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HomeMy WebLinkAbout15.F.8. Northridge Court Cost Participation IS: p. ~. CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Northridge Court Cost Participation DATE: July 2, 2004 INTRODUCTION: The Council is asked to consider a financial assistance to the Scott County Housing and Redevelopment Authority (HRA), regarding development ofthe Northridge Court apartment building. This would help to address a funding shortfall for the project. BACKGROUND: In September, 2003 the City entered into a development agreement with the Scott County HRA which provided for the construction of a 58-unit apartment known as Northridge Courts. The construction project which is currently nearing completion. In this arrangement, the City agreed to transfer ownership of the former Black Arrow municipal parking lot to the HRA, in exchange for the construction of 50-space parking lot off Fuller Street, and a 39-space parking lot adjacent to Levee Drive. The agreement also called for the City to provide General Obligation backing of bonds that were sold to finance the project by the HRA. Shortly after the bonds were sold, a couple of issues arose relating to water that has caused a financial problem for the budget. The first related to an increase by SPUC regarding the water availability charges (WAC charges), which amounted to approximately $54,000. In addition, the HRA was made aware after their budget was set that SPUC's practice is to require all water services be "looped". In this case, it meant that the Northridge Court water line had to be extended from the southwest corner ofthe building site, to the northeast corner of the building site. The SPUC Commissioners did agree to spend up to $70,000 to extend the water main through Huber Park to the Holmes A venue water main. They were also recently asked to consider an additional approximately $10,000 of costs to finalize connections. The HRA feels that the City didn't adequately notify them oflatter issue, which they feel impacted the develop ability of the site. Overall, there are approximately $231,000 in project overruns as a result ofthese water issues, for which the HRA is unable to accommodate within the current budget. They have indicated to me that there is no contingency remaining in the project, and because of the apparent extreme sensitivity to the rents that they can charge for the apartments, there is no ability to add any monthly rental fees to accommodate these extra costs. Over the past several weeks, we have attended numerous meeting between the HRA, SPUC, and the City. What the BRA has proposed is that the $231,000 be split. Assuming that SPUC has done their part by accepting the $70,000 water looping, (plus an additional $10,000 for extra connection charges that is over and above the $231,000), it would leave $160,000 to be shared between the City and HRA. Assuming for the sake of discussion that the City Council is willing to do this, I did request the HRA to provide a possible cost-sharing scenario. One suggestion is that the 39-space vehicle parking lot along Levee Drive might be omitted at this time. It was to have cost both the City and the HRA $36,000 each. If not built at this time, it is possible that a paved parking lot will be needed when Huber Park is in full operation, but a decision could be deferred until that time. However, ifthat were later decided to be needed, it would likely be the City's responsibility to construct that. If now omitted, the City's budgeted $36,000 could be paid to the HRA for assistance in their budget. Another alternative that was suggested by the HRA in terms of cost sharing would be for the City to pick up part ofthe costs of reopening Fuller Street. The HRA suggests that the City could undertake the installation of Class V gravel, paving, striping, and landscaping of the Fuller Street extension and parking lot, at a contract cost of$35,980. Further, the restoration ofthe City/DNR walking path with finish grade and landscaping would be $8,000. (The walking path restoration was to be the HRA's responsibility). This would mean that the City would have a total contribution of $79,980. In talking with the City Attorney, nothing in the development agreement would prohibit the City frotp participating in this manner. As I spoke with the City Attorney, and relayed to him that the HRA has a target date open of August 1 st, it would be difficult for the City to obtain quotes to do this work itself. However, it could make payment to the HRA directly. The Development Agreement with the HRA would have to be amended to provide for the above. DISCUSSION: Under the contract, there is no obligation for the City to participate in this funding. What the City did was provide the land to the BRA; sometime after that, there seemed to be some missed communication in terms of what the expectations and costs were for the provision of water services. Should the City be involved? In the narrow sense, the direct interest that the City has is to make certain that this project is successful, owing to the fact that the City is providing the backing to the G.O. Bonds that were sold to finance the project. From a more global standpoint, this situation involves three public, or quasi-public agencies - Shakopee Public Utilities, Scott County HRA, and the City of Shakopee. The HRA would otherwise have to seek legal action to remedy the situation, and its possible that the City would be named as a party to the suit. I feel confident that there is nothing that the City did wrong. However, I also do not feel that that is good policy to have three organizations that have worked together in the past to be in litigation for something such as this. For that reason, the City Council may wish to consider participation. BUDGET IMPACT: $36,000 has already been budgeted for the Levee Drive parking lot. That money would be paid directly to the HRA to assist in the shortfall. The balance of the $43,980 would logically come from the Capital Improvement Fund. In this way, the 2004 General Fund would not be impacted. RECOMMENDATION: If it were the desire of the Council to participate in this, my recommendation would be to make payment of $79,980 directly to the HRA, and have them finish the project directly. Staff would have to be directed to amend the Development Agreement to provide for this. ACTION REQUIRED: If the Council concurs, it should, by motion: (1) Authorize the city to pay $35,980 for the Fuller Street Extension and parking lot; (2) Relieving the HRA of its obligation to construct the Levee Drive parking lot; (3) Authorize the city to pay $8,000 for the restoration ofthe City/DNR path; (4) Authorize the appropriate city officials to take the necessary steps and execute the necessary documents to accomplish those matters. (ML~ Mark MeN eill City Administrator MM:th 6/03/2003 DEVELOPMENT AGREEMENT BETWEEN SCOTT COUNTY HOUSING AND REDEVELOPMENT AUTHORITY, CITY OF SHAKOPEE, MINNESOTA AND ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, MINNESOTA This document was drafted by: Leonard, Street and Deinard Professional Association (BLP) 150 South Fifth Street Suite 2300 Minneapolis, Minnesota 55402 2345086v5 Development Agreement TABLE OF CONTENTS Page AR TI CLE I - D EFINITI 0 N S ........................................... ......................................................................... 2 Section 1.1. Definitions.................................................. ..........................,..............,.........,........,....,.......2 AR TI CLE IT - REPRESENT A TI ONS .......................................................................................................4 Section 2.1. Representations by the HRA. ..............................................................................................4 Section 2.2. Representations and Warranties by the EDA.......................................................................4 Section 2.3. Representations and Warranties by the City. .......................................................................4 ARTICLE ITI - PROJECT; PUBLIC IMPROVEMENTS; DEVELOPMENT COMMITTEE.........6 Section 3.1. GeneraL..........................................................................................,.................................... 6 Section 3.2. Public lInprovements.............................................................................................. .............6 Section 3.3. Development Committee.,.......,.......................,.........................,......................................... 6 Section 3.4. Notices ........................,.............................................................,......................................... 7 ARTICLE IV - PROJECT FINANCING .................................................................................................8 Section 4.1. GeneraL..................................................................,................................................... ......... 8 Section 4.2. Bonds..,................................................................................................................... .... ........ 8 Section 4.3. Surplus Revenues, Reimbursement to City....................................... ................ ........... ........ 8 Section 4.4. Project Management........................................................,............................... ....................9 ARTICLE V - INSURANCE; PILOT ....................................................................................................1 0 Section 5.1. Insurance...........,................................................................................,.,............................ 1 0 Section 5.2. PILOT..........................................................,..................,.....................................,.......... .11 ARTICLE VI - CONDITIONS PRECEDENT; EVENTS OF DEFAULT ...............................;.........12 Section 6.1. Conditions Precedent. .............................,.. .................................,.....................................12 Section 6.2. Events of Default Defined. .................................................,..............................................12 Section 6.3. Remedies on Default. .................................. ..................................................................... .12 Section 6.4. No Remedy Exclusive. ............................. ........................................................................ .12 Section 6.5. No Additional Waiver lInp1ied by One Waiver. ................................................................13 AR TI CLE VII - ADD ITI 0 NAL PRO VISIONS .....................................................................................14 Section 7.1. Conflict of Interests; HRA Representatives Not fudividually Liable. ................................14 Section 7.2. Equal Employment Opportunity. .......................................................................................14 Section 7.3. Restrictions on Use. ......,...................................................................................................14 Section 7.4. Titles of Articles and Sections. ..........................................................................................14 Section 7.5. Notices and Demands. .......................................................................................................14 Section 7 .6. Counterparts. ....,.........................................,........................,.............,..................,.....,..... .14 Section 7.7. Recording.........,................,............................................,................................................. .15 Section 7.8. Bank Qualification. ...........................................................................,.............................. .15 Section 7.9. Supersedes Joint Powers Agreement. ................................................................................15 EXHIBIT A-LEGAL D ESCRlPTI 0 N .....................................................................................................1 EXmBIT B - DESCRIPTION OF PROJECT .........................................................................................1 EXHIBIT C - DESCRIPTION OF BONDS .............................................................................................1 EXmBIT D - DESCRIPTION OF PUBLIC IMPROVEMENTS..........................................................1 2345086v5 Development Agreement DEVELOPMENT AGREEMENT THIS AGREEMENT, made on or as of this first day of ,2003, by and between the SCOTT COUNTY HOUSING AND REDEVELOPMENT AUTHORITY (the "Authority"), a public body corporate and politic and political subdivision of the State of Minnesota (the "State"), the CITY OF SHAKOPEE, MINNESOTA (the "City"), a municipal corporation and political subdivision of the State, and the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, MINNESOTA (the "EDA"), a public body corporate and politic and political subdivision of the State, WITNESSETH: WHEREAS, the Authority and the EDA are each authorized by Minnesota Statutes to undertake housing development projects, as described in Minnesota Statutes, Section 469.001 through 469.047 (the "Act"); and WHEREAS, the Authority and the EDA propose to jointly undertake an approximately 58-unit multifamily housing development project intended for rental to seniors (age 55 and over) (the "Project") on the property legally described on Exhibit A (the "Project Site") and as such project is more fully described on Exhibit B attached hereto; and WHEREAS, the Authority proposes to open Fuller Street adjacent to the Project, to acquire and construct an approximately 50-stall surface parking lot on a site across Fuller Street from the Project (the "Fuller Street Lot") and to construct an approximately 39-stall surface parking lot on property owned by the City on Levee Drive (the "Levee Drive Lot" and, together with the Fuller Street Lot and the opening of Fuller Street, the "Public Improvements"); and WHEREAS, the Authority will issue certain bonds described herein to fmance the acquisition and construction of the Project; and WHEREAS, the parties hereto desire to more specifically detail the rights and obligations of each ofthem in connection with the Project and the Public Improvements; NOW, THEREFORE, in consideration of the mutual covenants and obligations of the Authority, the EDA and the City, each party does hereby represent, covenant and agree with the other as follows: 2345086v5 Development Agreement ARTICLE I Definitions Section 1.1. Definitions. ill this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Sections 469.001 to 469.047, as amended. "Agreement" means this Development Agreement, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Scott County Housing and Redevelopment Authority, a public body corporate and politic and political subdivision of the State, and its successors and assigns. "Bonds" means the Authority's bonds described Exhibit C attached hereto, to be issued by the Authority pursuant to this Agreement and the Financing Documents. "City" means the City of Shakopee,. Minnesota, a municipal corporation and political subdivision of the State, and its successors and assigns. "Closing" means the closing of the Bonds. "EDA" means the Economic Development Authority for the City of Shakopee, Minnesota, a public body corporate and politic and political subdivision of the State, and its successors and assigns. "Event of Default" means an action described listed in Article VII of this Agreement. "Financing Documents" means an illdenture of Trust and other documents relating to the Issuance of the Bonds. "Fuller Street Lot" means an approximately 50-stall surface parking lot to be acquired and constructed by the Authority as further described on Exhibit D attached hereto. "Levee Drive Lot" means an approximately 39-stall surface parking lot to be constructed by the Authority on property owned by the City and described on Exhibit D attached hereto. "Maturity Date" means the date that the Bonds, and any debt of the Authority issued to refund the Bonds, have been paid in full in accordance with the terms thereof, and the City has been repaid in full any amount~ advanced by the City to pay debt service on the Bonds as provided in Section 4.3 hereof. "Payment Obligation" shall have the meaning given such term under Section 4.3. "Project" theans the approximately 58-unit multifamily housing development project intended for rental to seniors (age 55 and over) to be constructed and owned by the Authority on the Project Site, and all improvements functionally related and subordinate thereto. 2 2345086v5 Development Agreement "Project Site" means the real property to be conveyed by the City to the Authority upon which the Project will be constructed, a legal description of which property is attached as Exhibit A to this Agreement. "Public Improvements" means the acquisition and construction of the Fuller Street Lot, the construction of the Levee Drive Lot and the opening of Fuller Street, as further described on Exhibit D. "State" means the State of Minnesota. 3 2345086v5 Development Agreement ARTICLE n Representations Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a public body corporate and politic and political subdivision of the State of Minnesota with the power to enter into this Agreement and carry out its obligations hereunder. (b) 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 provisions of any restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Authority is now a party or by which it is bound, or constitutes an event of default under any of the foregoing. Section 2.2. Representations by the EDA. The EDA makes the following representations as the basis for the undertaking on its part herein contained: (a) The EDA is a public body corporate and politic and political subdivision of the State of Minnesota with the power to enter into this Agreement and carry out its obligations hereunder. (b) 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 provisions of any restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the EDA is now a party or by which it is bound, or constitutes an event of default under any of the foregoing. Section 2.3. Representations by the City. The City makes the following representations as the basis for the undertaking on its part herein contained: (a) The City is a municipal corporation and political subdivision of the State of Minnesota with the power to enter into this Agreement and carry out its obligations hereunder. (b) 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 provisions of any restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the City is now a party or by which it is bound, or constitutes an event of default under any of the foregoing. (c) The City is the fee owner of a portion of the Project Site. The Project Site is currently subject only to those encumbrances listed on Exhibit A hereto. The City is also the fee 4 2345086v5 Development Agreement owner of the land upon which the Levee Drive Lot is to be constructed. That land is subj ect only to those encumbrances listed on Exhibit D hereto. 5 2345086v5 Development Agreement ARTICLE III Project. Public Improvements. Development Committee Section 3.1. General. The City is the fee owner of a portion of the Project Site and has, or will acquire, insurable title to the remainder thereof. Subject to the terms and conditions of this Agreement, including all exhibits hereto: (a) the City will convey the Project Site to the Authority on the Closing date in exchange for the Authority's agreement to convey to the City of the Fuller Street Lot upon completion of the construction thereof. (b) the City will contribute $36,000 to the Authority on the date of the Closing to defray certain costs of the Public Improvements, (c) the City will demolish any property on the site for the Levee Drive Lot and do any other work necessary to make such site buildable and will make the site available to the Authority for construction of the Levee Drive Lot at such time as is required by the Authority to coordinate such construction withthe construction of the Project, (d) the Authority will issue the Bonds, as further described in Article N and use the proceeds to construct and equip the Project (pursuant to the description of the Project and the schedules attached hereto as Exhibit B), (e) the Authority will undertake the Public Improvements as provided in Section 3.2, and (f) upon completion of construction of the Fuller Street Lot the Authority will convey title to such lot to the City in exchange for the conveyance by the City to the Authority of the Project Site. The Authority will use commercially reasonable efforts to begin construction of the Project and the Public Improvements within six (6) months from the date the Authority receives all City approvals necessary prior to commencement of constructions and expects to complete construction within twelve (12) months following such commencement. Section 3.2. Public Improvements. Using Authority Funds (not including any proceeds of the Bonds) and $36,000 contributed by the City as described in Section 3.1(b), in cooperation with the City, the Authority will: (a) cause to be done all work reasonably necessary to open Fuller Street; (b) acquire the property identified on Exhibit D hereto and construct the Fuller Street Lot thereon; and (c) construct the Levee Drive Lot on property owned by the City, all as further described on Exhibit D. The' City agrees to cooperate with the Authority in the use of eminent domain, if necessary to acquire the land necessary for the Fuller Street Lot and hereby consents to and approves the use by the Authority of eminent domain for such purpose. Section 3.3, Development Committee. The parties hereby create a Development Committee which shall be comprised of the following 5 members or their designees: the President ofthe EDA, the Mayor and 6 2345086v5 Development Agreement City Administrator of the City, and the Chair and Executive Director of the Authority, and which shall be and remain in effect as long as any of the Bonds for which the full faith and credit of the City is pledged remain outstanding. The Authority shall submit to the Development Committee for its prior approval any decisions with respect to the optional redemption of the Bonds. In addition, the Authority shall submit to the Development Committee for its prior approval, any decisions required to be made by the Authority under the Financing Documents that adversely affect the ongoing existence or operation of the Project, including without limitation, any decision regarding the restoration of the Project or the redemption of Bonds in the event of casualty loss. Section 3.4. Notices. The Authority shall send to the EDA a copy of each and any report required to be made regarding the Project pursuant to the Financing Documents. 7 2345086v5 Development Agreement ARTICLE IV Proiect Financing: Section 4.1. General. The Authority, with the cooperation of the City, will use commercially reasonable efforts to provide for the financing of the Project as provided in this Article IV, contingent on final approval of the Financing Documents by each of the parties hereto and contingent on confirmation of the Authority's intent to undertake the Project following publi? hearings required by law. Section 4.2. Bonds, Contingent on such public hearings, the Authority will issue the Bonds to finance the cost of constructing and equipping of the Project. The Bonds will be secured by a lien on net revenues of the Project and certain reserves described on Exhibit C hereto and by a pledge of the full faith and credit of the City. The Authority will grant a mortgage in favor of the City to secure repayment to the City of amounts, if any, advanced by the City from time to time to pay debt service on the Bonds. Section 4.3. Surplus Revenues, Reimbursement to City. (a) Surplus Revenues. Any amounts authorized to be released to the Authority in any year from the surplus funds established by the Financing Documents and any net operating income received by the Authority from the Project following the date on which the Bonds have been paid in full and the indenture of trust relating to the Bonds has been discharged (together, "Surplus Revenues") shall be applied by the Authority in the following order of priority: First, to the extent pledged to the Bonds, to the trustee or paying agent to pay any fees or charges then due; Second, to repay to the City advances, if any, that the City shall have made from its own resources pursuant to the pledge by the Authority of the City's full faith and credit to the Bonds, together with interest thereon from the date of any such advance until repaid, at a variable weekly rate of interest equal to the Reference Rate of First Bank National Association, in Minneapolis, Minnesota, as in effect and modified from time to time. The Authority's obligation to repay the City pursuant to this Section shall be referred to in this Agreement as the "Payment Obligation"; Third, to fund any separate operating or other reserve established by the Authority for the Proj ect from time to time; and Fourth, the Authority shall retain all Surplus Revenues and shall apply the same for any purpose authorized by law. (b) Surplus Levee. To the extent that in any year that Surplus Revenues are not sufficient to satisfy any Payment Obligation, the Authority will apply to such Payment Obligations that part of its special benefits tax received by it in that year which described as follows: (i) the portion of the special benefits tax which is not allocated under any other bond contract or obligation, (ii) less the reasonable administrative and other fixed costs of the Authority which are payable from the special benefits tax, (iii) times a fraction the numerator of which is the most recent annual amount of the Authority's special benefits tax generated by taxes paid by within the City of Shako pee, and the denominator of which is the Authority's most recent total annual special benefits tax. For purposes of this provision, the special benefits tax shall be deemed to 8 2345086v5 Development Agreement be unrestricted to the extent that it is not pledged to the payment of a specific obligation, and the Authority is not obligated by contract, or otherwise, to use the special Levee for a specific purpose in such year. Section 4.4. Project Management. The Authority will either manage the Project itself or will cause the Project to be managed only by established, experienced professional management companies that have continuously managed at least 200 units of multifamily rental housing units during the five year period prior to first being engaged to manage the Project. Notwithstanding the foregoing, during any period when there is an outstanding Payment Obligation from the Authority to the City, or during any period for which cash flows prepared by the Authority pursuant to the Financing Documents project that revenues available to pay debt service on the Bonds will not be at least 105% of the amount required therefore, the City shall have the right upon prior written notice to the Authority and the trustee for the Bonds to direct the control, management and operation of the Project. 9 2345086v5 Development Agreement ARTICLE V Insurance~ PILOT Section 5.1. Insurance. (a) The Authority will provide and maintain at all times during the construction of the Project an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the EDA or the City, furnish the EDA or the City with proof of payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so~called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Project at the date of completion, and with coverage available in nonreporting form on the so~called "all risk" form of policy. The interest of the EDA and the City shall be protected in accordance with a clause in form and content satisfactory to the EDA and the City; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and (iii) Workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Project and while the Bonds remain outstanding, the Authority shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the EDA or the City shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Project under a policy or policies covering such risks as are ordinarily insured against by similar businesses; (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the EDA and the City as additional insureds; and (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Authority, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Authority may, if permitted by law, be self-insured with respect to all or any part of its liability for workers' compensation. (c) All insurance required in this Article V shall be taken out and maintained in responsible insurance companies selected by the Authority which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Authority will deposit annually with the EDA policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement, each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Authority, the 10 2345086v5 Development Agreement EDA and the City at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Authority may maintain a single policy, blal1ket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Authority shall deposit with the EDA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Proj ect. (d) To the extent permissible under the Financing Documents, proceeds of insurance or a condemnation award for the Project shall be applied by the Authority to repair or rebuild the Project, but only as long as such insurance proceeds or condemnation award, together with other moneys available to the Authority for such purpose, are sufficient to complete such repair or rebuilding. Section 5.2. PILOT. (a) The Project will be subject to a payment in lieu of taxes based on actual shelter rents charged for units in the Project (regardless of any subsidies provided to individual tenants) pursuant to Sections 469.040 and 272.01, as provided by law, and at least until the Maturity Date. 11 2345086v5 Development Agreement ARTICLE VI Conditions Precedent; Events of Default Section 6.1. Conditions Precedent. The following shall be conditions precedent to the performance of the obligations of the Authority hereunder: (i) Cost of public improvements. The total cost of the Public Improvements shall not exceed amounts available to the Authority therefore, unless the Authority shall have identified additional funding sources. (ii) Public hearing. The Authority shall have confirmed its intent to issue the Bonds to finance the Project following the holding of public hearings regarding the Project and the Bonds pursuant to the Act. (iii) The ability of the Authority to provide for the sale of the Bonds with terms and at a rate that is economically feasible. The following shall be conditions precedent to the performance of the obligations of the City hereunder: (iv) Public hearing. The City shall have confirmed its intent to authorize the Authority to pledge the City's full faith and credit to the Bonds following the holding of a public hearing regarding the Bonds pursuant to the Act. In the event any of the conditions precedent listed as (i) through (iii) is not met, the Authority may terminate this Agreement by written notice delivered to the City. In the event the condition precedent listed as (iv) is not met, the City may terminate this Agreement by written notice delivered to the Authority. Section 6.2. Events of Default Defined. The term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any failure by any party to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed hereunder. Section 6.3. Remedies on Default. Whenever any Event of Default referred to in Section 6.2 of this Agreement occurs, the non-defaulting party, after providing thirty (30) days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty (30) days or, if the Event of Default is by its nature incurable within thirty days, the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible, may take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. Section 6.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to any party in this Agreement 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 12 2345086v5 Development Agreement expedient. In order to entitle any party 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 VIT. Section 6.5. 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 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. 13 2345086v5 Development Agreement ARTICLE VII Additional Provisions Section 7.1. Conflict of Interests: Representatives Not Individually Liable. The Authority, the EDA and the City, to the best of their respective knowledge, each represent and agree that no member, official or employee of their respective bodies shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee 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 Authority, the EDA or the City shall be personally liable with respect to any other party, or any successor in interest, in the event of any default or breach by the Authority, EDA or City or for any amount which may become due to the other party or successor or on any obligations under the terms of this Agreement. Section 7.2, Equal Emplovment Opportunity. The Authority, for itself and its successors and assigns, agrees that during the construction of the Project provided for in this Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 7.3. Restrictions on Use. The Authority agrees for itself and its successors and assigns: (a) it shall use the Housing Facility as a "qualified housing development project" for elderly persons, pursuant to the Act, as long as any Series B Bonds remain outstanding; and (b) it shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease or rental, or in the use or occupancy of the Project or any improvements erected or to be erected thereon, or any part thereof. Section 7.4. 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 7.5. 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 dispatched by registered or certified mail, postage prepaid, return receipt requested or delivered personally; and (a) in the case of the Authority, is addressed to or delivered personally to the Authority at 323 South Naumkeag Street, Shakopee, Minnesota 55379; and (b) in the case of the EDA, is addressed to or delivered personally to the EDA at 129 Holmes Street S., Shakopee, MN 55379; and (c) in the case of the City, is addressed to or delivered personally to the City at 129 Holmes Street S., Shakopee, MN 55379; and or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section 7.5. Section 7.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 14 2345086v5 Development Agreement Section 7.7. Recording. The Authority may record this Agreement and any amendments thereto with the Scott County Recorder. Section 7.8. Bank Qualification. For purposes of to Section 265(b) of the Internal Revenue Code of 1986, as amended, the parties hereto irrevocably agree that: (a) There shall be allocated to the City the full principal amount of the Bonds, or, upon written receipt by the Authority of notice from the City received at least. 30 days prior to the date of the Closing, such lesser amount of its $10,000,000 annual cap on bank qualified bonds as the City expects to be available within 2003. (b) In the event the Authority receives notice from the City that less than the full principal amount of the Bonds are to be allocated to the City for this purpose, the remainder of the Bonds shall be allocated to the Authority for purposes of Section 265(b) of the Code. (c) In either event, such allocation bears a reasonable relationship to the respective benefits of the City, the EDA and the Authority from the issuance of such Bonds. Section 7.9. Supersedes Joint Powers Agreement. This Agreement shall supersede and replace the Preliminary Joint Powers Agreement in all respects. 15 2345086v5 Development Agreement IN WITNESS WHEREOF, the Authority, the EDA and the City have each caused this Agreement to be duly executed in their respective names and behalf and their respective seals to be hereunto duly affixed as of the date first above written, with actual execution on the dates set forth below. SCOTT COUNTY HOUSING AND REDEVELOPMENT AUTHORITY By Its Chair By Its Executive Director STATE OF MINNESOTA ) ) COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this _ day of , 2003 by Marjorie R. Henderson and William I. Jaffa, the Chair and Executive Director, respectively, of the Scott Housing and Redevelopment Authority, a public body corporate and politic, on behalf of the Authority. Notary Public S,. 1 2345086v5 Development Agreement ECONOMIC DEVELOPMENT AUTHOIDTYFOR THE CITY OF SHAKOPEE, MINNESOTA By Its President By Its Executive Director STATE OF MINNESOTA ) ) COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this _ day of ,2003 by and Mark McNeill, the President and Executive Director, respectively, of the Economic Development Authority for the City of Shakopee, Minnesota, a public body corporate and politic, on behalf ofthe Authority. Notary Public S-2 2345086v5 Development Agreement CITY OF SHAKOPEE, MINNESOTA By Its Mayor By Its City Administrator By Its City Clerk STATE OF MINNESOTA ) ) COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of ,2003 by William Mars, Mark McNeill and Judith S. Cox, the Mayor, City Administrator and City Clerk, respectively, of the City of Shakopee, Minnesota, a public body corporate and politic, on behalf of the City. Notary Public S-3 2345086v5 Development Agreement Exhibit A to that certain Development Agreement by and between the Scott County Housing and Redevelopment Authority, City of Shakopee, Minnesota and Economic Development Authority for the City of Shakopee, Minnesota Project Site Legal Description (Attached) Permitted Encumbrances: A -1 234S086vS Development Agreement Exhibit B to that certain Development Agreement by and between the Scott County Housing and Redevelopment Authority, City of Shakopee, Minnesota and Economic Development Authority for the City of Shakopee, Minnesota Description of Project The Project will consist of an approximately 58-unit multifamily housing development project intended for rental to seniors (age 55 and over), contained in one three-story building. There will be constructed under the east building an approximately _-space below grade parking facility, for use by residents. There will be constructed adjacent to the buildings a surface parking lot to be used by residents and their guests. The following schedules are attached hereto: Schedule 1 - Site Plan Schedule 2 - Preliminary floor plans for each floor of each building Schedule 3 - Elevations Schedule 4 - Construction Schedule B-1 2345086v5 Development Agreement Exhibit C to that certain Development Agreement by and between the Scott County Housing and Redevelopment Authority, City of Shakopee, Minnesota and Economic Development Authority for the City of Shakopee, Minnesota Description of Bonds The Project will be financed by the issuance by the HRA of its housing development revenue bonds (the "Bonds") in an amount presently expected not to exceed $7,000,000. Security. for the Bonds will include: a. a lien on net revenues of the Proj ect; b. an operating reserve fund in an amount equal to 3 months average operating costs; c. a debt service reserve fund equal to 6 months maximum annual debt service; d. a maintenance and replacement reserve e. if necessary, a pledge by the HRA of up to $70,000 of its special benefits tax Levee, annually; and f. the full faith and credit of the City. Any funds generated by the Project in any year in excess of what is necessary to pay expenses and debt service, fund necessary reserves and make any other payments required under this Agreement will be the property of the HRA, used for housing or commercial development. C -1 2345086v5 Development Agreement Exhibit D to that certain Development Agreement by and between the Scott County Housing and Redevelopment Authority, City of Shakopee, Minnesota and Economic Development Authority for the City of Shakopee, Minnesota Description of Public Improvements Opening of Fuller Street: Fuller Street Lot: Legal Description: Levee Drive Lot: Legal Description: Permitted Encumbrances: Site Map - Attached D -1 2345086v5 Development Agreement