordinated to the rights of any party having an interest in the
Development Property.
Section 2.2 By the City. The City makes the following representations as the
basis for the undertaking on its part herein contained:
(a) The City is authorized by law to enter into this Agreement and to carry
out its obligations hereunder.
(b) The City will, in a timely manner, subject to all notification
requirements, review and act upon all submittals and applications of the Developer
and will cooperate with the efforts of Developer to secure the granting of any permit,
license, or other approval required to construct and operate the Improvements;
provided, however, that nothing contained in this subparagraph 2.2(b) shall be
construed to limit in any way the reasonable and legitimate exercise of the City's
discretion in considering any submittal or application.
(c) The Development Property is zoned for purposes which include the
Development as proposed. The City has issued all necessary planned unit
development, conditional use permits and plat approval for the Development
Property.
Section 2.3 By the HRA. The HRA makes the following representations as
the basis of the undertakings on its part:
(a) The HRA is authorized by law to enter into this Agreement and to carry
out its obligations hereunder;
(b) The HRA shall cooperate with the City and the Developer with regard
to the issuance of any additional permits required by the Developer to construct the
Improvements.
(c) The HRA will issue the TIF Note upon completion of the
Improvements in accordance with Section 3.03.
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ARTICLE III.
CITY OBLIGATIONS FOR HOUSING BONDS AND
SUBORDINATED HOUSING NOTE; DEFERMENT OF
FEES; ACQUISITION OF DEVELOPMENT PROPERTY;
CONSTRUCTION OF PUBLIC IMPROVEMENTS
Section 3.1 Housing Bonds and Subordinated Housing Note. The City agrees
to issue the Housing Bonds and Subordinated Housing Note pursuant to the Housing
Act in an aggregate amount, not to exceed $ , sufficient to pay the estimated
Project Costs; provided, however, that the principal amount of the Housing Bonds
shall not exceed $ and the principal amount of the Subordinated Housing
Note shall not exceed $ . The obligation of the City to issue the Housing
Bonds and Subordinated Housing Note is subject to the following conditions:
(a) The Financing Documents, in form and substance satisfactory to
the City and the City Attorney, have been duly executed and delivered by the
Developer and the other parties thereto.
(b) The Developer shall have executed and delivered the PUD
Agreement.
(c) Faegre & Benson LLP, as bond counsel, shall have delivered its
opinion that the Housing Bonds and Subordinated Housing Note were validly
issued and that the interest thereon is exempt from federal income taxation.
(d) The City shall have received opinions of counsel to the Developer
and the other parties to the Financing Documents, in form and substance
satisfactory to it, to the effect that the Financing Documents are valid and
binding obligations of such parties, enforceable in accordance with their terms.
(e) The Developer shall have entered into a contract for construction of
the Improvements with , in form and substance satisfactory to the
City, and providing for a guaranteed maximum price of not more than
(f) All conditions precedent to the execution and delivery of the
Financing Documents shall have been satisfied without regard to any waivers
which the City has not approved.
Neither the City nor the HRA shall be responsible for the failure of the
Developer, Dunbar or any other person to satisfy the foregoing conditions and the
City and HRA make no representations or warranties that such conditions can or will
be met. The City and HRA have no obligation to issue any additional obligations to
refund the Housing Bonds or Subordinated Housing Note or to provide any additional
funds for completion of the Development or otherwise.
Section 3.2. Park Dedication and Utility Connection Charges. The City agrees
that park dedication fees in the amount of$ and utility connection fees in
the amount of$ otherwise payable with respect to the Development are
deferred and shall be payable only in the event that the Developer violates the Senior
Housing Restriction set forth in Section 2.1(f). In that event such fees shall be
immediately due and payable together with interest on the deferred amounts
computed at the rate of 7.00%per annum from the date hereof.
Section 3.3. Conveyance of Development Property: Execution of Ground
Lease. On or prior to , 2001 Dunbar shall convey fee title to the
Development Property to the Developer, subject only to Permitted Encumbrances.
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ARTICLE IV.
CONSTRUCTION OF IMPROVEMENTS
Section 4.1 Construction of Improvements. The Developer agrees to
construct the Improvements and complete the Project in accordance with the PUD
Agreement on or prior to , 2002. This covenant to construct the
Improvements shall run with the land. When the Project is completed, as evidenced
by a Certificate of Completion, the Development Property shall be released from the
requirements of this Article IV and shall no longer be encumbered by the obligations
imposed under this Article IV.
Section 4.2 Building Plans. When the Developer completes the design for the
Improvements, it may submit the plans and specifications to the City as part of its
application for a building permit. If the proposed Improvements for that phase are
substantially consistent with the definition of the Improvements set forth herein and
the Developer has complied with all other applicable requirements for the issuance of
a building permit, the permit shall be issued in accordance with standard City
practices. The City shall not be required to provide a building permit or otherwise
permit construction of any improvements on the Development Property if, in its
reasonable judgment, such improvements would interfere with the ability of the
Developer to complete the Improvements described herein within applicable land-use
regulations. Any change in the approved plans for a phase which substantially alters
the construction of the Improvements shall be subject to approval by the City.
Section 4.3 Completion of Construction. All construction shall be in
conformity with the plans. Periodically during construction, but at intervals of not
less than 30 days, the Developer shall make reports in such detail as may reasonably
be requested by the City concerning the actual progress of construction.
Section 4.4 Certificate of Completion. Promptly after notification by the
Developer of completion of the Improvements, the City shall inspect the construction
to determine whether it has been completed in accordance with the terms of this
Agreement. In the event that the City determines that the construction has been
completed in accordance with the plans and applicable regulations, the City shall
furnish the Developer with a Certificate of Completion in the form provided in
Exhibit C. Such certification by the City shall be a conclusive determination of
satisfaction and termination of the agreements and covenants in Article IV of this
Agreement with respect to the obligation of the Developer to construct the
Improvements.
The Certification of Completion provided for in this Section 4.4 shall be in
recordable form. If the City shall refuse or fail to provide certification in accordance
with the provisions of this Section 4.4, the City shall within 15 days of such
notification provide the Developer with a written statement, indicating in adequate
detail in what respects the Developer has failed to complete the Improvements in
accordance with the applicable plans and applicable regulations, or is otherwise in
default, and what measures or acts will be necessary, in the opinion of the City, for the
Developer to take or perform in order to obtain such certification. The City shall
issue the Completion Certificate the Improvements conform to the applicable plans
and applicable regulations.
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ARTICLE V.
LIMITATION UPON ENCUMBRANCE; PROHIBITIONS
AGAINST ASSIGNMENT AND TRANSFER; SUBORDINATION
Section 5.1 Limitation Upon Encumbrance of Development. Prior to the
issuance of the Certificate of Completion, neither the Developer nor any successor in
interest to the Development Property or any part thereof shall engage in any financing
or any other transaction creating any Mortgage or other encumbrance or lien upon the
Development Property, whether by express agreement or operation of law, or suffer
any encumbrance or lien to be made on or attached to the parcel of the Development
Property other than this Agreement, the PUD Agreement and the Financing
Documents.
Section 5.2 Representation as to Development. The Developer represents and
agrees that its undertakings pursuant to the Agreement are for the purpose of
implementation of the Development and not for speculation in landholding. The
Developer further recognizes that, in view of the importance of the Development to
the general welfare of the City and the substantial financing and other public aids that
have been made available by the HRA and the City for the purpose of making the
Development possible, the qualifications and identity of the Developer are of
particular concern to the HRA and the City. The Developer further recognizes that it
is because of such qualifications and identity that the HRA and City are entering into
this Agreement, and, in so doing, are further willing to rely on the representations and
undertakings of the Developer for the faithful performance of all undertakings and
covenants agreed by Developer to be performed.
Section 5.3 Prohibition Against Transfer of Property and Assignment of
Agreement. For the reasons set out in Section 5.2 of this Agreement, the Developer
represents and agrees that, prior to the issuance of the Certificate of Completion as
certified by the City:
(a) Except for leases and other tenancies in the rental units of the
Improvements, any other purpose authorized by this Agreement, the Developer,
except as so authorized, has not made or created, and will not make or create, or suffer
to be made or created, any total or partial sale, assignment, conveyance, or any trust or
power, or transfer in any other mode or form of or with respect to this Agreement or
the Development Property or any part thereof or any interest therein, or any contract
or agreement to do any of the same, without the prior written approval of the City;
and
(b) The City shall be entitled to require, except as otherwise provided in
this Agreement, as conditions to any such approval under this Section 5.3 that: (i)
Any proposed transferee shall have the qualifications and financial responsibility, as
reasonably determined by the City, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer or, in the event the transfer is of or
relates to part of the Development, such obligations to the extent that they relate to
such part. (ii) Any proposed transferee, by instrument in writing satisfactory to the
City and in form recordable among the land records, shall for itself and its successors
and assigns, and specifically for the benefit of the HRA and the City, have expressly
assumed all (or the applicable portion) of the obligations of the Developer under this
Agreement and agreed to be subject to such obligations, restrictions and conditions or,
in the event the transfer is, of, or relates to part of the Development, such obligations,
conditions, and restrictions to the extent that they relate to such part; provided, that
the fact that any transferee of, or any other successor in interest whatsoever to, the
Development or any part thereof, shall, for whatever reason, not have assumed such
obligations or agreed to do so, shall not, unless and only to the extent otherwise
specifically provided in this Agreement or agreed to in writing by the City, relieve or
except such transferee or successor from such obligations, conditions, or restrictions,
or deprive or limit the HRA and the City of or with respect to any rights or remedies
or controls with respect to the Development or the construction of the Improvements;
it being the intent of this Section 5.3, together with other provisions of this
Agreement, that to the fullest extent permitted by law and equity and excepting only
in the manner and to the extent specifically provided otherwise in the Agreement no
transfer of, or change with respect to, ownership in the Development or any part
thereof, or any interest therein, however consummated or occurring, whether
voluntary or involuntary, shall operate, legally or practically, to deprive or limit the
HRA or the City, of any rights or remedies or controls provided in or resulting from
this Agreement with respect to the Development and the construction of the
Improvements that the HRA and the City would have had, had there been no such
transfer or change. (iii) There shall be submitted to the City for review all instruments
and other legal documents involved in effecting transfers described herein, and if
approved by the City, their approval shall be indicated to the Developer in writing.
In the absence of specific written agreement by the City to the contrary, no
such transfer or approval by the City thereof shall be deemed to relieve the Developer
from any of its obligations with respect thereto.
Section 5.4 Approvals. Any approval required to be given by the City under
this Article V may be denied only in the event that the City reasonably determine that
the ability of the Developer to perform its obligations under this Agreement will be
materially impaired by the action for which approval is sought.
Section 5.5 Subordination and Modification for the Benefit of Mortgagees.
(a) In order to facilitate the obtaining of temporary or permanent financing
for the construction or purchase of the Development, or individual phases thereof,by
the Developer, the City agrees to subordinate its rights under this Agreement to the
Holder of any Mortgage entered into for the purpose of obtaining such financing, but
only provided that the Mortgage or subordination agreement provides that if the
Holder of the Mortgage shall foreclose on the Development Property or the
Improvements thereon, or any portion thereof, or accept a deed to such property in
lieu of foreclosure, it shall consent to be bound by the TIF Restrictions, Senior
Housing Restriction and Orono Preference Requirement set forth in Section 2.1(f).
(b) In order to facilitate the obtaining of financing for the acquisition and
construction of the Development, the City agrees that it shall agree to any reasonable
modification of this Article V or waiver of its rights hereunder to accommodate the
interests of the Holder of the Mortgage, provided, however, that the City determines,
in its reasonable judgment, that any such modification(s) will adequately protect the
legitimate interests and security of the HRA and the City with respect to the
Development.
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ARTICLE VI.
TAX INCREMENT NOTE
Section 6.1 Issuance of Tax Increment Note. Dunbar represents that it has
incurred and will incur significant costs in acquiring the Development Property which
are estimated to be at least$ . In consideration of this Agreement, the HRA
agrees to reimburse up to $900,000 of these costs, together with interest accruing
thereon at 7.00% per annum, as provided in and subject to the provisions of the TIF
Note substantially in the form of Exhibit B hereto. Upon issuance by the City of the
Certificate of Completion attached as Exhibit C, the HRA shall issue the TIF Note and
deliver the same to the Dunbar or Dunbar's designee, as registered owner of the TIF
Note.
Dunbar covenants and agrees not to sell, transfer or convey the TIF Note
without the express written consent of the HRA, which consent shall not be
unreasonably withheld if the transferee executes and delivers to the HRA and the City
an investment letter substantially in the form of Exhibit E hereto; provided, however,
that Dunbar may, without such consent, pledge or grant a security interest in the TIF
Note to a lender as security for a loan. Dunbar acknowledges that neither the City nor
the HRA make any representations as to the adequacy of tax increments available to
pay the TIF Note.
The TIF Note shall be payable solely from tax increment from the TIF District
received by the HRA to the extent provided in Section 6.2 hereof and neither the City
nor the HRA shall be liable on the TIF Note, nor shall the TIF Note be payable out of
any funds or properties of the City or HRA except for said tax increment.
Section 6.2 Tax Increment Available for TIF Note. The Note shall be paid
solely from tax increment from the TIF District as set forth in the TIF Note. Only the
amounts specifically required to be paid thereon shall be due and payable, regardless
of whether the TIF Note has been paid in full.
ARTICLE VII.
EVENTS OF DEFAULT
Section 7.1 Events of Default Defined. The following shall be deemed Events
of Default under this Agreement and the term shall mean, whenever it is used in this
Agreement, unless the context otherwise provides, the failure by the Developer to
observe and substantially perform any covenant, condition, obligation or agreement
on its part to be observed or performed hereunder, after written notice to the
Developer as provided in this Agreement.
Section 7.2 Remedies on Default. Whenever any Event of Default occurs, the
HRA and the City may, in addition to any other remedies or rights given the HRA and
the City under this Agreement, (1) without notice suspend their performance under
this Agreement until they receive assurances from the Developer, deemed adequate by
the HRA and the City, that the Developer has cured its default (or will do so within a
reasonably acceptable period) and will continue its performance under this
Agreement, and (2) after provision of 60 days written notice to the Developer of the
Event of Default, but only if the Event of Default has not been cured within said 60
days, or if the Event of Default cannot be cured within 60 days, the Developer does
not provide assurances reasonably satisfactory to the City and the HRA that the Event
of Default will be cured as soon as reasonably possible, take any one or more of the
following actions:
(a) cancel or rescind this Agreement or the TIF Note, or both;
(b) withhold the Certificate of Completion; or
(c) take whatever action at law or in equity as may appear necessary or
desirable to the HRA or the City to enforce performance and observance of any
obligation, agreement, or covenant of Dunbar the Developer under this Agreement.
Section 7.3 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the HRA or the City 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. In order to entitle the HRA,
the City or the Developer to exercise any remedy reserved to it, it shall not be
necessary to give notice, other than such notice as may be required in this Article VII.
Section 7.4 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by another 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.
[The balance of this page intentionally left blank.]
ARTICLE VIII.
ADDITIONAL PROVISIONS
Section 8.1 Conflicts of Interest: Representatives Not Individually Liable. No
HRA or City officer who is authorized to take part in any manner in making this
Agreement in his or her official capacity shall voluntarily have a personal financial
interest in this Agreement or benefit financially therefrom. No member, official, or
employee of the HRA or the City shall be personally liable to the Developer, or any
successor in interest, in the event of any default or breach by the HRA or the City or
for any amount which may become due to the Developer or successor or on any
obligations under the terms of this Agreement.
Section 8.2 Notice of Status and Conformance. At such time as all of the
provisions of this Agreement have been fully performed by the Developer, the HRA
and the City upon not less than ten days prior written notice by Developer agree to
' execute, acknowledge and deliver without charge to Developer or to any person
designated by Developer a statement in writing in recordable form certifying the
extent to which this Agreement has been fully performed and the obligations
hereunder fully satisfied.
Section 8.3 Notices and Demands. Except as otherwise expressly provided in
this Agreement, a notice, demand or other communication under this Agreement by
either party to the other shall be sufficiently given or delivered if it is sent by mail,
postage prepaid, return receipt requested or delivered personally:
(a) As to the City:
City of Orono
City Administrator
Orono, Minnesota
(b) As to the HRA:
Executive Director
Orono HRA
Orono, Minnesota
(c) As to the Developer:
(d) As to Dunbar:
or at such other address with respect to any party as that party may, from time to time,
designate in writing and forward to the others as provided in this Section 8.3.
Section 8.4 Counterparts. This Agreement may be simultaneously executed in
any number of counterparts, all of which shall constitute one and the same instrument.
Section 8.5 Severability. If any term of this Agreement or application of it to
any person or circumstance is invalid or unenforceable, the remainder of this
Agreement or the application of it to other persons or circumstances shall not be
affected, and each provision of this Agreement shall be valid and enforceable to the
extent permitted by law.
[The balance of this page intentionally left blank.]
IN WITNESS WHEREOF, the HRA and the City have caused this Agreement
to be duly executed in their names and behalf and the Developer has caused this
Agreement to be duly executed as of the day and year first above written.
CITY OF ORONO, MINNESOTA
By
Mayor
By
City Clerk
ORONO HOUSING AND REDEVELOPMENT
AUTHORITY.
By
, Executive Director
By
, Chair
ORONO SENIOR HOUSING, LLC
By
Its
DUNBAR DEVELOPMENT CORPORATION
By
Its
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of June,
2001, by and , the Mayor and City
Clerk of the City of Orono, Minnesota, a municipal corporation under the laws of the
State of Minnesota, on behalf of the city.
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of June,
2001, by and , the Executive
Director and Chair of the Orono Housing and Redevelopment Authority, a public
body corporate and politic, on behalf of the HRA.
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of
, 2001, by , the of Orono
Senior Housing, LLC, a Minnesota limited liability company, on behalf of the
company.
Notary Public
MI 745414.02EXHIBIT A
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
, according to the recorded
plat thereof, Hennepin County,
Minnesota.EXHIBIT B
FORM OF TIF NOTE
No. R- 1
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
ORONO HOUSING AND
REDEVELOPMENT AUTHORITY
TAX INCREMENT REVENUE
NOTE OF 2001
[1] The Orono Housing and Redevelopment Authority (the "HRA"),
located in the City of Orono, Hennepin County, Minnesota, hereby acknowledges
itself to be indebted and, for value received, hereby promises to pay to Dunbar
Development Corporation, a Minnesota corporation, or its registered assigns (the
"Registered Owner"), but only in the manner, at the times, from the sources of
revenue, and to the extent hereinafter provided, the Principal Amount of this Note (as
defined in paragraph [2] hereof) and to pay interest on the unpaid portions of the
Principal Amount of this Note at the rate of interest of 7.00% per annum. Interest
shall accrue on the Principal Amount from , 2001, and shall be computed on
the basis of a 360-day year consisting of 12 30-day months. This Note is the "TIF
Note" described and defined in that certain Development Agreement, dated as of June
, 2001 (as the same may be amended from time to time, the "Development
Agreement"), among the HRA, the City of Orono, Minnesota, Dunbar Development
Corporation and Orono Senior Housing, LLC, a Minnesota limited liability company,
as the initial Developer under the Development Agreement. Each capitalized term
which is used but not otherwise defined in this Note shall have the meaning given to
that term in the Development Agreement.
[2] The Principal Amount of this Note shall be $900,000.
[3] Subject to the terms hereof, amounts due on this Note shall be payable
on each February 1 and August 1, commencing February 1, 2004, and continuing
through February 1, 2024 (the "Payment Dates"). All amounts of accrued interest on
this Note which are not paid in full on any Payment Date shall also accrue additional
interest from the date of such non-payment (the "Compound Interest") until paid at
the rate of interest of 7.00% per annum.
[4] On each Payment Date (or, if not a business day of the HRA, the first
business day thereafter) the HRA 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 of the
HRA preceding such Payment Date an amount equal to the lesser of(1) the Available
Tax Increments (which generally consist of 90% of the tax increments from the
HRA's Tax Increment Financing District No. 1-1) received by the HRA within the 6-
month period preceding said Payment Date and(2) the sum of(i) the Compound
Interest, (ii)the accrued and unpaid interest on the Principal Amount, and(iii) the
unpaid Principal Amount of this Note. All payments made by the HRA under this
Note shall be applied first to pay the Compound Interest, second to pay the accrued
and unpaid interest on the Principal Amount of this Note and third to pay the unpaid
Principal Amount hereof. The HRA shall not have the right on any Payment Date to
prepay the obligations on this Note (that is, to apply more revenue hereto than the
Available Tax Increments as of said Payment Date) without the prior written consent
of the Registered Owner and the Developer, which consent either may withhold in its
sole and absolute discretion. The HRA shall have the right without any consent to
prepay all unpaid Additional TIF Note Increments on any Additional Payment Date.
[5] This Note shall terminate and be of no further force and effect on any
date upon which the HRA shall have terminated the Development Agreement or on
the last Payment Date of the amounts due hereon, whichever occurs earliest.
[6] The HRA makes no representation or covenant, express or implied, that
the revenues described herein will be sufficient to pay, in whole or in part, the
amounts which are or may otherwise become due and payable hereunder. Any
amounts which have not become due and payable on this Note on or before the final
Payment Date shall no longer be a debt or obligation of the HRA whatsoever.
[7] The HRA's payment obligations hereunder shall be further conditioned
on the Developer's compliance with the terms and conditions of the Development
Agreement and on the fact that there shall not at the time have occurred and be
continuing an Event of Default under the Development Agreement, and, further, if
pursuant to the occurrence of an Event of Default under the Development Agreement
the HRA duly elects to terminate the Development Agreement pursuant to its terms,
the HRA shall have no further debt or obligation under this Note whatsoever;
provided that if, pursuant to an Event of Default, the HRA elects pursuant to Section
7.2 of the Development Agreement to withhold payment otherwise due hereon, said
suspended payment shall become payable hereon upon cure of the Event of Default.
Reference is hereby made to the provisions of the Development Agreement for a
fuller statement of the obligations of the Developer and of the rights of the HRA
thereunder, and said provisions are hereby incorporated by reference into this Note to
the same extent as though set out in full herein. The execution and delivery of this
Note by the HRA, and the acceptance thereof by the initial Registered Owner hereof,
shall conclusively establish this Note as the "TIF Note" (and shall conclusively
constitute discharge of the HRA's obligation to issue and deliver the same) under the
Development Agreement.
[8] This Note is not any obligation of any kind whatsoever of any public
body, except that this Note is a special and limited revenue obligation but not a
general or moral obligation of the HRA and is payable by the HRA only from the
sources and subject to the qualifications and limitations stated or referenced herein.
Neither the full faith and credit nor the taxing powers of the HRA are pledged to or
available for the payment of this Note, and no property or other asset of the HRA,
save and except the above referenced Available Tax Increments, is or shall constitute
a source of payment of the HRA's obligations hereunder.
[9] This Note is issued by the HRA in aid of financing a project pursuant to
and in full conformity with the Constitution and laws of the State of Minnesota,
including Minnesota Statutes, Sections 469.174 through 469.179, and including
specifically but without limitation Section 469.178, Subdivision 4, thereof.
[10] This Note may be assigned but upon such assignment the assignor shall
promptly notify the HRA thereof in writing, and the assignee shall surrender this Note
to the HRA either in exchange for o anew fullyregistered note or for transfer of this
g g
Note on the registration records for the Note maintained by the HRA. As a condition
to any such transfer, the transferee shall have delivered to the HRA an executed
Investor Letter in the form of Exhibit I to the Development Agreement. Each such
assignee shall take this Note subject to the foregoing conditions and subject to all
provisions stated or referenced herein.
[11] IN WITNESS WHEREOF, the Orono Housing and Redevelopment
Authority has caused this Note to be executed by the manual signatures of its Chair
and Executive Director, has caused the official seal of the HRA to be omitted
herefrom, as permitted by law, and has caused this Note to be issued and dated as of
June , 2001.
Chair Executive Director
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note was as of the latest date listed
below registered in the name of the last Registered Owner noted below, and that, at
the request of said Registered Owner of this Note, the undersigned has as of said
applicable date registered this Note as to principal and interest on 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 OF REGISTERED DATE OF SIGNATURE OF
OWNER REGISTRATION HRA EXECUTIVE
DIRECTOR
Dunbar Development Corporation , 2001
EXHIBIT C
CERTIFICATE OF COMPLETION AND PARTIAL RELEASE
The undersigned hereby certifies that Orono Senior Housing, LLC, a Minnesota
limited liability company, and/or permitted assigns (the "Developer") has fully and
completely complied with the Developer's obligations under Article IV of that
document entitled "Development Agreement," dated June_, 2001 between the City
of Orono, the Orono Housing and Redevelopment Authority, Dunbar Development
Corporation and Orono Senior Housing, LLC, a Minnesota limited liability company,
and filed for record , 20_, as Document No. in the office of the
Hennepin County Recorder with respect to construction of that phase of the
Improvements (as defined in the Development Agreement) constructed on the real
property described in Exhibit A hereto. As to the real property described in Exhibit
A, the obligations of Article IV of the Development Agreement are terminated and
satisfied and released of record.
DATED:
CITY OF ORONO, MINNESOTA
By:
Its Mayor
By:
Its City Clerk
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of
, by and
, the Mayor and City Clerk of the City of Orono,
Minnesota, a municipal corporation under the laws of the State of Minnesota, on
behalf of the city.
Notary Public
EXHIBIT D
Form of Income Certification
Certification of Tenant Eligibility
•
•
UNIT NUMBER:
I/We, the undersigned, being first duly sworn, state that I/we have read and
answered fully and truthfully each of the following questions for all persons who are
to occupy the unit in the Orono Woods Apartments development for which
application is made, all of whom are listed below:
1. 2. 3. 4. 5.
Name of Members of the Household Relationship to Head of Household
Age Social Security Number Place
of Employment
Head - -
Spouse - -
Income Computation
6. Anticipated Annual Income. The anticipated total annual income from all
sources of each person listed in item 1 above for the twelve month period beginning
on the date of this certificate, including income described in (a) below, but excluding
all income described in (b) below, is $
(a) The amount set forth above includes all of the following income (unless
such income is described in (b) below;
(i) all wages and salaries, overtime pay, commissions, fees, tips and
bonuses before payroll deductions;
(ii) net income from the operation of a business or profession or
from the rental of real or personal property(without deducting
expenditures for business expansion or amortization of capital
indebtedness or any allowance for depreciation of capital assets);
(iii) interest and dividends (including income from assets as set forth
in item 7(b) below);
(iv) the full amount of periodic payments received from social
security, annuities, insurance policies, retirement funds, pensions,
disability or death benefits and other similar types of periodic receipts;
(v) payments in lieu of earnings, such as unemployment and
disability compensation, workmen's compensation and severance pay;
(vi) the maximum amount of public assistance available to the above
persons;
(vii) periodic and determinable allowances, such as alimony and
child support payments and regular contributions and gifts received
from persons not residing in the dwelling;
(viii) all regular pay, special pay and allowances of a member of the
Armed Forces (whether or not living in the dwelling) who is the head
of the household or spouse; and
(ix) any earned income tax credit to the extent it exceeds income tax
liability.
(b) The following income is excluded from the amount set forth above:
(i) casual, sporadic or irregular gifts;
(ii) amounts that are specifically for or in reimbursement of medical
expenses;
(iii) lump sum additions to family assets, such as inheritances,
insurance payments (including payments under health and accident
insurance and workmen's compensation), capital gains and settlement
for personal or property losses;
(iv) amounts of educational scholarships paid directly to student or
educational institution, and amounts paid by the government to a
veteran for use in meeting the costs of tuition, fees, books and
equipment, but in either case only to the extent used for such purposes;
(v) hazardous duty pay to a member of the household in the armed
forces who is away from home and exposed to hostile fire;
(vi) relocation payments under Title H of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970;
(vii) income from employment of children (including foster children)
under the age of 18 years;
(viii) foster child care payments;
(ix) the value of coupon allotments under the Food Stamp Act of
1977;
(x) payments to volunteers under the Domestic Volunteer Service
Act of 1973;
(xi) payments received under the Alaska Native Claims Settlement
Act;
(xii) income derived from certain submarginal land of the United
States that is held in trust for certain Indian tribes;
(xiii) payments on allowances made under the Department of Health
and Human Services' Low-Income Home Energy Assistance Program;
(xiv) payments received from the Job Partnership Training Act;
(xv) income derived from the disposition of funds of the Grand River
Bank of Ottawa Indians; and
(xiv) the first $2,000 of per capita shares received from judgments
awarded by the Indian Claims Commission or the Court of Claims or
from funds held in trust for an Indian tribe by the Secretary of Interior.
7. Net Family Assets. If any of the persons described in item 1 above (or any
person whose income or contributions were included in item 6 above) has any
savings, stocks, bonds, equity in real property or other form of capital investment
(excluding interests in Indian trust lands), provide:
(a) the total value of all such assets owned by all such persons:
$ ;
(b) the amount of income expected to be derived from such assets in the
12-month period commencing on the date hereof:
$ ;
(c) the amount of such income included in item 6:
$ ;
8. Orono Connection
(a) Are any of the persons listed in item 1 above residents of the City of
Orono, former residents of the City of Orono, parents of residents of the City of
Orono or former full-time employees of the City of Orono?
Yes No
(b) (Complete only if the answer to item 8(a) is "Yes") Describe the basis
for the "Yes" response, including relevant names, addresses and time periods.
•
The above information is full, true and complete to the best of my knowledge.
I have no objections to inquiries being made for the purpose of verifying the
statements made herein. The undersigned acknowledge that the lease executed by the
undersigned may be canceled upon notice as provided therein if the undersigned have
misrepresented any of the information set forth above.
Date:
Signature
FOR COMPLETION BY PROJECT OWNER OR MANAGER ONLY:
A. Calculation of eligible income:
(1) Enter amount entered for entire household in item 6 above:
(2) If the amount entered in item 7(a) above is greater than $5,000,
enter the greater of(i) the amount entered in 7(b) less the amount
entered in 7(c) or (ii) 10% of the amount entered in 7(a):
(3) TOTAL ELIGIBLE INCOME (Line A(I) plus line A(2):
B. The amount entered in A(3) (Total Eligible Income) is:
Less than $ , which is an amount
equal to 50% of median income for the Minneapolis-St.
Paul SMSA.
More than the above-mentioned amount.
C. Number of apartment unit assigned:
D. This apartment unit was was not last occupied for a
'period of at least 31 consecutive days by a person or persons whose aggregate
anticipated annual income, as certified in the above manner, was less than or equal to
the amount at which a person would have qualified under B above.
E. Applicant:
Qualifies as a Lower-Income Tenant.
Does not qualify as a Lower Income Tenant,
•
Owner or Manager
EXHIBIT E
INVESTOR LETTER
Orono Housing and
Redevelopment Authority
Orono, Minnesota
City of Orono, Minnesota
Orono, Minnesota
Re: Orono Housing and Redevelopment Authority Tax Increment
Revenue Note
Ladies and Gentlemen:
The undersigned representative of (the "Purchaser"),
being the purchaser of the Orono Housing and Redevelopment Authority Tax
Increment Revenue Note of 2001, dated as of June , 2001 (the "Note"), does
hereby certify, represent and warrant for the benefit of the addressees that:
(a) The Purchaser is either a bank, savings and loan association, registered
investment company, insurance company or other"Accredited Investor" as defined in
Rule 501(a) of Regulation D of the Securities Act of 1933, as amended. Purchaser (i)
is duly and validly organized under the laws of its jurisdiction of incorporation or
organization, (ii) is legally authorized to purchase the Note as lawful investment of
the Purchaser, (iii) has such knowledge and experience in business and financial
matters as to be capable of evaluating the merits and risks of an investment in the
Note on the basis of the information and review of documents described in section(d)
below and the investigation which the Purchaser has conducted and (iv) can bear the
economic risk of the purchase of the Note.
(b) The Purchaser has purchased the Note for its own account for
investment purposes only or has become the registered owner thereof for security
purposes and not for the account of any other person and not for distribution,
assignment or resale; provided, however, the Purchaser may dispose of the Note or
any portion thereof or interest therein in compliance with paragraph 10 of the Note
and provided further that a sale of shares in any investment company that purchases
the Note will not, in and of itself, constitute a distribution of the Note for the purposes
of this section (b).
(c) Neither the City of Orono, Minnesota(the "City"), the Orono Housing
and Redevelopment Authority (the "HRA") nor its counsel shall be deemed to have
made any representations with respect to the Note or the Development Agreement or
tax increment financing district referred to therein as of any date, except as expressly
provided in the Note or the Development Agreement.
(d) The Purchaser has obtained and has read and reviewed such documents,
instruments and information related to the issuance of the Note as the Purchaser has
requested from the City and the HRA. The Purchaser has also reviewed such other
information as requested and has been provided an opportunity to ask questions of,
and has received answers from, representatives of the City and the HRA regarding the
terms and conditions of the Note. We understand that the Note is payable solely from
certain tax increment pledged to the payment thereof and understand that such tax
increment may not be sufficient to pay stated principal and interest on the Note and
that there may be other risks in such an investment which are not described therein.
(e) The undersigned is a duly appointed, qualified and acting officer or
representative of the Purchaser and authorized to make the certifications,
representations and warranties contained herein and the purchase of the Note
constitutes a lawful investment of the Purchaser.
(f) The Purchaser acknowledges that the City, the HRA, the members of
their respective governing bodies and their officers (each individually an "Issuer
Party" and collectively the "Issuer Parties") have not undertaken to furnish
information to the Purchaser or to ascertain the accuracy or completeness of any
information that may have been furnished to the Purchaser by or on behalf of the City,
the HRA or the prior holder of the Note relating to the tax increment pledged to
payment of the Note and that none of the Issuer Parties have made any representations
concerning the accuracy or completeness of any information supplied to the Purchaser
or relating to the security for the Note. The Purchaser hereby waives any
requirements of due diligence in investigation or inquiry on the part of any Issuer
Parties and all claims, actions, or causes of action which the Purchaser may have
directly or indirectly from or relating to any action which the Issuer Parties took or
could have taken, in connection with the issuance and sale of the Note to the
Purchaser.
IN WITNESS WHEREOF, I have hereunder set my hand the day of
Name:
Title:
M1:745414.02