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HomeMy WebLinkAbout2017-05-23 HRA Agenda PacketPLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS. MOUND HOUSING &i REDEVELOPMENT AUTHORITY REGULAR MEETING TUESDAY, MAY 239 2017 6:45 P.M. MOUND CITY COUNCIL CHAMBERS Page 1. Opening the meeting 2. Action approving agenda, with any amendments 3. Action approving minutes: April 11, 2017 regular meeting 4. Stacie Kvilvang from Ehlers requesting consideration and action 2-3 on resolution recommending proposed modification to the 4-51 Redevelopment Plan for the Mound Harbor Project Area and establishment of the Harrison Bay Senior Housing TIF District 5. Action to approve Resolution Authorizing an Interfund Loan for 52-53 Advance of Certain Costs in Connection with the Harrison Bay Senior Living Housing Tax Increment Financing District 6. Stacie Kvilvang from Ehlers requesting action on a resolution 54-55 approving a Contract for Private Development with Harrison Bay Senior 56-101 Living LLC for the construction of a 72 -unit senior rental facility, contingent upon City Council approval of establishment of the TIF District 7. Adjourn Note: No HRA meetings were held on April 25, 2017 or May 9, 2017 due to lack of agenda items. 01,731EFTITH The Mound Housing and Redevelopment Authority in and for the City of Mound, Minnesota, met in regular session on Tuesday, April 11, 2017, at 6:55 p.m. in the council chambers of the Centennial Building. Members present: Chair Mark Wegscheid, Commissioners Ray Salazar, Jeff Bergquist, and Kelli Gillispie Members absent: Commissioners Jennifer Peterson Others present: City Manager and Director of Public Works Eric Hoversten, Director of Community Development Sarah Smith, Administrative Assistant Mary Mackres, Consultant Planner Rita Trapp, and Field Officer Stewart Simon, Public Present: Christine Valerius, Kevin Peterson, and Jason Biddle 1. Open meeting Chair Mark Wegscheid called the meeting to order at 6:55 p.m. 2. Approve agenda MOTION by Salazar, seconded by Bergquist, to approve the agenda. All voted in favor. Motion carried. 3. Approve minutes MOTION by Salazar, seconded by Gillispie, to approve the minutes of the March 28, 2017 regular meeting. Salazar, Gillispie, and Wegscheid voted in favor, Bergquist abstained. Motion carried, 4. Adjourn MOTION by Gillispie, seconded by Salazar, to adjourn at 6:56 p.m. All voted in favor. Motion carried. Attest: Catherine Pausche, Clerk 0 Chair Mark Wegscheid HOUSING1 REDEVELOPMENTAUTHORITY ! 1 i THE CITY OF i! 1 , MINNESOTA CITY OF i 1 HENNEPIN COUNTY STATE OF 1 RESOLUTION NO. RESOLUTION 1!P 1, MODIFICATION! THE REDEVELOPMENT PLAN FOR i 1 HARBOR PROJECT AREA; 1 ESTABLISHING THE HARRISON SENIOR HOUSING1 DISTRICT 1 ADOPTING PLAN THEREFOR. WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "HRA") and the City of Mound (the "City") that the HRA and the City adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan Modification") for the Mound Harbor Project Area (the "Project Area"), and establish the Harrison Bay Senior Housing Tax Increment Financing District (the "District") and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1794, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the Board's consideration; and WHEREAS, the HRA has investigated the facts relating to the Plans and has caused the Plans to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Plans. The HRA has also requested the City Planning Commission to provide for review of and written comment on Plans which they did on May 2, 2017, and that the Council schedule a public hearing on the Plans upon published notice as required by law. WHEREAS, this Board has reviewed the contents of the Plans, and on this date, the City Council of the City shall hold a duly noticed public hearing on the Plans. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: The Redevelopment Plan for the Project is hereby amended to reflect that the boundaries of the Project Area are being expanded to include the area up to and inclusive of the District. 2. The HRA hereby finds that the District is in the public interest and is a "housing district" under Minnesota Statutes, Section 469.174, Subd. 11, and finds that the adoption of the proposed Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop for affordable and high quality housing in the City and the State of Minnesota. 3. The HRA further finds that the Plans will afford maximum opportunity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. The reasons and facts supporting the findings in this resolution are described in the Plans. 5. The HRA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. It is not anticipated that the District will contain commercial/industrial property. As a result, there should be no impact due to the fiscal disparities provision on the District. 6. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Plans, as presented to the HRA on this date, are hereby approved, established and adopted and shall be placed on file in the office of the Executive Director of the HRA. 7. Upon approval of the Plans by the City Council, the staff, the HRA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of any project or a development agreement with any developer. Upon approval of the Plans by the City Council, the Executive Director of the HRA is authorized and directed to forward a copy of the Plans to the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. 9. The Executive Director of the HRA is authorized and directed to forward a copy of the Plans to the Hennepin Auditor and request that the Auditor certify the original tax capacity of the District as described in the Plans, all in accordance with Minnesota Statutes 469.177. Approved by the Board on May 23, 2017. ATTEST: Secretary -3- Chair As of May 15, 2017 Draft for Public Hearing Housing and Redevelopment Authority in and for the City of Mound, Minnesota Hennepin County State of Minnesota Adopted Modification No. 1 Public Hearing k �jt i lei , March 22, 2005 May 23, 2017 Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 vwvw.ehlers-inc.com me TABLE OF CONTENTS (for reference purposes only) SECTION I REDEVELOPMENT PLAN FOR MOUND HARBOR PROJECT AREA .............. 1-1 Subsection 1-1. Definitions .............................................. 1-1 Subsection 1-2. Statement of Need and Public Purpose ....................... 1-2 Subsection 1-3. Statutory Authority ........................................ 1-4 Subsection 1-4. Statement of Objectives ................................... 1-5 Subsection 1-5. Project Area ............................................ 1-5 Subsection 1-6. Property Acquisition ...................................... 1-5 Subsection 1-7. Redevelopment Project Financing ........................... 1-5 APPENDIX A Description of Project Area ................................................ A-1 APPENDIX B Map of Project Area ..................................................... B-1 APPENDIX C HKGI Analysis of Blight Conditions ......................................... C-1 APPENDIX D Mound Harbor Renaissance Sketch Plan (July 2004) ........................... D-1 in SECTION I REDEVELOPMENT PLAN FOR MOUND HARBOR PROJECT AREA Subsection 1-1. Definitions The terms defined below have, for purposes of this Redevelopment Plan, the meanings herein specified, unless the context specifically requires otherwise: "Authority" means the Housing and Redevelopment Authority in and for the City of Mound, Minnesota. "Bond" means any tax-exempt or taxable bonds issued by the City or Authority to finance the Public Redevelopment Costs, and any obligations issued to refund such bonds. "City" means the City of Mound, Minnesota. "City Council" means the City Council of the City. "County" means Hennepin County, Minnesota. "HRA Act" means Minnesota Statutes, Sections 469.001 to 469.047. "Project" means the Mound Harbor Redevelopment Project, the boundaries ofwhich are generally described in Exhibit A and generally illustrated in the map attached as Exhibit B. "Project Area" means the area within the boundaries of the Project as shown in Exhibits A and B. "Public Redevelopment Costs" means all legally permissible costs incurred or to be incurred by or on behalf of the Authority in carrying out the Redevelopment Plan, including but not limited to: (a) the costs of any redevelopment activities consistent with the Redevelopment Plan as originally adopted or subsequently amended; (b) costs of administering the Project; and (c) debt service payments on any obligations issued to finance Public Costs authorized by the Redevelopment Plan. "Redevelopment Plan" means this Redevelopment Plan forthe Project as it may be amended or supplemented from time to time. "State" means the State of Minnesota. "Tax Increment Financing District" or "TIF District" means any tax increment financing district that may be established under the TIF Act within the Project. "Tax Increment Financing Act" or "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.179, as amended and supplemented from time to time. "Tax Increment Financing Plan" means the Tax Increment Financing Plan for any Tax Increment Financing District. "Tax Increments" means the tax increments derived from any Tax Increment Financing District. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area -6� Subsection 1-2. Statement of Need and Public Purpose The Authority finds that there is a need for redevelopment within the City and the Project Area to remedy blight and blighting conditions, preventthe emergence of blight, promote the health, safety and welfare ofCity residents, encourage related development and redevelopment in order to protect, improve the tax base and general economic vitality of the City, and assure that the long term housing needs of the City are met. The Authority specifically finds that: (a) the land within the Project Area would not be available for redevelopment without the financial aid to be sought underthis Redevelopment Plan; (b) the Redevelopment Plan will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and (c) that the Redevelopment Plan conforms to the general plan for the development of the City as a whole. The Authority further finds that the Project is a "redevelopment project" within the meaning of Minnesota Statutes, Section 469.001, subd. 16 of the HRA Act. The factual basis for the above findings includes: A. The City has conducted several studies of the Project Area, including the Mound Visions Concept Plan (1991), the Mound Environmental and Appearance Model (1992), the Mound Comprehensive Plan (2000), the 2000 Mound Zoning Ordinance Amendment Project (2000) and the Mound Visions Areawide Alternative Review (2005). These studies, including the findings made therein, are incorporated here by reference. B. The Hoisington Koegler Group, Inc., together with city planning staff conducted an inventory study of the current condition of properties within the original Project Area in 2005. The study reports of obsolescence, land use incompatibilities, poor parcel and building configuration, and hazardous traffic conditions for vehicles and pedestrians. A summary of the findings are found in the attached Exhibit C. C. In late 2004 and early 2005, LHB, Inc. ("LHB") conducted a study of building conditions in a portion of the Project Area. That study determined that a substantial percentage of the buildings in the area are structurally substandard as defined in Mirmesota Statutes, Section 469.174, subd. 10. Such findings contribute to the conclusion that the Project Area is a "blighted area" within the meaning of Section 469.002, subdivision l l of the HRA Act. Data from the LHB Study are on file with the Authority. These study results will also be used when considering the establishment of future tax increment financing districts. D. The City's Comprehensive Plan, as adopted on April 11, 2000, identified the comprehensive downtown redevelopment project as the public's highest priority regarding commercial land use in the City. E. Background of Mound Visions Redevelopment Program. The City committed itself to revitalizing its downtown efforts through an effort called "Mound visions " Mound Visions began in 1991 when the City began to explore ways to strengthen its downtown business community. For some time, the downtown struggled to realize its full potential, not because of the efforts of private businesses, but largely due to the lack of image, connectivity, and pedestrian appeal. Many of the elements so important to the area, such as natural amenities and pedestrian comfort had been forgotten. Early efforts focused on general beautification, fagade improvements and limited streetscape improvements. Through this exercise, the community learned it needed much more than aesthetics for a successful downtown. Mound Visions incorporates a comprehensive approach to planning, design and implementation projects that will involve both public and private entities. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area 1.2 Mound Harbor Renaissance Plan. The proposed Mound Harbor Renaissance (MHR) project will be the heart ofthe Mound Visions Flan for downtown revitalization. The original plan established five new downtown mixed-use districts and since that time, two have essentially been completed. The Mound Harbor Renaissance (MHR) project will complete the three remaining districts including Lost Lake, Auditor's Road, and Lake Langdon and will rebuild downtown as a mixed-use, pedestrian friendly environment which is oriented towards Mound's greatest natural asset, Lost Lake, and its historic channel which extends to Lake Minnetonka. Project goals include: • Establishing a traditional downtown by creating a distinctive community place for Mound. • Creating a central core of traditional, multi -story "main street" type buildings with retail along the street and office or housing uses located above. • Keeping the downtown vital by mixing retail, entertainment and office uses with a wide range of lifecycle housing. • Offering the community new housing choices including senior cooperative apartments, urban "rowhouse style townhomes" and loft or apartment -style condominiums. • Connecting the downtown area with new greenways, trails and traditionally designed streets and sidewalks. Incorporating streetscape and landscaping elements along the new mainstreet and realigned CSAH 15 corridor. Providing central, downtown parking areas including both structured and surface lots. Enhancing community appreciation of and access to, the area's natural resources by reclaiming the historic Lost Lake channel and providing public dock and boat slip amenities for both residents and visitors. • Projecting and enhancing the City's natural resources through the incorporation of innovative and unique stormwater strategies. • Planning for regional transportation connections including the existing rail corridor being planned for as a possible future LRT route and a new transit shelter to be incorporated into the Park and Ride facility currently proposed for the True Value District. PlanningStrate ies. Redevelopment of the City's downtown area is a recurrent theme in the approved comprehensive plan which was adopted by the City of Mound on April 11, 2000. In anticipation of the proposed downtown redevelopment project, a number of planning -related efforts have been undertaken by the City including the Mound Environmental and Appearance Model which was adopted in 1992. This document was based on the Mound Market Position which was adopted by the City of Mound on 1991. Additionally, the Mound Zoning Ordinance was amended in 2000 to incorporate new regulations and standards for the Pedestrian, Destination, and Linear Districts which were created to guide the City's "new " downtown. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area 1.3 -8- Mound Harbor Renaissance Plan Review Sketch Plan. The sketch plan for the Mound Harbor Renaissance proposal was formally reviewed the Mound Planning Commission and City Council in August and September 2004 respectively. While the sketch plan for the Mound Harbor Renaissance project does not include the South CSAH l 10 corridor, it is important to mention that redevelopment ofthis corridor is anticipated and therefore has been included in the Project Area. A copy of the approved sketch plan of the Mound Harbor Renaissance proposal is included as Exhibit D. AUAR. Preparation of the Mound Visions Areawide Alternative Urban Review (AUAR) commenced in June 2004. The Mound Visions FinalAUAR and Mitigation Plan was approved by the Mound City Council on January 25, 2005. Related Proiects The City was awarded a stormwater initiatives grant from the Twin Cities Metropolitan Council in October 2003 for the downtown project. Environmental investigation grants for the Lost Lake District, True Value District and Auditor's Road Districts were awarded to the City of Mound by Hennepin County Environmental Services and the Minnesota Pollution Control Authority (MPCA) in 2002 and 2004. A $1.5M levy was approved for the Minnehaha Creek Watershed District (MCWD) to undertake stormwater improvements associated with the downtown Mound redevelopment project. The levy will be funded over a 3 year period and includes unique and innovative strategies and programs as outlined in the MCWD report entitled "Supplementing Mound Downtown Redevelopment with Innovative Storrnwater Management." According to the report, "The purpose of the MCWD participation in the redevelopment is to incorporate stormwater management practices that reach as far as possible and incorporate as many new ideas as needed to improve the quality of runoff reaching Lake Minnetonka via Lost Lake and Lake Langdon." • The City of Mound was awarded a $1.2M Livable Communities development grant from the Twin Cities Metropolitan Council to fund public parking in the Auditor's Road District in February 2005. • At its March 9, 2005 meeting, the Lake Minnetonka Conservation District (LMCD) Board of Managers approved the City of Mound multiple dock license and variance application(s) to allow (37) slips for the Lost Lake townhome project (subject to conditions.) The City of Mound submitted the dredge and aquatics permit applications for the Lost Lake townhome project to the Minnehaha Creek Watershed District (MCWD) and the Department of Natural Resources on February 3, 2005. It is anticipated that the City's dredge permit application will be reviewed by the MCWD Board of Managers on April 215' Subsection 1-3. Statutory Authority The Authority is authorized under the HRA Act to undertake and administer the Redevelopment Plan and the Project, and to finance Public Redevelopment Costs through issuance of bonds secured by Project revenues. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area 1-4 -9- Subsection 1-4. Statement of Objectives The Authority seeks to accomplish the following general objectives within the Redevelopment Project: A. Promote the prompt development and redevelopment of property within the Project Area in a mariner consistent with the City comprehensive plan and the Mound Visions Plan and the Concept Plan, which property is currently less productive because of substandard conditions, lack of adequate community services, or general blight. B. Promote the development of adequate public facilities necessary to serve the Project Area and the City as whole. C. Promote the concentration ofresidential and appropriate commercial development within the Project area in order to maintain the area in a manner compatible with its prominence in the City. D. Construct, acquire or finance any public facilities, including sanitary sewer, water, storm drainage and roads, deemed necessary and desirable for the development or redevelopment of the Project area. E. Assist in development orredevelopment through provision ofpublic services, environmental remediation, soil and terrain corrections or site improvements, or land acquisition, all in cases deemed appropriate by the Authority. F. Employ any powers of the Authority under the HRA Act for the benefit of the Project in such cases and upon such terns as the Authority may deem appropriate. G. Promote the development and redevelopment of multifamily housing in the community. Subsection 1-5. Project Area The Project boundaries are described in Exhibit A and are illustrated in the map attached as Exhibit B. (AS MODIFIED MAY 23, 2017) The boundaries of the Project Area are being expanded to include the area up to and inclusive of the Harrison Bay Senior Mousing Tax Increment Financing District. Subsection 1-6. Property Acquisition The Authority may acquire any property within the Project Area as identified in Exhibit B, or interests therein, as the Authority may deem necessary or desirable to carry out the objectives of the Redevelopment Plan. Acquisition may be accomplished by negotiation or by the exercise ofthe Authority's powers of eminent domain. Subsection 1-7. Redevelopment Project Financing The Authority may establish one or more TIF Districts in the Project to finance Public Redevelopment Costs. The Authority may also use any other revenues available to the Authority to pay such costs, including without limitation grant funds, property tax abatements through the City under Minnesota Statutes, Sections 469.1812 to 469.1815, and proceeds of a special tax, if any, levied under Section 469.033 of the HRA Act. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area 1-5 -10- APPENDIX A DESCRIPTION OF PROJECT AREA WUND HARBOR PROJECT • �� 13-117-24-33-00041 5557 SHORELINE DR 13-117-24-33�OpQ5 5555 SHORELINE DR 13-117-24-33-i?rJ44~6 5545 SHORELINE DR 13-117-2_4--33-17 9 5519 SHORELINE DR 13-11i-24-9310 ADDRESS UNASSIGNED 13-117-24-33-0011 5501 SHORELINE DR 13-117-24-33-0012 , ADDRESS UNASSIGNED 1 13 1'17-24-33-00 13 1 ADDRESS UNASSIGNED 13-117-24-33-0014 5575 SHORELINE DR 13-117-24-33-0015 5581 SHORELINE DR 13-117-24-33-0016 2300 COMMERCE BLVD 13-117-24-33-0017 2305 COMMERCE BLVD 13-117-24-33-0019 ADDRESS UNASSIGNED 13-117-24-33-0020 2302 COMMERCE BLVD 13-117-24-33-0047 2316 COMMERCE BLVD 13-117-24-33-0348 I - A©DRESS UNASSIGNED 13-117-24-3 491 5579 AUDITOR'S RD 13-117-24-33-0050 2334 COMMERCE BLVD 1. 13-117-24-33-W51 2348 COMMERCE BLVD 13-117-24-33.0052 2360 COMMERCE BLVD 13-117-24,33-0055 2380 COMMERCE BLVD 13-117-24-33-0056 2368 COMMERCE BLVD 13-117-.24-33-0057 2396 COMMERCE BLVD 13-117-24-33-0469 - ADDRESS UNASSIGNED 13-117-24-33-0076 5533 SHORELINE DR 13-117-24-33.11082 2372 COMMERCE BLVD 13-117-24-33-0083 2290 COMMERCE BLVD 13-117-24-3340090 I ADDRESS UNASSIGNED .13-117-24-34-ON31 5377 SHORLINE DR 13-,117-24.34-0075 ADDRE55 UN4045SIGNEU 114-117-24-44-0001 2321 COMMERCE BLVD 14-117-24-44-0002 2339 COMMERCE BLVD ,114-117-24-44-0003 2365 COMMERCE BLVD 14-117-24-44-0004 2345 COMMERCE BLVD 14-117-24-44-0006 ADDRE aS UNASSIGNED 14-117-24-44-0041 2301 COMMERCE BLVD 14-117-24-44-0042 2313 COMMERCEBLVD 14-117-24-44-0043 ADDRESS UNASSIGNED Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area A_1 -11- 14-117-24-447QP14 ADDRESS UNASSIGNED ADDRESS UNASSIGNED -14-117-24-44-06-4s—T—ADDRESS 14-117-24-44-0050k UNASSIGNED 14-117-24-44-0046 ADDRESS ADDRESS UNASSIGNED S ADDRESS UNASSIGNED 14-117-24-44-00471 14-117-24-44-0057 ADDRESS UNASSIGNED- --1 14-117-24-44-0048 ADDRESS UNASSIGNED 14-117-24-44-O049 ADDRESS UNASSIGNED 14-117-24-44-0050k ADDRESS UNASSIGNED 14-117-24-44-0051 ADDRESS ADDRESS UNASSIGNED S 14-117-24-44-0056 ADDRESS UNASr>IGNr=D 14-117-24-44-0057 ADDRESS UNASSIGNED 1) 14-117-24-44-0060 ADI ADDRESS UNASSIGNED 14-117-24-44-ONI ADDRESS UNASSIGNED 14-117-24-44-0062 ADDIiESS UNASSIGNED 23-117-24-11-0001 2434 COMMERCE BLVD 23-117-24-11 0002 2426 COMMERCE BLVD 23-117-24-11-4003 !"I COMMERCE BLVD 23-117-24-11-0004 2462 COMMERCE BLVD 23-117-24-11-0005 2480 COMMERCE BLVD VD 23-117-24-11-0006 2500 COMMERCE BLVD -0009 25" COMMERCEE JD 23-117,24-11.101 00 2658 COMMERCE BLVD 23-117-24-11-0027 2610 COMMERCE BLVD D 23-117-24-11-0028 ADDRESS UNASSIGNED 23-117-24-11-0033 2590 COMMERCE BLVD 23-117-24-14-0007 2630 COMMERCE BLVD 23.117-24-14-0008 2642 COMMERCE BLVD 23.117-.24-'-4 043 2606 COMMERCE BLVD 23-117-24-14-0044 5668 BARTLETT BLVD 23-117-24-14-0050 2620 60MMERCE BLVD 23-117-24-14-0138 2590 COMMERCE BLVD 23-117`-24-14-0139 5680 BARTLETT BLVD 24-117-24-22-0001 2420 COMMERCE BLVD 24-117-24-22-0013 2400 COMMERCE BLVD (AS MODIFIED MA Y 23, 2 017) The Project Area is being expanded to include the parcels as shown below and in the map in Appendix B. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area -12- A-2 Parcels Currently in the Mound Harbor District Project Area 053-1411724440040 ADDRESS UNASSIGNED 053-1311724340146 LOST LAKE LA 053-1311724330168 LOST LAKE LA 053-1311724330167 LOST LAKE LA 053-1311724330143 LOST LAKE CT 053-1311724330142 LOST LAKE CT 053-1311724330166 LOST LAKE LA 053-1311724330049 AUDITORS RD 053-1311724330165 LOST LAKE LA 053-1311724330048 ADDRESS UNASSIGNED 053-1411724440004 COMMERCE BLVD 053-1311724340147 LOST LAKE LA 053-1311724330050 ADDRESS UNASSIGNED 053-1311724330140 LOST LAKE CT 053-1311724330144 LOST LAKE LA 053-1311724330012 ADDRESS UNASSIGNED 053-1311724340132 SHORELINE DR 053-1311724330137 LOST LAKE CT 053-1311724330107 LOST LAKE LA 053-1311724330154 ADDRESS UNASSIGNED 053-1411724440001 COMMERCE BLVD 053-1311724330010 ADDRESS UNASSIGNED 053-1311724330004 ADDRESS UNASSIGNED 053-1411724440062 ADDRESS UNASSIGNED 053-1411724440051 ADDRESS UNASSIGNED 053-1411724440047 ADDRESS UNASSIGNED 053-1311724330013 ADDRESS UNASSIGNED 053-1411724440006 ADDRESS UNASSIGNED 053-1411724440056 ADDRESS UNASSIGNED 053-1311724330141 LOST LAKE CT 053-1411724440003 COMMERCE BLVD 053-1411724440057 ADDRESS UNASSIGNED 053-1311724330139 LOST LAKE CT 053-1311724330047 COMMERCE BLVD 053-1411724440061 ADDRESS UNASSIGNED 053-1311724330108 LOST LAKE LA 053-1311724330109 LOST LAKE LA 053-1411724440002 COMMERCE BLVD 053-1311724330017 COMMERCE BLVD 053-1311724330106 LOST LAKE LA 053-1311724330164 LOST LAKE LA 053-1311724330163 LOST LAKE LA Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area A-3 -13- 053-1411724440060 053-1311724330128 053-1311724330011 053-1311724330014 053-1311724330015 053-1311724330016 053-1411724440044 053-1411724440043 053-1311724330009 053-1311724330076 053-1411724440050 053-1311724330090 053-1411724440049 053-1411724440048 053-1311724330056 053-1311724330051 053-1311724330169 053-1311724330138 053-1311724330052 053-1311724330171 053-1311724330170 053-1311724340149 053-2411724220013 053-1311724330057 053-1311724330006 053-1311724330005 053-1411724440042 053-1411724440046 053-1411724440045 053-1411724440041 053-1311724330083 053-1311724330055 053-1311724340148 053-1311724330020 053-1311724340152 053-1311724330019 053-1311724340151 053-1311724330082 053-1311724340150 053-2311724140008 053-2311724140044 053-2311724140132 053-2311724140043 053-2311724140007 053-2311724140050 ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED SHORELINE DR SHORELINE DR COMMERCE BLVD ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED ADDRESS UNASSIGNED COMMERCE BLVD ADDRESS UNASSIGNED LOST LAKE LA LOST LAKE CT COMMERCE BLVD LOST LAKE LA LOST LAKE LA LOST LAKE LA COMMERCE BLVD COMMERCE BLVD ADDRESS UNASSIGNED ADDRESS UNASSIGNED COMMERCE BLVD ADDRESS UNASSIGNED ADDRESS UNASSIGNED COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD LOST LAKE LA COMMERCE BLVD LOST LAKE LA ADDRESS UNASSIGNED LOST LAKE LA COMMERCE BLVD LOST LAKE LA COMMERCE BLVD BARTLETT BLVD BARTLETT BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area A-4 -14- 053-2311724140139 053-1311724330162 053-2311724110002 053-2411724220001 053-2311724110001 053-2311724110003 053-2311724110004 053-2311724110005 053-2311724110006 053-2311724110027 053-2311724110033 053-2311724140138 053-2311724110034 BARTLETT BLVD ADDRESS UNASSIGNED COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD COMMERCE BLVD Parcels to be Included in the Expanded Portion of the Mound Harber District Project Area 053-1411724140001 ADDRESS UNASSIGNED 053-1411724140003 ADDRESS UNASSIGNED 053-1411724140004 COMMERCE BLVD 053-1411724410193 COMMERCE BLVD 053-1411724410194 COMMERCE BLVD 053-1411724410089 COMMERCE BLVD 053-1411724410090 ADDRESS UNASSIGNED 053-1411724440071 ADDRESS UNASSIGNED 053-1411724440072 ADDRESS UNASSIGNED 053-1411724440069 COMMERCE BLVD 053-1411724340080 ADDRESS UNASSIGNED 053-1411724440070 COMMERCE BLVD 053-1411724410057 COMMERCE BLVD 053-1411724410005 COMMERCE BLVD 053-1411724410004 COMMERCE BLVD 053-1411724410030 COMMERCE BLVD 053-1411724410027 COMMERCE BLVD 053-1411724410006 COMMERCE BLVD 053-1411724410029 COMMERCE BLVD 053-1411724410028 COMMERCE BLVD 053-1411724410026 COMMERCE BLVD 053-1411724410001 COMMERCE BLVD 053-1411724140038 COMMERCE BLVD 053-1411724140037 COMMERCE BLVD 053-1411724140006 GRANDVIEW BLVD 053-1411724140002 COMMERCE BLVD 053-1411724140005 COMMERCE BLVD 053-1411724140036 GRANDVIEW BLVD Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area A-5 -15- MAP OF PROJECT AREA (AS MODIFIED MAY 23, 2017) Housing and Redevelopment Authority in and for the Cit} of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area B-1 -16- 0 Harrison Bay Lake Langdon Lo take 1� fw FT" Legend N 0,125 0.25 Mound Harbor TIF District Miles Existing Mound Harbor District Project Area New Mound Harbor District Project Area Proposed Harrison Bay Senior Housing TIF District April 26, 2017 APPENDIX C HKGI ANALYSIS OF BLIGHT CONDITIONS FOR THE MOUND HARBOR PROJECT AREA Statutory Definition of Blighted Area "Blighted area (contains) buildings or improvements which by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light, and sanitary facilities, excessive land coverage, deleterious land use, or obsolete layout, or any combination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community." I.Dilapidation The residential and commercial properties were constructed between 1905 and 2000. Even though these properties, as well as the existing commercial and residential improvements constructed on them, can be considered old, they are not considered to have any historical value nor architectural merit. Old properties, however, require relatively higher levels of maintenance and repair. Over half of these properties can be considered to be lacking in needed maintenance and repair. The criterion of "dilapidation" was observed to apply to forty-three (43) of the sixty (60) parcels within the project planning area. Twelve (12) of parcels exhibited "strong" evidence of this criterion while another thirty-one (3 1) parcels exhibited "moderate" evidence. a Deferred maintenance of structures and site improvements. b Buildings and paved surfaces in disrepair a Deferred Maintenance: Specific evidence of deferred maintenance includes: ® Poorly maintained exterior building surfaces including masonry, stucco, wood clapboard and metal siding. e Back yard areas overgrown with vegetation. • Cracked, rutted paved surfaces. • Roof system in a failing condition 0 Foundation cracks, settling or heaving • Windows & Doors: cracked, broken, ajar or boarded up. Excluding eleven (11) parcels that have become part of the Auditors Road Street Right -of -Way or are "undevelopable" lake or wetlands, seventy-two 72% of these properties (43 of 60 parcels) exhibit a deferred maintenance pattern. In addition, individual owners would be reluctant to make the required level of investments to their individual properties, given the context of the deteriorating nature of adjacent and nearby properties. b. Building and paved surfaces in disrepair: Specific evidence of buildings and paved surfaces in disrepair includes: • Masonry surfaces broken and in need of tuck -pointing • Broken windows • Windows and doors ajar and inoperable • Entry stairways and service/loading docks and broken and failing • Cracked, broken and crumbling paved surfaces Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area C_1 _18_ The twelve (12) properties exhibiting moderate to strong evidence of "dilapidation" include a wide variety of building surfaces and site improvements in a state of significant disrepair. The obvious dilapidation of each of commercial properties and residential properties represent a clear blighting influence on abutting properties. In addition, the problems with windows, doors, building surfaces and pavement negatively impact the current use and future prospects for these properties. 2. Obsolescence/Obsolete Layout The criteria of"obsolescence" and "obsolete layout" were observed to apply to seven (7) parcels within the project planning area, all of which five (5) exhibited "strong" evidence of these criteria and two (2) additional parcels exhibited "moderate" evidence. a. Dysfunctional layout of buildings and parking. b. Substandard design of alley. C. Dated appearance of structures. a. Dysfunctional layout of building and parking: All seven commercial parcels are without adequate or convenient parking for customers or visitors based on the layout of the building at zero front lot line. Four of the seven had no available on-site parking. Three of the seven had limited parking which was below current standards. In addition, parking and loading/service areas are not segregated or clearly identified. b. Substandard design of alley_: The alleys on Shoreline Blvd. and Commerce Blvd. commercial properties are long (generally over 100 feet) and narrow. This presents problems to easy and convenient site access and is a psychological barrier to access the front of the business if on -street parking stalls are full. Overall the alleys represent an inconvenient and potentially unsafe site access for the majority of parcels within the project planning area C. Outdated appearance of structures: There is very little evidence of regular maintenance, updating or major rehabilitation is evident on the exteriors of any of theses structures. In the commercial core at Commerce and Shoreline Blvd. there has been only $360,000.00 of property investment over the past 15 years. Most ofthis investment, as indicated by building permit data, is for non-structural improvements. As stated in Paragraph l (Dilapidation), these buildings "are not considered to have any historical value nor architectural merit," and they in fact tend to serve as remnants from a past era that are not consistent with contemporary needs and preferences of retail and commercial service uses. 3. Faulty arrangement or design The criterion of "faulty arrangement or design" was observed to apply to twelve (12) parcels within the project planning area. Nine (9) of parcels exhibited "strong" evidence of this criterion while another three (3) parcels exhibited "moderate" evidence. a. hladequate parking. b. Inconvenient pedestrian and vehicular access. C. Substandard alley. a. Inadequate Parking: Eight (8) commercial properties utilize narrow alleys for site access. This results in a poorly functioning, obsolete parking and loading service area. The lack of legal parking in front of the properties, due to the fact that these properties front onto a City - Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area C-2 -19- owned right-of-way which is not used for street purposes, compounds the parking and loading deficiencies. This situation produces a blighting influence to surrounding properties, as commercial tenants' employees, suppliers, and customers seek out nearby parking opportunities b. Inconvenient pedestrian and vehicular access: The awkward and confusing parking arrangement in the rear of buildings along Shoreline and Commerce Boulevards creates safety hazards for pedestrians trying to access the front doors. The ill-defined narrow alley offers no separation between cars and pedestrians seeking to access to the commercial uses. It is likely to present a particularly undesirable site condition in winter months during conditions of snow and ice. The substandard design of the alley that serves as the primary access for the majority of parcels in the project planning area (see paragraph 2. Dilapidation) also serves as a clear representation of this criterion. C. Substandard alley. See Paragraph 2 (Dilapidation) and Paragraph 5 (Other Factors). 4.Excessive Land Coverage The criterion of "faulty arrangement or design" was observed to apply to eighteen (18) parcels within the project planning area. Ten (10) of parcels exhibited "strong" evidence of this criterion while one (l) additional parcel exhibited "moderate" evidence. a. Size and placement of commercial buildings. a. Size and placement of commercial buildings: Twenty-four (24) of the sixty (60) parcels exhibit this criterion due to their nonconforming lot size. Twenty-eight (28) ofthe sixty (60) buildings exhibit this criterion due to their relative the amount of remaining site area available for parking, loading, and access. As referenced in Paragraph 3 (Faulty Design and Arrangements), the placement of the commercial buildings at a zero -front -setback exacerbates the problem of excessive land coverage because the principal access points to the buildings are opposite the parking areas, making for difficult pedestrian connections. 5.Other Factors In addition to the above, the following other blighting factors were evident: a. Negative conditions within public rights-of-way. b. Overgrown vegetation. C. Economics of renewal/reinvestment. a. Negative conditions within the public rights -of -waw 0 The substandard design of the alley serving commercial and residential properties. 0 The obsolete design of the parking areas. The above referenced conditions within public right-of-way represent a blighting influence the impacts the entire project planning area. Vehicular and pedestrian access is compromised by the substandard and antiquated arrangement of driveway cuts, paved surfaces, parking and driveways serving the majority of parcels. Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area C-3 -20- Overgrown Vegetation: Overgrown vegetation present on many of the parcels representing a blighting influence consistent with the intent of the statutory definition for a blight area. Economics of renewal/reinvestment: In addition, the physical and economic difficulties associated with lot -by -lot, or building -by -building, renewal of these 60 properties lead to the conclusion that this type and form of reinvestment is unlikely to occur. A renewal/reinvestment scenario that would take the forth oftotal redevelopment appears more likely, more desired, and more feasible in terms of producing property design/layout and land use mix that would be market -sensitive and would contribute to the near-term and future health and welfare of the Mound Harbor Project Area. Note: The full report and field data are on file in the office of Mound Community Development Director Housing and Redevelopment Authority in and for the City of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area C_4 -21- APPENDIX D MOUND HARBOR RENAISSANCE SKETCH PLAN (JULY2004) Housing and Redevelopment Authority in and for the Cite of Mound, Minnesota Redevelopment Plan for Mound Harbor Project Area C-5 -22- ��fk( $\°J\ ;E�fE �2#$§b A�tc� ■�a�� aim«« % £2 k\i}/ ?�,ee q�K'k# 2@t(�` ■az»/& 23- f I-- As of May 18, 2017 Draft for Public Hearing FinancingTax Increment Plan for • of Harrison•r Housing FinancingTax Increment District housing district) The Housing and Redevelopment Authority of the City of Mound, Minnesota Hennepin County State of Minnesota Public Hearing: May 23, 2017 Adopted: Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com 5M Table of Contents (for reference purposes only) Section 1 - Tax Increment Financing Plan for the Harrison Bay Senior Housing Tax Increment Financing District .............. 1-1 Subsection 1-1. Foreword ............................................... 1-1 Subsection 1-2. Statutory Authority ........................................ 1-1 Subsection 1-3. Statement of Objectives ................................... 1-1 Subsection 1-4. Redevelopment Plan Overview .............................. 1-1 Subsection 1-5. Description of Property in the District and Property To Be Acquired 1-1 Subsection 1-6, Classification of the District .......................... 1-1 Subsection 1-7. . ...... Duration and First Year of Tax Increment of the District ........... 1-1 Subsection 1-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements ................ 1-1 Subsection 1-9. Sources of Revenue/Bonds to be Issued ...................... 1-1 Subsection 1-10. Uses of Funds .................. . .................... . ... 1-1 Subsection 1-11. Fiscal Disparities Election .................................. 1-1 Subsection 1-12. Business Subsidies ....................................... 1-1 Subsection 1-13. County Road Costs ....................................... 1-1 Subsection 1-14. Estimated Impact on Other Taxing Jurisdictions ................. 1-1 Subsection 1-15. Supporting Documentation ................................. 1-1 Subsection 1-16. Definition of Tax Increment Revenues ........... . ............ 1-1 Subsection 1-17. Modifications to the District ................................. 1-1 Subsection 1-18. Administrative Expenses ................................... 1-1 Subsection 1-19. Limitation of Increment .................................... 1-1 Subsection 1-20. Use of Tax Increment ..................................... 1-1 Subsection 1-21. Excess Increments ....................................... 1-1 Subsection 1-22. Requirements for Agreements with the Developer ............... 1-1 Subsection 1-23. Assessment Agreements .................................. 1-1 Subsection 1-24. Administration of the District ................................ 1-1 Subsection 1-25. Annual Disclosure Requirements ............................ 1-1 Subsection 1-26. Reasonable Expectations ................................ . . 1-1 Subsection 1-27. Other Limitations on the Use of Tax Increment .................. 1-1 Subsection 1-28. Summary ............................................... 1-1 Appendix A Project Description...................................................... A-1 Appendix B Map of the Mound Harbor Project Area and the District .......................... B-1 Appendix C Description of Property to be Included in the District ............................ C-1 Appendix D Estimated Cash Flow for the District ........................................ D-1 Appendix E Housing Qualifications for the District ........................................ E-1 Appendix F Findings for the District ................................................... F-1 -25- Section 9 - Tax Increment Financing Plan for the Harrison Bay Senior Housing Tax Increment Financing District Subsection 1-1. Foreword The Housing and Redevelopment Authority of the City of Mound, Minnesota (the "HRA"), the City of Mound (the "City"), staff and consultants have prepared the following information to expedite the establishment of the Harrison Bay Senior Housing Tax Increment Financing District (the "District"), a housing tax increment financing district, located in the Mound Harbor Project Area. Subsection 1-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the HRA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S.'), Sections 469.001 to 469.047, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for the Mound Harbor Project Area. Subsection 1-3. Statement of Objectives The District currently consists of three parcels of land and adjacent and internal rights-of-way. The District is being created to facilitate the construction of 72 units of senior housing consisting of 52 units of assisted living and 20 units of memory care in the City. Fifteen of the units (20%) are anticipated to be affordable to households with incomes at or below 50% of area median income. Please see Appendix A for further District information regarding the project. The HRA has not entered into an agreement but anticipates entering into an agreement with Harrison Bay Senior Living, LLC. Development is anticipated to begin in mid -2017 and be completed by the end of 2018. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Mound Harbor Project Area. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Mound Harbor Project Area and the District. Subsection 1-4. Redevelopment Plan Overview 1. Property to be Acquired - Selected property located within the District may be acquired by the HRA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the HRA or City may sell to a developer selected properties that it may currently own or subsequently acquire within the District or may lease land or facilities to a developer. 4. The HRA or City may perform or provide for some oral] necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor^ 't Area 1 1 -26- Subsection 1-6. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The HRA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the HRA or City only in order to accomplish one or more of the following: stonn sewer improvements; acquire land for needed public streets and utilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The HRA or City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives ofthis TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 1-6. Classification of the District The HRA and City, in detennining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, find that the District, to be established, is a housing district pursuant to M.S., Section 469.174, Subd. 11 ant/M.S., Section 469.1761 as defined below: M.S., Section 469.174, Subd.11: "Housing district" means a type of tax increment financing district which consists ofa project, ora portion of a project, intended for occupancy, in part, by persons or, families of low and moderate income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, any other similar present or future federal, state, or municipal legislation, or the regulations promulgated under any of those acts, and that satisfies the requirements ofM.S, Section 469.1761. Housing project means a project, or portion of a project, that meets all the qualifications ofa housing district under this subdivision, whether or not actually established as a housing district. M.S., Section 469.1761: Subd. 1. Requirement imposed. (a) In order for a tax increment financing district to qualify as a housing district: (1) the income limitations provided in this section must be satisfied; and (2) no more than 20 percent of the square footage of buildings that receive assistance from tax increments may consist of commercial, retail, or other nonresidential uses. (b) The requirements imposed by this section apply to property receiving assistance financed with tax increments, including interest reduction, land transfers at less than the authority's cost of acquisition, utility service or connections, roads, parking facilities, or other subsidies. The provisions of this section do not apply to districts located within a targeted area as defined in Section 462C.02 Subd 9, clause (e). (c) For purposes of the requirements ofparagraph (a), the authority may elect to treat an addition to an existing structure as a separate building if: Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor t Area 1.2 -27- (1) construction of the addition begins more than three years after construction of the existing structure was completed; and (2) for an addition that does not meet the requirements ofparagraph (a), clause (2),ifit is treated as a separate building, the addition was not contemplated by the tax increment financing plan which includes the existing structure. Subd. 2. Owner occupied housing. For owner occupied residential property, 95 percent of the housing units must be initially purchased and occupied by individuals whose family income is less than or equal to the income requirements for qualified mortgage bond projects under section 143(f) of the Internal Revenue Code. Subd. 3. Rental property. For residential rental property, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(d) of the Internal Revenue Code. The requirements of this subdivision apply for the duration of the tax increment financing district. Subd. 4. Noncompliance; enforcement. Failure to comply with the requirements of this section is subject to M.S., Section 469.1771. In meeting the statutory criteria set forth above, the HRA and City rely on the following facts and findings: • The District consists of three parcels. • The development will consist of 72 units of senior housing • 20% of the units will be occupied by person with incomes less than 50% of median income • Not more than 20% of the square footage of the buildings will consist of commercial, retail, or non- residential uses. Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 1-7. Duration and First Year of Tax Increment of the District Pursuant to MS., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 25 years after receipt of the first increment by the HRA or City (a total of 26 years of tax increment). The HRA or City elects to receive the first tax increment in 2019, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2044, or when the TIF Plan is satisfied. The HRA or City reserves the right to decertify the District prior to the legally required date. Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor ^ -t Area 1-3 _28- Subsection 1-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7andM.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2016 for taxes payable 2017. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2019) the amount by which the original value has increased or decreased as a result of: I . Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the HRA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2017, assuming the request for certification is made before June 30, 2017. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within the Mound Harbor Project Area, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table below. The HRA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2019. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion (PTC) $237,837 Original Estimated Net Tax Capacity (ONTO) $8,075 Estimated Captured Tax Capacity (CTC) $229,762 Original Local Tax Rate 1.23363 Pay 2017 Estimated Annual Tax Increment (CTC x Local Tax Rate) $283,441 Percent Retained by the HRA 100% Tax capacity includes a 3% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one with partial completion is estimated to be $58,500. Pursuant to MS., Section 469.177 Subd. 4, the HRA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor 1 Area 1-4 -29- The City is reviewing the area to be included in the District to determine if any building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Subsection 1-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds in the table set forth in Section 1-10 will be financed primarily through the annual collection of tax increments. The HRA or City reserves the right to issue bonds or incur other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a pay-as-you-go note and interfund loan but reserves the right to issue bonds in any form as authorized under the TIF Act. Any refunding amounts will be deemed a budgeted cost without a formal modification to the TIF Plan. This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $5,057,232 Interest $505,723 TOTAL $5,562,955 The HRA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $3,740,244. Such bonds may be in the form of pay-as- you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Subsection 1-10. Uses of Funds Currently under consideration for the District is a proposal to construct 72 units of senior housing consisting of 52 units of assisted living and 20 units of memory care. Fifteen of the units (20%) are anticipated to be affordable to households with incomes at or below 50% of area median income. The HRA and City have determined that it will be necessary to provide assistance to the project for certain project costs, as described herein. The HRA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment ofproperty within the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the table on the following page. Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor " ' .t Area 1-5 -30- USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $250,000 Site Improvements/Preparation $200,000 Utilities $150,000 Affordable Housing $2,225,000 Other Qualifying Improvements $409,521 Administrative Costs (up to 10%) $505,723 PROJECT COST TOTAL $3,740,244 Interest $1,822,711 PROJECT AND INTEREST COSTS TOTAL $5,562,955 The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated costs associated with the District (not including interest costs) are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. The HRA may expend funds for qualified housing activities outside of the District boundaries. Subsection 1-11. Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the City may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b, (inside the District) are followed, the following method of computation shall apply: (1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial -industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to M.S., Section 276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. Where the original net tax capacity is equal to orgreater than the current net tax capacity, there is no captured tax capacity and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority. (2) The county auditor shall exclude the retained captured net tax capacity ofthe authorityfrom the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The taxgenerated by the extension of the less of (A) the local taxing district tax rates or (B) the original local tax rate Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor r- *;t Area 1-6 -31- to the retained captured net tax capacity of the authority is the tax increment of the authority. The City will choose to calculate fiscal disparities by clause b. It is not anticipated that the District will contain commercial/industrial property. As a result, there should be no impact due to the fiscal disparities provision on the District. According to M.S., Section 469.177, Subd. 3: (c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election front the method of computation in paragraph (a) to the method in paragraph (b). Subsection 1-12. Business Subsidies Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy pursuant to M.S., Sections 116J993 to 116J.995: (1) A business subsidy of less than $150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbort Area 1.7 -32- (21) Business loans and loan guarantees of $150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration; and (23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The HRA will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 1-13. County Road Costs Pursuant to M.S., Section 469.175, Subd. ]a, the county board may require the HRA or City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads, it must notify the HRA or City within forty- five days of receipt of this TIF Plan. In the opinion of the HRA and City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads. The HRA and City are aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Subsection 1-14. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the HRA or City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE 2016/Pay 2017 Estimated Captured Total Net Tax Capacity (CTC) Percent of CTC Tax Capacity Upon Completion to Entity Total Hennepin County 1,573,060,731 229,762 0.0146% City of Mound 11,214,808 229,762 2.0487% Westonka ISD No. 277 36,551,041 229,762 0.6286% Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor " Area 1.8 -33- IMPACT ON TAX RATES The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the actual Pay 2017 rate. The total net capacity for the entities listed above are based on actual Pay 2017 figures. The District will be certified under the actual Pay 2017 rates, assuming the request for certification is made before June 30, 2017. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $5,057,232; (2) Probable impact of the District on city provided services and ability to issue debt An impact of the District on police protection is expected. The City currently contracts with the Orono Police Department for police services. With any addition of new residents or businesses, police calls for service may be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment or require that the City expand its contract with the Orono Police Department. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $850,626; Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor ^ `- t Area 1-9 -34- Pay 2017 Percent Potential Extension Rates of Total CTC Taxes Hennepin County 0.440870 35.74% 229,762 101,295 City of Mound 0.474750 38.48% 229,762 109,080 Westonka ISD No. 277 0.207440 16.82% 229,762 47,662 Other 0.110570 8.96% 229,762 25,405 Total 1.233630 100.00% 283,441 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the actual Pay 2017 rate. The total net capacity for the entities listed above are based on actual Pay 2017 figures. The District will be certified under the actual Pay 2017 rates, assuming the request for certification is made before June 30, 2017. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $5,057,232; (2) Probable impact of the District on city provided services and ability to issue debt An impact of the District on police protection is expected. The City currently contracts with the Orono Police Department for police services. With any addition of new residents or businesses, police calls for service may be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment or require that the City expand its contract with the Orono Police Department. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $850,626; Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor ^ `- t Area 1-9 -34- (4) Estimated amount of tax increment attributable to county levies It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,807,455; (5) Additional information requested by the county or school district The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 1-15. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the HRA and City's findings: • Market Conditions Analysis and Recommendations for Downtown Mound, Minnesota Subsection 1-16. Definition of Tax Increment Revenues Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the authority with tax increments; 3. Principal and interest received on loans or other advances made by the authority with tax increments; 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and 6. The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 1-17. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the HRA or City; 5. Increase in the estimate of the cost of the District, including administrative expenses, that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the HRA or City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor " ' t Area 1-10 -35- of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 469, the geographic area of the District may be reduced, but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a housing district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 11 must be documented. The requirements of this paragraph do not apply if (1) the only modification is elimination of parcel(s) from the District and (2) (A) the current net tax capacity of the parcel(s) eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or (B) the HRA agrees that, notwithstanding M. S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parce](s) eliminated from the District. The HRA or City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 1-18. Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the HRA or City, other than: Amounts paid for the purchase of land; Amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the District; Relocation benefits paid to or services provided for persons residing or businesses located in the District; Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses (1) to (3). For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982, and before August 1, 2001, administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined inM.S, Section 469.174, Subd. 25, clause (1), from the District, whichever is less. Pursuant to MS., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits ofM.S., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently .36 Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor:t Area 1-11 -36- percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 1-19. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax incrementfnancingdistrietpursuanttoM.S., Section 469.177, nodemolition, rehabilitation or renovation ofproperty or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax incrementfnancing district by the authority or by the owner- of the parcel in accordance with the tax inerementfrnancing plan, no additional tax increment may be taken from that parcel, and the original net tax capacity of that parcel shall be excluded.frona the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or othersitepreparation on thatparcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax incrementftnancingplan, the authorityshall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions ofthis subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February I of the fifth yearfollowing the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The HRA or City or a property owner must improve parcels within the District by approximately May 2021 and report such actions to the County Auditor. Subsection 1-20. Use of Tax Increment The HRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: I . To pay the principal of and interest on bonds issued to finance a project; 2. To finance, or otherwise pay public redevelopment costs of the the Mound Harbor Project Area pursuant to M.S., Sections 469.001 to 469.047; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; 4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5. To pay principal and interest on any loans, advances or other payments made to or on behalf of the Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor37- I Area 1-12 - HRA or City or for the benefit of the Mound Harbor Project Area by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 4620 M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. Revenues derived from tax increment from a housing district must be used solely to finance the cost of housing projects as defined in M.S., Sections 469.174, Subd. 11 and 469.1761. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the HRA or City may be included in the cost of a housing project. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment Fund of said District. The HRA or City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, administration, and other costs eligible to be reimbursed with tax increment. Remaining increment funds will be used for HRA or City administration (up to 10 percent) and for the costs of public improvement activities outside the District. Subsection 1-21. Excess Increments Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the following: I. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The HRA or City must spend or return the excess increments under paragraph (c) within nine months after the end of the year. In addition, the HRA or City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in the Mound Harbor Project Area or the District. Subsection 1-22. Requirements for Agreements with the Developer The HRA or City will review any proposal for private development to detennine its conformance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the development with City plans and ordinances. The HRA or City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 10 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the NRA or City as a result Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor _38 t Area 1-13 of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 10 percent of the acreage, the HRA or City concluded an agreement for the development of the property acquired and which provides recourse for the HRA or City should the development not be completed. Subsection 1-23. Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8, the HRA or City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 1-24. Administration of the District Administration of the District will be handled by the City Finance Director/Clerk. Subsection 1-25. Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HRA or City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August l of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 1-26. Reasonable Expectations As required by the TIF Act, in establishing the District, the detennination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon HRA and City staff awareness of the feasibility of developing the project site(s) within the District. Subsection 1-27. Other Limitations on the Use of Tax increment General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay public redevelopment costs of the the Mound Harbor Project Area pursuant to MS., Sections 469.001 to 469.047. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Housing District Exceptions to Restriction on Pooling; Five Year Limit. Pursuant to M.S., Section Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor39- - I Area 1-14 - 469.1763, (1) At least 80% of the tax increment derived from the District must be expended on Public Costs incurred within said district, and up to 20% of said tax increments may be spent on public costs incurred outside of the District but within the Mound Harbor Project Area; provided that in the case of a housing district, a housing project, as defined in M.S., Section 469.174, Subd. 11, is deemed to be an activity in the District, even if the expenditure occurred after five years. Subsection 1-28. Summary The Housing and Redevelopment Authority of Mound, Minnesota is establishing the District to provide an impetus for residential development and provide safe and decent life cycle housing in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, telephone (651) 697-8500. Mound Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Mound Harbor — ' t Area 1-15 -40- Appendix A Project Description Harrison Bay Senior Living, LLC, intends to redevelop the parcels in the District into a mixed -income housing project with a total of 72 units, which includes 52 units of assisted living and 20 units of memory care. Fifteen of the units are anticipated to be affordable to households with incomes at or below 50% of area median income. The City intends to issue a PAYGO TIF Note to offset qualified costs related to the development of the site. Appendix -41- A"' Map of the Mound Harbor Project Area and the District Appendix g_1 -42- Harrison Bay Lake Langdon 7r- r Legend Mound Harbor TIF District Existing Mound Harbor District Project Area New Mound Harbor District Project Area Proposed Harrison Bay Senior Housing TIF District q H RI Im N A 0.725 0.25 Miles April 26, 2017 ITY F• 0 Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. Parcel Numbers Address Owner 14-117-24-14-0001 Unassigned Commerce Partnr of Mound LLC 14-117-24-14-0003 Unassigned Commerce Partnr of Mound LLC 14-117-24-14-0004 1861 Commerce Blvd Commerce Partnr of Mound LLC Appendix -44- c-1 '••- • M no Estimated Cash Flow for the District Appendix D-1 -45- Im r 0 0 0 0 0 0 0 0 0 0 0 0 O O O O t N Qt f 1 0t n O� 0 O l f J00" r" 0N O N O O 11 N N� 00 11: 1-: d Q y N _^ a E m U^R S a U aroa c m o.cooroaUoo�oomooro o w W SER ffl t0 N 0�� y�f9 �b4 fA E O tNtl NtLU N�ILUrE UXILOZ N U_ a a E m E E E m 'o = aNi W U U c Q Z 2 Q h n n h nrr 000000 N N N N N N T T T T T T t0 f6 f W l0 f0 aaaaaa 0 n v e :2mnrn myivo 0 0 0 00 N N O N Cf.p N N N N m T S a"C c _ m a Z X M E `o m a. > o 'mE o : m > o c 3 d m c LL U cm aci `o c O T E a a_ O d o 0 =0 U N 'in Q w h a N C O c 'ac Uo�'caK—tea .� a --m cOOoa x� �a x mS cam ami~ mous o d Qat- U�c~' "c°mai cJ a; ao oui"- co u m is E .3. a rnN E W � ooM aLL 3 is > l0 C 3 a a a N O N N C x x N u C , c V j C Y N H a a N F x F- a E C u N 2 a W N N x N 0 O� o y n.RN pmm2,.T-xmw an�u~o Z 0 �`o ��> F N N Z N N E J a amc `m Oct9 o`o Ni aia}SNE&E�OEyo N N G d a Y N_ N O •YC C r d N N N N U N N N j A t0 OOULLWS Ea -o GLLE L L2U nm Em gQiaN V � c 'rn A O x x N y N d �umaaa=a SUU U anhnrn 30 0 0 N N 101104 N c> m m m m m CM Y a a a a a o _ 0 0 0 0 0 =O O O O O 0 0 0 0 0 W M M rt L! 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Mromco, c�mCCC„CCCC�m��mmmromm���mmo O O O 00'- ^NNNNNNMMMMV 'NNNpO W W W— W W m m ^ O (p W W M M m O O W W to hW Wnnc s{m(r O hW W OO m m r n N NNNOOrr(O [D (D W rn mma V N MM tQ to W W (D N N (p ^ ^_ rP-� Qj V: .- �- O O m m al al O� rn^ �- e( V N W M M W W Ln M M t0 O W W N r n r n h r r W W W W W W W W mmmm rn rn 0 0 0 0 0 0 ^^^^- N N N N N N M M M S V O n O cD to W (D W N r W M N m 'n O to O to M N V m m V to W M O W W m M m tD W n •- h to M W ep o a o e o 0 0 o e o 0 0 0 o a M M M M M M M M M M M M M M M (D W W W tD fp (O (O c0 (O W W W (O W M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M N N N N ` N N N N N N N N M M M M M M M M M M M O W (0 (p tp (p (O (D O W O M HJ M M M M M M M M M eN- to N to O V O O m O r M M O m M W r (O W O (n O m rn N N N N M N h t0 N N M W W W M Q m O r O W s{ n O M (p to O N N M M� st V to N W W r W m O O N N e- ^ .- to to tC1 ltJ N in N N N N to N to (n (n (P � 4n N W N to N (� N N r n n r r h r n n n r n h r h r rr r r n r r r r n O O O O O O O O O O O O O O O O O O O C O O O O c O O O O O O W m to to V to N W W to � W M N M t0 O O O N V W M O m In M In m W to W W 0 N W M W O O ^ W Iq (p r W N W N m W W m N W r O R r• �- lC� m M N N r ^ (D fD N r M m to _ n ? O 1� 0 o e o 0 o e a o v o 0 0 0 0 0 0 0 o e o 0 o e o 0 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O I": Housing Qualifications for the District INCOME RESTRICTIONS �DiJSTrD,+►i'[L,S gats , No. of Persons 50% of Median Income 60% of Median Income I -person $31,650 $37,980 2 -person $36,200 $43,440 3 -person $40,700 $48,840 4 -person $45,200 $54,240 Source: Department of Housing and Urban Development and Minnesota Housing Finance Agency The two options for income limits on a standard housing district are 20% of the units at 50% of median income or 40% of the units at 60% of median income. There are no rent restrictions for a housing district. ***PLEASE NOTE: THESE NUMBERS ARE ADJUSTED ANNUALLY. ALL INCOME FIGURES REPORTED ON THIS PAGE ARE FOR 2017. Appendix -49- E"' Appendix F Findings for the District The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for the Harrison Bay Senior Housing Tax Increment Financing District, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: Finding that the Harrison Bay Senior Housing Tax IncrementFinancingDistriet is a housing district as defined in M.S., Section 469.174, Subd. 11. Harrison Bay Senior Housing TIF District consists of three parcels. The development will consist of a mixed -income housing project with a total of 72 units, which includes 52 units of assisted living and 20 units of memory care. All or a portion of which will receive tax increment assistance and will meet income restrictions described in M.S. 4691761. At least 20 percent of the units receiving assistance will have incomes at or below 50 percent of statewide median income. Appendix E of the TIF Plan contains background for the above finding. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonablyforeseeablefuture: This finding is supported by the fact that the development proposed in this plan is a housing district that meets the City's objectives for development and redevelopment. The cost of land acquisition, site and public improvements and utilities makes this housing development infeasible without City assistance. Due to the high costs of building affordable new housing in the City, the cost of financing the proposed public improvements, costs to include affordable housing, and the insufficiency of rents in an affordable housing development to provide a sufficient rate of return, this project is feasible only through assistance, in part, from tax increment financing. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. The increased market value of the site that could reasonably be expected to occur without the use of tax inerementfinancing would be less than the increase in market value estimated to resultfrom the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan: This finding is justified on the grounds that the cost of land acquisition, site and public improvements and utilities add to the total development cost. Historically, site development costs and reduced rents required for the affordable units in this area have made development infeasible without tax increment assistance. The City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. 3. Finding that the TIFPlan for the Harrison Bay Senior Housing Tax Increment Financing District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. Appendix F-1 -50- 4. Finding that the TIF Plan for Harrison Bay Senior Housing Tax Increment Financing District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Mound Harbor Project Area by private enterprise. Through the implementation of the TIF Plan, the HRA and the City will provide an impetus for affordable senior residential development, which is desirable or necessary for increased population and an increased need for life -cycle housing within the City. Appendix F_2 -51- HOUSING r REDEVELOPMENT AUTHORITY OF r FOR THE CITY OF i r MINNESOTA CITY OF i l HENNEPIN COUNTY STATE OF i i ki Wild i i DID, i i r WHEREAS, the City Council of the City of Mound, Minnesota (the "City") and the Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "HRA"), intend to establish the Harrison Bay Senior Housing Tax Increment Financing District (the "TIF District") within the Mound Harbor Project Area (the "Project"), and will adopt a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain improvements within the Project. WHEREAS, the HRA has determined to temporarily borrow funds from the City available for such purposes to use tax increments from the TIF District to pay for certain costs identified in the TIF Plan, which may include land/building acquisition, site improvements/preparation, utilities, other qualifying improvements, interest and administrative costs (collectively, the "Qualified Costs"). WHEREAS, under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or loan money from the City's general fund or any other fund from which such advances may be legally authorized, in order to finance the Qualified Costs. WHEREAS, the HRA intends to reimburse the City for the Qualified Costs from tax increments derived from the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "Interfund Loan"). WHEREAS, on the date hereof, the City Council of the City will consider a resolution approving the interfund loan from its general fund. NOW THEREFORE BE IT RESOLVED by the Board of Commissioners (the "Board") of the HRA as follows: The HRA hereby requests that the City provide it with an interfund loan in an amount up to $10,000, or so much thereof as may be paid as Qualified Costs, from any legally authorized HRA fund. The HRA shall reimburse the City for such advances together with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be 4% and will not fluctuate. 2. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on each August 1 and February 1 (each a "Payment Date"), commencing on the first Payment Date on -52- which the HRA has Available Tax Increment (defined below), or on any other dates determined by the Executive Director of the HRA, through the date of last receipt of tax increment from the TIF District. Payments on the Interfund Loan are payable solely from "Available Tax Increment," which shall mean, on each Payment Date, tax increment available after other obligations have been paid, or as determined by the Executive Director of the HRA, generated in the preceding six (6) months with respect to the property within the TIF District and remitted to the HRA by Hennepin County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfand loans secured in whole or in part with Available Tax Increment. 4. The principal sum and all accrued interest payable under this Interfund Loan are pre -payable in whole or in part at any time by the HRA without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Interfund Loan. 5. This Interfund Loan is evidence of an internal borrowing by the HRA in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or the City or any political subdivision thereof, including, without limitation, the HRA. Neither the State of Minnesota or the City, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The HRA shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 6. The HRA may amend the terms of this Interfund Loan at any time by resolution of the Board with approval of the City Council, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. Approved by the Board on May 23, 2017. ATTEST: Secretary -53- Chair HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF MOUND, MINNESOTA RESOLUTION NO. RESOLUTION APPROVING O. PRIVATEDEVELOPMENT HARRISONWITH WHEREAS, the City of Mound, Minnesota (the "City) and the Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "Authority") have approved the creation of Harrison Bay Senior Housing Tax Increment Financing District (the "TIF District"), a housing district, within the Mound Harbor Project Area (the "Redevelopment Project") located in the City and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project; and WHEREAS, Harrison Bay Senior Living, LLC, a Minnesota limited liability company (the "Developer"), has proposed to construct a 72 -unit senior rental housing facility, twenty percent (20%) of the units of which will be affordable to persons of low and moderate income (the "Minimum hnprovements"), on property within the TIF District (the "Development Property"); and WHEREAS, there has been presented before this Board of Commissioners of the Authority a Contract for Private Development (the "Agreement") proposed to be entered into between the Authority and the Developer, pursuant to which the Developer will agree to construct the Minimum Improvements and the Authority will agree to reimburse the Developer for a portion of public development costs related thereto with tax increment generated from the Development Property. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota that: 1. The Authority finds that the execution of the Agreement by the Authority and performance of the Authority's obligations thereunder are in the best interest of the City and its residents. 2. The Agreement is hereby authorized, approved, and confirmed in all respects and the Chair and Executive Director are hereby authorized and directed to execute and deliver the Agreement for and on behalf of the Authority in substantially the form now on file with the Authority but with such modifications as shall be deemed necessary, desirable or appropriate, their execution thereof to constitute such conclusive evidence of their approval of any and all modifications therein. 3. The Chair and the Executive Director are authorized and directed to execute and deliver any additional agreements, certificates or other documents that the Authority determines are necessary to carry out the intentions of this resolution and the Agreement. 499967v1 JAE MU195-36 -54- Approved by the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota this 23`d day of May, 2017. Chair ATTEST: Clerk 499967v] JAE MU195-36 -55- Second Draft May 18, 2017 m between Lei W1191 11 all)' i Divel 10fig 11001 i and ION .' Ill i Dated: , 2017 This document was drafted by: KENNEDY & GRAVEN, Chartered (JAE) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: 612-337-9300 -56- PREAMBLE.......................................................................................................................................1 ARTICLE I Definitions SectionI.1. Definitions.................................................................................................................... 3 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority................................................................................. 6 Section 2.2. Representations and Warranties by the Developer......................................................6 ARTICLE III Tax Increment Financing Assistance Section 3.1. Status of Development Property..................................................................................8 Section 3.2. Environmental Conditions............................................................................................ 8 Section 3.3. Reimbursement of Public Development Costs............................................................ 8 Section3.4. Issuance of Note........................................................................................................... 8 Section 3.5. Payment of Authority Costs......................................................................................... 9 Section3.6. Records.......................................................................................................................10 Section 3.7. Purpose of Assistance.................................................................................................10 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements...................................................................................11 Section 4.2. Construction Plans...................................................................................................... l 1 Section 4.3. Commencement and Completion of Construction.....................................................12 Section 4.4. Certificate of Completion...........................................................................................12 Section 4.5. Affordability Covenants; Qualification of TIF District.............................................13 Section 4.6. Affordability Housing Reporting...............................................................................13 ARTICLE V Insurance Section5.1. Insurance.....................................................................................................................15 Section5.2. Subordination..............................................................................................................16 498202v4 JAE MU 195-36 -57- ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent Taxes.............................................................................17 Section 6.2. Reduction of Taxes.....................................................................................................17 Section6.3. Qualifications..............................................................................................................17 ARTICLE VII Other Financing Section7.1. Generally.....................................................................................................................18 Section 7.2. Authority's Option to Cure Default in Mortgage.......................................................18 Section 7.3. Modification; Subordination......................................................................................18 Section7.4. Termination................................................................................................................18 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development ............................................... Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement........................................................ Section 8.3. Release and Indemnification Covenants....................................................................20 ARTICLE IX Events of Default Section 9.1. Events of Default Defined ..........................................................................................22 Section 9.2. Remedies on Default.................................................................................................. 22 Section 9.3. Termination or Suspension of Note...........................................................................23 Section 9.4. No Remedy Exclusive................................................................................................23 Section 9.5. No Additional Waiver Implied by One Waiver........................................................ 23 Section9.6. Attorneys' Fees...........................................................................................................23 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable ................................. 25 Section 10.2. Equal Employment Opportunity................................................................................25 Section 10.3. Restrictions on Use.....................................................................................................25 Section 10.4. Titles of Articles and Sections.................................................................................... 25 Section 10.5. Notices and Demands............................................................................................ 25 Section10.6. Counterparts................................................................................................................26 Section10.7. Recording....................................................................................................................26 Section10.8. Amendment................................................................................................................26 Section 10.9. Termination Agreement.............................................................................................26 498202v4 J.AE MU195-36 _58_ Section 10. 10. Authority Approvals .................................... Section 10.11. Estoppel Certificate.................................................................................................... 26 TESTIMONIUM...................................................................................................................... S-1 SIGNATURES...................................................................................................................... S-1 EXHIBIT A Development Property.................................................................................A-1 EXHIBIT B Authorizing Resolution................................................................................B-1 EXHIBIT C Certificate of Completion............................................................................0-1 EXHIBIT D Form of Investment Letter...........................................................................D-1 EXHIBIT E Affordable Housing Compliance Certificate .............................................. E-1 498202v4 JAE MU 195-36 -59- THIS CONTRACT FOR PRIVATE DEVELOPMENT, made as of the day of , 2017 (the "Agreement"), is between the HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF MOUND, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota (the "Authority"), and HARRISON BAY SENIOR LIVING, LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended (the "HRA Act"), and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Mound, Minnesota (the "City"); and WHEREAS, the City and the Authority have undertaken a program to promote economic development and job opportunities and to promote the development and redevelopment of land which is underutilized within the City, and in this connection created the Mound Harbor Project Area (the "Redevelopment Project") within the City pursuant to the HRA Act; and WHEREAS, pursuant to the HRA Act, the Authority is authorized to undertake certain activities to facilitate the development and redevelopment of real property by private enterprise and promote the development of affordable housing within the City; and WHEREAS, within the Redevelopment Project, the Authority and the City have created the Harrison Bay Senior Housing Tax Increment Financing District (the "TIF District"), a housing district, in order to facilitate the development of affordable senior housing within the City; and WHEREAS, the Developer has acquired certain property (the "Development Property") within the TIF District and construct a 72 -unit senior rental housing facility, twenty percent (20%) of the units of which will be affordable to persons of low and moderate income, as described herein (the "Minimum Improvements"); and WHEREAS, in order to achieve the objectives of the Redevelopment Plan (hereinafter defined) for the Redevelopment Project and make the Minimum Improvements economically feasible for the Developer to construct, the Authority is prepared to reimburse the Developer for a portion of the public development costs related to the Minimum Improvements; and WHEREAS, the Authority believes that the development of the Minimum Improvements within the TIF District pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State of Minnesota and local laws and requirements under which the Minimum Improvements has been undertaken and is being assisted. 498202x4 JAE MU 195-36 -60- NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: (The remainder of this page is intentionally left blank.) 498202A JAE MU195-36 -61- Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Administrative Costs" has the meaning give such term in Section 3.5 hereof. "Affordable Housing Compliance Period" means the period commencing on the date the Minimum Improvements are first occupied by tenants and ending on December 31" of the fifteenth year following initial occupancy of the Minimum Improvements. "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority of and for the City of Mound, Minnesota, a public body corporate and politic under the laws of the State. "Authority Representative" means the Executive Director of the Authority or any person designated by the Executive Director to act as the Authority Representative for the purposes of this Agreement. "Authorizing Resolution" means the resolution of the Authority, substantially in the form of the attached EXHIBIT B, adopted by the Board on May 23, 2017, approving this Agreement and authorizing the issuance of the Note. "Available Tax Increment" means, on each Payment Date, ninety percent (90%) of the Tax Increment attributable to the Development Property and paid to the Authority by the County in the six months preceding the Payment Date, Available Tax Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default under this Agreement. "Board" means the Board of Commissioners of the Authority. "Certificate of Completion" means the Certificate, in substantially the form attached hereto as EXHIBIT C, to be provided to the Developer pursuant to Section 4.4 hereof. "City" means the City of Mound, Minnesota. "Construction Plans" means the plans, specifications, drawings and related documents related to the Minimum Improvements, which (a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the City and are deemed consistent with the project and site development plans that were approved by the City as part of the land use and subdivision processes and (b) shall include at least the following: (1) site plan; (2) foundation plan; (3) floor plan for each floor; (4) cross-sections of each (length and 498202v4 JAE MU195-36 -62- width); (5) elevations (all sides, including a building materials schedule); (6) landscape and grading plan; and (7) such other plans or supplements to the foregoing plans as the City may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County" means Hennepin County, Minnesota. "Developer" means Harrison Bay Senior Living, LLC, a Minnesota limited liability company, or its permitted successors and assigns. "Development Property" means the real property described in EXHIBIT A attached hereto. "Event of Default" means an action by the Developer listed in Article IX hereof. "Holder" means the owner of a Mortgage. "NRA Act" means Minnesota Statutes, Sections 469.001 through 469.047, as amended. "Material Change" means a change in construction plans that adversely affects generation of tax increment or changes the number of units of rental housing. "Maturity Date" means the date that the Note has been paid in full or terminated in accordance with its terms, whichever is earlier. "Minimum Improvements" means the development on the Development Property of a senior rental housing facility containing 72 rental units (including approximately 52 assisted living units and 20 memory care units), at least twenty percent (20%) of which will be occupied by persons with incomes no greater than fifty percent (50%) of the area median household gross income within the County. "Mortgage" means any mortgage made by the Developer that is secured, in whole or in part, with the Development Property and that is a permitted encumbrance pursuant to the provisions of Article VII hereof. "Note" means a Tax Increment Revenue Note, substantially in the form contained in the Authorizing Resolution, to be delivered by the Authority to the Developer in accordance with Section 3.4 hereof. "Payment Date" has the meaning given such term in the Note. "Project Area" means the real property located within the boundaries of the Redevelopment Project, as described in the Redevelopment Plan. "Public Development Costs" means the costs related to land acquisition, soil remediation, demolition, site improvements and construction of the Minimum Improvements. 498202v4 JAE MU195-36 A -63- "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project approved and adopted by the Board and the City Council of the City. "Redevelopment Project" means the Mound Harbor Project Area. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes that is paid with respect to the TIF District and that is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 through 469.1794, as amended. "Tax Increment District" or "TIF District" means the Harrison Bay Senior Housing Tax Increment Financing District, a housing tax increment financing district created by the City and the Authority. "Tax Increment Plan" or "TIF Plan" means the Tax Increment Financing Plan for the TIF District, as approved by the City Council on May 23, 2017, and as it may be amended. "Tax Official" means any County assessor, County auditor, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Transfer" has the meaning set forth in Section 8.2(a) hereof. "Unavoidable Delays" means delays beyond the reasonable control of the parry seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority in exercising its rights under this Agreement), including without limitation condemnation or threat of condemnation of any portion of the Development Property, which directly result in delays. Unavoidable Delays shall not include delays experienced by the Developer in obtaining permits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 hereof, so long as the Construction Plans have been approved in accordance with Section 4.2 hereof. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU195-36 r -64- Representations and Warranties 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 housing and redevelopment authority organized and existing under the laws of the State. Under the provisions of the HRA Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority will use its best efforts to facilitate development of the Minimum Improvements, including but not limited to cooperating with the Developer in obtaining necessary administrative and land use approvals. (c) The Authority will issue the Note, subject to all the terms and conditions of this Agreement. (d) The Authority proposes to assist in financing the Public Development Costs necessary to facilitate the construction of the Minimum Improvements in accordance with the terms of this Agreement to further the objectives of the Redevelopment Plan. (e) The Authority finds that the Minimum Improvements are necessary to alleviate a shortage of, and maintain existing supplies of, decent, safe, and sanitary senior housing for persons of low or moderate income and their families as such income is determined by the Authority. (f) This Agreement has been duly executed and delivered by the Authority and such execution, delivery and performance by the Authority does not conflict with or result in a violation of any judgment, order, or decree of any court to which the Authority is a party or by which it is bound. This Agreement contains the valid and binding obligations of the Authority and is enforceable in accordance with its terms. Section 2.2. Representations and Warranties by the Developer. The Developer represents and warrants that: (a) The Developer is a limited liability company, which is duly organized and in good standing under the laws of the State; the Developer is not in violation of any provisions of its bylaws or operating agreement; and the Developer is duly authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution, delivery, and performance of this Agreement by proper action of its respective officers, directors, managers, governors or members (as applicable). (b) The Developer will construct the Minimum Improvements and cause the Minimum Improvements to be operated and maintained in accordance with the terms of this Agreement, the 498202v4 JAE MU 195-36 -65- Redevelopment Plan and all local, State and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (c) The Developer has received no notice or communication from any local, State or federal official that the activities of the Developer or the Authority in the Project Area may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware). The Developer is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, State or federal environmental law, regulation or review procedure. (d) The Developer will use its best efforts to obtain or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, State and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. The Developer did not obtain a building permit for any portion of the Minimum Improvements before May 23, 2017, the date of approval of the TIF Plan for the TIF District. (e) 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 corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing, which default or breach might prevent the Developer from performing its obligations under this Agreement. (f) The Developer shall promptly advise the Authority in writing of all litigation or claims affecting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Developer or its business which may delay or require changes in construction of the Minimum Improvements. (g) The Developer represents that no more than twenty percent (20%) of the square footage of the Minimum Improvements will consist of commercial, retail or other nonresidential use. (h) The Developer represents that each unit within the Minimum Improvements has facilities to cook (such as a microwave) and a bathroom. The Developer further represents that 24 hour nursing care will not be provided at the Minimum Improvements. (The remainder of this page is intentionally left blank.) 498202~4 JAE MU 195-36 -66- Tax Increment Financing Assistance Section 3.1. Status of Development Property. The Developer has acquired the Development Property, The Authority has no obligation to acquire the Development Property. Section 3.2. Environmental Conditions. (a) The Developer acknowledges that the Authority makes no representations or warranties as to the condition of the soils on the Development Property or the fitness of the Development Property for construction of the Minimum Improvements or any other purpose for which the Developer may make use of such property, and that the assistance provided to the Developer under this Agreement neither implies any responsibility by the Authority for any contamination of the Development Property nor imposes any obligation on such party to participate in any cleanup of the Development Property. (b) Without limiting its obligations under Section 8.3 hereof, the Developer further agrees that it will indemnify, defend, and hold harmless the Authority and its governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Development Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of the Authority under State or federal law, including without limitation Minnesota Statutes, Sections 466.04 and 604.02. Section 3.3. Reimbursement of Public Development Costs. The Developer has acquired the Development Property and shall take all action necessary to construct the Minimum Improvements. In order to make the development of the Minimum Improvements economically feasible, the Authority shall reimburse the Developer for Public Development Costs in the maximum amount of $930,000. Section 3.4. Issuance of Note. (a) Terms. In order to reimburse the Developer for a portion of the Public Development Costs related to constructing the Minimum Improvements on the Development Property, the Authority shall issue and Developer shall purchase the Note in the maximum principal amount of $930,000 in substantially the form set forth in EXHIBIT B. The Authority and the Developer agree that the Note shall be issued in consideration of the Developer paying the Public Development Costs related to the Minimum Improvements. Before delivery of the Note, the Developer shall have: (i) delivered to the Authority written evidence in a form satisfactory to the Authority that the Developer has paid Public Development Costs in at least the principal amount of the Note; 498202v4 JAE MU195-36 -67- (ii) submitted the Construction Plans to the Authority and obtained approval for the Construction Plans from the Authority; (iii) obtained approval of the final plat for the Development Property; (iv) submitted evidence that the Developer has obtained financing in accordance with Section 7.1 hereof, and (v) delivered to the Authority an investment letter in a form set forth in EXHIBIT D attached hereto. (b) Termination of Right to Note. Notwithstanding anything to the contrary in this Agreement, if the conditions for delivery of the Note are not met by December 31, 2019, the Authority may terminate the Note and this Agreement by thirty (30) days' written notice to the Developer. Thereafter, unless the conditions have been met within said thirty (30) day period, neither party shall have any obligations or liability to the other hereunder, except that any obligations of the Developer under Sections 3.5 and 8.3 hereof survive such termination. (c) Qualifications. The Developer understands and acknowledges that the Authority makes no representations or warranties regarding the amount of Available Tax Increment, or that revenues pledged to the Note will be sufficient to pay the principal and interest on the Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Developer may rely. If the Public Development Costs exceed the principal amount of the Note, such excess is the sole responsibility of Developer. (d) The Authority acknowledges that the Developer may assign the Note to any lender that provides part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority consents to such assignment, conditioned upon receipt of an investment letter from such lender in substantially the form set forth in EXHIBIT D attached hereto. Section 3.5. Payment of Authority Costs. The Developer has deposited with the Authority $25,000 to pay Administrative Costs. The Authority will use such deposit to pay "Administrative Costs," which term means out-of-pocket costs incurred by the Authority, together with staff and consultant costs of the Authority, all attributable to or incurred in connection with the negotiation, preparation or modification of this Agreement, the TIF Plan, and other documents and agreements in connection with the establishment of the TIF District and development of the Development Property, and not previously paid by the Developer. At the Developer's request, but no more often than monthly, the Authority will provide the Developer with a written report including invoices, time sheets or other comparable evidence of expenditures for Administrative Costs and the outstanding balance of funds deposited. At any time the deposit drops below $1,000, the Developer shall replenish the deposit to $5,000 within thirty (30) days after receipt of written notice thereof from the Authority. If at any time the Authority determines that the deposit is insufficient to pay Administrative Costs, the Developer is obligated to pay such shortfall within fifteen (15) days after 498202v4 JAE MU195-36 -68- receipt of a written notice from the Authority containing evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be incurred, are less than the deposit by the Developer, the Authority shall return to the Developer any funds not anticipated to be needed. Section 3.6. Records. The Authority and its representatives shall have the right at all reasonable times after reasonable notice to inspect, examine and copy all books and records of Developer relating to the Minimum Improvements and the costs for which the Developer has been reimbursed with Tax Increment, Section 3.7. Purpose of Assistance. The parties agree and understand that the purpose of the Authority's financial assistance to the Developer is to facilitate development of affordable residential senior rental housing for persons of low and moderate income, and is not a "business subsidy" within the meaning of Minnesota Statutes, Sections 1161.993 to 1161.995, as amended. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU195-36 -69- Construction of Minimum Improvements Section 4.1. Construction of Improvements. The Developer agrees that it will construct the Minimum Improvements on the Development Property substantially in accordance with the approved Construction Plans and at all times prior to the Maturity Date will cause the Minimum Improvements to be operated and maintained, preserved and kept with the appurtenances and every part and parcel thereof in good repair and condition. Section 4.2. Construction Plans. (a) Before commencing construction of the Minimum Improvements, the Developer shall submit to the Authority Representative the Construction Plans for the Minimum Improvements. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in substantial conformity with the Redevelopment Plan, this Agreement, the project and site development plans that received City approval as part of the land use and subdivision processes and all applicable State and local laws and regulations. The Authority Representative will approve the Construction Plans in writing if- (i) the Construction Plans conform to all terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, State and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds available to the Developer from all sources (including the Developer's equity) for construction of the Minimum Improvements; and (vi) no Event of Default has occurred and is continuing. Approval may be based upon a review by the City's building official of the Construction Plans. No approval by the Authority Representative shall relieve the Developer of the obligation to comply with the terms of this Agreement or of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority Representative shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority Representative, in whole or in part. Such rejections shall set forth in detail the reasons therefor, and shall be made within ten (10) days after the date of their receipt by the Authority. Failure by the Authority Representative to reject the Construction Plans in said ten (10) day period shall constitute approval of such Construction Plans. If the Authority Representative rejects any Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within ten (10) days after written notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority Representative's approval shall not be unreasonably withheld, delayed or conditioned. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. 498202v4 JAE MU195-36 -70- (b) If the Developer desires to make any Material Change in the Construction Plans or any component thereof after their approval by the Authority, the Developer shall submit the proposed change to the Authority for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 with respect to such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be made within ten (10) days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans will not be unreasonably withheld or conditioned. (c) The requirements of this Section 4.2 do not have any effect on the City's general planning process and the timelines for submitting various planning and land use applications. The Developer shall be responsible for obtaining all required land use and related approvals arising out of any substantial changes to the project or site plans proposed by the Developer. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements by December 31, 2017. Subject to Unavoidable Delays, the Developer shall complete the construction of the Minimum Improvements by December 31, 2019, or if the Minimum Improvements are substantially complete by December 31, 2019 (all work has been completed except for inside finishings), then such later date mutually agreed to by the parties to this Agreement. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in substantial conformity with the Construction Plans as submitted by the Developer and approved by the Authority. The Developer agrees for itself, its successors, and assigns, and every successor in interest to the Development Property, or any part thereof, that the Developer, and such successors and assigns, shall promptly begin and diligently prosecute to completion the development of the Development Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Section 4.3. After the date of this Agreement and until construction of the Minimum Improvements has been completed, the Developer shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Developer with respect to such construction. Section 4.4. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of the Developer to construct the Minimum Improvements (including the dates for beginning and completion thereof), the Authority Representative will furnish the Developer with a Certificate of Completion shown as EXHIBIT C attached hereto promptly following submittal of a written request to the Authority Representative from the Developer. 498202v4 JAE MU 195-36 ^ -71- (b) If the Authority Representative shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4, the Authority Representative shall, fifteen (15) days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the Authority, for the Developer to take or perform in order to obtain such certification. (c) Regardless of whether a Certificate of Completion is issued by the Authority, the construction of the Minimum Improvements shall be deemed to be complete upon issuance of a certificate of occupancy by the City. Section 4.5. Affordability Covenants; Qualification of TIF District. The Authority and the Developer understand and agree that the TIF District constitutes a "housing district' under Section 469.174, subdivision 11 and Section 469.1761 of the TIF Act. In that regard, the Developer agrees that the Minimum Improvements are subject to the following affordability covenants: (a) During the Affordable Housing Compliance Period, the Minimum Improvements must comply with Section 469.176 1, subdivision 3 of the TIF Act, which requires that the Minimum Improvements satisfy the income requirements for a qualified residential rental project as defined in Section 142(d) of the Internal Revenue Code. Those income requirements are either (i) twenty percent (20%) or more of the residential units are occupied by individuals whose income is fifty percent (50%) or less of the area median gross income, or (ii) forty percent (40%) or more of the residential units are occupied by individuals whose income is sixty percent (60%) or less of the area median gross income. (b) In consideration of the financial assistance provided by this Agreement (from tax increment), the Developer represents and covenants that during the Affordable Housing Compliance Period, at least twenty percent (20%) of the units in the Minimum Improvements shall be available for occupancy by individuals or families whose income is fifty percent (50%) or less of the area median gross income. The Developer further represents that of the fifteen (15) affordable units, four (4) of the affordable units will be memory care units and eleven (11) of the affordable units will be assisted living units. (c) If the Authority receives notice from the State Department of Revenue, the State Auditor, any Tax Official or any court of competent jurisdiction that the TIF District does not qualify as a "housing district," such event shall be deemed an Event of Default under this Agreement; provided, however, that the Authority may not exercise any remedy under this Agreement so long as such determination is being contested and has not been finally adjudicated. In addition to any remedies available to the Authority under Article IX hereof, the Developer shall indemnify, defend and hold harmless the Authority for any damages or costs resulting therefrom. (d) The Developer understands that if the Developer does not comply with the affordability covenants in this Section 4.5, the TIF Act requires the Authority to decertify the TIF District. 498202v4 JAE MU195-36 -72- Section 4.6. Affordable Housing Reporting. At least annually, no later than April 1 of each year commencing on the April 1 first following the issuance of the Certificate of Completion, the Developer shall provide a report to the Authority evidencing that the Developer complied with the income and rent affordability covenants set forth in Section 4.5 hereof during the previous calendar year. The report shall include the compliance certificate set forth in EXHIBIT E and the income form entitled "Tenant Income Certification" from the Minnesota Housing Finance Agency (MHFA HTC Form 14), or if unavailable, any similar form. The Authority may require the Developer to provide additional information in order to access the accuracy of such certification. Unless earlier excused by the Authority, the Developer shall send affordable housing reports to the Authority through the Affordable Housing Compliance Period. The Authority is not obligated to notify the Developer of this reporting requirement. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU 195-36 -73- Insurance Section 5.1. Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority 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 Minimum Improvements 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 Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority, (ii) comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Protective Liability 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); the Authority shall be listed as an additional insured on the policy; and (iii) workers' compensation insurance, with statutory coverage; provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (b) Upon completion of construction of the Minimum Improvements and prior to the Maturity Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) insurance against loss and/or damage to the Minimum Improvements 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 Authority as an additional insured; and (iii) such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided 498202v4 JAE MU195-36 -74- that the Developer may 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 Developer that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the Authority 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, 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 Developer and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Developer agrees to notify the Authority immediately in the case of damage exceeding $1,000,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Developer will promptly cause the repair, reconstruction and restoration of the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the net proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. The Developer shall cause to be completed the repair, reconstruction and restoration of the Minimum Improvements, regardless of whether the net proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction and restoration shall be the property of the Developer or its assignee (e) The Developer and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. Section 5.2. Subordination. Notwithstanding anything to the contrary contained herein, the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all respects, be subject and subordinate to the rights of any Holder under a Mortgage allowed pursuant to Article VII hereof. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU195-36 . -75- Tax Increment, Taxes Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is providing substantial aid and assistance in furtherance of the development through the issuance of the Note. The Developer understands that the Tax Increments pledged to payment on the Note are derived from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements. The Developer acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney fees. Nothing in this Agreement in any way limits or prevents the Developer from contesting the assessor's proposed market values for the Development Property or the Minimum Improvements, but the Developer recognizes that such action may affect the amount of Available Tax Increment. Section 6.2. Reduction of Taxes. The Developer may seek through petition or other means to have the assessor's estimated market value for the Development Property reduced. Until the Note is fully paid, such activity must be preceded by written notice from the Developer to the Authority indicating its intention to do so. Upon receiving such notice, or otherwise learning of the Developer's intentions, the Authority may suspend payments due under the Note until the actual amount of the reduction is determined, whereupon the Authority will make the suspended payments less any amount that the Authority is required to repay the County as a result any reduction in market value of the Development Property. During the period that the payments are subject to suspension, the Authority may make partial payments on the Note if it determines, in its sole and absolute discretion that the amount retained will be sufficient to cover any repayment which the County may require. The Authority's suspension of payments on the Note pursuant to this Section shall not be considered a default under Section 9.1 hereof. Section 6.3. Qualifications. Notwithstanding anything herein to the contrary, the parties acknowledge and agree that upon Transfer of the Development Property to another person of entity, the Developer will remain obligated under Sections 6.1 and 6.2 hereof, unless the Developer is released from such obligations in accordance with the terms and conditions of Section 8.2(b) or 8.3 hereof. 498202v4 JAE MU195-36 -76- Other Financing Section 7.1. Generally. Before issuance of the Note, the Developer shall submit to the Authority or provide access thereto for review by Authority staff, consultants, and agents, evidence reasonably satisfactory to the Authority that Developer has available funds, or commitments to obtain funds, whether in the nature of mortgage financing, equity, grants, loans, or other sources sufficient for paying the cost of the developing the Minimum Improvements, provided that any lender or grantor commitments shall be subject only to such conditions as are normal and customary in the commercial lending industry. Section 7.2. Authority's Option to Cure Default on Mortgage. In the event that any portion of the Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage authorized pursuant to this Article VII, the Developer shall make commercially reasonable efforts to cause the Authority to receive copies of any notice of default received by the Developer from the Holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Developer within such cure periods as are available to the Developer under the Mortgage documents. Section 7.3. Modification; Subordination. In order to facilitate the Developer obtaining financing for the development of the Minimum Improvements, the Authority agrees to subordinate its rights under this Agreement to the Holder of any Mortgage securing construction or permanent financing, under terns and conditions reasonably acceptable to the Authority. Any agreement to subordinate this Agreement must be approved by the Board of the Authority. Section 7.4. Termination. All the provisions of this Article VII shall terminate with respect to the Minimum Improvements upon delivery of the Certificate of Completion for the Minimum Improvements. The Developer or any successor in interest to the Minimum Improvements or portion thereof, may sell, assign, transfer or engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum Improvements or any portion thereof for which a Certificate of Completion has been obtained, without obtaining prior written approval of the Authority, provided that such sale, financing or other transaction creating a mortgage or encumbrance shall not be deemed as resulting in any subordination of the Authority's rights under this Agreement unless the Authority expressly consents to such a subordination. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU195-36 -77- Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development. The Developer represents and agrees that its purchase of the Development Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property and not for speculation in land holding. Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement. The Developer represents and agrees that prior to issuance of a Certificate of Completion for the Minimum Improvements: (a) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to undertaking the development contemplated under this Agreement, and any other purpose authorized by this Agreement, the Developer 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 lease, 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, to any person or entity whether or not related in any way to the Developer (collectively, a "Transfer"), without the prior written approval of the Authority (whose approval will not be unreasonably withheld, conditioned or delayed, subject to the standards described in paragraph (b) of this Section) unless the Developer remains liable and bound by this Agreement in which event the Authority's approval is not required. Any such Transfer shall be subject to the provisions of this Agreement. For the purposes of this Agreement, the term Transfer does not include acquisition of a controlling interest in Developer by another entity or merger of Developer with another entity. (b) In the event the Developer, upon Transfer of the Development Property or any portion thereof, seeks to be released from its obligations under this Agreement as to the portion of the Development Property that is transferred or assigned, the Authority shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer as to the portion of the Development Property to be transferred. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Developer under this Agreement as to the portion of the Development Property and Minimum Improvements to be transferred and agreed to be subject to all the conditions and restrictions to which the Developer is subject as to such portion; provided, however, that the fact that any transferee 498202v4 JAE MU195-36 i6- of, or any other successor in interest whatsoever to, the Development Property and Minimum Improvements, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Development Property, the Minimum Improvements or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Development Property, the Minimum Improvements or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally, or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Development Property and Minimum Improvements that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Developer, or any other party bound in any way by this Agreement or otherwise with respect to the Development Property and Minimum Improvements, from any of its obligations with respect thereto. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII shall be in a form reasonably satisfactory to the Authority. In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned, or otherwise conveyed. The restrictions under this Section terminate upon issuance of the Certificate of Completion. Section 8.3. Release and Indemnification Covenants. (a) The Developer releases from and covenants and agrees that the Authority and the governing body members, officers, agents, servants, and employees thereof (the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Development Property or the Minimum Improvements. (b) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Developer agrees to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action, or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance, and operation of the Development Property. 498202v4 JAE MU 195-36 ^ -79- (c) The Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants, or employees or any other person who may be about the Development Property or Minimum Improvements. (d) All covenants, stipulations, promises, agreements, and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements, and obligations of such entity and not of any governing body member, officer, agent, servant, or employee of such entities in the individual capacity thereof. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU195-36 -80- Events of Default Section 9.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, any one or more of the following events: (a) If the Developer or the Authority fails to observe or perform any covenant, condition, obligation, or agreement on its part to be observed or performed under this Agreement. (b) If a receiver, trustee or liquidator of the Developer, or of the Development Property is appointed in any proceeding brought against the Developer or involving the Development Property, and is not discharged within ninety (90) days after such appointment, of if the Developer consents or acquiesces to such appointment; or (c) If the Developer shall: (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law; or (ii) make an assignment for benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated a bankrupt or insolvent. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 hereof occurs, the non -defaulting party may exercise its rights under this Section 9.2 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 (30) 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: (a) Suspend its performance under the Agreement until it receives reasonably satisfactory assurances that the defaulting party will cure its default and continue its performance under the Agreement. (b) Upon a default by the Developer, the Authority may suspend payments under the Note or terminate the Note and the TIF District, subject to the provisions of Section 9.3 hereof. (c) 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 498202v4 JAE MU195-36 ^^ -81- performance and observance of any obligation, agreement, or covenant of the Developer or the Authority under this Agreement. Section 9.3. Termination or Suspension of Note. After the Authority has issued its Certificate of Completion for the Minimum Improvements, the Authority may exercise its rights under Section 9.2(c) hereof only for the following Events of Default: (a) if the Developer fails to pay real estate taxes or assessments on the Development Property or any part thereof when due, and such taxes or assessments shall not have been paid, or provision satisfactory to the Authority made for such payment, within thirty (30) days after written demand by the Authority to do so; or (b) if the Developer fails to comply with Developer's obligation to cause such improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition, pursuant to Sections 4.1 and 5.1(d) hereof, provided that, upon Developer's failure to comply with Developer's obligations under Sections 4.1 or 5.1(d) hereof, if uncured after thirty (30) days' written notice to the Developer of such failure, the Authority may only suspend payments under the Note until such time as Developer complies with said obligations. If the Developer fails to comply with said obligations for a period of eighteen (18) months, the Authority may terminate the Note and the TIF District; or (c) if the Developer fails to comply with the income restrictions or to deliver annual rent and income reports as provided in Sections 4.5 and 4.6 hereof, provided that, upon the Developer's failure to provide annual reports, if uncured after thirty (30) days' written notice to the Developer of such failure, the Authority may only suspend payments under the Note until such time as the Developer delivers said reports. If the Developer fails to deliver rent and income reports for a period of six months following the date such reports are due after written notice to the Developer of such failure, the Authority may terminate the Note and the TIF District. Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to any party 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 Authority 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 IX. Section 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 9.6. Attorneys' Fees. Whenever any Event of Default occurs and if the Authority or the Developer shall employ attorneys or incur other expenses for the collection of payments due 498202v4 JAE MU195-36 -82- or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Developer or the Authority under this Agreement, the non -prevailing party or parties in any such action agrees that it shall, within ten (10) days of written demand by the prevailing party or parties, pay to the prevailing party or parties the reasonable fees of such attorneys and such other reasonable expenses so incurred. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU 195-36 -83- Additional Provisions Section 10.1. Conflict of Interests, Representatives Not Individually Liable. The Authority and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement that affects his personal interests or the interests of any corporation, partnership, or association in which he, directly or indirectly, is interested. No member, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority for any amount that may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 10.3. Restrictions on Use. The Developer agrees that, until the end of the Affordable Housing Compliance Period, the Developer, and such successors and assigns, shall use the Development Property solely for the development of residential rental housing in accordance with the terms of this Agreement, and 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 Development Property or any improvements erected or to be erected thereon, or any part thereof. Section 10.4. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 1.0.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the 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, to the following addresses (or to such other addresses as either party may notify the other): To the Developer: Harrison Bay Senior Living, LLC c/o Trident Development, LLC 3601 Eighteenth Street South St. Cloud, MN 56301 Attn: Roger Fink 498202v4 JAE MU195-36 - - -84- To the Authority: Housing and Redevelopment Authority of and for the City of Mound, Minnesota 2415 Wilshire Boulevard Mound, MN 55364 Attn: Executive Director Section 10.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.7. Recording. The Authority may record this Agreement and any amendments thereto with the County recorder or registrar of titles, as applicable. The Developer shall pay all costs for recording. Section 10.8. Amendment. This Agreement may be amended only by written agreement approved by the Authority and the Developer. Section 10.9. Termination of Agreement. This Agreement shall terminate at the earlier of the (i) end of the Affordable Housing Compliance Period and (ii) a termination pursuant to Article IX hereof. Section 10.10. AuthorityApprovals. Unless otherwise specified, any approval required by the Authority under this Agreement may be given by the Authority Representative, except that final approval of issuance of the Note shall be made by the Board of the Authority. Section 10.11. Estoppel Certificate. Each party, respectively, agrees that at any time and from time to time within ten (10) business days after receipt of a written request by the other party, to execute, acknowledge and deliver to such party a statement in writing and in such form as will enable it to be recorded in the proper office for the recordation of deeds and other instruments certifying (a) that this Agreement is unmodified and in full force and effect or, if there have been modifications, that the same are in full force and effect as modified and identifying the modifications; (b) that no party is in default under any provisions of this Agreement or, if there has been a default, the nature of such default; (c) that all work to be performed, under this Agreement or any related agreement, has been performed or, if not so performed, specifying the work to be performed; and (d) as to any other matter that the requesting party or a prospective mortgagee or other lender shall reasonably request. It is intended that any such statement may be relied upon by any person, prospective mortgagee of, or assignee of any mortgage, upon such interest. Any such statement on behalf of the Authority may be executed by the Executive Director of the Authority without Board approval. (The remainder of this page is intentionally left blank.) 498202v4 JAE MU 195-36 - -85- IN WITNESS WHEREOF, the Authority and the Developer have caused this Contract for Private Development to be duly executed by their duly authorized representatives as of the date first above written. Lei e I 1101 By Its Chair By Its Executive Director STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2017, by Mark Wegscheid, the Chair of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) } SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2017, by Eric Hoversten, the Executive Director of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public 498202v4 JAE MU195-36 -86- Execution page of the Developer to the Contract for Private Development, dated as of the date and year first written above. Its STATE OF MINNESOTA ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2017, by , the of Harrison Bay Senior Living, LLC, a Minnesota limited liability company, on behalf of the Developer. Notary Public 498202v4 JAE MU195-36 r -87- M Lot 1, Block 1, Dutch Lake Preserve, Hennepin County, Minnesota 498202v4 JAE MU195-36 -88- HOUSING/ REDEVELOPMENT AUTH „i !' I ! OF t FOR THE CITY OF MOUND, MINNESOTA BE IT RESOLVED BY the Board of Commissioners (the `Board") of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "Authority"), as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority and the City of Mound, Minnesota (the "City") have heretofore approved the establishment of the Harrison Bay Senior Living Tax Increment Financing District (the "TIF District"), a housing district, within the Mound Harbor Project Area (the "Redevelopment Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the TIF District. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note, Series 2017 (the "Note"), in the aggregate principal amount of $930,000, for the purpose of financing certain public development costs of the TIF District. 1.02. Agreement Approved; Issuance Sale and Terms of the Note. The Authority hereby approves the Contract for Private Development (the "Agreement") between the Authority and Harrison Bay Senior Living, LLC, a Minnesota limited liability company (the "Owner"), and authorizes the Chair and the Executive Director to execute such Agreement in substantially the form on file with Authority, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with Section 3.4 of the Agreement. The Note shall be sold to the Owner. The Note shall be dated the date of delivery 498202v4 JAE MU 195-36 -89- thereof and shall bear interest at the rate of 3.5% per annum to the earlier of maturity or prepayment. In exchange for the Authority's issuance of the Note to the Owner, the Owner shall pay certain Public Development Costs (as defined in the Agreement) related to the Minimum Improvements (as defined in the Agreement) pursuant to Section 3.3 of the Agreement. The Note will initially be delivered in the principal amount of $930,000 for Public Developments Costs in accordance with the terms of Section 3.4 of the Agreement. Section 2. Form of Note. The Note shall be in substantially the form set forth in SCHEDULE A with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue. Section 3. Terms, Execution and Delivery. 3.01. Denomination, PaMent. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates, Interest Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the Executive Director of the Authority to perforin the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggegate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. 498202v4 JAE MU195-36 - - -90- (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its Chair and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. Available Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Schedule A of this resolution. 498202v4 JAE MU195-36 -91- 4.02. Available Tax Increment. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall account for Available Tax Increment separately and use such funds for no purpose other than the payment of the principal of and interest on the Note. Any Available Tax Increment remaining after the Note is paid in full may be used for any eligible cost. Section 5. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted by the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota, this 23Td day of May, 2017. Chair Clerk 498202v4 JAE 1,IU195-36 - -92- No. R-1 UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF MOUND, MINNESOTA TAX INCREMENT REVENUE NOTE SERIES 20_ Date Rate of Original Issue 3.5% , 20 The Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "Authority"), for value received, certifies that it is indebted and hereby promises to pay to Harrison Bay Senior Living, LLC, or registered assigns (the "Owner"), the principal sum of $ and to pay interest thereon at the rate of 3.5% per annum, as and to the extent set forth herein. 1. Pa, ents. Principal and interest ("Payments") shall be paid for a ten-year period commencing on August 1, 20_, and each February 1 and August 1 thereafter to and including February 1, 20_ (the "Payment Dates"), in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the date of issue through and including February 1, 20_ shall be compounded semiannually on February 1 and August 1 of each year and added to principal. Payments are payable by mail to the adchess of the Owner or such other address as the Owner may designate upon thirty (30) days' written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. Payments on this Note are payable on each Payment Date solely from and in the amount of "Available Tax Increment," which shall mean, on each Payment Date, ninety percent (90%) of the Tax Increment attributable to the Development Property (defined 498202v4 JAE MU 195-36 -93- in the Agreement) and paid to the Authority by Hennepin County, Minnesota in the six months preceding the Payment Date, all as such terms are defined in the Contract for Private Development between the Authority and the Owner, as the developer, dated , 2017 (the "Agreement"). Available Tax Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default under the Agreement. The Authority shall have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay the unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 20_. 4. Default. If on any Payment Date there has occurred and is continuing any Event of Default under the Agreement, the Authority may withhold from payments hereunder under all Available Tax Increment. If the Event of Default is thereafter cured in accordance with the Agreement, the Available Tax Increment withheld under this Section shall be deferred and paid, without interest thereon, on the next Payment Date after the Event of Default is cured. If the Event of Default is not timely cured, the Authority may terminate this Note by written notice to the Owner in accordance with the Agreement. 5. Optional Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 6. Termination. At the Authority's option, this Note shall terminate and the Authority's obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of Default on the part of the Developer as defined in Section 9.1 of the Agreement, but only if the Event of Default has not been cured in accordance with Section 9.2 of the Agreement. 7. Nature of Obligation. This Note is the sole note of an issue in the total principal amount of $930,000 all issued to aid in financing certain public development costs of a housing development undertaken pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution (the "Resolution") duly adopted by the Authority on May 23, 2017, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.1794, as amended. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision 498202v4 JAE MU 195-36 -94- thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 8. Estimates of Available Tax Increment. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the Available Tax Increment and the Agreement are for the benefit of the Authority only and are not intended as representations on which the Developer may rely. THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THIS NOTE. 9. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the Executive Director of the Authority, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer- or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota have caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. L911jolAUT1101el 0 - is Chair Executive Director 498202v4 JAE MU 195-36 r -95- The ownership of the unpaid balance of the within Note is registered in the bond register of the Executive Director, in the name of the person last listed below. Date of Registration Registered Owner Signature of Executive Director Harrison Bay Senior Living, LLC Federal ID # 498202v4 JAX- MU 195-36 -96- WA• The undersigned hereby certifies that Harrison Bay Senior Living, LLC (the "Developer"), has fully complied with its obligations under Articles III and IV of that document titled "Contract for Private Development," dated , 2017 (the "Agreement"), between the Housing and Redevelopment Authority of and for the City of Mound, Minnesota and the Developer, with respect to construction of the Minimum Improvements in accordance with Article IV of the Agreement, and that the Developer is released and forever discharged from its obligations with respect to construction of the Minimum Improvements under Articles III and IV of the Agreement. The Minimum Improvements were first occupied on _, 20—. The Affordable Housing Compliance Period will end on December 31, 20—. Dated: 20—. HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF MOUND, MINNESOTA By Its 'Executive Director STATE OF MINNESOTA SS. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this — day of _, 20 by , the Executive Director of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public This instrument was drafted by: Kennedy & Graven, Chartered (JAE) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 498202v4 JAE MU195-36 -97- To the Housing and Redevelopment Authority of and for the City of Mound, Minnesota Attention: Executive Director Dated: , 20 Re: Tax Increment Revenue Note, Series 20_, in the original aggregate principal amount of $930,000 The undersigned, as purchaser of $930,000 in principal amount of the above -captioned Tax Increment Revenue Note, Series 20_ (the "Note"), approved pursuant to Resolution No. , adopted by the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of Mound, Minnesota (the "Authority") on May 23, 2017 (the "Resolution"), hereby represent to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, as special counsel to the Authority, as follows: 1. We understand and acknowledge that the Note is delivered to the Purchaser on this date pursuant to the Resolution and the Contract for Private Development, dated , 2017 (the "Agreement"), between the Authority and Harrison Bay Senior Living, LLC, a Minnesota limited liability company. 2. The Note is payable as to principal and interest solely from Available Tax Increment pledged to the Note, as defined therein. 3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above -stated principal amount of the Note. 4. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 5. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Authority, the Note and the security therefor, and that as reasonable investors we have been able to make our decision to purchase the above -stated principal amount of the Note. 498202v4 JAE MU195-36 -- -98- 6. We have been informed that the Note (i) is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, or under federal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. i. We acknowledge that the Authority and Kennedy & Graven, Chartered, as special counsel to the Authority, have not made any representations or warranties as to the status of interest on the Note for the purpose of federal or state income taxation. 8. We represent to you that we are purchasing the Note for our own accounts and not for resale or other distribution thereof, except to the extent otherwise provided in the Note, the Resolution, or any other resolution adopted by the Authority. 9. All capitalized terms used herein have the meaning provided in the Agreement unless the context clearly requires otherwise. 10. The Purchaser's federal tax identification number is 11. We acknowledge receipt of the Note on the date hereof (The remainder of this page is intentionally left blank.) 498202v4 JAE MU 195-36 r -99- IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the date and year first written above. Its 498202v4 JAE MU 195-36 -100- The undersigned officer of Harrison Bay Senior Living, LLC (the "Developer"), does hereby certify that as of the date of this Certificate not less than twenty percent (20%) of the residential units in the Harrison Bay Senior Living Project located at in Mound, Minnesota (the "Project"), referred to as the "Minimum Improvements" in the Contract for Private Development, dated , 2017, between the Housing and Redevelopment Authority of and for the City of Mound, Minnesota and the Developer are occupied by individuals whose income is fifty percent (50%) or less of the area median gross income. The undersigned officer of the Developer further represents that of the fifteen (15) affordable units, four (4) of the affordable units are memory care units and eleven (11) of the affordable units are assisted living units. Attached hereto are the vacancy rate and the income verifications used to establish the above conclusions broken down by unit type and size. Dated this day of , 20 By Its 498202v4 JAE MU195-36 -iQ1-