2004-01-29AGENDA
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
January 29, 2004
7:00 P.M.
Open Meeting
Discussion/Action on Term Sheet for Mound Harbor Renaissance
Page
3. Discussion/Action on Custer Purchase and License Agreements
4. Adjourn
o
o
o
o
CITY OF MOUND
MOUND HARDOR RENAISSANCE REDEVELOPMENT PROJECT
SUMMARY OF FINANCIAL TERMS [Ehlers & Associates]
Project is in three phases:
Phase I: Lost Lake
Phase II: Auditors Road
Phase III: Langdon Lake
After the Phase I is complete, the developer can decide not to commence Phase II if they
believe it is not feasible. If they chose not to commence Phase II they will not get the
Phase I development fee (estimated to be over $550,000), any additional profit estimated
to be over $770,000), or any Phase I tax increment (estimated to be over $2,3000,000).
All of the above will be available to the HRA to complete Phases II and III.
After Phase I is complete and the developer commences Phase II, the city will issue Tax
Exempt General Obligation Special Assessment-Tax Increment bonds for public
improvements including parking ramps. These bonds will have first call on all tax
increment and will not be issued unless project will generate sufficient tax increment to
pay annual debt service.
After Phase I is complete and the developer commences Phase II, the HRA will issue Tax
Increment Revenue (non recourse to the HRA or City) bonds to pay for qualified
redevelopment costs.
After the Phase II is complete, the developer can decide not to commence Phase III if
they believe it is not feasible. If they chose not to commence Phase III, they will lose on
half of the Phase I and II development fee (estimated to be over $770,000), any additional
profit (estimated to be over $2,000,000), or any extra Phase II tax increment. All of the
above will be available to the HRA to complete Phases II and III.
After Phase II is complete and the developer commences Phase III, the city will issue
additional Tax Exempt General Obligation Special Assessment-Tax Increment bonds for
public improvements. These bonds will have first call on all tax increment and will not be
issued unless project will generate sufficient tax increment to pay annual debt service.
After Phase II is complete and the developer commences Phase III, the HRA will issue
additional Tax Increment Revenue (non recourse to the HRA or City) bonds to pay for
qualified redevelopment costs.
The developer is limited to a set developer fee. After Phase III is complete, the HRA will
review the developers' revenues and expenses. Any profit over the agreed upon amount
will be split equally by the developer and the HRA.
If after Phase III is complete and the HRA projects that the project will generate
additional tax increment over what is needed to pay the bonds and notes, it may issue pay
as you go notes to the developer or HRA to cover any unpaid obligations.
1/26/04
TERM SHEET
Mound Harbor Renaissance Development, LLC -
Downtown Mound Redevelopment
This Term Sheet outlines the redevelopment and public finance terms' of a
Redevelopment Agreement between the Mound Housing and Redevelopment Authority- and
Mound Harbor Renaissance Development, LLC.
Redeveloper:
Mound Harbor Renaissance Development, LLC and its assigns
City:
City of Mound, Minnesota
Authority:
Mound Housing and Redevelopment Authority
Redevelopment Property:
The City Property, Authority Property and Private Property
together comprising approximately acres, all as identified on
Exhibit A and Exhibit B and on the Site Plan attached as Exhibit C.
The Authority will obtain title to the City Property and will convey
it and the Authority Property to the Redeveloper at no cost
pursuant to the terms of a Development Agreement with the
Redeveloper, except that the Custer and Metro Transit parcels shall
be conveyed to the Redeveloper at the Authority's acquisition cost.
Creation of TIF District:
The Authority shall create a redevelopment tax increment
financing district and any qualifying subdistricts for the
Redevelopment Property (the "TIF District") assuming the
statutory tests for establishment are met. The TIF District is
expected to include all of the shaded and unshaded parcels shown
on Exhibit B, including the hotel parcel and parcels in 110 South
(subject to any lot splits required for district qualification). The
Authority will properly consider and, subject to a substantive
factual basis, will make all necessary findings, including the "but
for" finding on need for public assistance. The Authority will also
undertake any necessary or appropriate modifications or
refinements to the definition of the underlying Project area. The
Redeveloper shall not commence construction of any
improvements until 180 days have elapsed after the Authority's
approval of the TIF District.
Eminent Domain:
The Redeveloper shall use its best efforts to acquire the Private
Property through negotiation with the current oWners. The
Authority will assist with acquisition of any remaining parcels
through eminent domain, provided:
a. The required primary public purpose findings can be found to
support such action.
bo
To institute condemnation proceedings, the Redeveloper
provides 10% of the Authority's estimate of the total
acquisition costs for the parcel, which shall include an estimate
of market value and relocation benefits and assistance,
attorney's fees and all other professional fees and services.
At the time a court deposit or any payment is required (subject
to the Redeveloper's right to elect not to proceed, as set forth in
"Project Feasibility" below), the Redeveloper advances an
amount equal to the greater of (i) 110% of the estimated total
acquisition costs, less the Redeveloper's initial deposit or (ii)
the amount of such deposit or payment. Transfer of the parcel
to the Redeveloper will be scheduled promptly after acquisition
of the parcel. At the closing, the Redeveloper either sha. ll pay
the condemnation costs, if any, incurred beyond the sums
previously deposited by the Redeveloper or shall receive a
refund if the final total acquisition costs are less than the
Redeveloper's deposits. If the amount of the award or
relocation payment is appealed, the Redeveloper shall advance,
at closing, 110% of the amount of the Respondent's claim plus
the City's estimated costs of defending the appeal, less the
amount of deposits made by the Redeveloper.
Management and Admin Fee: A fee payable to the Redeveloper equal to ten percent (10%) of
Project Costs payable on an ongoing basis and at the
Redeveloper's election as costs are incurred.
Developer Fee:
The Developer Fee is the minimum amount payable to the
Redeveloper upon completion or earlier termination of the
Redevelopment Project, and shall be (i) 5.50% of total project
costs incurred by the Redeveloper excluding the Management Fee
and (ii) 10% of the total land sales.
Profit Sharing:
Profit shall be split 50/50 between the Authority and the
Redeveloper upon completion of all Phases. Profit shall equal
Project Revenues less Project Costs, where:
a. "Project Revenues" shall mean all cash sources, including:
(i)
Revenue Bond proceeds, net of costs of issuance, debt
service reserves, capitalized interest and other items
which reduce bond proceeds available to the Project,
Project Feasibility and
Early Termination:
Effect of Early Termination:
bo
(ii)
City Bond proceeds, net of costs of issuance, debt service
reserves, capitalized interest and other items which
reduce bond proceeds available to the Project,
(iii) Grants,
(iv) . Land sales proceeds net of sales costs,
(v)
The amount of any shortfall funded by the City, the
Authority or the Redeveloper to make a Phase feasible
(see "Project Feasibility")
(vi)
The anticipated present value of the proceeds of the
Revenue Notes (using the assumptions contained in the
Redeveloper's pro forma attached as Exhibit D adjusted,
if necessary, for market conditions (the "Pro Forma")
"Project Costs" are described on the Pro Forma and shall
include the Management Fee and the Developer Fee.
The Redeveloper shall undertake to complete Phase I (Lost Lake).
The feasibility of each of Phase II (Auditors Road) and Phase III
(Langdon Lake) shall be determined, first, by adding projected
revenue (sources) for that Phase to Profit from prior Phases.
However, for purposes of this calculation only, Revenue Note
proceeds shall be the present value of the first fifteen years of tax
increment only (adjusted, if necessary, for market conditions).
This sum shall be compared to projected Project Costs for the
Phase under consideration as shown on the Pro Forma. If a
shortfall is projected as a result of the feasibility analysis for the
Phase, the Redeveloper may elect not to proceed with the Phase
unless the City, the Authority or the Redeveloper agrees to fund
the shortfall. The Redeveloper may also elect not to proceed with
the Phase in any event, with the consequences set forth under
"Effect of Early Termination".
(1) If due to un£easibilily: If the Redevelopment Project is
terminated after completion of Phase I or Phase II because of lack
of feasibility of a subsequent Phase:
The Redeveloper shall be paid the Management Fee (to the
extent not previously paid) and the Developer Fee for
completed Phases.
bo
The Redeveloper shall be reimbursed (but only from Pro]eet
Revenues for completed Phases) for all unreimbursed third-
party costs incurred by the Redeveloper.
In addition, if the Redeveloper elects not to proceed with Phase II
because of either of the following:
(i)
The hotel developer fails to comply with paragraph 1 of
Exhibit E by December 1, 2004 and the Authority has not
also by that date terminated its agreement with the hotel
developer, or
(ii)
The hotel developer fails to comply with paragraph 2 of
Exhibit E by May 1, 2005 and the Authority has not also
by that date terminated its agreement with the hotel
developer,
then the Redeveloper's termination shall be treated as a lack of
feasibility pursuant to this paragraph (1) and not a Redeveloper
election pursuant to paragraph (2) below.
(2) 'I£at Redeveloper election: If the Redevelopment Project is
terminated after completion of Phase I or Phase II notwithstanding
feasibility of subsequent Phases:
a. The Redeveloper shall be paid the Management Fee (to the
extent not previously paid) for completed Phases.
b. (i) If only Phase I is completed, the Redeveloper receives'no
Developer Fee and no Profit sharing.'
(ii)
If Phases I and II are completed, the Redeveloper
receives one-half of the Developer Fee for both Phases I
and II and no Profit sharing.
(Note: If Phases I, II and III are completed, the Redeveloper
receives the Developer Fee for all Phases and Profit sharing.)
Co
The Redeveloper shall be reimbursed (but only from Project
Revenues for completed Phases) for all unreimbursed third-
party costs incurred by the Redeveloper provided that such
costs paid for studies or other services that would also benefit
another redeveloper or the Authority in redeveloping the
uncompleted Phases.
4
Land Sales Prices:
Construction Fund Admin-
istration and Accounting:
In any event (regardless of circumstances of early termination):
The Redeveloper will be liable to the City for any awards,
relocation payments or discontinuance fees relating to any
condemnation proceedings pending at the time of such
termination and any relocation benefits that the Authority is
subsequently required to pay based on activities prior to
termination. The Redeveloper shall be reimbursed (but only
froTM Project Revenues for completed Phases) for such costs.
bo
Any funds remaining shall be the property of the Authority and
the Redeveloper will execute a release or termination of the
redevelopment agreeme~nt.
Co
If the Redeveloper owns parcels or options to purchase parcels
within a Phase that will not proceed, at the Authority's request,
the Redeveloper shall convey such parcels or options to the
Authority at the Redeveloper's cost plus interest accrued at a
rate of 7.5% per annum from the date the Redeveloper actually
paid the cost.
If the Redeveloper completes Phase I but does not complete Phase
II, the Redeveloper may not proceed 'with Phase III unless the
Authority consents.
Prior to the commencement of each Phase, the Redeveloper and
the Authority shall agree upon the land sale prices to builders or
users. If land sales are negotiated with unrelated parties in an
arm's length transaction, those prices shall be determinative. If a
site is to be sold to a related party (as defined in Internal Revenue
Code regulations) or developed by 'the RedeveloPer, the land sale
price shall be determined by agreement between the Authority and
Redeveloper or, if agreement cannot be reached, by an appraisal
conducted by an appraiser mutually agreeable to the parties. In the
case of sales to unrelated parties, the Redeveloper shall certify to
the Authority 'that such parties woUld be considered unrelated
under applicable Internal Revenue Code regulations.
Projected land sales proceeds for parcels developed by the
Redeveloper or a related party shall be included in the calculation
of Profit in order to determine the feasibility of Phases II and III.
The Redeveloper shall administer Project Revenues and
disbursements therefrom, subject to trust instruments, etc.
regarding the repayment of Bonds. The Redeveloper shall deliver
Public Assistance and
Tax Increment Financing:
City Bonds:
to the Authority quarterly reports and also year-end compilation
reports which have been prepared by a CPA and certified by the
Redeveloper, with both types of reports to not be more limited in
scope than the reports which are required-to be submitted to its
investors and lenders.
The Redeveloper and the Authority are proceeding in the joint
expectation that the City will provide the following forms of
assistance to the Project:
The City will issue tax exempt general obligation special
assessment bonds for qualifying public improvements as
described in "City Bonds" below, and will levy special
assessments against a portion of the Redevelopment Property
as described in "Special Assessments".
b. The City Will issue tax exempt general obligation parking
improvement bonds as described in "City Bonds" below.
The Authority intends to provide the following forms of assistance
to the Project:
The Authority will issue tax exempt tax increment revenue
bonds (the "Revenue Bonds"), payable only from tax
increment as described below.
b. The Authority will issue a pay-as-you-go ~Tax Increment
Revenue Note payable from tax increment as described below.
The Authority's administrative fee shall be 5% of available tax
increment and shall be subordinated to both the City Bonds and the
Revenue Bonds.
The City will issue the following tax exempt general obligation
bonds (collectively, the "City Bonds"). The City shall not require
personal guarantees from the principals of the Redeveloper for the
City Bonds.
Special Assessment Bonds.· At the Redeveloper's request and as
allowed by law, which request may be made at any time after the
City has approved the plans for the Public Improvements, the City
will issue bonds for qualifying public improvements and shall levy
special assessments as described in "Special Assessments". Debt
service on the bonds shall be paid from the levy and from available
tax increment.
Revenue Bonds:
Tax Increment
Revenue Notes:
Parking Improvement Bonds: At the Redeveloper's request and as
allowed by law, which request may be made at any time
subsequent to the issuance of a building permit for the relevant
parking deck, the City will issue bonds for .the qualifying costs of
the parking decks and shall assess 100% of the costs against the
benefited parcels located within the Redevelopment Property. The
Redeveloper acknowledges that issuance of the bonds prior to
completion may require guarantees. Debt service on the bonds
shall be' paid from available tax increment and assessments will be
levied only if available tax increment is insufficient.
The Authority intends to issue tax exempt tax increment revenue
bonds in amoUnts that meet Underwriting standards and upon terms
as are then available in the public marketplace. Revenue Bonds
may be issued without personal guarantees in the second quarter of
each year with respect to Minimum Improvements completed by
December 31 of the prior year. The Redeveloper acknowledges
that"issuance of the Revenue Bonds prior to completion may
require guarantees. The Authority administration fee shall be
subordinated to provide additional coverage for the issuance of the
Revenue Bonds. The Revenue Bonds shall be payable only from
tax increment and shall not be a general obligation of the City or
the Authority.
Eligible Project expenses which have not been reimbursed by the
City Bonds or the Revenue Bonds shall be paid via the issuance of
one or more Tax Increment Revenue Notes. The following terms
shall be applicable to the Tax Increment Revenue Notes:
a. Term: coterminous with duration of the TIF district.
b. Interest rate: 7.5%.
c. Date of issuance: Upon execution of the Redevelopment
Agreement.
d. Interest accrual: Interest shall accrue from the date that the
Redeveloper actually has paid tax increment eligible expenses.
e. Security: The pledge of tax increment for the Notes shall be
subordinated to the pledge of tax increment for the City Bonds,
the Revenue Bonds and the City's administrative fee.
Revenue Notes (or, at the Authority's election, interfund loans)
shall be issued as follows:
To the Redeveloper in the amount of the gap, if any, between
Project Costs and the sum of items (i), (ii), (iii) and (iv) of
Project Revenues as described in paragraph (a) under "Profit
Sharing";
7
Priority of Application of.
Tax Increment:
Special Assessments:
Capitalized Interest:
Grant Applications:
ii.
111.
To the City, the Authority or the Redeveloper, as the case may
be, for unreimbursed eligible Project costs in the amount of any
shortfall funded by any of those entities to make Phase II or
Phase III feasible; and
The remaining-tax increment shall be distributed to the
Redeveloper and the Authority in equal (50/50) shares for
unreimbursed eligible Project costs, the present value of which
shall be determined using the assumptions contained in the Pro
Forma, adjusted, if necessary, for market conditions.
Available tax increment shall be applied in the following order of
priority:
a. The
b. The
c. The
d. The
e.
City Bonds
Revenue Bonds
Authority's administrative fee (5%)
Tax Increment Revenue Note described in (i) above
The Tax Increment Revenue Note(s) described in (ii)
above, which shall be issued paripassu
The Tax Increment Revenue Note(s) described in (iii)
above, which shall be issued pari passu
The City shall levy approximately $700,000 of sPecial assessments
against the commercial property and the hotel (not to exceed
$.50/developed sq. ft.) for the costs of certain public
improvements. The City may assess benefited property outside of
the Redevelopment Property for an appropriate amount of the costs
for such improvements.
Special assessments on housing, if any, will be paid off when sold
and thus will be used only as a method for interim funding for
Public Improvements.
Capitalized interest during the construction period and costs of
issuance of the City Bonds and the Revenue Bonds shall be tax
increment eligible expenses and shall be paid either from available
tax increment or bond proceeds.
The Authority and City will use their best efforts to obtain
assistance from the State of Minnesota, Metropolitan Council,
DEED or other available public funds.
Government Approvals:
Utility Trunk Charges:
Infrastructure and
Other Fees:
Water/Sanitary Sewer:
Park Dedication Fee:
Public Improvements:
The Redeveloper, the Authority and the City will cooperate and
use their best efforts to obtain all necessary government approvals.
The City will waive water and sewer mink fees.
The Redeveloper will pay the normal and customary permit and'
plan review fees and shall be responsible for obtaining all building
permits prior tO construction.
The Redeveloper is responsible for installation of water and sewer
lateral lines and services to serve the Redevelopment Property in
compliance with the standards set forth in the redevelopment
agreement/subdivision ordinance. [Identify nature of security to be
provi~ded by contractor.]
The Redeveloper shall pay a park dedication fee of $93,200, less
the allocable portion thereof attributable to the hotel to be
determined bY negotiation, One-half of the fee shall be payable
upon final plat approval for Phase I (Lost Lake), and one-fourth of
the fee shall be payable upon final plat approval for each of the
two remaining Phases. The portion of the fee payable with respect
to each of the last two Phases shall not be payable if such Phase is
not constructed. The dollar amount of park dedication fee payable
by the Redeveloper with respect to each Phase shall be stated in the
redevelopment agreement, with the reduction relating to the hotel
to be taken against the park dedication payment for Phase II.
The Redeveloper will construct the following Public
Improvements in accordance with City specifications and subject
to approval by the City engineer. The parties shall coordinate the
installation of the Public I~mprovements in order to accommodate
the timetable for construction of the Minimum Improvements.
Upon completion of the Public Improvements in compliance with
City specifications and acceptance by the City, the Public
Improvements shall become public property.
· Utility relocation .
· Sanitary sewer
· Water mains and stubs
· Storm sewers and storm water system elements (ponds, pipes,
infiltration system) both on and off site
· UndergroUnd utilities
9
Site Improvements:
Minimum Improvements:
Quality of Minimum
Improvements:
The Redeveloper shall construct all site improvements, including:
Building demolition
· Site clearance
· Landscaping~ and screening according to City-approved
landscape plans
Trails and other pedestrian improvements pursuant to City-
approved site plans (if such improvements are privately owned;
if public, they will be treated as Public Improvements)
· Grading and import/export of soil in accordance with City-
approved grading plans
· Retaining walls and fences
· Private streets, including curb and gutter
· Docks and dredging (classify as Minimum Improvements if
private property)
Subject to market conditions and unavoidable delays, and subject
to the Redeveloper's right to not proceed with Phases II and III, the
Redeveloper shall construct or cause to be constructed the
following Minimum Improvements on the Redevelopment
Property:
· Approx. 82,000 sq. ft. office/retail with surface parking
· 133 units condominiums with underground and surface
parking
· 55 units senior condominiums with underground and surface
parking
· 11 units lake view townhomes with individual garages
· 11 units center townhomes with individual garages
· 23 units lakefront townhomes with surface parking
· Parking deck in Langdon Lake with capacity for such number
of cars as agreed upon by the parties
· Parking deck in Auditors Road with capacity for such number
of cars as agreed upon by the parties
· Park & Ride/farmer's market as agreed upon by the parties
The Redeveloper shall not be required to execute assessment
agreements. To ensure quality of the Minimum Improvements, at
the beginning of each Phase the Redeveloper shall provide the
Authority with a description of the housing products or other
Minimum Improvements to be constructed and specifications of
construction materials, fixtures and available upgrades. Both
parties acknowledge that it is in their mutual interest to maximize
10
Right of First Refusal
as to 110 South:
Hotel Project:
land sales proceeds and the value of the completed Minimum
Improvements.
The Authority shall have the fight to decline to approve the
Minimum Improvements for a Phase if in the Authority's
reasonable discretion it appears that the market value for the
Minimum Improvements for the Phase as a whole will be less than
that projected in the Pro Forma.
The Redeveloper shall have a right of first refusal for four (4) years
from the date of City approval of the TIF District with respect to
the redevelopment of any of the parcels identified as 110 South on
Exhibits A and B. The terms of such right of first refusal will be
contained in the contract for private development.
The-City shall provide the hotel developer with a deadline for a
determination as to whether the hotel project shall proceed. Such
deadline shall be not later than May 1, 2005 or as agreed upon
between the Redeveloper and the Authority.
The hotel developer and the Authority shall comply with the
requirements set forth on Exhibit E.
If the hotel project is terminated:
'(i) except as to the Custer and Metro Transit parcels, the
Redeveloper shall acquire the land from the Authority upon
the same terms given to the proposed hotel developer,
(ii) .the Redeveloper shall include that parcel within the
Redevelopment Project,
(iii) the Redeveloper shall not be required to construct a hotel on
the parcel, .
(iv) the Minimum Improvements for the parcel will be
compatible 'with an amended concept plan (which shall be
agreeable to both the Authority and the Redeveloper) and the
adjacent Minimum Improvements, and
(v) the parcel and Minimum Improvements constructed thereon
will be subject to the terms of the redevelopment agreement.
For purposes of the preceding paragraph, the hotel project shall be
deemed terminated upon the first to occur of any of the following
events:
11
Risk Of Failure of Hotel
Project:
Timing:
(i) The hotel developer notifies the Authority that he has
decided not to construct the hotel,
(ii) The hotel developer fails to comply with paragraph 1 of
Exhibit E by December 1, 2004,
(iii) The hotel developer fails to comply with paragraph 2 of
Exhibit E and enter into a development agreement with the
City by May 1, 2005, or
(iv) The hotel developer is in substantial default on its
redevelopment agreement with'the Authority.
Following completion of the hotel, if the assessed value of the
hotel should fall below the assessed value assumed for purposes of
the Pro Forma, the resulting loss of tax increment in any year shall
be credited against the Authority's share of any Profit-sharing
payable for that year.
Phase I (Lost Lake): · Begin on or about May 1, 2005
· Corn_plete on or abOut December 31, 2006
Phase II (Auditors Road):
· Begin on or about May 1, 2006 (subject to completion
of rerouting of County Road 15 and reconstruction of
the sewer line and lift station, if required)
· Complete on or about December 31, 2007
Phase III (Langdon Lake): · Begin on or about May 1, 2007
· Complete on or about December 31, 2008
The Redeveloper may delay beginning Phase III by 18 months.
Target start dates shall be subject to (i) the Authority's acquiring
all of the parcels in a particular Phase that it has undertaken to
acquire, (ii) the Authority's conveying such parcels to the
Redeveloper and (iii) receipt Of all necessary governmental
approvals for construction of the Minimum Improvements,
including dredging permits and shoreland density variances.
If the target start date of a Phase is delayed, construction for the
Phase will commence within 90 days of the resolution of the cause
of the delay subject to winter delay of streets, utilities and grading.
If a start date would fall between November 1 and March l, it will
be extended until the following May 1.
12
Payment for Custer and
Metro Transit Parcels:
Concept Plan Approval:
Maintenance of Parking
Decks:
Change in Redeveloper
Entity:
Assignment:
If the target start date of a Phase is delayed more than 12 months
due to causes beyond the Redeveloper's control, the Redeveloper
shall have the right to re-examine the feasibility of that Phase (as
contemplated in ?Project Feasibility and Early Termination")
based on then-prevailing cost estimates and market conditions.
The Redeveloper will reimburse the Authority for the Authority's
acquisition costs of the Custer and Metro Transit parcels at the
time such parcels are conveyed to the Redeveloper (or portion
thereof, if the hotel project proceeds), plus interest accrued at a rate
equal to the Authority's cost of funds. The Authority may not
require the Redeveloper to accept conveyance of such parcels
before the Redeveloper takes title to the rest of the parcels in Phase
II.
The Authority shall approve the concept plan by the later to occur
of the following:
(i)
(ii)
30 days following City approval of the AUAR, or
60 days following the Redeveloper's submission to the
Authority of a complete application for approval of the
concept plan, unless the review period is extended as
provided by law.
The City and the Redeveloper or-its assignee shall enter into a
parking deck maintenance agreement pursuant to which the
Redeveloper shall agree to maintain the parking decks.
Prior to completion of the Project, the business entity and equity
owners of the Redeveloper may change as long as majority control
of the Redeveloper continues to be held by one or more of the
original equity owners of the Redeveloper, as long as such change
does not materially impair the ability of the Redeveloper to
continue the Project.
Prior to completion of the Project, the Redeveloper may assign all
of its rights under the agreement for private development to one or
more redevelopers, subject to' the reasonable consent of the
Authority, and provided that the proposed assignees have the
requisite qualifications and financial ability and agree to assume all
of the Redeveloper's obligations.
13
Business Subsidy Act:
Relocation:
City Actions:
Effect of Term' Sheet:
The Redeveloper shall set wage and job goals in connection with
the Business Subsidy Act, if applicable. If such goals are not
required by the Act, the Redeveloper agrees to comply with any of
the Act's reporting requirements that-may nonetheless be
applicable to the Redevelopment Project.
The Authority will provide relocation services and benefits for all
individuals and entities whose displacement from the
Redevelopment Property would entitle them to such services and
benefits, and the Redeveloper will reimburse the Authority for all
costs and expenses related thereto. The Redeveloper may, in lieu
of funding such services and benefits, provide a written waiver.
Such waiver must be in a- form acceptable to the Authority.
The Authority represents to the Redeveloper that it is the City's
intent to take the following, actions to induce the Redeveloper to
execute a contract for private development with the Authority:
Convey the City Property to the Authority prior to its
conveyance to the Redeveloper.
· Agree that SAC credits generated by demolition within the
Redevelopment Property shall not be allocated outside the
Project.
· City fees (infrastructure, impact, permits, other) are set forth on
Exhibit F. There shall be no increases in such fees for the
Redevelopment Property through 12/31/07, and thereafter
increases shall be limited to 10% annually.
· Approve the park dedication fee set forth under "Park
Dedication Fee."
· Waive water and sewer trunk fees.
· Levy the special assessments described in. "Special
Assessments."
· Execute agreements pledging its full faith and credit for the
repayment of City Bonds.
If the City does not perform all of the above actions, then the
Redeveloper will be reimbursed by the Authority all of its third-
party costs or increases in fees.
This Term Sheet outlines the terms under which the parties are
willing to enter into a contract for private redevelopment, but does
not constitute an offer or acceptance on any party's part. All rights
and obligations with respect to the Redevelopment Property shall
only be as provided for in a Contract for Private Redevelopment
approved by the Authority's Board of Commissioners.
14
EXHIBITS:
A
B
C
D
E
Redevelopment Property - Parcel List
Redevelopment Property - Parcel Diagram
Site Plan
Redeveloper's Pro Forma
Hotel Requiremenfs
City Fee Schedule
G:~WPDATA~M~Mound Harbor Renaissance LLC~01~Doc~Term Sheet vi 1.doc
16
Redevelopment Property - Parcel List
~EXI-IIglT A
(Preliminary and for identification purposes only; subject to change.)
Project AreaI PID I Address ~ I Owner I Current Use
LOST LAKE 13-117-24-33-0069 Unassigned City Vacant
13-117-24-34-0063 5377 Shoreline Dr Balboa MN Co - Maxwell Vacant
13-117-24-34-0075 None Balboa MN Co - Maxwell Vacant
LANGDON 14-117-24-44-0001 2321,2323, 2325 PTS Holdings
LAKE Commerce ProFix
14-117-24-44-0002 2339 Commerce Meisel Old Bank Bldg
14-117-24-44-0003 2365, 2363 Commerce Meisel 2365 - Styles by Dianne, Westonka Dental
Byers Chiro, Sun Cont., The Laker &
Pioneer, Kromer Co., Minnetonka Paint
14-117-24-44-0004 2345, 2343, 2347? Koenig & Schwert D & L Cleaning, 3's Company Hair,
Commerce Wiser Ins., Westonka Tan
14-117-24-44-0006 Unassigned Meisel Vacant
14-117-24-44-0041 2301, 05 Commerce Westonka (Johnson) J. Dickenson / Susan McGraw DDS
...14-117-24..44-0042 2313, 15 Commerce Netka H & R Block
14o117-24-44-0043 Unassigned Meisel Vacant
14-117-24-44-0044 Unassigned Meisel Vacant
...!4-117-24-44-0045 Unassigned Meisel Vacant
14-117-24-44-0046 Unassigned Meisel Vacant
14-117-24-44-0047 Unassigned Meisel Vacant
14-117-24-44-0048 Unassigned Meisel Vacant
14-117-24-44-0049 Unassigned Meisel Vacant
14-117-24-44-0050 Unassigned Meisel I Vacant
14-117-24-44-0051 Unassigned Meisel ;Vacant
14-117-24-44-0056 Unassigned City ~ Vacant
14-117-24-44-0057 Unassigned City Vacant / shoreline
14-117-24-44-0060 Unassigned Meisel Vacant
14-117-24-44-0061 Unassigned Meisel Vacant
14-117-24-44-0062 Unassigned City Vacant / marsh
No PID# Unassigned City Juniper Rd and alleys
No PID# Unassigned City Juniper Rd and alleys
AUDITORS 13-117-24-33-0004 5567 Shoreline Dr Beckel Westonka Travel & Tan
ROAD 13-117-24-33-0005 5555 Shoreline Dr Mo}. House of Mo)/, Xtreme Contractors
13-117-24-33-0006 5541, 5545 Shoreline Dr Johnson Positive Promotions (5541),
Kirby Vacuum (5545)
13-117-24-33-0009 Unassigned Metro Transit (City) Vacant / ROW
13-117-24-33-0010 Unassigned City Vacant / ROW / c. lreenway
13-117-24-33-0011 Unassigned City Vacant / ROW / greenway
13-117-24-33-0012 Unassigned City Vacant / ROW / greenway
13-117-24-33-0013 Unassigned City Vacant / ROW / greenway
13-117-24-33-0014 5575 Shoreline Dr Perbix Carpet Man (gone?), locksmith
13-117-24-33-0015 5581 Shoreline Dr Lauer Dentist, Fine Impressions Photo Studio
13-117-24-33-0016 2300 Commerce HRA Vacant
13-117-24-33-0017 2306 Commerce HRA Vacant / dilapidated
13-117-24-33-0019 Unassigned City Vacant / ROW / ~reenway
13-117-24-33-0047 1959 Commerce Larson Larson Printing
13-117-24-33-0048 Unassigned City Vacant / parking lot
13-117-24-33-0049 Unassigned City Vacant / ROW
13-117-24-33-0050 Unassigned City Vacant / ROW
13-117-24-33-0051 2348 Commerce City Vacant / ROW / greenway
13-117-24-33-0076 5533 Shoreline Dr Custer Glass Plus
17
13-117-24-33-0090 Unassigned City Park & Ride/Farmers Market
No PID# Auditor #1 Unassi~Ined Count), ROW - CR 15
No PID#Audit0r #2 Unassigned City ROW. Marian Lane
No PID~ Auditor #3 Unassi~Ined Cit7 ROW - Alley
ProiectArea I PID I Address I Owner I Current Use
110 SOUTH 13-117-24-33-0020 2360 Commerce Netka Vacant/dock
13-117-24-33-0052 2360 Commerce Netka Apartment bid9 (18 units/
13-117-24-33-0082 2372 Commerce Lodge #320 Masonic Lod~le
13-117-24-33-0055 2380 Commerce Ryan Residential house - rental
13-117-24-33-0056 2388 Commerce Whalen Residential house - rental
13-117-24-33-0057 2396 Commerce Williams Trustee Commercial bld~
.~4-117-24-22-0013 2400 Commerce Falness Residential house - rental
24-117-24-22-0001 2420 Commerce Falness Residential house - rental
23-117-24-11-0002 2426 Commerce Hostetler ' Gene Allen Desitin - House
Redevelopment Property - Parcel Diagram
EXHIBIT B
20
· Redevelopment Property - Pamel List
EXI-IIB1T B
Site Plan
EXI-IIBIT C
(Preliminary and for illustrative purposes only. Subject to change and to the Authority's
approval.)
21
Redeveloper's Pro Forma
~XFIIBIT D
22
EXHIBIT D
Redeveloper's Pro Forma
~MOUND HARBOR RENAISSANCE, LLC
City of Mound
SOURCES AND USES
Phase I Phase II Phase III
Total'
Area D Area C Area B
Lost Lake Auditors Rd Langdon Lk TOTAL
PROJECT REVENUES
1 City Bonds I 5.00% 1,310,907 :1,203,343 2,514,250
1 a City Bonds - Lost Lake 8'1 '1,803 811,803
2 Tax Exempt Revenue Bonds-Net 6.50%! 2,942,951 3,182,405 6,125,356
2a Tax Exempt Revenue Bonds-Net - Lost Lake '1,963,836 1,963,836
3' Grants 26,396 29,499 24,105 80,000
4 Land Payment 4,935,000 2,082,000 3,527,500 10,544,500
5 TOTAL SOURCES 4,961,396 9,140,996 7,937,353 22,039,746
I
PROJECT COSTS
6 Land and Building Acquisition 602,183 2,222,171 3,633,480 6,457,834
7 Relocation I - 374,000 500,500 874,500
8 Design & Development 364,433 407,263 332,793 1,104,490
9 Site Preparation 893,887 720,177 1,208,026 2,822,091
10 Environmental& Wetlands 182,027 212,300 176,213 570,540
11 Public Improvements (Installation of Public Utilities) 324,132 428,826 379,241 1,132,200
12 Streets and Sidewalks 172,725 498,079 204,817 875,621
13 Parking - Ramps/Decks - 1,210,950 756,378 1,967,328
14 Other Improvements/Costs 417,889 260,250 351,600 1,029,739
15 Capitalized Interest 7.0% 234,475 609,986 1,040,848 1,885,309
16 Mgmt & Admin Fee (% of above costs) 10.0% 319,175 694,400 858,390 1,871,965
17 Sub-total 3,510,927 7,638,402 9,442,287 20,591,617
18 Developer Fee (% of above costs) 5.5% 175,546 381,920 472,114 1,029,581
19 Developer Fee (% of Land Sales) 10.0% 493,500 208,200 352,750 1,054,450
I
20 TOTAL PROJECT COSTS 4,179,974 . 8,228,523 10,267,151 22,675,648
21 PROFIT (LOSS) 781,423 912,474 (2,329,798) (635,902)
22 Cumulative Profit (Loss) 781,423 1,693,896 (635,902)i
2.50% Inflation
23 PV- Revenue Note 7.5% 509,638 695,484 844,376 2,049,498
24 I tCumulative Rev. Note 509,638 1,205,122 2,049,498 ,
Mound Harbor 13b - no S 110.xlsSandUTotal (2) I 1/1612004
Hotel Requirements
EXI~IBIT E
o
o
Hotel developer to provide by December 1, 2004 an independent market or financial
feasibility study by a regionally or nationally recognized consultant verifying economic
viability. The study will be based on a hotel, restaurant and banquet facility having the
capacities, design and market valuation contained in the design plans previously submitted
by the hotel developer; and will further .assume a market rate of return. The_consultant
chosen to perform the study shall be subject to the approval of the Authority upon
consultation with its financial advisor.
Hotel developer to provide evidence by May 1, 2005 of financial ability to develop, own
and operate a hotel to be constructed in accordance with the guidelines used as the basis
for, and/or recommended as a result of, the market/financial feasibility study, including
evidence of any necessary financing. Such evidence shall include a written commitment
from a federally insured financial institution for any required borrowing. Such written
commitment shall be subject only to such contingencies as: (i) do not conflict with the
approved concept plan,, the Redeveloper's redevelopment agreement with the Authority or
the hotel developer's redevelopment agreement with the Authority and (ii) can reasonably
be met, as determined by the Authority's financial advisor.
Consistency of hotel design with overall Mound Harbor Renaissance Redevelopment Plan,
including:
a. Size of footprint
b. Consistency of exterior materials and colors with the rest of the Redevelopment
District
c. COnsistency of materials, features and details of streetscape
d. Height
Hotel developer and Redeveloper shall each prepare for review and reasonable approval by
the other a full set of architectural and engineering plans, including exterior elevations,
streetscape, landscaping and parking decks relating to Phase II (Auditors Road) to ensure
consistency. Inability to achieve mutual approval within 30 days shall be settled by the
City, with each of hotel developer and Redeveloper to share the expense of resolution.
Cross easements for:
a. Parking
b. Utilities
c. Ingress and egress
23
o
o
9.
10.
11.
12.
13.
14.
15.
Parking decks to be public, with a portion of the lower level reserved for hotel use (number
of stalls reserved to be specified).
Minimum assessed value of hotel for ad valorem property tax purposes to be approximately
as set forth in the Pro Forma, following consultation with the Authority, its financial
advisor and the County assessor.
Minimum number of rooms to be specified.
MaXimum size of restaurant and banquet rooms to be specified.
If hotel construction begins before the rest of Phase II (Auditors Road), hotel developer
must be willing to accept and pay for modifications to the parking deck, if necessary.
Hotel to be the franchisee of a national chain which provides a nationally advertised
reservation service. Authority, Redeveloper and hotel developer to agree as to the level of
hotel service to be provided.
Hotel to be professionally managed and operated by individuals having experience in the
management of such facilities.
Timetable for hotel construction to be subject to the approval of the Authority and the
Redeveloper, which approval shall not be unreasonably withheld, with construction to be
.fully completed and the hotel ready to open at the same time as the rest of Phase II.
Authority, Redeveloper and hotel developer to agree as to the allocation of docks to each
party, which party shall obtain all necessary permits and all parties to agree on construction
of the docks.
Any uses as a hotel, sit-down restaurant and banquet hall are permitted uses. Any
additional uses shall be subject to the approval of the Authority and the Redeveloper for the
duration of the TIF District, which approval shall not be unreasonably withheld. There will
be a presumPtion of reasonableness ~s to any use which does not duplicate a use or a tenant
planned elsewhere for the Redevelopment Project. These restrictions will be memorialized
on appropriate instruments so as to run with the land and be binding on successors in
interest in the hotel Parcel for the term of the tax increment district. Such instrument shall
also provide, to the fullest extent allowed by law, that the parcel may not become tax-
exempt for the duration of the TIF District.
24
City Fee Schedule
]gXI-IIBIT F
BUILDING AND CONSTRUCTION
Buiidin,q Permit:
300.20 Wrecking pen'nit:
Minor building $50
Minor building to be replaced on same site $50
Single family wood frame $150
Duplex $200
Multiple dwelling: 1st two units $200
Each addn'[unit $250
Total cost of wrecking at $6 for each
$500 or fraction thereof of the
market value of such work.
Gas burners:
not exceeding 99,999 BTU $10
100,000- 199,999 BTU $15
200,000 ~ 399,999 BTU $30
400,000 - 599,999 BTU $44
600,000 - 999,999 BTU $60
Install/remove flammable & combustible liquids and LP tanks:
Tank not buried enclosed-500 gals. or less $10
Tank not buried enclosed - over 500 gals. $15
Tank buried or enclosed $25
Removal of combustible/flammable liquid tank $15
Removal of storage tanks of above/below ground liquor gas $15
330.20 Building Permits See 1997 UBC,Sect. 107,Table 1-
A+surch.
Fire suppression Same as above
Inspection fees Same as above
Plan check fees Same as above
EXCAVATION & LAND RECLAMATION
460.15 Grading plan review fees:
*50 cu yards or less $0
'51-100 cu yards $15
'101-1,000 cu yards $22
'1 001-10,000 cu Yards $30
25
'10,001-100,000 cu yards:
First 10,000 cu yards $30
Additional for ea 10,000 cu yards or fraction thereof $15
'100,001-200,000 cu yards:
First 100,000 cu yards $165
Additional for ea 10,000 cu yards or fraction thereof $9
'200,001 or more:
First 200,000 cu yards $255
Additional for ea 10,000 cu yards~or fraction thereof $4.50
Additional plan review, due to changes, additions, or revisions to
approve plans: per hour (min. 1/2 hour) $30
Grading Permit Fees:
*50 cu yards or less $15
'51-100 cu yards $22
'101-1,000 cu yards:
First 1,000 cu yards $22.50
Additional for ea 100 cu yards or fraction thereof $10~50
'1,001-10,000 cu yards:
First 1,000 cu yards $117
Additional for ea 100 cu yards or fraction thereof $9
'10,001-100,000 cu yards:
First 1,000 cu yards $198
Additional for ea 100 cu yards or fraction thereof $22.50
After hours inspection: Minimum charge 2 hours $30/hr.
Re-inspection fees assessed under Provision of Chapter 305(g)
(UBC) $30/yr.
Inspection for which no fee is specified Minimum 1/2 hour @ $30/hr.
Difference between original and
Fee for authorizing additional grading under valid permit:
entire project.
305.15 Street Excavation:
Unpaved street $100+$500 deposit
Macadam $100+$500 deposit
Concrete or bade $100+$500 deposit
LAND USE ADMINISTRATION FEES: (Staff reports, meetings, etc.)
Property file research- admin, fee (non-owners) $15
Building permit deposit (to cover staff review time - non-pickups):
Minor projects (value less than $1,000) $100
Major projects (value more than $1,000) $500
Land Use application fee - city staff:
1-3 hours N/C
More than 3 hours $30/hr.
Unauthorized construction/no permit issued Double building permit fee
26
SUBDIVISION & ZONING FEES:
330.12 Waiver of Platting fee $200
Waiver of Platting escrow $500
350.475 Fence Permit $55
350.530 Zoning variance $200
Variance escrow $500
350.525 Conditional Use Permit $350
CUP escrow $500
350.755 Vacation $350
350.1100 Wetlands Permit $350
350.520 Zoning Amendment $350
Rezoning escrow $500
Planned Unit Development $1,700
Site Plan Review $350
Commercial Site Plan review escrow $500
Preliminary Plat $350 + $15/Iot
Final Plat $350 + $15/lot
Minor Subdivision - Lot split $250
Per lot over 2 lots $15
Park Dedication Fee $1,100 or 10%
Escrow deposit - small project app. $1,000
Escrow deposit - large project app. $5,000
365.05 Sign Permit $100
Sign alteration fee: Structural alter'n, up to the 1st $1,000 $50
Temporary sign permit $25
¢92.00 Containers in right-of-way $50
¢93.00 Portable Storage Container $50
UTILITIES:
Water:
I10.45
Water Trunk Area Charge (WTAC)
Water Service Connection Fee
51,500 per unit
$240/unit
Sewer:
500.45 Sewer Availability Charge (SAC) $1,200/unit
(passes through to Met Council Envir. Serv.)
Sewer Trunk Area Charge (STAC) $1,500/unit
Sewer Service Connection Fee $240/unit
27
1/27/04
PURCHASE AGREEMENT
Mound, Minnesota
2004
IN CONSIDERATION OF THE MUTUAL COVENANTS, DUTIES AND
OBLIGATIONS CONTAINED HEREIN, the HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF MOUND, a Minnesota public body corporate
and politic, having its principal place of business at 5341 Maywood Road, Mound Minnesota
55364 ("BUYER"), hereby agrees to the purchase of property situated in the County of
Hennepin, State of Minnesota, and legally described in the attached Exhibit A ("Property")
together with all buildings and improvements currently located thereon, from the undersigned
KENNETH L. CUSTER AND SALLY A. CUSTER, husband and wife as joint tenants
("SELLERS"), said SELLERS agreeing to sell such Property to BUYER. The consideration
("Consideration") for the transaction contemplated by this Agreement is Four Hundred Thirty
Seven Thousand Five Hundred Dollars ($437,500). The Consideration shall be allocated
between the real estate, and relocation benefits and payments to which SELLERS and others
would be entitled. The allocation will be made following determination as to the amount of such
benefits and payments. Payment of the Consideration will be made in the following manner:
Five thousand dollars ($5,000.00) as earnest money, the receipt of which is
hereby acknowledged, and which shall be held and disbursed pursuant to the
terms of this Agreement.
Three Hundred thirty two thousand five hundred dollars ($332,500.00) paid in
cash or by certified or cashier's check or wire transfer of immediately available
funds on the closing date.
One hundred thousand dollars ($100,000.00) payable on the date on which the
SELLERS vacate the Property under the License Agreement. The allocation of
the Consideration between the real estate (land and building) and relocation
benefits and payments will be made at the time of this payment.
THE CONDITIONS AND TERMS OF THIS PURCHASE AGREEMENT INCLUDE
THE FOLLOWING:
DEiED/MARKETABLE TITLE/OTHER iDOCUMENTS:
Subject to perfbrmance by BUY'ER, SELLERS agree to execute and deliver at the
time of closing a warranty deed conveying marketable title to said Property,
subject only to the following exceptions:
JB1)-242235v2
MU195-18
Building and zoning laws, ordinances, state and federal regulations, and
Easements of record, if any.
b. At Closing the following additional documents will be delivered:
2.
3.
4.
5.
The License Agreement;
Sellers Affidavit;
Well disclosure certificate;
Affidavit of non-foreign national status;
Any other and further documents reasonably required in connection with
the closing or necessary to accomplish the transfer of title to BUYER.
POSSESSION: SELLERS agree to deliver possession not later than the date of closing.
BUYER's possession will be subject to a written license agreement in favor of SELLERS
permitting SELLERS to remain in occupancy of the Property from the date of Closing
until October 1, 2004. The license will provide that the SELLERS shall have such
continuing right of occupancy conditioned on SELLERS payment of taxes and special
assessments due and payable on the Property for the period of such occupancy; that the
SELLERS maintain liability insurance on the Property in amounts acceptable to BUYER;
that SELLERS are entirely responsible for all property and fixtures located on the
Property during the term of occupancy; that the BUYER has no responsibility to repair or
maintain the Property during SELLERS occupancy; that the SELLERS shall be
responsible for all utilities serving the Property during the period of occupancy. The
License will not be assignable or transferable in whole or in part The SELLERS will
acknowledge that the License Agreement will not entitle them or others to further
relocation benefits or payments The License Agreement will executed by the parties at
closing.
Notwithstanding any provision in this Agreement, or in the License Agreement to the
contrary, SELLERS shall have the right to salvage the structure at 5533 Shoreline Drive
until, but not including, October 1, 2004. Provided, however that such salvage does not
increase the cost of demolition of the remainder, create a hazard or nuisance, or result in
the release of any contamination.
COSTS AND PRO-RATIONS: SELLERS and BUYER agree to the following pro-
rations and allocations of costs regarding this Agreement:
Deed Tax. BUYER shall pay all state deed tax regarding a Warranty Deed and
any other documents necessary to place record title in the condition warranted and
to be delivered by SELLERS under this Agreement.
Recording Costs. BUYER shall pay the cost of recording all other documents
including the iDeed to be delivered by SELLERS to BUYER.
Taxes and Assessments. SELLERS shall pay all real estate taxes due and
payable in the years prior to the year of closing, and special assessments certified
· 1:3D-242235 v2
M1!195-18
for payment with such taxes, together with all penalties and interest thereon. Real
estate taxes due and payable in the year of closing and special assessments
certified for payment therewith, will be prorated as of the date of closing.
BUYER will assume all special assessments levied or pending with respect to the
Property on the date of closing.
SELLERS make no representation or warranty whatsoever concerning the amount
of real estate taxes or assessments which shall be assessed or levied against the
Property subsequent to the date of this Purchase Agreement.
Title Insurance Commitment Costs. BUYER will pay all service charges for
obtaining the title insurance commitment with respect to the Property described in
Section 4.
Title Insurance Premium. BUYER shall pay all premiums required for any
owner's or mortgagee's title insurance policy issued in connection with this
transaction.
Closing Costs. BUYER shall each pay any closing fee payable to Title Company
with respect to the transaction contemplated by this Agreement.
TITLE: Promptly after acceptance of this Purchase Agreement, BUYER shall obtain a
title insurance commitment covering the Property. BUYER shall have 30 business days
after receipt of the commitment (but not less than 30 days after the date of this Purchase
Agreement) to examine the same and to deliver written objections to title, if any, to
SELLERS. SELLERS shall be allowed 60 days a~er the making of BUYER'S
objections to cure the same, but SELLERS shall have no obligation to do so.
Pending such cure, the closing specified under Section 14 shall be postponed to the extent
necessary to accommodate such cure. Upon such cure, the closing shall be held on the
later of (a) the closing date specified under Section 14; of (b) the first business day
occurring 10 days after the date such cure is completed.
If such cure is not completed within said 60 day period, BUYER shall have the option to
do any of the following:
Terminate this Agreement, whereupon the earnest money will be returned to
BUYER,
b. Waive one or more of the objections and proceed to closing.
DEFAULT: If either party shall default in any of the covenants contained in this
Agreement and continue into default For a period of thirty days, then and in that case, the
other party may terminate this Agreement, time being of the essence hereof. Either party
shall have the right of' enforcing the specific performance of this Agreement provided this
JBI)-242235v2
MI. il95-18
Agreement shall not be terminated as aforesaid, and provided action to enforce such
specific performance shall be commenced within six months after such right of action
shall arise.
CONTINGENCIES: This Purchase Agreement is subject to the following
contingencies:
Environmental. BUYER shall have a reasonable time from the date of this
agreement to conduct all necessary inspections of the Property, including, without
limitation, soil borings, soil and water sampling and testing, and trenching, and to
prepare or cause to have prepared all at BUYER's sole expense, such reports and
studies as may in the BUYER"s judgment be necessary to determine whether the
Property is free of contamination or pollution; or, if contamination or pollution is
found to be present, what remedial actions are likely to be required. BUYER may
terminate this agreement if it is not satisfied that the Property is free of such
pollution or contamination; or if polluted or contaminated, it is not satisfied, in
BUYER'S sole discretion, that the nature, timing or cost of any likely program for
remedial action, including, without limitation, those required for the Minnesota
Voluntary Investigation and Clean-up Program are consistent with BUYER's plans
and budget for reuse of the Property.
Soils. BUYER shall have a reasonable time from the date of this agreement to
conduct all necessary inspections of the Property, including, without limitation,
soil borings, soil sampling and testing, and trenching and to prepare or cause to
have prepared, at BUYER's sole expense, such reports and studies as may in
BUYER's judgment be necessary to determine, in BUYER'S sole discretion, that
the condition of the soils is such as to permit the use of the Property for its
intended purpose, with due regard to the timing, nature and cost of necessary
corrective actions. The BUYER may terminate this agreement if it is not so
satisfied.
Survey. BUYER is satisfied as the result of a survey of the Property prepared at
BUYER's expense that there are no gaps, gores or overlaps or other matters
disclosed by such survey which would impact upon the intended development of
the Property.
BUYER shall have 75 days from the date of this Agreement to terminate this
Agreement fbr failure of the contingencies described above, in the event of any
termination under this paragraph, the earnest money will be refunded to the
BUYER.
To assist the BUYER in the investigations described above, SELLERS hereby
grant to BUYER, its agents and designated representatives the right to enter upon
the Property at reasonable times and from time to time after the date of this
Agreement for the purposes described above. SELLERS also agree to provide
BUYER with copies of all reports and studies in SELLERS's possession relating
,IBD-242235v2
MU195-18
10,
to matters described in sub-paragraphs a and b. SELLERS consent and agree that
BUYER may retain environmental consulting firms of BUYER's choice, for the
purpose of conducting or evaluating the studies and reports referenced above.
WELL AND SEPTIC SYSTEM DISCLOSURE: The SELLERS certifies that there
ARE/ARE NOT any wells or septic systems on the Property
OTHER GENERAL AND SPECIAL WARRANTIES:
Mechanic's Liens: SELLERS warrant that, prior to the closing date, SELLERS
have made any and all payments in full for all labor, materials, machinery,
fixtures or tools furnished within the 120 days immediately preceding the closing
date in connection with construction, alteration or repair of any structure on or
improvement (including, but not limited to grading and landscaping, etc.) to the
iProperty, if any.
Notices: SELLERS warrant that SELLERS has not received any notice from any
governmental authority as to violation of any law, ordinance, or regulation. If the
Property is subject to restrictive covenants, SELLERS warrant that SELLERS
have not received any notice from any person or authority as to a breach of the
covenants. Any notices received by SELLERS shall be provided to BUYER
immediately.
DISCLAIMER OF WARRANTIES: BUYER ACKNOWLEDGES THAT IT
WILL HAVE ADEQUATE OPPORTUNITY TO INSPECT THE PROPERTY
AND ACCEPTS THE RISK THAT ANY INSPECTION MAY NOT DISCLOSE
ALL MATERIAL MATTERS AFFECTING THE PROPERTY. SUBJECT
ONLY TO THE TERMS OF SECTIONS__ AND ., BUYER AGREES
THAT IF BUYER PURCHASES THE PROPERTY, IT WILL ACCEPT THE
iPROPERTY IN ITS "AS IS .... WHERE IS" AND "WITH ALL FAULTS"
CO'NDITION AT CLOSING WITHOUT ANY REPRESENTATION OR
WARRANTY WHATSOEVER INCLUDING AS TO MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND WITHOUT ANY
RIGHT OF OFF-SET OR REDUCTION IN THE PURCHASE PRICE.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES: All of the
representations, warranties, covenants and agreements of the parties hereto contained in
this agreement shall survive the closing of the transaction contemplated herein and the
delivery of any documents provided for herein and shall not be merged into any other
agreement.
RISK OF LOSS: lfthe Property is substantially damaged before the closing date so as
to make its use for the intended purposes significantly more costly, this Purchase
Agreement shall become null and void, at the BUYER's option. If such an event occurs,
BUYER and SELLERS agree to sign a Cancellation of Purchase Agreement within a
reasonable time after such event takes place.
JBD-242235v2
M[!195-18
II d I& ~, 18 i,l,
l 1
12.
13
14.
TIME OF ESSENCE: Time is of the essence in this Purchase Agreement.
CLOSING DATE AND LOCATION: Closing shall take place at any location which is
mutually acceptable to the parties. Closing shall occur not later than 15 days after all of
the preconditions to closing have been satisfied or waived. Unless extended by the
mutual agreement of the parties, this agreement shall be null and void if the closing has
not taken place by ., 2004.
ADDITIONAL DOCUMENTS: BUYER and SELLERS agree to cooperate with the
other and their representatives regarding any reasonable requests made subsequent to the
execution of this Purchase Agreement to correct any clerical errors in this Purchase
Agreement and to provide any and all additional documentation deemed necessary by
either party to effectuate the transaction contemplated by this Purchase Agreement.
NOTICES: Any notice required or permitted to be given by any party upon the other is
given in accordance with the Agreement if it is directed to the SELLERS by delivering it
personally to the SELLERS; or if it is directed to the BUYER, by delivering it personally
to an officer of the BUYER; or to either party if mailed in a sealed wrapper by United
States registered or certified mail, return receipt requested, postage prepaid; or if
transmitted to either party by facsimile, copy followed by mailed notice as above
required; or if deposited by either party, cost paid with a nationally recognized, reputable
overnight courier, properly addressed as follows:
IF TO THE SELLERS:
Kenneth L. Custer and Sally A Custer
IF TO THE BUYER:
Housing and Redevelopment Authority
in and for the City of Mound
5341 Maywood iRoad
Mound, Minnesota 55364
ATTN: Executive Director and City Manager
AND COPY TO:
John B. Dean
KENNEDY & GRAVEN, CHARTERED
470 Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402
Notices shall be deemed effective on the earlier of the date of receipt or the date of
deposit as aforesaid; provided, however, that if notice is given by deposit, that the time
for the response to any notice by the other party shall commence to run one (1) business
JBD-242235v2
MU195-18
15.
day after any such deposit. Any party may change its address for the service of notice by
giving written notice of such change to the other party, or in any manner above specified,
ten (10) days prior to the effective date of such change.
EXECUTION IN COUNTERPARTS: This Purchase Agreement may be executed in
counterparts by the parties hereto.
ENTIRE AGREEMENT: This Purchase Agreement, any attached exhibits and any
addenda or amendments signed by the parties shall constitute the entire agreement
between SELLERS and BUYER, and supersedes any other written or oral agreements
between SELLERS and BUYER. This Purchase Agreement can only be modified in
writing signed by SELLERS and BUYER.
NOTICE: The attached notice is made a part of the Authority's offer to purchase.
JBD-242235v2
M1~195-18
The undersigned, do hereby approve the above Agreement and the sale thereby made.
Date:
SELLERS:
,2004.
KENNETH L CUSTER
SALLY A. CUSTER
iHOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MOUND
By:
Its Chair
By:
Its
Executive Director
This instrument was drafted by:
KENNEDY & GRAVEN, CHARTERED (JBD)
470 Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402
612-337-9300
JBl)-242235v2
MU195-18
NOTICE TO KENNETH L. CUSTER AND SALLY A. CUSTER
You are hereby notified as follows:
The Housing and Redevelopment Authority in and for the City of Mound ("HRA")
is a legal entity organized and operating in accordance with Minnesota Statutes,
Chapter 469
2. Among the powers conferred upon the HRA is the power of eminent domain.
The parcel of land which is the subject of the attached purchase agreement is located
within the area of the City of Mound which the HRA has designated as a
Redevelopment Project Area.
It is the intention of the HRA to acquire the subject property and to make it available
fbr redevelopment.
In tile event that tile HRA and the owner are unable to reach mutually acceptable
terms concerning the purchase of the subject property, is the present intention of the
HRA to take the steps necessary, and in accordance with the applicable provisions of
law, acquire the subject property through the exercise of its power of eminent
domain.
JBl)-242235vl
M[~195-18
LICENSE AGREEMENT
January 27, 2004
THIS INDENTURE of License, dated as of the__ day of ,2004, by and
between the HOUS1NG AND REDEVELOPMENT AUTHORITY IN AND FOR TI-YE CITY
OF MOUND, a Minnesota public body, corporate and politic, hereinafter referred to as
"Grantor", and KENNETH L. CUSTER AND SALLY A. CUSTER, husband and wife,
hereinafter referred to as "Grantees".
DEFINITIONS:
"Licensed Premises" -The parcel of land which is legally described on Exhibit "A"
attached hereto and made a part hereof; including all buildings and improvements currently
located thereon.
"License" - This Agreement.
TERM; EARLY TERMINATION:
1. a. Term. In consideration of Grantees' performance of Grantees' obligations
under this License, Grantor hereby Licenses the Licensed Premises to Grantees for a term
commencing on the date hereof (the "Commencement Date") and expiring on October 1, 2004
(the "Expiration Date"), unless sooner terminated as provided for in this License.
b. Termination. This License may be terminated by the Grantor in
accordance with the provisions of Section 14.
LICENSE FEE:
2. License Fee. Grantees shall pay to Grantor a gross license fee for the Term in the
amount of $ 1.00 ("License Fee"). The License Fee will be payable on the Commencement
Date.
3. Taxes and special assessments. The Grantees shall pay to Grantor, at least five
days prior to the date due and before penalty attaches their prorata share (based on the length of
the Term) all real estate taxes and installments of special assessments due and payable with
respect to the Licensed Premises.
USE RESTRICT IO N S:
4. a. Grantees shall use the Licensed Premises as and only as for the location
for the continuation of the activities that Grantees have conducted on the Licensed Premises prior
to the sale to the Grantor. Grantees shall comply with all applicable laws, ordinances and
JBl)-242270vl 1
M[;195-18
governmental regulations, and all recorded covenants and restrictions affecting the Licensed
Premises and the use of the Licensed Premises. Grantees shall not use the Licensed Premises for
the storage, handling, transportation or disposal of any Hazardous Substance, Hazardous Waste,
pollutant or contaminant as those terms are defined in 42 U.S.C. § 9601 et. seq. (CERCLA) or
Minn. Stat. Ch. 115B (MERLA).
b. The Licensed Premises may not be into operation for the purposes
mentioned above until the Grantees have furnished Grantor with proof of the insurance coverage
required under Section 9 of this License.
UTILITIES AND OPERATING COSTS:
5. Grantees shall pay all charges for water and sewer, garbage and refuse removal,
electricity and any other utility services furnished to the Licensed Premises, and all other costs
associated with the use, operation and management of the Licensed Premises during the term of
the License.
MAINTENANCE AND REPAIR OF THE LICENSED PREMISES:
6. Grantees accept the Licensed Premises AS IS and WHERE IS, and with all
defects whether known or unknown. Grantees agree to defend, indemnify and hold harmless
Grantor with respect to claims which may be made based upon the condition of the Licensed
Premises during the term of this License. Grantees shall, at all times throughout the term of this
License, and at its sole expense, clean, keep and maintain the Licensed Premises in a condition
of good and safe repair.
ALTERATION OR IMPROVEM'ENT OF THE LICENSED PREMISES:
7. Grantees shall not make any additions or improvements in or to the Licensed
Premises without Grantor's prior written consent. Grantees warrant to Grantor that all such
additions or improvements shall be in strict compliance with all relevant laws, ordinances,
governmental regulations, and insurance requirements. Grantees may commence the
construction of the improvements and such additions only after obtaining and providing to
Grantor the requisite approvals, licenses and permits and indemnifications.
INDEMNIFICATION; COVENANTS TO DEFEND AND HOLD HARMLESS:
8. Grantees shall hold Grantor harmless from and indemnify and defend Grantor
against any claim or liability arising in any manner from Grantees' use, improvement or
occupancy of the Licensed Premises, or relating to the death or bodily injury to any person or
damage to any personal property present on or located in or upon the Licensed Premises,
including the person and personal property of Grantees or Grantees' employees and all persons
in or upon the Licensed Premises at Grantees' invitation or sufferance. Grantees agree to pay all
sums of money in respect of any labor, service, materials, supplies or equipment furnished or
alleged to have been furnished to Grantees in or about the Licensed Premises, and not furnished
J13D-242270vl 2
NIt:195-18
on order of Grantor. Grantees may contest any lien for such services, materials, supplies or
equipment, on the condition that Grantees first provide to Grantor cash, bond, or other security
against such lien which Grantor reasonably determines to be sufficient.
LIABILITY INSURANCE:
9. Grantees shall, at their expense, during the term of this License, keep in full force
and effect a policy or policies of "occurrence" based commercial general liability insurance,
providing coverage for bodily injury, personal property damage, personal injury, and contractual
liability, on terms and with companies acceptable to Grantor. Such policy or policies shall name
both Grantees and Grantor as insured parties and shall have combined policy limits in amounts
not less than $300,000. Such policy or policies shall provide that thirty (30) days written notice
must be given to Grantor prior to cancellation thereof. Grantees shall furnish evidence
satisfactory to Grantor at the Commencement Date that such coverage is in full force and effect.
QUIET iENJOYMENT:
10. Grantor warrants that it has full right to execute and to perform this License, and
that Grantees, upon Grantees' perfbrmance of all of the terms, conditions, covenants and
agreements on Grantees' part to be observed and performed under this License, may peaceably
and quietly enjoy the Licensed Premises subject to the terms and conditions of this License.
ASSIGNMENT OR SUBLICENSING:
Il. Grantees agree not to sublicense any portion of the Licensed Premises or to
transfer or assign this License without obtaining the prior written consent of Grantor, which
consent Grantor may grant or deny at Grantor's sole discretion. Grantor's consent to any
sublicensing or assignment of this License shall not be a waiver of Grantor's rights under this
Section as to any subsequent sublicensing or assignment. Grantees' assignment of this License
or sublicensing of the Licensed Premises shall not relieve Grantees from any of Grantees'
obligations under this License.
S U R RE N D E R:
12. Upon expiration or termination of this License, Grantees shall peaceably
surrender the Licensed Premises. Prior to such termination or expiration, Grantees may,
at their expense, remove all personal property from the Licensed Premises, so long as
such removal will cause no injury to the Licensed Premises. Grantees shall be
conclusively deemed to have abandoned any personal property not removed prior to the
effective date of termination of this License. Prior to the expiration or termination of this
License, Grantees shall have the right to salvage part of the structure located on the
Licensed Premises so long as such salvage does not increase the cost of demolition of the
remainder, create a hazard or nuisance, or result in the release of any contamination.
JBI)-242270v I 3
MU195-18
ACCESS TO LICENSED PREMISES:
13. Grantees agree to permit Grantor and the authorized representatives of Grantor to
enter the Licensed Premises at all times during the hours between 8:00 a.m. and 5:30 p.m.
Monday through Friday (upon 24 hours' notice to Grantees and without interrupting or
interfering with Grantees' business activities) for the purpose of inspecting the same and
conducting such investigations, testing, measurements, and assessments as may be desired by
Grantor: or to conduct any other activities as may be desirable in the sole discretion of Grantor.
DEFAULT OF GRANTEE:
14. Events Of Default: The occurrence of any one or more of the following events
shall constitute an Event of Default:
(1)
Agreement.
Grantees' fhilure to pay when due; any payment required under this
(2) Grantees' failure to maintain and keep in place the insurance required
pursuant to Section 9, which failure remains uncured for five (5) days following
Grantor's written notice to Grantees of Grantees' failure to perform such obligation;
(3) Grantees attempt to sublicense any portion of the Licensed Premises, or
assign its interest under this License, without the prior written consent of Grantor;
(4) Grantees' filing, or having filed against it, any bankruptcy or debtor
proceedings or proceedings for the appointment of a receiver or trustee of all or any
portion of the Licensed Premises, or if Grantees make an assignment for the benefit of
creditors.
(5) Grantees' failure to fully perform any of Grantees' other obligations under
this License, which failure remains uncured for thirty (30) days following Grantor's
written notice to Grantees of Grantees' failure to perform such other obligation.
b. Grantor's Remedies: If an Event of Default occurs, and following any
applicable notice and cure period, if any, Grantor shall have the following remedies;
(1) Grantor may, but shall ]not be obligated to, and without notice to or
demand upon the Grantees and without waiving or releasing the Grantees from any
obligations of the Grantees under this License, pay or perform any obligations of
Grantees; pay any cost or expense to be paid by Grantees; obtain any insurance coverage
and pay premiums therefor; and make any other payment or perform any other act on the
part of the Grantees to be made and performed as provided for in this License, in such
rnanner and to such extent as the Grantor may deem desirable, and in exercising any such
right, may also pay all necessary and incidental costs and expenses, employ counsel and
.lBD-242270vl 4
M1!195-18
incur and pay attorneys' fees. Grantees shall pay any and all such sum or sums to Grantor
upon demand.
(2) Grantor may terminate this License by written notice to Grantees in which
case Grantees shall vacate the Licensed Premises in accordance with Section 12. Such
termination shall, unless a different time is specified elsewhere in this License, be
effective 10 days following the date of giving notice. Neither the passage of time after
the occurrence of an Event of Default nor Grantor's exercise of any other remedy with
regard to such Event of Default shall limit Grantor's right to terminate the License by
written notice to Grantees.
(3) In addition to all other remedies of Grantor, Grantor shall be entitled to
reimbursement upon demand of all reasonable attorneys' fees which Grantor incurs in
connection with any Event of Default.
(4)
License.
Grantor may initiate legal proceedings to enforce the provisions of this
No remedy provided for herein or elsewhere in this License or otherwise available to Grantor by
law, statute or equity, shall be exclusive of any other remedy, but all such remedies shall be
cumulative and may be exercised from time to time and as often as the occasion may arise.
DAMAGE OR DESTRUCTION:
15. If fire or other casualty damages or destroys the Licensed Premises or
Improvements, or if the Licensed Premises or Improvements incur substantial damage due to
vandalism, or other unforeseen cause during the term of this License, then Grantees shall have
the option of terminating this License. lin which case Grantees shall vacate the Licensed
Premises in accordance with Section 12.
GENERAL:
16. Grantor's Disclaimer of Warranty: Grantor disclaims any warranty that the
Licensed Premises is suitable roi' Grantees' use.
c. Relationship of Grantor and Grantees: The License does not create the
relationship of principal and agent or of partnership or of joint venture or of any association
between Grantor and Grantees, the sole relationships between the parties hereto being that of
Grantor and Grantees under this License.
d. Waiver: No waiver of Grantor's remedies upon the occurrence of an
Event of Default shall be implied from any omission by Grantor to take any action on account of
such Event of Default, and no express waiver shall affect any Event of Default other than the
Event of Default specified in the express waiver and such an express waiver shall be effective
.IBD-242270vl 5
MUI95-18
only for the time and to the extent expressly stated. One or more waivers by Grantor shall not
then be construed as a waiver of a subsequent Event of Default.
e. Choice of Law: The laws of the State of Minnesota shall govern the
validity, performance and enforcement of this License.
this License.
Time: Time is of the essence in the performance of all obligations under
g. Entire Agreement and Amendment: This License and the Exhibits, if any,
attached hereto and forming a part hereof, and the Purchase Agreement between the parties
hereto dated, 2004 constitute the entire agreements between Grantor and
Grantees affecting the Licensed Premises and there are no other agreements, either oral or
written, between them other than said documents and as are herein set forth. No subsequent
alteration, amendment, change or addition to this License shall be binding upon Grantor or
Grantees unless reduced to writing and executed in the same form and manner in which this
License is executed.
h. Successors and Assigns: The terms, covenants and conditions of this
License shall be binding upon and inure to the benefit of the successors and assigns of the parties
hereto.
17. No Claim Upon Termination. Grantees acknowledge that Grantor is willing to
enter into this agreement and provide the Grantees the use of the Licensed Premises only because
Grantees, in addition to performing its obligations hereunder, have stipulated and agreed with
Grantor as follows:
a. Grantees waive any claim they may have based upon Grantor's termination of this
Agreement whether based upon the value of the Improvement, the value of the License, or for
any other reason known or unknown at this time.
b. Grantees will make no further claim for relocation benefits or assistance
following the termination of this Agreement; it being understood and agreed between the parties
that all matters pertaining to relocation benefits and assistance have been fully addressed in the
Purchase Agreement between the parties.
c. Grantees indemnify and hold harmless the Grantor from any claims of the nature
described in subparagraphs a and b above as are made by third parties.
18. Right to Make Application. Nothing in this License shall be deemed to limit the
right of Grantor to make applications to other governmental entities with respect to the Licensed
Premises; and the Grantees' permission or consent shall not be required for such applications.
IN WITNESS WHEREOF, the Grantor and the Grantees have caused these presents to be
executed in form and manner sufficient to bind them at law, as of the day and year first above
written.
JBD-242270vl 6
MU195-18
GRANTOR:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF MOUND
By:
Pat Meisel
Its: Chair
and
By:
.Kandis M. Hanson
Its: Executive Director
GRANTEES:
Kenneth L Custer
Sally A. Custer
JBD-242270vl 7
MI. 195-18
EXHIBIT A
Legal Description of the Licensed Premises
[To be supplied prior to execution]
JBD-197897v2
RC125-1