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2018-02-27 HRA CC Agenda PacketMISSION STATEMENT: "The City of Mound, through teamwork and cooperation, provides, at a reasonable cost, quality services that respond to the needs of all citizens, fostering a safe, attractive and flourishing community." CONCURRENT SPECIAL MEETING AGENDA MOUND HOUSING AND REDEVELOPMENT AUTHORITY AND MOUND CITY COUNCIL TUESDAY, FEBRUARY 27, 2018 6:30 P.M. MOUND CITY COUNCIL CHAMBERS CENTENNIAL BUILDING 5341 MAYWOOD ROAD, MOUND, MN Call to Order 2. Approval of the agenda, with any amendments 3. Request for Qualifications and Interest in a Townhome Development in the Mound Harbor District in Mound, MN: Presentations of concept plans and development proposals from respondents: 1-3 (Also see separate pkt) A. Tom Bakritges, Director of Land Development, Homestead Partners B. Mike Kevitt, Vice President of Land Development, SVK Development, LLC 4. Discussion and action to select the preferred developer for a townhome development in the Mound Harbor District 5. Council Action: Action on a resolution authorizing staff to negotiate the 4 terms of a purchase agreement for consideration by the HRA Board and City Council (NOTE: Insert selected developer name) 6. HRA Action: Action on a resolution authorizing staff to negotiate the 5 terms of a purchase agreement for consideration by the HRA Board and City Council (NOTE: Insert selected developer name) 7. Council Action: Action on a resolution approving amended and restated 6-14 Master Subordination Agreement and Estoppel Certificate related to the (13-14) Indian Knoll Manor Project 8. HRA Action: Action on a resolution approving amended and restated 15-16 Master Subordination Agreement and Estoppel Certificate related to the (15-16) Indian Knoll Manor Project 9. Adjourn This is a preliminary agenda and subject to change. The City Council and HRA will set a final agenda at the meeting. More current meeting agendas may be viewed at City Hall or at the City of Mound web site: www.cityofmound.com. ^vc- CITY OF MtlIIND 2415 WILSHIRE BOULEVARD . MOUND, MN 55364-1668 ^ PH: 952-472-0600 ^ FAX: 952-472-0620 ® WWW.CITYOFMOUND.COM February 15, 2018 Developer Street Address City, State ZIP Dear Thank you for submitting a response to the City of Mound's Request for Qualifications and Interest in a Townhome Development in the Mound Harbor District. The Mound City Council and Housing and Redevelopment Authority have set a special concurrent meeting on Tuesday, February 27, 2018 beginning at 6:30 pm and have selected three developers to present their concept plans and development proposals for consideration. Because the developers selected have strong track records on references and previous developments, there will be less emphasis on the proof of ability to finance and the pro -forma at this time. Presentations on February 27 should reflect the contents of the proposals previously submitted, but also need to include information on any of the following subjects that were not addressed in the original proposal. The format of the presentation should address the following subjects in this order: 1) Price for the 2.3 acre parcel of land and number of units by type, for the number of lots/parcels most likely to be developed under your proposal; 20 of which have access to a boat slip on Lost Lake/Lake Minnetonka (refer to draft Slip Use Agreement included in the original RFQ/I document). Assume the site is a buildable site with no additional soil correction needed and that the developer will be responsible for all public improvements, including removal and replacement of any roads within the subdivision. 2) Market value of completed development broken down by number of units and unit type (base model before upgrades). For each unit type, specify: • Minimum estimated lot size • Estimated finished unit square footage, number of stories • Number of garage stalls, bedrooms, baths, and any special accoutrements • Estimated market value of each unit type and total for the development • Provide representative examples taken from pervious, similar projects of floor plans and pictures demonstrating quality of finishes in the base model 3) Concept Plan Information - provide an image of the proposed concept plan and address the following: A. Rational or basis for the quantity, orientation and unit -mix (if appropriate) you included in the site plan most likely built under your proposal. - 1 - B. Describe how your development site plan proposal will integrate with existing lakefront, natural resources, and community gathering and pedestrian uses and character within the district. C. Describe how your development site plan will integrate with possible future restaurant use of the adjacent parcel to the east in terms of potential circulation, parking, noise, and process concerns. Identify any specific planning concepts or features you may have included in your proposal to mitigate these factors. D. Describe in very general terms the basic structure of the HOA you envision for the continuation of the development after individual unit sales, including covenants, basic financial structure, key HOA responsibilities, basic governance, owner occupancy vs. sublet, etc. 4) Estimated timeline for land use approvals and construction. 5) Lead Developer Information A. List developments completed or in process, including: city, development name, type (luxury townhome, multi use retail/apartments, multi -family, etc), number of units, unit sizes (in Square Feet - separate finished/unfinished) B. Other information the developer feels is relevant for the Council/HRA to consider when deciding on which developer to select (example: Indicate if design and construction are performed "in-house" by the holding company or a subsidiary thereof vs. subcontractors, etc.) 6) Question and Answer Session - Each developer will present separately while the other two are waiting outside the chambers. Every effort will be made to ask each developer the same set of questions. Developers are invited to submit up to two questions in advance that they would like to be given the opportunity to answer as well as have the other developers address the same issue. The City appreciates your participation and cooperation in this process. It should be noted that only the townhome development is under consideration in this evaluation. In an effort to maintain comparability the assumptions listed above should be adhered to. Any reference made to the restaurant parcel should be framed only in the context of planning for the interaction of sites and uses. Presentations must be submitted by 4:00pm on Wednesday, February 21st. Presentations will be given to the Council separately from the published packet, although a public copy will be in the Chamber on February 27th and available to the public thereafter, to comply with statute. Each of the presentations should take 20 minutes, including the Question and Answer Session. Please contact City Manager Eric Hoversten at (952)472-0609 with any questions. We look forward to your presentation on the 27th! Sincerely, Eric Hoversten City Manager !PAN Developers need to submit their presentations by Wednesday, February 21st at 4:00 pm. Presentations will be shared with the City Council / HRA in a separate packet in advance of the meeting, but will become public once the meeting starts. In an attempt to standardize the formats to foster/aid comparability, we ask that the presentations use the following formats, in this order. #1. Price for the 2.3 acre parcel of land and number of units by type. Offer price: #2. Market Value of Completed Development (Example based on 2305 & 5485 Lost Lake Court) # UNITS MIN LOT SIZE # OF STORIES FINISHED SQ FEET # GARAGE STALLS # BEDROOMS # BATHS EST. MARKET VALUE 11 .03 acres 3 2,400 1 Tandem 2 3.5 450,000 16 .09 acres 2 2,400 3 3 2.25 665,000 TOTAL MARKET VALUE $ XXM Provide images of concept plans, floor plans, sample exteriors and interior finishes, etc. for the proposed townhome project. #3. Concept Plan Information - provide image of concept plan and address issues outlined in memo. #4. Estimated Timeline for Land Use Approvals and Construction a. Purchase and Development Agreement - March/April b. Land Use Approvals - completed by 2018 C. Site Work - completed by 2019 d. Construction of initial units - completed by 2019 e. Construction of remaining units - completed by , 20_ #5. Lead Developer Information - Previous Developments CITY DEVELOPMENT NAME TYPE # UNITS FINISHED SQ FOOTAGE/UNIT Mound Villas on Lost Lake Luxury Townhomes 27 2,200 - 3,000 #6. Q & A - submit up to two questions if desired. -3- CITY OF MOUND RESOLUTION NO. 18 - RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY COUNCIL WHEREAS. the City of Mound (the "City") owns multiple parcels in the Mound Harbor District in K80und. MN; and WHEREAS. the (}dv Council approved the issuance of Request for Qualifications and Interest (hereinafter "RFC)/I") in 3 TovvDh0nle Development in the K8VUnd Harbor District at the November 28. 2017 regular meeting; and WHEREAS. the City Council directed staff to invite three of the RF{J/| respondents to present their proposals at the February 27. 2018 concurrent meeting of the Mound Housing and Redevelopment Authority (hereinafter "HRA") and the Mound City Council; and WHEREAB, NHH Properties withdrew from consideration on February 16. 2018; and KKHEREAS, two developers, Homestead Partners, LLC and 8VK Development, LLC, presented their concept plans and development proposals to the Mound HRA and the City Council on February 27. 2018; and WHEREAS, presentations of concept plans and development proposals were received and C8FBfUUy reviewed by the HRA Board of Commissioners and City Council; and WHERE/kS, while both organizations are highly qua|ified, was better able to demonstrate the ability to meet the stated objectives of: (1) offering oVnOp8Ubve price for the land and maximizing the market value of completed development; (2) desirability of concept plan to balance intensity Of Use with preservation of public enjoyment of the area; and (3) ability to complete the development in a brno|y manner and to independently finance all improvements; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Mound, Minnesota, authorizes Staff to negotiate the barrnn of purchase agreement with for consideration by the HRA Board and the City Council. Adopted bvthe City Council this 27thday ofFebruary, 2O18 Mayor Mark Wegscheid Attest: Catherine Pauache.Clerk MOUND HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 18- H RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY COUNCIL WHEREAS, the Mound Housing and Redevelopment Authority of Mound, Minnesota (the "HRA") owns multiple parcels in the Mound Harbor District in Mound, MN; and WHEREAS, the HRA Board approved the issuance of a Request for Qualifications and Interest (hereinafter "RFQ/I") in a Townhome Development in the Mound Harbor District at the November 28, 2017 regular meeting; and WHEREAS, the HRA Board directed staff to invite three of the RFQ/1 respondents to present their proposals at the February 27, 2018 concurrent meeting of the Mound Housing and Redevelopment Authority and Mound City Council; and WHEREAS, NHH Properties withdrew from consideration on February 16, 2018; and WHEREAS, two developers, Homestead Partners, LLC and SVK Development, LLC, presented their concept plans and development proposals to the Mound Housing and Redevelopment Authority and Mound City Council on February 27, 2018; and WHEREAS, presentations of concept plans and development proposals were received and carefully reviewed by the HRA Board of Commissioners and City Council; and WHEREAS, while both organizations are highly qualified, was better able to demonstrate the ability to meet the stated objectives of: (1) offering competitive price for the land and maximizing the market value of completed development; (2) desirability of concept plan to balance intensity of use with preservation of public enjoyment of the area; and (3) ability to complete the development in a timely manner and to independently finance all improvements; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Mound Housing and Redevelopment Authority, that Staff is authorized to negotiate the terms of a purchase agreement with for consideration by the HRA Board and the City Council. Adopted by the HRA this 27th day of February, 2018. Attest: Catherine Pausche, Clerk -5- Chair Mark Wegscheid ti�i�t#9k re�-��*aa�fig9w �a��a t..:_.. kdf3€p sax ,Y.` taae trite .. B�s3 Fm�,pr P[§5#txtz kauetivbi �aa31:�2�+ ;7 Wei t�ca7^ - A���&�@ TV* M " a;x�tx+ obi P4xxt:w w. T:m;'fitk FOR USE BY FILING OFFICER ONLY i 1 1 .1 lilli; ' : ! . 1 ' 1 ESTOPPEL CERTIFICATE THIS AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE AMENDS AND RESTATES IN ITS ENTIRETY THE MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE DATED DECEMBER 13, 2016 AND FILED OF RECORD IN THE OFFICE OF THE COUNTY RECORDER FOR HENNEPIN COUNTY ON DECEMBER 14, 2016 AS DOCUMENT NUMBER A10391059. THIS MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE (this "Agreement") is effective as of the day of , 2018, and entered into among IKM Limited Partnership, a Minnesota limited partnership ("Borrower"), the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), County of Hennepin, Minnesota, a public body corporate and politic under the laws of the State of Minnesota (the "County"), City of Mound, a Minnesota municipal corporation (the "City"), Aeon, a Minnesota non-profit corporation ("GP"), and The Housing and Redevelopment Authority of the City of Mound, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the "HRA"). RECITALS A. Borrower has applied to and obtained certain loans from the other parties to this Agreement and will use the proceeds of the loans and additional equity to fund the acquisition, Blsm H11 Apts, Mound Master Subordination Agreement (Ver. 11/20/2017) M MHFA Dev. #7878 1,129/2018 construction and/or rehabilitation of a multifamily housing development identified as MHFA Development No. D 78 78 (the "Development"), which will be situated on real property located in the City of Mound, County of Hennepin, State of Minnesota, and legally described in Exhibit A attached to this Agreement (the "Property"). B. The following is a listing and description of the loans that Borrower has obtained from the other parties to this Agreement (collectively, the "Loans"), and the repayment of the Loans will be secured by liens on the Property, and a listing of the documents that evidence and secure the repayment of the Loans (collectively, the "Loan Documents"): Description of Loan A loan from MHFA through its HUD Risk -Sharing (Federal Financing Bank) Program. A loan from MHFA through its Flexible Financing for Capital Costs Program. A loan from MHFA through its Preservation Affordable Rental Investment Fund Program. Amount of Loan Documents Evidencing Loan and Securing Repayment $721,000.00 Those documents set forth in Exhibit B attached to this Agreement. $1 15,000.00 Those documents set forth in Exhibit C attached to this Agreement. $885,000.00 Those documents set forth in Exhibit D attached to this Agreement. A loan from the County through $500,000.00 the HOME Investment Partnerships Program. A loan from the City through the Local Housing Incentives Account Program. A loan from GP through the Environmental Response Fund. A loan from the HRA through the Local Housing Incentives Account Program. Those documents set forth in Exhibit E attached to this Agreement. $400,000.00 Those documents set forth in Exhibit F attached to this Agreement. $390,982.00 Those documents set forth in Exhibit G attached to this Agreement. $2,120,000.00 Those documents set forth in Exhibit H attached to this Agreement. C. The parties intend that the Loans, the corresponding Loan Documents, and other documents referred to in this Agreement and the liens created by the Loan Documents and other documents referred to in this Agreement have a certain order of priority. Blsm H11 Apts, Mound Master Subordination Agreement (Ver. 11/20/2017) MHFA Dev. #7878 1!29/2018 D. The parties wish to specify how the terms and conditions contained in the Loan Documents will be interpreted in the event of a conflict or inconsistency. NOW, THEREFORE, in consideration of good and valuable consideration, and in further consideration of the parties making and entering into the Loans, the parties to this Agreement agree as follows: 1. Definitions. For the purposes of this Agreement, the definitions set forth above are incorporated into this Section 1 by reference. The following terms have the meanings set out respectively after each term, and its meaning is equally applicable to both the singular and plural forms of the term defined: (a) "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Loan Documents, any of their respective properties, or any of their respective partners, members, officers, directors or shareholders. (b) "City Loan" means a loan from the City through the Local Housing Incentives Account Program to Borrower in an original principal amount of $400,000.00. (c) "City Loan Documents" means those documents listed in Exhibit F attached to this Agreement which evidence and secure the repayment of the City Loan. (d) "County Loan" means a loan from the County through the HOME Investment Partnerships Program to Borrower in an original principal amount of $500,000.00. (e) "County Loan Documents" means those documents listed in Exhibit E attached to this Agreement which evidence and secure the repayment of the County Loan. (f) "Development Agreement" means the Development Agreement between Borrower and the City dated October 27, 2016, recorded December 14, 2016 as Document No. A10391046 in the office of the County Recorder for Hennepin County, Minnesota. (g) "GP Loan" means a loan from the GP through the Environmental Response Fund to Borrower in an original principal amount of $390,982.00. (h) "GP Loan Documents" means those documents listed in Exhibit G attached to this Agreement which evidence and secure the repayment of the GP Loan. (i) "HRA Loan" means a loan from the HRA through the Local Housing Incentives Account Program to Borrower in an original principal amount of $2,120,000.00. Blsm HI1 Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 3 1/29/2418 (Ver. 11/20/2017) -8- 0) "HRA Loan Documents" means those documents listed in Exhibit H attached to this Agreement which evidence and secure the repayment of the HRA Loan. (k) "MHFA FFCC Loan" means a loan from MHFA through its Flexible Financing for Capital Costs Program to Borrower in an original principal amount of $115,000.00. (1) "MHFA FFCC Loan Documents" means those documents listed in Exhibit C attached to this Agreement which evidence and secure the repayment of the MHFA FFCC Loan. (g) "MHFA HRS (FFB) Loan" means a loan from MHFA through its HUD Risk -Sharing (Federal Financing Bank) Program to Borrower in an original principal amount of $721,000.00. (h) "MHFA HRS (FFB) Loan Documents" means those documents listed in Exhibit B attached to this Agreement which evidence and secure the repayment of the MHFA HRS (FFB) Loan. (i) "MHFA PARIF Loan" means a loan from MHFA through its Preservation Affordable Rental Investment Fund Program to Borrower in an original principal amount of $885,000.00. 0) "MHFA PARIF Loan Documents" means those documents listed in Exhibit D attached to this Agreement which evidence and secure the repayment of the MHFA PARIF Loan. (k) "RAD Use Agreement" means the Rental Assistance Demonstration Use Agreement between Borrower and the Secretary of Housing and Urban Development ("HUD") dated December 8, 2016, recorded December 14, 2016 as Document No. A 10391045 in the office of the County Recorder for Hennepin County, Minnesota. (1) "Section 811 Use Agreement" means the Section 811 Project Rental Assistance Demonstration Program Use Agreement between Borrower and MHFA dated July 10, 2017, recorded August 7, 2017 as Document No. A10467567 in the office of the County Recorder for Hennepin County, Minnesota. 2. Consent to Loans, Liens and Encumbrances. The parties agree and consent to all of the Loans and agree that all of the liens and encumbrances created by the Loan Documents are deemed to be permitted encumbrances under their respective Loan Documents. The parties further agree to execute any and all documents that any party to this Agreement may reasonably request in order to document that the liens and encumbrances are permitted encumbrances under their respective Loan Documents. Blsm H11 Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 4 1!29=2618 (Ver. 11/2012017) -9- 3. Use of Loan Documents. The parties agree and consent to the use of the Loan Documents set forth in the attached exhibits in conjunction with the Loan referenced in each exhibit. In addition, each party, as to the Loan Documents that correspond to one of its Loans, does hereby covenant, warrant, consent and agree that (i) the described Loan Documents are all of the documents that the party has entered into regarding the corresponding Loan, (ii) there are no documents relating to its Loan other than the described Loan Documents for its Loan, (iii) it will not enter into any other document for its Loan that would adversely impact any other party or parties to this Agreement without the prior written consent of the party or parties (excluding documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), (iv) any existing document or documents that may come into existence in the future to which a party is or becomes a party or from which a party obtains a benefit that is different from the benefits that the other parties have received or will receive, and that is not listed in the Loan Documents set forth in this Agreement for the Loan, will be of no force or effect until approved and consented to in writing by all of the parties to this Agreement upon which the document has, or will have, an adverse effect (excluding documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), and upon written approval, the documents will automatically be considered to be included in the exhibit to this Agreement setting forth the Loan Documents for the Loan. The other parties to this Agreement will execute any document that may reasonably be requested in order to include the document in the exhibit. 4. Subordination of Loans and Loan Documents. (a) Loan Priority. Except as specifically provided below, each party agrees to the following priority of the Loan Documents and any and all the liens and encumbrances created by the Loan Documents and subordinates its respective Loan Documents and the liens and encumbrances created by its respective Loan Documents to those Loan Documents and liens and encumbrances created by the Loan Documents that are listed as having a priority over its Loan Documents and the liens and encumbrances created by its respective Loan Documents: Loan Documents and Party to the Loan Documents Order of Liens and Encumbrances and Holder of Liens and Priority Created by the Loan Documents Encumbrances Created by the Loan Documents RAD Use Agreement HUD First MHFA HRS (FFE) Loan MHFA Second Documents MHFA FFCC Loan Documents MHFA Third MHFA PARIF Loan Documents MHFA Fourth County Loan Documents County Fifth Blsm till Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 5 1=29.`2018 (Ver. 11120%2017) -10- City Loan Documents City Sixth GP Loan Documents GP Seventh HRA Loan Documents HRA Eighth Development Agreement City Ninth Section 811 Use Agreement MHFA Tenth (b) Tax Credit Declaration. The parties acknowledge that the Development has received the benefits of Low Income Housing Tax Credits (the "Credits") pursuant to Section 42 of the Internal Revenue Code ("Section 42") and that it was a condition of the receipt of the Credits that Borrower file a Declaration of Land Use Restrictive Covenants for Low -Income Housing Credits which was recorded in the Office of the County Recorder for Hennepin County, Minnesota on December 21, 2017 as Document No. A10513806 (the "Tax Credit Declaration"). The parties consent to the terms of the Tax Credit Declaration as required by Section 2(c) of the Tax Credit Declaration and agree that the Tax Credit Declaration is subordinate to each of their Loans and the related Loan Documents, except to the extent required by Section 9(d) of the Tax Credit Declaration (relating to the three-year vacancy control during the extended use period). 5. Interpretation. The parties are entering into and executing this Agreement in order to establish the subordination and priority of the Loan Documents and any liens and encumbrances created by the Loan Documents, and, accordingly, the parties agree, understand, and acknowledge that the enforceability of this Agreement is not, and will not be, restricted, limited, or impaired by the fact that not all of the parties to this Agreement are signatories to each or any of the Loan Documents. 6. Most Restrictive Requirements. Notwithstanding the order of priority and subordinations granted in this Agreement, the Borrower will comply not only with the Loan Documents having first priority but with all Loan Documents. For example, if a party's Loan Documents contain rent, income or occupancy requirements that are more restrictive than Loan Documents that are more senior in priority, then the Borrower will comply with the more restrictive Loan Documents for as long as they remain in effect. 7. Absence of Events of Default and Compliance with Closing Requirements. Each party states, represents, and warranties that as to each of its individual Loans, (i) its Loans have been duly closed, (ii) there are no events of default, or events that with the passage of time could constitute an event of default, currently existing with respect to any of its Loans, and (iii) all of its Loans are in good standing. 8. Notice of Default and Cure Rights. Each party will deliver to the other parties a default notice within five business days in each case where a party has given a default notice to Borrower (provided that each party will have no liability to any party for failure to timely give notice). Failure of the notifying party to send a default notice to the other parties will not prevent 131sm H11 Apts, Mound Master Subordination Agreement (ver. 11/20/2017) MHFA Dev. #7878 P29/2018 the exercise of the notifying party's rights and remedies under the Loan Documents, subject to the provisions of this Agreement. The other parties will have the opportunity, but not the obligation, to cure any default within 60 days following the date of the notice; provided, however that the notifying party will be entitled, during the 60 -day period, to continue to pursue its rights and remedies under the Loan Documents. 9. Use of Insurance and Condemnation Proceeds. Notwithstanding any provisions to the contrary contained in this Agreement or in any of the Loan Documents, the parties agree that any and all insurance and/or condemnation proceeds will be used first to repair or reinstate the Development. If there are any remaining proceeds, or if the amounts are insufficient to repair or reinstate the Development, or if the Development cannot be repaired or reinstated, then the proceeds will be used to pay off the Loans in order of the priority of the Loan Documents specified in this Agreement. 10. Agreement Not to Commence Bankruptcy Proceeding. The parties agree that during the term of this Agreement they will not commence, or join with any other creditor in commencing, any Bankruptcy Proceeding with respect to Borrower, without the other parties' prior written consents. 11. Survival of Termination. The terms of this Agreement will continue, and will survive the termination of this Agreement, if any payment under the Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In the event, any or all of the Loans originally intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if the payment had not been made. 12. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be an original but all of which will constitute one instrument. (THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK) NOTE: Signature pages and loan documents are not ePacket for the Concurrent Meeting of the Mound City Council and HRA, but have been reviewed by B1sm Hit Apts, Mound Master Subordination Agreement (ver. 11/20/2017) MHFA Dev. #7878 1/29/2018 CITY OF MOUND RESOLUTION NO. 18 - RESOLUTION APPROVING AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN KNOLL MANOR PROJECT WHEREAS, The Housing and Redevelopment Authority of the City of Mound (the "Authority") previously sold certain property owned by the Authority, located at 2020 Commerce Boulevard, Mound, Minnesota including the housing facility known as Indian Knoll Manor (the "Property") to IKM Limited Partnership, a Minnesota limited partnership, an affiliate of Aeon, a Minnesota nonprofit corporation ("IKM"); and WHEREAS, the City of Mound (the "City") received funds in the amount of $400,000 from the Metropolitan Council under its Local Housing Incentives Account Program, and on December 13, 2016, provided a loan of the proceeds thereof in the amount of $400,000 to IKM (the "LHIA Loan") to finance IKM's costs of acquisition of the Property and the construction of certain improvements on the Property (the "Project"); and WHEREAS, the City agreed to subordinate the LHIA Loan to a loan provided to IKM by the County (the "County Loan") and to construction financing provided by Wells Fargo, National Association, a national banking association ("Wells Fargo") to IKM, in accordance with the Master Subordination Agreement and Estoppel Certificate, dated December 13, 2016, and filed in the office of the County Recorder for Hennepin County on December 14, 2016 as Document Number Al 0391059 (the "MSA"); and WHEREAS, the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), will serve as the permanent lender for the Project and has assumed the senior financing position initially held by Wells Fargo; and WHEREAS, it has been requested that the City agree to resubordinate the LHIA Loan to the County Loan and to MHFA's senior financing pursuant to the Amended and Restated Master Subordination Agreement and Estoppel Certificate (the "Amended Subordination Agreement"), between the City, the Authority, IKM, Hennepin County, Aeon, and the Minnesota Housing Finance Agency, which will amend and restate in its entirety the MSA; and WHEREAS, it has also been requested that the City agree to subordinate the Development Agreement, entered into in 2016 between IKM and the Developer in accordance with the Amended Subordination Agreement; and WHEREAS, the City Council has reviewed the Amended Subordination Agreement and finds the execution of the same are in the best interests of the City and of its residents. -13- NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mound, Minnesota as follows: 1. That the Amended and Amended Subordination Agreement is hereby approved, subject to the modifications that do not alter the substance of the transaction and that are approved by the City Attorney. 2. That the Mayor and the City Manager are hereby authorized and directed to execute all appropriate documents, including, but not limited to, the above stated document, to effectuate the transaction contemplated by this Resolution. Adopted by the City Council this 27th day of February, 2018. Mayor Mark Wegscheid Attest: Catherine Pausche, Clerk MOUND HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 18- H RESOLUTION APPROVING AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN KNOLL MANOR PROJECT WHEREAS, The Housing and Redevelopment Authority of the City of Mound, Minnesota (the "Authority") previously sold certain property owned by the Authority, located at 2020 Commerce Boulevard, Mound, Minnesota including the housing facility known as Indian Knoll Manor (the "Property") to IKM Limited Partnership, a Minnesota limited partnership, an affiliate of Aeon, a Minnesota nonprofit corporation ("IKM"); and WHERAS, on December 12, 2016, the Authority provided a loan to IKM in the amount of $2,120,000 (the "HRA Loan") to help finance the acquisition of the Property and to certain improvements thereto (the "Project"); and WHEREAS, on December 12, 2016, the Authority also provided a loan of proceeds from an environmental response fund grant from Hennepin County in the amount of $390,982 (the "ERF Grant" and together with the HRA Loan, the "HRA Financing") to Aeon to provide a loan to IKM to finance the Project; and WHEREAS, the Authority agreed to subordinate the HRA Financing to a loan provided to IKM by the County (the "County Loan") and to construction financing provided by Wells Fargo, National Association, a national banking association ("Wells Fargo") to IKM, in accordance with the Master Subordination Agreement and Estoppel Certificate, dated December 13, 2016, and filed in the office of the County Recorder for Hennepin County on December 14, 2016 as Document Number Al 0391059 (the "MSA"); and WHEREAS, the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), will serve as the permanent lender for the Project and has assumed the senior financing position initially held by Wells Fargo; and WHEREAS, it has been requested that the Authority agree to resubordinate the HRA Financing to the County Loan and to MHFA's senior financing pursuant to the Amended and Restated Master Subordination Agreement and Estoppel Certificate (the "Amended Subordination Agreement"), between the City, the Authority, IKM, Hennepin County, Aeon, and the Minnesota Housing Finance Agency, which will amend and restate in its entirety the MSA; and WHEREAS, the Board of Commissioners has reviewed the Amended Subordination Agreement and finds the execution of the same is in the best interests of the Authority. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Mound as follows: 517521v1 GAF MU195-39 -15- That the Amended Subordination Agreement is hereby approved, subject to the modifications that do not alter the substance of the transaction and that are approved by the City Attorney. 2. That the Chair and the Executive Director are hereby authorized and directed to execute all appropriate documents, including, but not limited to, the above stated document, to effectuate the transaction contemplated by this Resolution. Adopted by the Board of Commissioners this 27th day of February, 2018. Attest: Catherine Pausche, Clerk Chair Mark Wegscheid 2 517521v1 GAFMU195-39 SIO MISSION STATEMENT: "The City of Mound, through teamwork and cooperation, provides, at a reasonable cost, quality services that respond to the needs of all citizens, fostering a safe, attractive and flourishing community." CONCURRENT SPECIAL MEETING AGENDA MOUND HOUSING AND REDEVELOPMENT AUTHORITY AND MOUND CITY COUNCIL TUESDAY, FEBRUARY 27, 2018 6:30 P.M. MOUND CITY COUNCIL CHAMBERS CENTENNIAL BUILDING 5341 MAYWOOD ROAD, MOUND, MN Call to Order 2. Approval of the agenda, with any amendments 3. Request for Qualifications and Interest in a Townhome Development in the Mound Harbor District in Mound, MN: Presentations of concept plans and development proposals from respondents: 1-3 (Also see separate pkt) A. Tom Bakritges, Director of Land Development, Homestead Partners B. Mike Kevitt, Vice President of Land Development, SVK Development, LLC 4. Discussion and action to select the preferred developer for a townhome development in the Mound Harbor District 5. Council Action: Action on a resolution authorizing staff to negotiate the 4 terms of a purchase agreement for consideration by the HRA Board and City Council (NOTE: Insert selected developer name) 6. HRA Action: Action on a resolution authorizing staff to negotiate the 5 terms of a purchase agreement for consideration by the HRA Board and City Council (NOTE: Insert selected developer name) 7. Council Action: Action on a resolution approving amended and restated 6-14 Master Subordination Agreement and Estoppel Certificate related to the (13-14) Indian Knoll Manor Project 8. HRA Action: Action on a resolution approving amended and restated 15-16 Master Subordination Agreement and Estoppel Certificate related to the (15-16) Indian Knoll Manor Project 9. Adjourn This is a preliminary agenda and subject to change. The City Council and HRA will set a final agenda at the meeting. More current meeting agendas may be viewed at City Hall or at the City of Mound web site: www.cityofmound.com. ^vc- CITY OF MtlIIND 2415 WILSHIRE BOULEVARD . MOUND, MN 55364-1668 ^ PH: 952-472-0600 ^ FAX: 952-472-0620 ® WWW.CITYOFMOUND.COM February 15, 2018 Developer Street Address City, State ZIP Dear Thank you for submitting a response to the City of Mound's Request for Qualifications and Interest in a Townhome Development in the Mound Harbor District. The Mound City Council and Housing and Redevelopment Authority have set a special concurrent meeting on Tuesday, February 27, 2018 beginning at 6:30 pm and have selected three developers to present their concept plans and development proposals for consideration. Because the developers selected have strong track records on references and previous developments, there will be less emphasis on the proof of ability to finance and the pro -forma at this time. Presentations on February 27 should reflect the contents of the proposals previously submitted, but also need to include information on any of the following subjects that were not addressed in the original proposal. The format of the presentation should address the following subjects in this order: 1) Price for the 2.3 acre parcel of land and number of units by type, for the number of lots/parcels most likely to be developed under your proposal; 20 of which have access to a boat slip on Lost Lake/Lake Minnetonka (refer to draft Slip Use Agreement included in the original RFQ/I document). Assume the site is a buildable site with no additional soil correction needed and that the developer will be responsible for all public improvements, including removal and replacement of any roads within the subdivision. 2) Market value of completed development broken down by number of units and unit type (base model before upgrades). For each unit type, specify: • Minimum estimated lot size • Estimated finished unit square footage, number of stories • Number of garage stalls, bedrooms, baths, and any special accoutrements • Estimated market value of each unit type and total for the development • Provide representative examples taken from pervious, similar projects of floor plans and pictures demonstrating quality of finishes in the base model 3) Concept Plan Information - provide an image of the proposed concept plan and address the following: A. Rational or basis for the quantity, orientation and unit -mix (if appropriate) you included in the site plan most likely built under your proposal. - 1 - B. Describe how your development site plan proposal will integrate with existing lakefront, natural resources, and community gathering and pedestrian uses and character within the district. C. Describe how your development site plan will integrate with possible future restaurant use of the adjacent parcel to the east in terms of potential circulation, parking, noise, and process concerns. Identify any specific planning concepts or features you may have included in your proposal to mitigate these factors. D. Describe in very general terms the basic structure of the HOA you envision for the continuation of the development after individual unit sales, including covenants, basic financial structure, key HOA responsibilities, basic governance, owner occupancy vs. sublet, etc. 4) Estimated timeline for land use approvals and construction. 5) Lead Developer Information A. List developments completed or in process, including: city, development name, type (luxury townhome, multi use retail/apartments, multi -family, etc), number of units, unit sizes (in Square Feet - separate finished/unfinished) B. Other information the developer feels is relevant for the Council/HRA to consider when deciding on which developer to select (example: Indicate if design and construction are performed "in-house" by the holding company or a subsidiary thereof vs. subcontractors, etc.) 6) Question and Answer Session - Each developer will present separately while the other two are waiting outside the chambers. Every effort will be made to ask each developer the same set of questions. Developers are invited to submit up to two questions in advance that they would like to be given the opportunity to answer as well as have the other developers address the same issue. The City appreciates your participation and cooperation in this process. It should be noted that only the townhome development is under consideration in this evaluation. In an effort to maintain comparability the assumptions listed above should be adhered to. Any reference made to the restaurant parcel should be framed only in the context of planning for the interaction of sites and uses. Presentations must be submitted by 4:00pm on Wednesday, February 21st. Presentations will be given to the Council separately from the published packet, although a public copy will be in the Chamber on February 27th and available to the public thereafter, to comply with statute. Each of the presentations should take 20 minutes, including the Question and Answer Session. Please contact City Manager Eric Hoversten at (952)472-0609 with any questions. We look forward to your presentation on the 27th! Sincerely, Eric Hoversten City Manager !PAN Developers need to submit their presentations by Wednesday, February 21st at 4:00 pm. Presentations will be shared with the City Council / HRA in a separate packet in advance of the meeting, but will become public once the meeting starts. In an attempt to standardize the formats to foster/aid comparability, we ask that the presentations use the following formats, in this order. #1. Price for the 2.3 acre parcel of land and number of units by type. Offer price: #2. Market Value of Completed Development (Example based on 2305 & 5485 Lost Lake Court) # UNITS MIN LOT SIZE # OF STORIES FINISHED SQ FEET # GARAGE STALLS # BEDROOMS # BATHS EST. MARKET VALUE 11 .03 acres 3 2,400 1 Tandem 2 3.5 450,000 16 .09 acres 2 2,400 3 3 2.25 665,000 TOTAL MARKET VALUE $ XXM Provide images of concept plans, floor plans, sample exteriors and interior finishes, etc. for the proposed townhome project. #3. Concept Plan Information - provide image of concept plan and address issues outlined in memo. #4. Estimated Timeline for Land Use Approvals and Construction a. Purchase and Development Agreement - March/April b. Land Use Approvals - completed by 2018 C. Site Work - completed by 2019 d. Construction of initial units - completed by 2019 e. Construction of remaining units - completed by , 20_ #5. Lead Developer Information - Previous Developments CITY DEVELOPMENT NAME TYPE # UNITS FINISHED SQ FOOTAGE/UNIT Mound Villas on Lost Lake Luxury Townhomes 27 2,200 - 3,000 #6. Q & A - submit up to two questions if desired. -3- CITY OF MOUND RESOLUTION NO. 18 - RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY COUNCIL WHEREAS. the City of Mound (the "City") owns multiple parcels in the Mound Harbor District in K80und. MN; and WHEREAS. the (}dv Council approved the issuance of Request for Qualifications and Interest (hereinafter "RFC)/I") in 3 TovvDh0nle Development in the K8VUnd Harbor District at the November 28. 2017 regular meeting; and WHEREAS. the City Council directed staff to invite three of the RF{J/| respondents to present their proposals at the February 27. 2018 concurrent meeting of the Mound Housing and Redevelopment Authority (hereinafter "HRA") and the Mound City Council; and WHEREAB, NHH Properties withdrew from consideration on February 16. 2018; and KKHEREAS, two developers, Homestead Partners, LLC and 8VK Development, LLC, presented their concept plans and development proposals to the Mound HRA and the City Council on February 27. 2018; and WHEREAS, presentations of concept plans and development proposals were received and C8FBfUUy reviewed by the HRA Board of Commissioners and City Council; and WHERE/kS, while both organizations are highly qua|ified, was better able to demonstrate the ability to meet the stated objectives of: (1) offering oVnOp8Ubve price for the land and maximizing the market value of completed development; (2) desirability of concept plan to balance intensity Of Use with preservation of public enjoyment of the area; and (3) ability to complete the development in a brno|y manner and to independently finance all improvements; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Mound, Minnesota, authorizes Staff to negotiate the barrnn of purchase agreement with for consideration by the HRA Board and the City Council. Adopted bvthe City Council this 27thday ofFebruary, 2O18 Mayor Mark Wegscheid Attest: Catherine Pauache.Clerk MOUND HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 18- H RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY COUNCIL WHEREAS, the Mound Housing and Redevelopment Authority of Mound, Minnesota (the "HRA") owns multiple parcels in the Mound Harbor District in Mound, MN; and WHEREAS, the HRA Board approved the issuance of a Request for Qualifications and Interest (hereinafter "RFQ/I") in a Townhome Development in the Mound Harbor District at the November 28, 2017 regular meeting; and WHEREAS, the HRA Board directed staff to invite three of the RFQ/1 respondents to present their proposals at the February 27, 2018 concurrent meeting of the Mound Housing and Redevelopment Authority and Mound City Council; and WHEREAS, NHH Properties withdrew from consideration on February 16, 2018; and WHEREAS, two developers, Homestead Partners, LLC and SVK Development, LLC, presented their concept plans and development proposals to the Mound Housing and Redevelopment Authority and Mound City Council on February 27, 2018; and WHEREAS, presentations of concept plans and development proposals were received and carefully reviewed by the HRA Board of Commissioners and City Council; and WHEREAS, while both organizations are highly qualified, was better able to demonstrate the ability to meet the stated objectives of: (1) offering competitive price for the land and maximizing the market value of completed development; (2) desirability of concept plan to balance intensity of use with preservation of public enjoyment of the area; and (3) ability to complete the development in a timely manner and to independently finance all improvements; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Mound Housing and Redevelopment Authority, that Staff is authorized to negotiate the terms of a purchase agreement with for consideration by the HRA Board and the City Council. Adopted by the HRA this 27th day of February, 2018. Attest: Catherine Pausche, Clerk -5- Chair Mark Wegscheid ti�i�t#9k re�-��*aa�fig9w �a��a t..:_.. kdf3€p sax ,Y.` taae trite .. B�s3 Fm�,pr P[§5#txtz kauetivbi �aa31:�2�+ ;7 Wei t�ca7^ - A���&�@ TV* M " a;x�tx+ obi P4xxt:w w. T:m;'fitk FOR USE BY FILING OFFICER ONLY i 1 1 .1 lilli; ' : ! . 1 ' 1 ESTOPPEL CERTIFICATE THIS AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE AMENDS AND RESTATES IN ITS ENTIRETY THE MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE DATED DECEMBER 13, 2016 AND FILED OF RECORD IN THE OFFICE OF THE COUNTY RECORDER FOR HENNEPIN COUNTY ON DECEMBER 14, 2016 AS DOCUMENT NUMBER A10391059. THIS MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE (this "Agreement") is effective as of the day of , 2018, and entered into among IKM Limited Partnership, a Minnesota limited partnership ("Borrower"), the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), County of Hennepin, Minnesota, a public body corporate and politic under the laws of the State of Minnesota (the "County"), City of Mound, a Minnesota municipal corporation (the "City"), Aeon, a Minnesota non-profit corporation ("GP"), and The Housing and Redevelopment Authority of the City of Mound, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the "HRA"). RECITALS A. Borrower has applied to and obtained certain loans from the other parties to this Agreement and will use the proceeds of the loans and additional equity to fund the acquisition, Blsm H11 Apts, Mound Master Subordination Agreement (Ver. 11/20/2017) M MHFA Dev. #7878 1,129/2018 construction and/or rehabilitation of a multifamily housing development identified as MHFA Development No. D 78 78 (the "Development"), which will be situated on real property located in the City of Mound, County of Hennepin, State of Minnesota, and legally described in Exhibit A attached to this Agreement (the "Property"). B. The following is a listing and description of the loans that Borrower has obtained from the other parties to this Agreement (collectively, the "Loans"), and the repayment of the Loans will be secured by liens on the Property, and a listing of the documents that evidence and secure the repayment of the Loans (collectively, the "Loan Documents"): Description of Loan A loan from MHFA through its HUD Risk -Sharing (Federal Financing Bank) Program. A loan from MHFA through its Flexible Financing for Capital Costs Program. A loan from MHFA through its Preservation Affordable Rental Investment Fund Program. Amount of Loan Documents Evidencing Loan and Securing Repayment $721,000.00 Those documents set forth in Exhibit B attached to this Agreement. $1 15,000.00 Those documents set forth in Exhibit C attached to this Agreement. $885,000.00 Those documents set forth in Exhibit D attached to this Agreement. A loan from the County through $500,000.00 the HOME Investment Partnerships Program. A loan from the City through the Local Housing Incentives Account Program. A loan from GP through the Environmental Response Fund. A loan from the HRA through the Local Housing Incentives Account Program. Those documents set forth in Exhibit E attached to this Agreement. $400,000.00 Those documents set forth in Exhibit F attached to this Agreement. $390,982.00 Those documents set forth in Exhibit G attached to this Agreement. $2,120,000.00 Those documents set forth in Exhibit H attached to this Agreement. C. The parties intend that the Loans, the corresponding Loan Documents, and other documents referred to in this Agreement and the liens created by the Loan Documents and other documents referred to in this Agreement have a certain order of priority. Blsm H11 Apts, Mound Master Subordination Agreement (Ver. 11/20/2017) MHFA Dev. #7878 1!29/2018 D. The parties wish to specify how the terms and conditions contained in the Loan Documents will be interpreted in the event of a conflict or inconsistency. NOW, THEREFORE, in consideration of good and valuable consideration, and in further consideration of the parties making and entering into the Loans, the parties to this Agreement agree as follows: 1. Definitions. For the purposes of this Agreement, the definitions set forth above are incorporated into this Section 1 by reference. The following terms have the meanings set out respectively after each term, and its meaning is equally applicable to both the singular and plural forms of the term defined: (a) "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Loan Documents, any of their respective properties, or any of their respective partners, members, officers, directors or shareholders. (b) "City Loan" means a loan from the City through the Local Housing Incentives Account Program to Borrower in an original principal amount of $400,000.00. (c) "City Loan Documents" means those documents listed in Exhibit F attached to this Agreement which evidence and secure the repayment of the City Loan. (d) "County Loan" means a loan from the County through the HOME Investment Partnerships Program to Borrower in an original principal amount of $500,000.00. (e) "County Loan Documents" means those documents listed in Exhibit E attached to this Agreement which evidence and secure the repayment of the County Loan. (f) "Development Agreement" means the Development Agreement between Borrower and the City dated October 27, 2016, recorded December 14, 2016 as Document No. A10391046 in the office of the County Recorder for Hennepin County, Minnesota. (g) "GP Loan" means a loan from the GP through the Environmental Response Fund to Borrower in an original principal amount of $390,982.00. (h) "GP Loan Documents" means those documents listed in Exhibit G attached to this Agreement which evidence and secure the repayment of the GP Loan. (i) "HRA Loan" means a loan from the HRA through the Local Housing Incentives Account Program to Borrower in an original principal amount of $2,120,000.00. Blsm HI1 Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 3 1/29/2418 (Ver. 11/20/2017) -8- 0) "HRA Loan Documents" means those documents listed in Exhibit H attached to this Agreement which evidence and secure the repayment of the HRA Loan. (k) "MHFA FFCC Loan" means a loan from MHFA through its Flexible Financing for Capital Costs Program to Borrower in an original principal amount of $115,000.00. (1) "MHFA FFCC Loan Documents" means those documents listed in Exhibit C attached to this Agreement which evidence and secure the repayment of the MHFA FFCC Loan. (g) "MHFA HRS (FFB) Loan" means a loan from MHFA through its HUD Risk -Sharing (Federal Financing Bank) Program to Borrower in an original principal amount of $721,000.00. (h) "MHFA HRS (FFB) Loan Documents" means those documents listed in Exhibit B attached to this Agreement which evidence and secure the repayment of the MHFA HRS (FFB) Loan. (i) "MHFA PARIF Loan" means a loan from MHFA through its Preservation Affordable Rental Investment Fund Program to Borrower in an original principal amount of $885,000.00. 0) "MHFA PARIF Loan Documents" means those documents listed in Exhibit D attached to this Agreement which evidence and secure the repayment of the MHFA PARIF Loan. (k) "RAD Use Agreement" means the Rental Assistance Demonstration Use Agreement between Borrower and the Secretary of Housing and Urban Development ("HUD") dated December 8, 2016, recorded December 14, 2016 as Document No. A 10391045 in the office of the County Recorder for Hennepin County, Minnesota. (1) "Section 811 Use Agreement" means the Section 811 Project Rental Assistance Demonstration Program Use Agreement between Borrower and MHFA dated July 10, 2017, recorded August 7, 2017 as Document No. A10467567 in the office of the County Recorder for Hennepin County, Minnesota. 2. Consent to Loans, Liens and Encumbrances. The parties agree and consent to all of the Loans and agree that all of the liens and encumbrances created by the Loan Documents are deemed to be permitted encumbrances under their respective Loan Documents. The parties further agree to execute any and all documents that any party to this Agreement may reasonably request in order to document that the liens and encumbrances are permitted encumbrances under their respective Loan Documents. Blsm H11 Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 4 1!29=2618 (Ver. 11/2012017) -9- 3. Use of Loan Documents. The parties agree and consent to the use of the Loan Documents set forth in the attached exhibits in conjunction with the Loan referenced in each exhibit. In addition, each party, as to the Loan Documents that correspond to one of its Loans, does hereby covenant, warrant, consent and agree that (i) the described Loan Documents are all of the documents that the party has entered into regarding the corresponding Loan, (ii) there are no documents relating to its Loan other than the described Loan Documents for its Loan, (iii) it will not enter into any other document for its Loan that would adversely impact any other party or parties to this Agreement without the prior written consent of the party or parties (excluding documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), (iv) any existing document or documents that may come into existence in the future to which a party is or becomes a party or from which a party obtains a benefit that is different from the benefits that the other parties have received or will receive, and that is not listed in the Loan Documents set forth in this Agreement for the Loan, will be of no force or effect until approved and consented to in writing by all of the parties to this Agreement upon which the document has, or will have, an adverse effect (excluding documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), and upon written approval, the documents will automatically be considered to be included in the exhibit to this Agreement setting forth the Loan Documents for the Loan. The other parties to this Agreement will execute any document that may reasonably be requested in order to include the document in the exhibit. 4. Subordination of Loans and Loan Documents. (a) Loan Priority. Except as specifically provided below, each party agrees to the following priority of the Loan Documents and any and all the liens and encumbrances created by the Loan Documents and subordinates its respective Loan Documents and the liens and encumbrances created by its respective Loan Documents to those Loan Documents and liens and encumbrances created by the Loan Documents that are listed as having a priority over its Loan Documents and the liens and encumbrances created by its respective Loan Documents: Loan Documents and Party to the Loan Documents Order of Liens and Encumbrances and Holder of Liens and Priority Created by the Loan Documents Encumbrances Created by the Loan Documents RAD Use Agreement HUD First MHFA HRS (FFE) Loan MHFA Second Documents MHFA FFCC Loan Documents MHFA Third MHFA PARIF Loan Documents MHFA Fourth County Loan Documents County Fifth Blsm till Apts, Mound MHFA Dev. #7878 Master Subordination Agreement 5 1=29.`2018 (Ver. 11120%2017) -10- City Loan Documents City Sixth GP Loan Documents GP Seventh HRA Loan Documents HRA Eighth Development Agreement City Ninth Section 811 Use Agreement MHFA Tenth (b) Tax Credit Declaration. The parties acknowledge that the Development has received the benefits of Low Income Housing Tax Credits (the "Credits") pursuant to Section 42 of the Internal Revenue Code ("Section 42") and that it was a condition of the receipt of the Credits that Borrower file a Declaration of Land Use Restrictive Covenants for Low -Income Housing Credits which was recorded in the Office of the County Recorder for Hennepin County, Minnesota on December 21, 2017 as Document No. A10513806 (the "Tax Credit Declaration"). The parties consent to the terms of the Tax Credit Declaration as required by Section 2(c) of the Tax Credit Declaration and agree that the Tax Credit Declaration is subordinate to each of their Loans and the related Loan Documents, except to the extent required by Section 9(d) of the Tax Credit Declaration (relating to the three-year vacancy control during the extended use period). 5. Interpretation. The parties are entering into and executing this Agreement in order to establish the subordination and priority of the Loan Documents and any liens and encumbrances created by the Loan Documents, and, accordingly, the parties agree, understand, and acknowledge that the enforceability of this Agreement is not, and will not be, restricted, limited, or impaired by the fact that not all of the parties to this Agreement are signatories to each or any of the Loan Documents. 6. Most Restrictive Requirements. Notwithstanding the order of priority and subordinations granted in this Agreement, the Borrower will comply not only with the Loan Documents having first priority but with all Loan Documents. For example, if a party's Loan Documents contain rent, income or occupancy requirements that are more restrictive than Loan Documents that are more senior in priority, then the Borrower will comply with the more restrictive Loan Documents for as long as they remain in effect. 7. Absence of Events of Default and Compliance with Closing Requirements. Each party states, represents, and warranties that as to each of its individual Loans, (i) its Loans have been duly closed, (ii) there are no events of default, or events that with the passage of time could constitute an event of default, currently existing with respect to any of its Loans, and (iii) all of its Loans are in good standing. 8. Notice of Default and Cure Rights. Each party will deliver to the other parties a default notice within five business days in each case where a party has given a default notice to Borrower (provided that each party will have no liability to any party for failure to timely give notice). Failure of the notifying party to send a default notice to the other parties will not prevent 131sm H11 Apts, Mound Master Subordination Agreement (ver. 11/20/2017) MHFA Dev. #7878 P29/2018 the exercise of the notifying party's rights and remedies under the Loan Documents, subject to the provisions of this Agreement. The other parties will have the opportunity, but not the obligation, to cure any default within 60 days following the date of the notice; provided, however that the notifying party will be entitled, during the 60 -day period, to continue to pursue its rights and remedies under the Loan Documents. 9. Use of Insurance and Condemnation Proceeds. Notwithstanding any provisions to the contrary contained in this Agreement or in any of the Loan Documents, the parties agree that any and all insurance and/or condemnation proceeds will be used first to repair or reinstate the Development. If there are any remaining proceeds, or if the amounts are insufficient to repair or reinstate the Development, or if the Development cannot be repaired or reinstated, then the proceeds will be used to pay off the Loans in order of the priority of the Loan Documents specified in this Agreement. 10. Agreement Not to Commence Bankruptcy Proceeding. The parties agree that during the term of this Agreement they will not commence, or join with any other creditor in commencing, any Bankruptcy Proceeding with respect to Borrower, without the other parties' prior written consents. 11. Survival of Termination. The terms of this Agreement will continue, and will survive the termination of this Agreement, if any payment under the Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In the event, any or all of the Loans originally intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if the payment had not been made. 12. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be an original but all of which will constitute one instrument. (THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK) NOTE: Signature pages and loan documents are not ePacket for the Concurrent Meeting of the Mound City Council and HRA, but have been reviewed by B1sm Hit Apts, Mound Master Subordination Agreement (ver. 11/20/2017) MHFA Dev. #7878 1/29/2018 CITY OF MOUND RESOLUTION NO. 18 - RESOLUTION APPROVING AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN KNOLL MANOR PROJECT WHEREAS, The Housing and Redevelopment Authority of the City of Mound (the "Authority") previously sold certain property owned by the Authority, located at 2020 Commerce Boulevard, Mound, Minnesota including the housing facility known as Indian Knoll Manor (the "Property") to IKM Limited Partnership, a Minnesota limited partnership, an affiliate of Aeon, a Minnesota nonprofit corporation ("IKM"); and WHEREAS, the City of Mound (the "City") received funds in the amount of $400,000 from the Metropolitan Council under its Local Housing Incentives Account Program, and on December 13, 2016, provided a loan of the proceeds thereof in the amount of $400,000 to IKM (the "LHIA Loan") to finance IKM's costs of acquisition of the Property and the construction of certain improvements on the Property (the "Project"); and WHEREAS, the City agreed to subordinate the LHIA Loan to a loan provided to IKM by the County (the "County Loan") and to construction financing provided by Wells Fargo, National Association, a national banking association ("Wells Fargo") to IKM, in accordance with the Master Subordination Agreement and Estoppel Certificate, dated December 13, 2016, and filed in the office of the County Recorder for Hennepin County on December 14, 2016 as Document Number Al 0391059 (the "MSA"); and WHEREAS, the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), will serve as the permanent lender for the Project and has assumed the senior financing position initially held by Wells Fargo; and WHEREAS, it has been requested that the City agree to resubordinate the LHIA Loan to the County Loan and to MHFA's senior financing pursuant to the Amended and Restated Master Subordination Agreement and Estoppel Certificate (the "Amended Subordination Agreement"), between the City, the Authority, IKM, Hennepin County, Aeon, and the Minnesota Housing Finance Agency, which will amend and restate in its entirety the MSA; and WHEREAS, it has also been requested that the City agree to subordinate the Development Agreement, entered into in 2016 between IKM and the Developer in accordance with the Amended Subordination Agreement; and WHEREAS, the City Council has reviewed the Amended Subordination Agreement and finds the execution of the same are in the best interests of the City and of its residents. -13- NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mound, Minnesota as follows: 1. That the Amended and Amended Subordination Agreement is hereby approved, subject to the modifications that do not alter the substance of the transaction and that are approved by the City Attorney. 2. That the Mayor and the City Manager are hereby authorized and directed to execute all appropriate documents, including, but not limited to, the above stated document, to effectuate the transaction contemplated by this Resolution. Adopted by the City Council this 27th day of February, 2018. Mayor Mark Wegscheid Attest: Catherine Pausche, Clerk MOUND HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 18- H RESOLUTION APPROVING AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN KNOLL MANOR PROJECT WHEREAS, The Housing and Redevelopment Authority of the City of Mound, Minnesota (the "Authority") previously sold certain property owned by the Authority, located at 2020 Commerce Boulevard, Mound, Minnesota including the housing facility known as Indian Knoll Manor (the "Property") to IKM Limited Partnership, a Minnesota limited partnership, an affiliate of Aeon, a Minnesota nonprofit corporation ("IKM"); and WHERAS, on December 12, 2016, the Authority provided a loan to IKM in the amount of $2,120,000 (the "HRA Loan") to help finance the acquisition of the Property and to certain improvements thereto (the "Project"); and WHEREAS, on December 12, 2016, the Authority also provided a loan of proceeds from an environmental response fund grant from Hennepin County in the amount of $390,982 (the "ERF Grant" and together with the HRA Loan, the "HRA Financing") to Aeon to provide a loan to IKM to finance the Project; and WHEREAS, the Authority agreed to subordinate the HRA Financing to a loan provided to IKM by the County (the "County Loan") and to construction financing provided by Wells Fargo, National Association, a national banking association ("Wells Fargo") to IKM, in accordance with the Master Subordination Agreement and Estoppel Certificate, dated December 13, 2016, and filed in the office of the County Recorder for Hennepin County on December 14, 2016 as Document Number Al 0391059 (the "MSA"); and WHEREAS, the Minnesota Housing Finance Agency, a public body corporate and politic of the State of Minnesota ("MHFA"), will serve as the permanent lender for the Project and has assumed the senior financing position initially held by Wells Fargo; and WHEREAS, it has been requested that the Authority agree to resubordinate the HRA Financing to the County Loan and to MHFA's senior financing pursuant to the Amended and Restated Master Subordination Agreement and Estoppel Certificate (the "Amended Subordination Agreement"), between the City, the Authority, IKM, Hennepin County, Aeon, and the Minnesota Housing Finance Agency, which will amend and restate in its entirety the MSA; and WHEREAS, the Board of Commissioners has reviewed the Amended Subordination Agreement and finds the execution of the same is in the best interests of the Authority. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Mound as follows: 517521v1 GAF MU195-39 -15- That the Amended Subordination Agreement is hereby approved, subject to the modifications that do not alter the substance of the transaction and that are approved by the City Attorney. 2. That the Chair and the Executive Director are hereby authorized and directed to execute all appropriate documents, including, but not limited to, the above stated document, to effectuate the transaction contemplated by this Resolution. Adopted by the Board of Commissioners this 27th day of February, 2018. Attest: Catherine Pausche, Clerk Chair Mark Wegscheid 2 517521v1 GAFMU195-39 SIO