HomeMy WebLinkAbout2018-07-26 HRA Regular Meeting Agenda Packet
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MINUTES
OF REGULAR MEETING
OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY
JUNE 28, 2018 MEETING RECESSED
RECESSED MEETING CONTINUED TO
JULY 13, 2018
CALL TO ORDER
Chair Hovland called the HRA meeting to order at 7:34 a.m.
ROLLCALL
Answering rollcall were Chair Hovland, Commissioners Staunton, Brindle, and Stewart.
Absent: Commissioner Fischer
APPROVAL OF MEETING AGENDA
Motion made by Commissioner Brindle seconded by Commissioner Staunton approving the
Meeting Agenda.
Ayes: Staunton, Hovland, Brindle, Stewart
Motion carried.
COMMUNITY COMMENT – None.
ADOPTION OF CONSENT AGENDA
Motion made by Commissioner Brindle seconded by Commissioner Stewart approving the
consent agenda.
V.A. Approve minutes of June 28, 2018.
Ayes: Staunton, Hovland, Brindle, Stewart
Motion carried.
V.B. TAX INCREMENT FINANCING FOR PENTAGON PARK SOUTH, 4815-4901 WEST 77TH
STREET AND 7710 COMPUTER AVENUE
Manager Neal reminded the HRA that at the June 28 meeting, staff informed the HRA that they were at an
impasse with the developer and did not feel comfortable advocating for the developers’ requests. Mr. Neuendorf
stated since the June 28 HRA meeting, staff and developer met several times and made some progress relative
to the four unresolved issues as following:
1) All parties are agreeable to three separate pay-as-you go TIF notes; however, they do not agreement
on the amount of the TIF;
2) No agreement reached on degree of improvements that should be delivered to qualify for the full TIF
amount; the developer is not willing to commit to a full build-out and is not agreeable to an alternative
like a Minimum Special Assessment Agreement;
3) Agreement reached on the lookback provision; and,
4) The developer was willing to provide the on-site public realm improvements as a condition of TIF
payments; however, the developer requested that the City complete the infrastructure improvements
on West 77th Street and special assess the developer for the work ($700,000). Mr. Neuendorf said staff
and the city attorney had concerns with this proposal.
The HRA discussion included public improvements planned for the area and costs; typical process for issuing
TIF notes; and the added complexity because 5-year limit for the TIF note ends July 2019.
The developer’s team addressed the HRA stating: the value of the project was supportive of the TIF note
requested; the TIF note requested followed state statute and passed the ‘but for’ test because TIF could be used
Minutes/HRA/June 28 recessed meeting continued to July 13 and 16, 2018
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for buildings and to enhance land value; and the developer believed it was reasonable to assume there would be
value based on their investment for the three TIF notes.
After further discussion with the HRA, the developer agreed to items 1, 2 and 3 as outlined by Mr. Neuendorf,
but stated the developer would like to exit the special assessment after Phase 2 starts. Mr. Anhut agreed with
exiting the special assessment if the property value exceeded the TIF notes.
Staff was directed to continue working with the developer.
Motion by Commissioner Stewart seconded by Commissioner Brindle to recess the July13
meeting until July 16, 2018, 7:30 a.m.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
Meeting recessed at 9:14 a.m.
JULY 16, 2018
RECESSED MEETING CONTINUED
CALL TO ORDER
Chair Hovland called the meeting to order at 7:36 a.m.
ROLLCALL
Answering rollcall were Chair Hovland, Commissioners Brindle, Fischer, Staunton, and Stewart.
MOTION TO OPEN RECESSED MEETING
Motion made by Commissioner Brindle seconded by Commissioner Stewart to continue the
recessed meeting.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
V.A. TAX INCREMENT FINANCING FOR PENTAGON PARK NORTH, 4600-4660 WEST 77TH
STREET
Mr. Neuendorf stated staff was at an impasse with the developer similar to the Pentagon Park South project.
He said staff and the developer have not reached an agreement on the affordable housing units and public parking.
Mr. Neuendorf also noted that the project would be on the July 17 Council agenda for consideration. He
explained that the developer did not plan to provide affordable housing but would instead sell land to Dominium
to build affordable housing at a future date. Mr. Neuendorf recommended requiring a payment of $5.4 million
to satisfy the City’s housing policy. He added the original redevelopment agreement stipulated 230 public parking
spaces and noted the developer requested $1.7 million to provide an additional 100 stalls over 130 currently in
the plan.
The HRA discussed the level of security that should be provided based on the housing policy. The HRA
expressed concern with the added complexity for the affordable housing units to be provided in the future and
with an unknown amount subsidy for Dominium. The HRA also discussed public parking with some indication
for this to be completed in Phases 2 and 3 instead of Phase 1.
The development team addressed the HRA regarding the affordable housing units and public parking.
Minutes/HRA/June 28 recessed meeting continued to July 13 and 16, 2018
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City Attorney Roger Knutson stated that if an agreement was not reached July 13, an extension would be
necessary because the proposed agreement on the Council agenda July 17 expired August 8. The developer
agreed to extend the agreement an additional 30 days.
Staff was directed by the HRA to continue working with the developer to reach an agreement for the security
amount of $5.46 million and 130 parking stalls.
V.B. TAX INCREMENT FINANCING FOR PENTAGON PARK SOUTH, 4815-4901 WEST 77TH
STREET AND 7710 COMPUTER AVENUE
Mr. Neuendorf said staff planned to continue working with the developer and would come back to the HRA on
July 26 for final approval.
I. CORRESPONDENCE
A. Correspondence
II. HRA COMMISSIONERS’ COMMENTS
III. EXECUTIVE DIRECTOR’S COMMENTS
IV. ADJOURNMENT
There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 9:26
a.m.
Respectfully submitted,
___________________________________________
Scott Neal, Executive Director
CITY OF EDINA
HENNEPIN COUNTY
STATE OF MINNESOTA
Council member 'KS Ci/A----. introduced the following resolution and moved its adoption:
RESOLUTION NO. 2018-64
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITH GRANDVIEW 2 TIF DISTRICT.
BE IT RESOLVED by the City Council (the "Council") of the City of Edina, Minnesota (the "City"), as
follows:
Section I. Background.
1.01. The City has approved the establishment of the Grandview 2 Redevelopment Tax Increment
Financing District (the "TIF District") within the Southeast Edina Redevelopment Project Area (the "Project
Area"), and has adopted a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain
improvements within the Project Area.
1.02. The City has determined to pay for certain costs identified in the TIF Plan consisting of site
improvements/preparation, interest, and administrative costs (collectively, the "Qualified Costs"), which costs
may be financed on a temporary basis from City funds available for such purposes.
1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or loan
money from the City's general fund or any other fund from which such advances may be legally authorized, in
order to finance the Qualified Costs; provided the loan or advance is authorized by resolution of the City not
later than 60 days after money is transferred, advanced, or spent, whichever is earliest.
1.04. The City intends to reimburse itself for the Qualified Costs from tax increments derived from
the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the
"Interfund Loan").
Section 2. Terms of Interfund Loan.
2.01. The City hereby authorizes the advance of up to $500,000 from the Centennial Lakes TIF
Account or so much thereof as may be paid as Qualified Costs. The City shall reimburse itself for such
advances from Available Tax Increment (defined below) together with interest at the rate of 4%, which does
not exceed the greater of the rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as
CITY OF EDINA
4801 West 50th Street • Edina, Minnesota 55424
www.EdinaMN.gov • 952-927-8861 • Fax 952-826-0389
of the date the loan is authorized. Interest accrues on the principal amount from the date of each tranche.
2.02. Principal and interest ("Payments") on the outstanding Interfund Loan balance shall be paid
annually on each December 31 (each a "Payment Date"), commencing on the first Payment Date on which the
City has Available Tax Increment (defined below), or on any other dates determined by the City Clerk,
through the date of last receipt of tax increment from the TIF District.
2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment," which shall
mean, on each Payment Date, tax increment available after other obligations have been paid, or as determined
by the City Clerk, generated in the preceding twelve (12) months with respect to the property within the TIF
District and remitted to the City by Hennepin County, all in accordance with Minnesota Statutes, Sections
469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund Loan may be subordinated to any
outstanding or future bonds, notes, or contracts secured in whole or in part with Available Tax Increment, and
are on parity with any other outstanding or future interfund loans secured in whole or in part with Available
Tax Increment.
2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in
whole or in part at any time by the City without premium or penalty. No partial prepayment shall affect the
amount or timing of any other regular payment otherwise required to be made under this lnterfund Loan.
2.05. This Interfund Loan is evidence of an internal borrowing by the City in accordance with
Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax
Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon
shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision
thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision
thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the
State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest
on this Interfund Loan or other costs incident hereto. The City shall have no obligation to pay any principal
amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment
Date.
2.06. Before the latest decertification of any tax increment financing district from which the interfund
loan is to be repaid, the City may modify or amend the terms of this Interfund Loan, in writing, by resolution
of the City Council, including a determination to forgive the outstanding principal amount and accrued interest
to the extent permissible under law.
2.07. The City shall report in its annual report to the State of Minnesota (I) the amount of the
Interfund Loan or advance made in a calendar year; and (2) any amendment of the Interfund Loan or advance
made in a calendar year.
Section 3. Effective Date. This resolution is effective upon the date of its approval.
The motion for the adoption of the foregoing resolution was duly seconded by Council member
---OR/Aim...e. , and upon a vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
ATTE T:
Dated: July 7, 2 18
—41 iii
lames Hovland, May. r Debra A. Mangen, City Clerk "4AP
(Seal)
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LICENSE AGREEMENT
LICENSE AGREEMENT (“Agreement”) made this _______ day of _____________,
2018, by and between the EDINA HOUSING AND REDEVELOPMENT AUTHORITY, a
Minnesota municipal corporation, whose address is 4801 W. 50th Street, Edina, MN 55424
("Authority"), and STEVENS CONSTRUCTION CORP., a Wisconsin corporation, whose
address is 1650 West 82nd Street, Suite 1040, Bloomington, Minnesota 55431 ("Contractor").
RECITALS
A. The Authority is the owner of real property located at 5146 Eden Avenue, Edina,
Minnesota 55424 (“Property”);
B. In conjunction with the redevelopment of property at 5220 Eden Avenue.
Contractor requires a temporary site for parking and storage of related equipment and
construction materials;
C. Subject to the terms of this Agreement, the Authority will allow the Contractor to
use the Property for temporary employee parking and storage of related equipment and new
construction materials.
NOW, THEREFORE, the parties do hereby agree as follows:
1. Grant of License. Except as otherwise limited or terminated as provided under
Paragraph 6, the Authority does hereby grant to Contractor a non-exclusive license over and
across the Property for: (a) parking by Contractor’s employees, contractors and subcontractors
actively working on the redevelopment of properties located at 5220 Eden Avenue (“Project”);
and (ii) temporary storage of equipment and new construction material used on the Project
(“Authorized Use”). At no time shall the site be used for the storage of soil or construction
debris. The use of the site shall be consistent with the site plan attached hereto as Exhibit “A”
(“Site Plan”). During the Contractor’s use of the site, the Authority maintains its right to enter the
property to conduct work related to the future re-development and re-use of the site. This right
extends to third parties employed by the Authority and its potential development partner.
2. Term. This Agreement shall commence on the execution date and extend through
December 31, 2018. Thereafter, this Agreement shall renew on a month-by-month basis through
April 30, 2019.
3. Termination. The Authority may immediately terminate this Agreement for a
breach of the Agreement by Contractor. In addition, the Authority may terminate this Agreement
upon 14 calendar days’ written notice to Contractor in the event that the Authority or partner
intends to initiate construction on the Property. The Contractor may terminate this Agreement
upon 7 days’ notice to the Authority, but Contractor shall not be entitled to refund of any
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Payments made to the Authority as required under Paragraph 4.
4. Payment. Contractor, in consideration of the licensing of the Property, hereby
covenants and agrees to pay to the Authority a fixed fee of $32,000. If the license to use the
property continues past 12/31/2018, the fee shall be $2,000 per month, paid in advance on or
before the 1st day of the month. Payment shall be delivered to the Edina Housing and
Redevelopment Authority, 4801 W. 50th Street, Edina, MN 55424 Attention: HRA Executive
Director.
5. Contractor Acknowledgment.
A. The Contractor acknowledges that the Contractor has inspected the Property and
is fully satisfied with its physical condition and agrees to accept the Property in its present "as is"
condition. Neither the Authority nor any representative of the Authority has made any
warranties or representations upon which the Contractor relies with respect to the physical
condition of the Property.
B. The Contractor accepts the Property subject to such conditions, restrictions, and
limitations, such as utility easements and public right of way, which presently appear of record in
regard to the Property.
C. The Contractor accepts the Property subject to any applicable health, life, safety,
fire, or zoning ordinances, codes, regulations or statutes of the City of Edina, the County of
Hennepin, the State of Minnesota, or any other governmental body now existing or which may
hereinafter exist by reason of any legal authority during the term of this Agreement.
D. The Contractor accepts the Property and is satisfied as to the boundary lines and
contents of its premises and likewise satisfied with the sufficiency of the present title of the
Authority.
6. Restrictions on Use.
A. The Property shall be used solely for the Authorized Use at Contractor’s sole cost
and expense.
B. Storage of equipment and new construction materials shall not exceed 20% of the
Property and shall be located in the northeast quadrant of the Property consistent with the Site
Plan. At no time is the site to be used for any storage of soil or construction debris. Equipment
and new construction materials shall be stored in a good and workmanlike manner and in
accordance with all applicable codes and regulations. The work shall be subject to City inspections
and approvals. If the equipment or materials are unkempt or unsightly in the reasonable opinion of
the Authority, the Contractor shall bring the Property into compliance with this Agreement upon
five days’ notice from the Authority. Material and equipment storage shall conclude on August 31,
2018.
C. No construction waste or soils are allowed on the Property. No hazardous
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materials are allowed on the Property.
D. Parking is allowed on paved portions of the site only, provided that parked
vehicles, equipment or materials do not block the access drive through the property.
E. Access to the site shall be exclusively through existing curb cuts.
F. Other than marking parking stalls and installing buffers to prevent parking on
unpaved areas, Contractor shall not alter or make improvements to the Property without the
written consent of the Authority, except as otherwise provided under this Agreement.
G. Contractor shall not harm existing trees located on the Property and shall
reimburse the Authority $3,000.00 for each mature tree that is significantly damaged.
H. The City will plow the access route through the Property and mow the grass along
Eden Avenue in accordance with its current practice. Contractor shall be responsible for all other
plowing on the Property and maintain or cut weeds on the Property in accordance with City
Code requirements, at Contractors cost.
I. Authority shall have the right to enter the Property at any time to inspect the
Property and to use the access route. The access route shall also be maintained for the use of
deliveries and access to adjacent properties in accordance with current practice.
7. Taxes. Contractor shall be responsible for all personal property and real estate
taxes incurred as a result of this Agreement.
8. Repair and Maintenance. During the term of this Agreement, Contractor will be
responsible for any and all repair and maintenance of the Property. Maintenance shall include, but
not be limited to, keeping the Property clean of trash, mowing and trimming as described in “H”
above.
9. Environmental Matters. The term "Environmental Laws" shall mean all federal,
state and local laws, including statutes, regulations, ordinances, codes, rules and other
governmental restrictions and requirements relating to the discharge of air pollutants, water
pollutants or process waste water or otherwise relating to the environment or hazardous
substances, including but not limited to the Federal Solid Waste Disposal Act, the Federal Clean
Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976, the Federal Comprehensive Environmental Responsibility, Cleanup and Liability Act of 1980,
regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency
and regulations of any state department of natural resources or state environmental protection
agency now or at any time hereafter in effect.
In order to induce the Authority to enter into this Agreement, the Contractor covenants,
represents and warrants to the Authority that while this Agreement is in effect Contractor will
comply with all applicable Environmental Laws.
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Contractor shall indemnify Authority against all claims, demands, charges, damages, orders,
judgments, citations, or costs, including reasonable attorneys' fees which Authority may incur by
reason of any violation of Environmental Laws occurring on the Property for which Authority may
become responsible by reason of Authority’s use of the Property.
10. Liability Insurance. the Contractor will, at the Contractor's sole cost and expense,
provide and maintain during the term of this Agreement a blanket or general liability insurance
policy against claims for personal injury, death, or property damage occurring in connection with
the use and occupancy of the Property, said policy will have limits of not less than Two Million and
00/100 Dollars ($2,000,000.00) combined single limit.
11. Property Damage Insurance. The Contractor will, at the Contractor's sole cost
and expense, provide and maintain all risk property insurance during the term of this Agreement in
an amount sufficient to cover all items of property owned, maintained, or controlled by the
Contractor on the Property
12. Requirement for All Insurance. All insurance policies (or riders) required by this
Agreement will be (i) taken out by the Contractor and maintained with responsible insurance
companies organized under the laws of one of the states of the United States and qualified to
do business in the State of Minnesota, (ii) will contain a provision that the insurer will not
cancel or revise coverage thereunder without endeavoring to give written notice to the
Contractor as an insured party and to the City as an additional insured at least ten (10) days
before cancellation or revision becomes effective, (iii) will name the Contractor as an insured
party and “Edina Housing and Redevelopment Authority” as an additional insured, (iv) will be in
accordance with specifications approved by the Authority for the Authority, and (v) will be
evidenced by a Certificate of Insurance listing “Edina Housing and Redevelopment Authority” as
an additional insured, by endorsement, which will be filed with the Authority.
13. Indemnification. The Contractor agrees to indemnify and save harmless the
Authority from and against all liability, damages, penalties, judgments, or claims of whatever
nature arising from injury to person or property sustained by anyone arising out of the
Contractor's use and occupancy of the Property and will at the Contractor's own cost and
expense defend any and all suits or actions (just or unjust) which may be brought against the
Authority or in which the Authority may be impleaded with others upon any such
above-mentioned matter, claim, or claims. This indemnification in no way limits the
Contractor's obligation to maintain a blanket or other general liability insurance policy for the
benefit of the Authority. This indemnity and hold harmless agreement will include indemnity
against all costs, expenses, and liabilities incurred in or in connection with any such claims or
proceedings brought thereon and the defense thereof.
14. Liens. Contractor shall not permit to be created or to remain undischarged any
lien, encumbrance or charge arising in whole or in part out of any work or work claim of any
contractor, mechanic, laborer of Contractor or material supplied by a vendor to Contractor
which might be, or become, a lien or encumbrance or charge upon the Property. If any lien or
notice of lien on account of an alleged debt of Contractor by a party engaged by Contractor to
work on the Property shall be filed against the Property, Contractor shall, within thirty (30)
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days after notice of the filing thereof, cause the same to be discharged of record by payment,
deposit, bond or other security given.
15. Assignment. The Contractor will not by operation of law or otherwise assign or
permit the Property as depicted and described in this Agreement to be used by others without the
Authority’s prior written consent in each instance.
16. Relationship of Parties. Nothing contained in this Agreement shall be deemed or
construed by the parties hereto or by any third party to create the relationship of principal and
agent or of partnership or of joint venture or of any association whatsoever between Authority
and Contractor, it being expressly understood and agreed that neither the payment of rent nor
any act of the parties hereto shall be deemed to create any relationship between Authority and
Contractor other than the relationship of licensor and Contractor.
17. Default. If the Contractor at any time defaults in the observance of any of the
terms, covenants, and conditions of this Agreement, including any exhibits thereto, the Authority
will immediately notify the Contractor of the Contractor's failure to observe such terms,
covenants, and conditions. Upon such notice being given by the Authority, this Agreement will
wholly cease and terminate and the Contractor will have no rights or interests whatsoever to
further use or occupy the Property. Upon termination, any equipment left on the site after a
Default will be removed at the sole expense of the Contractor.
18. Surrender of Possession. The Contractor agrees that at the expiration or
cancellation of this Agreement, the Contractor will yield up possession of the Property, remove all
vehicles, Contractor property, and construction materials and equipment. Upon surrendering
possession of the Property, the Contractor agrees to return the Property to the condition it was
in prior to the term of this Lease. Any equipment left on the site after a Default will be removed at
the sole expense of the Contractor.
19. Written Notices or Other Correspondence. Any written notice or other
correspondence to be provided by and between the Authority and the Contractor in accordance
with this Agreement will be either hand delivered or mailed by registered or certified mail to the
following addresses:
AUTHORITY:
Edina Housing and Redevelopment Authority
4801 W. 50th Street
Edina, MN 55424
Attention: Scott Neal, Executive Director
CONTRACTOR: Stevens Construction Corporation
1650 West 82nd Street, Suite 1040
Bloomington, Minnesota 55431
Attention: Jim Harmon, Director of MN Operations
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20. Waiver of Default. Any waiver by the Authority of a default under the provisions
of this Agreement by the Contractor will not operate or be construed as a waiver of a subsequent
default by the Contractor. No waiver will be valid unless in writing and signed by the Chair and
attested by the Secretary on behalf of the Authority.
21. Invalidity of Provisions. If any term or provision of this Agreement or any
application hereof to any person or circumstance is to any extent found to be invalid or
unenforceable, the remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or unenforceable will not
be effected thereby and each term and provision of this Agreement will be valid and be enforced
to the fullest extent permitted by law.
22. Entire Agreement. This instrument herein contains the entire and only agreement
between the parties and no oral statements or representations or prior written matter not
contained in this instrument will have any force and effect. This Agreement cannot be modified in
any way except by writing executed by both parties.
23. Governing Law. This Agreement will be governed exclusively by the provisions
hereof and by the laws of the State of Minnesota, as the same from time to time exists.
IN WITNESS WHEREOF, this Agreement was executed by the parties the day and
year first above written.
[remainder of page intentionally blank]
[signature pages to follow]
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EDINA HOUSING AND REDEVELOPMENT AUTHORITY
BY: __________________________________
James B. Hovland, Chair
AND _________________________________
Robert J. Stewart, Secretary
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STEVENS CONSTRUCTION CORPORATION
BY: __________________________________
Mark Rudnicki
Its: Chief Executive Officer & President
THIS INSTRUMENT WAS DRAFTED BY:
CAMPBELL KNUTSON, P.A.
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
(651) 452-5000
AMP
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EXHIBIT “A”
Site Plan
July 26, 2018
Chair and Members of the Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Potential Sale of Real Estate at 5146 Eden Avenue – Updated Business Terms with
Frauenshuh Inc.
Information / Background:
On June 28th, the HRA named Frauenshuh Inc. as the Preferred Developer for the vacant site at
5146 Eden Avenue. The proposed business terms have been refined in response to the comments
and concerns made by the HRA members.
A simplified deal structure is proposed. This new arrangement subdivides the site into two parcels
with each party constructing a separate stand-alone building on each parcel. The South parcel (1.5
acres) is proposed to be sold for private development. The North parcel (1.8 acres) is proposed to
be retained by the HRA for development of a new community art and active adult center and an
adjacent park.
Although each building will be constructed separately, the HRA and Frauenshuh are anticipated to
work cooperatively and share expenses related to entitlements, replatting, and storm water
improvements constructed below a portion of the public park. This approach should be more cost
effective for both parties.
The updated deal structure provides the following benefits to the City/HRA:
1) Allow adequate space for the appropriate size public building that delivers about 30,000
square feet of net usable space (approximately 45,000 gross square feet)
2) Provide for expansion potential of public building
3) Provide additional public parking for shared use of the businesses and guests in the area
4) Maximize the efficient use of incremental taxes generated by new private development
5) Eliminate the elevated civic plaza and incorporate new park space constructed on-grade
6) Allow the City and Frauenshuh to construct each building on separate but coordinated
schedules
STAFF REPORT Page 2
7) Link the development of private and public elements so that the best overall outcome can
be delivered
8) Return 45% of the site to the property tax rolls
9) Retain 55% of the site for permanent public use
The City’s Park and Recreation Department has engaged HGA Architects to prepare an initial
programmatic study for the new public building and outdoor park. Frauenshuh continues to work
with DJR Architecture to refine the multi-family residential building. Both architects will present a
summary of their program and design contract.
Guidance is requested regarding the HRA’s willingness to participate in the financing
of a new community building with “district parking” on this site and ability to begin
site planning and entitlement work in Fall 2018.
Updated concept plans for each building are attached to demonstrate the general scope and scale
of each building and their interaction on the site. It is noted that these concepts are subject to the
review and input of the Planning Commission, City Council and general community through the
City’s standard development review process.
While the current financial terms are substantially the same as those presented on June 28th, two
deal points are identified below in case the HRA has concerns with advancing to full real estate
contract.
• The business terms include a proposed sales price of $2.989 million for the 1.5 acre site.
This equates to approximately $2 million per acre. While this is not the highest value in
Edina, it is within the reasonable range for recent real estate sales. Frauenshuh has indicated
that this is the highest land price they can pay to provide a reasonable return.
• Frauenshuh has also requested $1.2 million in a low interest loan from the HRA or Edina
Housing Foundation to supplement the reduced income from the 10% of the project that is
leased to households earning no more than 50% of the Area Median Income. This loan
would extend over the 15-year term of affordability. This request is inconsistent with
Edina’s affordable housing policy (which requires the developer to bear the cost of the
affordable housing). If the HRA is willing to consider this request, staff can evaluate the need
for this type of loan as the overall financing strategy for the project is refined.
Guidance is requested regarding the HRA’s willingness to consider a low-
interest loan to support 10% affordable housing on this site.
Staff recommends approval of the proposed deal structure and seeks authorization to continue
negotiations and prepare a full sales contract for consideration on August 16, 2018. Upon approval
of the sales contract, a due diligence period will begin and the City and Frauenshuh will work
together to pursue land use entitlements by December 31, 2018.
END
5146 Eden Avenue
Updated Redevelopment Proposal between Edina HRA and Frauenshuh
DRAFT for Review July 23, 2018
A. Project Description
a. Redevelopment of vacant site to deliver four key elements
i. New multi-family housing – owned and operated by Frauenshuh
ii. New District parking structure – owned and operated by City
iii. New Community Arts & Active Adult Center – owned and operated by
City
iv. New outdoor park to complement Community Center – owned and
operated by City
B. Subdivision of Land and Real Estate Transaction
a. City to replat 3.3 acre property to create two parcels (North and South)
b. 1.5 acre (maximum) south parcel to be sold to Frauenshuh for private
development of multi-family housing (rental or ownership, at Frauenshuh’s
discretion)
i. $2,989,0000 proposed purchase price
1. $1.99 million per acre
2. $20,900 per unit
ii. $25,000 earnest money
iii. Typical contingencies (Including customary permitting, entitlements,
survey, title, environmental, etc.)
iv. Due diligence and entitlement period – August to March 31, 2019, with
30-day extensions, if necessary and mutually agreeable
v. Closing date – Spring 2019
c. 1.8 acre (minimum) north parcel to be retained by HRA for new public facility
i. City must engage design professionals by closing date (Spring 2019)
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 2
ii. City must award construction contract within 3-years of closing date
(Spring 2022), unless parties agree to extend. If no construction award,
the City must:
1. Extend first right to purchase the 1.8 acre parcel to Frauenshuh at
market rate.
2. If City and Frauenshuh are not able to reach agreement with 3
months, the City can use the property as it deems appropriate
(hold, sell, lease, etc) but any future use must respect the “no
build” line described below and non-public building size and land
use shall be agreeable to both parties. Frauenshuh to retain right
of first refusal.
3. Install the alternative park improvements (details TBD) and screen
the remainder of the site with a fence and row of trees.
4. Construct the pedestrian bridge to connect Jerry’s Ramp to the
park/plaza
d. Shared elements
i. Storm water facility below Civic plaza
1. Installed by Frauenshuh with costs shared by Frauenshuh & City
2. Each party shall bear the pro-rata allocation of design,
construction and operational costs
ii. Soil cut from both buildings used to fill civic plaza
iii. Site prep (fill) and Phase I finish for civic plaza by Frauenshuh with
reimbursement by City to be determined
iv. Equal access to District parking facilities upon completion
e. Permanent Easements
i. City to grant easement to Frauenshuh along shared boundary for shared
storm water facility
1. Approx size TBD
2. Located in the “no build” zone described below
ii. City to grant easement or similar to Frauenshuh to guarantee green
space, light and air (essentially a no-build zone – permanent green space
with only small park structures, temporary structures and land scape
elements)
1. Approx 10,000 to 20,000 Sq. Ft.
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 3
2. Approx 60 to 80 Ft. from property line
3. Approx 80 to 100 Ft. from building face
iii. Frauenshuh to grant public easement along perimeter sidewalks per Plat
iv. Frauenshuh to grant easement to City on south side of apartment
building for transit shelter; location, dimension and design to be mutually
agreeable
v. If mutually beneficial, Frauenshuh shall grant a public easement along the
western edge of the property.
f. Temporary easements and use agreements
i. Frauenshuh to have access to limited portions of the 1.8 acre north for
construction phasing effective on closing date (Spring 2019)
ii. City to grant temporary easement to construct the shared stormwater
facility
iii. City to have access to air rights or other temporary easements for Civic
Building, if needed
g. Other
i. Depending on the nature and use of the public plaza/park, a mutually
agreeable annual park user contribution may be considered if mutually
agreeable; this could take the form of an annual payment based on the
number of units constructed
ii. The site may be subject to Maintenance Assessments related to the 1984
Grandview MaintenanceDistrict. Assessments will be consistent with City
policy regarding allocation and amount.
iii. Details of these two items will be clarified during the entitlement phase.
C. Anticipated Schedule
a. Programmatic design and entitlement
i. Includes both Frauenshuh Apartments and Public Facility
ii. Summer 2018 to December 31, 2018 with extensions, if necessary and
mutually agreeable
b. Frauenshuh apartments
i. Go ahead (financing) letter and real estate closing – March 31, 2019
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 4
ii. Construction begins – Spring 2019
iii. Includes site prep of portions of the outdoor civic plaza (including grass)
iv. Includes installation of shared storm water facility
v. Construction substantially complete – Summer/Fall 2020
c. Public Facility
i. Preliminary design process – Summer 2018 to Spring 2019
ii. Approval of consultants – architects, fundraiser, owner’s rep, etc – Fall
2018 to Summer 2019
1. Lead architect under contract by closing date (March 31, 2019)
iii. Fundraising – Q4 2018 to Fall 2021
iv. Full design – Summer/Fall 2019
v. Bid project – Q4 2019
vi. Bid award – Q1 2020
vii. Construction begins – Spring 2020
viii. Completion – Summer/Fall 2021
d. Outdoor civic plaza (same as Public Facility)
i. Preliminary design – Summer 2018 to Spring 2019
ii. Fundraising – Q4 2018 to Fall 2021
iii. Construction start –
1. Phase 1 (initial fill and grass on southern portion by Frauenshuh–
2019
2. Phase 2 (final fill and final landscaping elements) by City– 2020
iv. Construction Completion – Phase 1 – Spring 2020; Phase 2 – Spring 2021
v. Full Completion - Fall 2021
D. Design and Engineering - Private Facility
a. South parcel anticipated to include:
i. Approximately 143 residential units
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 5
ii. At least 10% priced at affordable rates to households earning no more
than 50% AMI – this applies for at least 15-years after Certificate of
Occupancy issued
iii. Affordable units preferred to include efficiency, 1-bedroom and 2-
bedroom units
iv. On-site parking to serve residents and guests
b. Site plan will undergo Edina’s typical site plan review/rezoning process (includes
neighborhood meeting(s), Planning Commission and City Council)
c. Frauenshuh to select design team for their site
d. Frauenshuh to determine appropriate size, scale and design elements
e. City staff (HRA) to have early input on exterior elements that impact the public
realm experience and also elements of the apartment building that are exposed
to the public park/plaza so as to create conditions that are mutually beneficial –
this extends beyond the City’s typical role as regulator
E. Design and Engineering - Public Facilities and Shared Elements
a. North parcel anticipated to include:
i. Approximately 30,000 Sq. Ft. (net) of community center with expansion
potential
ii. Public parking to serve the broader Grandview District (at least 150
stalls)
iii. Outdoor public park/plaza for shared community use
iv. At least one pedestrian bridge to connect Jerry’s Ramp to the North
parcel
v. If the community center building is not constructed, City/HRA must
commit to maintaining open park space south of the “no build” line
b. City to select architect, engineer and landscape architect
c. City to determine process to design facility
d. City to determine operational programming
e. City to seek restauranteur to operate food/beverage operation
f. City to determine programming of outdoor civic plaza
g. Frauenshuh to have input on design/programming of outdoor civic plaza so as to
create conditions that are mutually beneficial
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 6
F. Neighbor Relations – issues to investigate
i. City and Frauenshuh will work cooperatively to identify and resolve
construction issues with neighboring property owners:
ii. CP Rail - Railroad operator
iii. CSM Properties – access to lower level
iv. Re-routing water treatment ventilation to allow truck access
v. Re-direct deliveries to Jerrys via Brookside alley
vi. Appetite for District parking using special permits
G. Entitlement Process
a. City and Frauenshuh to jointly pursue rezoning 3.3 acre property to PUD
featuring approx. 143 residential units and approx. 45,000 Sq Ft (gross) public
building with outdoor public plaza and below-grade district parking
b. Aim for securing final rezoning and site plan approval for Phase 1 (Frauenshuh
Apartments) by December 31, 2018, with extensions to Spring 2019 if necessary
c. Aim for Phase 2 site plan approval byQ3 2019
d. Frauenshuh to take the lead for entitlement process
i. Cost sharing of PUD and professional costs (including survey, title work,
transportation study, environmental study, etc) TBD
H. Construction Process
a. Frauenshuh Apartments
i. Privately bid and constructed
b. Public Facility
i. City will consider Construction Manager/Agent or General Contractor
with Owners Rep. TBD
I. Funding Frauenshuh Apartments
a. Project costs estimated at approximately $40 million
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 7
b. Predominantly privately funded with combination of equity and debt (subject to
final design and zoning and any resulting cost impacts)
c. Request $1.2 million low-interest loan from Edina Housing Foundation to
support 15 units priced at 50% AMI for 15-years
i. 1% interest over 15-years; interest payments with balloon; subordinate to
primary lender
d. Request reimbursement for City’s share of costs of shared storm water facility
e. Request reimbursement for costs of constructing Phase 1 of the outdoor civic
plaza
f. City/HRA will evaluate these funding requests using typical City/HRA policy
g. Frauenshuh will seek and City will sponsor TBRA grant application – November
2018
h. Frauenshuh will seek and City will sponsor DEED contamination grant
application – November 2018
J. Funding Public Facilities
a. Total Project Costs
i. Estimated at approximately $38 million
b. District Parking
i. Construction funded using HRA bonds – TIF with GO backing
ii. Repaid using incremental taxes from Grandview 2 TIF District
1. $5.5 million estimated from 5146 Eden/Frauenshuh
2. $6.1 million estimated from 5220 Eden/Trammell Crow
c. Public Facility and outdoor civic plaza
i. Construction funded using HRA Tax Abatement bonds with General
Obligation backing
1. Sized based on approved budget less fundraising and property
sales
2. 20 year term
5146 Eden Ave. Real Estate Overview DRAFT July 238, 2018 Page 8
3. Does not require referendum
4. Requires caution to avoid impact to AAA credit rating
ii. Sale of properties can offset construction costs
1. 5146 South parcel - $2.989 million
2. Existing Art Center - $1.341 million
3. Existing Senior Center - $2.5 million
iii. Strong potential for philanthropic contributions - $5.0 million estimated
iv. City will seek LCDA grant – Spring 2019
v. City will seek DEED contamination grant – May 2019
K. Maintenance Responsibilities
a. District Parking
i. City Public Works or Parks Dept to maintain
ii. Costs split by benefiting parties, using 1984 Grandview Maintenance
Assessment District – will require annual budget and updated allocation
policy
b. Outdoor public park/plaza
i. City Parks Dept to maintain
ii. Explore cost split by benefiting parties using 1984 Grandview
Maintenance District
L. Operational Responsibilities
a. District Parking
i. City Admin Dept to oversee permits and special event usage
b. Outdoor public park/plaza
i. City Parks Dept to schedule activities and special events
DJRARCHITECTURE INC.
The Grandview, Edina1
Scenario B Diagram
Key
Residential
Townhouse/Lofts
Park/Art & Senior Ctr.
Lobby/Entrance
Parking
Area to be regraded
with Art/Senior Center
Townhouse/Lofts
Amenity
Deck
Lobby/Entrance
Residential
Parking
L1 Parking
Entry
P1 Parking
Entry
Aerial View from Southwest
5146 Eden Avenue
South Parcel Concept
Updated 7-20-2018
To: Scott Neal, City Manager
From: Ann Kattreh, Parks & Recreation Director
Date: July 26, 2018
RE: New Community Facility at Grandview
On Thursday, June 28 I was directed to conduct a high level analysis of a new community facility at the old public works
site at Grandview. The facility tentatively is scheduled to be a multipurpose community facility including an Art Center,
Active Adult Center and a Café/Restaurant. The facility would have several multipurpose rooms and could be used by
the public in a variety of ways including meeting, small event, education and homework/gathering spaces. The Art Center
and Senior Center would both move their operations to this facility. The site will also contain a 45,000 outdoor park
and plaza on the south end of the community facility. This analysis determines the draft program for the space, the
number of square feet required for the program, the parking requirement, capital cost and the annual operating costs of
the facility.
Over the past 3 weeks the following have been completed:
Victor Pichaty of HGA was hired to provide parking plans and building test fit plan diagrams coordinating with the
current development on the south end of the site; program spreadsheet coordinating with test fit plan diagrams; 3D
block massing diagrams illustrating test fit concept in context; and a conceptual cost estimate of capital costs associated
with the construction of the new facility and associated site work.
City staff determined the programming for the facility.
City staff determined the number of square feet needed for the facility in conjunction with programming requirements.
City staff completed a high level operational pro forma for the facility. The 2016 Community Center Feasibility Study
completed by staff, HGA, PROS Consulting, and Sutton & Associates was the foundation of this programming and
financial analysis.
Given this study, the facility size is proposed to be 30,247 gross square feet and 45,145 net square feet. The cost
recovery expectation for this facility is 65% with an anticipated annual operating deficit of approximately $480,000.
Currently the five year average operating deficit of the Art Center is $178,000 and the 5 year average operating deficit
of the Senior Center is $45,000. Please note that the salary of the Senior Center’s Recreation Supervisor (Nicole
Gorman) is charged to Parks & Recreation Administration budget and not the Senior Center budget. The Senior Center
is in the General Fund. The Art Center is an Enterprise Fund.
The capital construction cost estimate for the community facility is $22,837169. This includes construction costs,
architecture and engineering fees and site furnishings. The outdoor park/plaza is estimated at $2,687,618 and 300
parking stalls in structured parking underneath the community facility is estimated at $11,592,000. The total estimate for
the building, parking and park is $37,859,677.
Edina Grandview Community CenterPreliminary Cost Modeling45,145 GSFTotal $145,500 GSFTotal $45,145 GSFTotal $45,145 GSFTotal $Construction Cost$16,215,539$8,181,818$1,113,750$25,511,108Design & Construction Contingency10%$1,621,55410%$818,18210%$111,37510%$2,551,111Escalation Allowance - 2 yrs12%$432,64212%$1,080,00012%$1,111,93412%$3,367,466$405/sf$18,269,735$69/sf$10,080,000$52/sf$2,337,059$696/sf$31,429,684Project Soft Costs (Allowance)25%$4,567,43415%$1,512,00015%$350,559$6,429,992.73$22,837,169$11,592,000$2,687,618$37,859,677Construction Cost(A&E Fees, Consultant Fees, Legal, Finance, Owners Rep, Moving & Relocation Costs, Permits & Testing, Hazmat Abatement, Furnishings, Shelving, Equipment, Technology) Project Cost* This estimate is prepared as a model of potential scope options an is intended for budgeting purposes. It is a high level analysis of potential costs and includes many assumptions, allowances and multipliers typical for this type project. The estimate is based on the information in this report and derived from similar project experience, historical examples, and database unit pricing. Further design development, definition of scope, and deeper investigation may necessitate revisions to these numbers as the project moves forward. PreliminaryFor HRA Discussion onlyJuly 20,2018
Subtotal - Art Center Core10895 0.67 16261Subtotal - Art Center Enhanced00Preliminary For HRA discussion only
Subtotal - Commons14002090Subtotal - Flexible Meeting00Subtotal - Food Service32004776Subtotal - Lounge16002388Subtotal - Drop-in Childcare2200 3284Subtotal - Children's Play Structure2400 3582Preliminary For HRA discussion only
Subtotal - Event Venue712010627Subtotal - Video Production7001045Subtotal - StudiosSubtotal - Fitness CenterSubtotal - GymnasiumSubtotal - Healthcare PartnerPreliminary For HRA discussion only
Subtotal - Building Support CoreSubtotal - Mechanical PenthousePreliminary For HRA discussion only
Preliminary For HRA discussion only
HRA Redevelopment Project Update
July 26, 2018
Address Project Description Status North of Hwy 62 4500 France
Ave.
Redevelopment of vacant Edina Cleaner
site; request for TIF for 4-story mixed-use
project by Orion Investments
Staff is reviewing pro forma,
a complete proposal is
anticipated in Sept. 2018
3925 Market
St.
Redevelopment of the former Center
Parking Ramp with Nolan Mains
apartments and new public parking
Actively under construction;
completion Fall 2019
3930-3944
Market St.
Expansion of North Parking Ramp to
include more public parking and first floor
retail space
Under construction; on
track for substantial
completion September 2018
5146 Eden
Ave.
Redevelopment of vacant site to
potentially include about 150 apartments
with 45,000 Sq. Ft. Public Building with
new park
Negotiating terms of sale
with Frauenshuh and
studying design program of
new public building with
HGA
Hwy 100 @
Vernon &
Eden Ave.
New public park (Grandview Green) built
on top of Highway 100 using a “freeway
lid”; infrastructure to be funded by new
property taxes from private construction
on 8-acres of new land created on un-used
right-of-way
Edina and MnDOT
executed MOU; concept
continues to be refined; real
estate lease structure
anticipated by 12/31/18 Greater Southdale Area 7200 France
Ave. Redevelopment of office building On hold
7250 France
Ave.
Redevelopment of office building; request
for TIF for mixed-use project by Property
Owner
On hold pending redesign
4100 W. 76th
St.
Redevelopment of office building; request
for City support to develop 80-units of
affordable housing by Aeon
HRA has pledged local
funds; Aeon is applying for
primary funding; site plan
review anticipated late
summer/early fall 2018
7001 York
Ave.
Redevelopment of Hennepin County’s
Southdale Regional Library with potential
for addition development on unneeded
portion of the site
Hennepin County is
preparing concept plans and
determining how much land
will be sold; next public
meeting anticipated
September 2018
Edina HRA Project Update
July 26, 2018
Page 2
Address Project Description Status Pentagon Park 4600-4660
W. 77th St.
Redevelopment of 12-acres of the Pentagon
Park North property for market-rate and
senior housing by Chase Real Estate
(approx. 585 total units). Developer has
requested $14.7 million in TIF to offset the
high cost of soil correction and public
improvements.
HRA Board discussed at
June 28th meeting and
confirmed the staff
recommendations
regarding TIF assistance
and adherence to
affordable housing policy.
Waiting for response from
developer.
4815-4901
W. 77th St.
and 7710
Computer
Ave.
Redevelopment of 12-acres of the Pentagon
Park South property for retail, hotels and
market-driven office/residential uses by
Solomon Real Estate & Hillcrest joint
venture. Developer has requested $18.1
million in TIF to offset the high cost of soil
correction, structured parking and public
improvements.
HRA Board discussed at
June 28th meeting and
confirmed the staff
recommendations
regarding level and type of
TIF assistance.
Waiting for response from
developer.
4820 W. 77th
St.
Potential redevelopment for affordably-
priced housing; related to Pentagon Park
North
Waiting for application.
Prepared July 20, 2018
July 26, 2018
Chair and Members of the Edina Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Tax Increment Financing for Pentagon Park South:
4815-4901 West 77th Street and 7710 Computer Avenue
Information / Background:
A joint venture consisting of Hillcrest Development and Solomon Real Estate proposes to build a
two-phase project to serve as a catalyst development on the Pentagon Park South parcel. Phase 1 is
intended to include two retail buildings, two hotels, a public plaza and site improvements for the
entire 12-acre site. Phase 2 is intended to consist of two office buildings and an office/retail building.
The specific elements in Phase 2 may change, if necessary to respond to future market conditions.
The overall redevelopment effort is estimated to cost more than $140 million.
The developer has requested an $18.1 million pay-as-you-go TIF Note to support the overall
project. This is approximately 13% of the estimated cost of the two-phase proposal. Payments
would be made only from incremental property taxes generated from the completed projects after
particular milestones are achieved.
Staff has been negotiating with the developers for many months in an effort to satisfy the financial
needs of the project while retaining a high standard for the use of Tax Increment Financing in Edina.
The input provided by the HRA members at the June 14 and June 28 meetings has been helpful to
send a clear message to the developers about the standards by which TIF will be used to support
redevelopment.
Based on the recent input and guided by Edina’s TIF Policy, staff and developers have reached
agreeable terms for consideration by the HRA.
Staff recommends that the HRA approve these general terms and conditions as
summarized in the attached documents. Staff further recommends that the HRA
authorize staff to complete the financial negotiations and prepare a full TIF
Redevelopment Agreement for final consideration.
# # #
STAFF REPORT Page 2
Background Information for Reference
May 2018 Site Plan (granted Preliminary Approval on 6/5/2018)
Pentagon Park South – Recommended TIF Participation
July 24, 2018
Below is a summary of the key terms of a TIF Agreement that are recommended by staff. These
revised terms have been prepared with input from the HRA’s legal and financial advisors. Items
not addressed here remain as outlined in the DRAFT Term Sheet that was previously
distributed. The developer and staff are agreeable to these terms.
1. TIF Amount. $18,100,000 plus interest
2. Up to three Notes will be issued by July 15, 2019 upon confirmation that qualified TIF
expenses in the amount of at least an amount equal to or greater than each TIF Note
have been incurred in satisfaction of the 5-year rule. Each note will be as follows:
A) TIF Note A up to- $9.0M will accrue interest and be eligible for payments
when the following conditions are satisfied:
a. Expenditures of approximately $9,148,000 as follows:
a. Site pre, soil correction, storm water, etc. $5,222,000
b. Demo, abatement, remediation $822,000
c. Pre-development costs $1,104,000
d. Site prep for parking structure #1 $1,500,000
e. Site prep for public plaza $500,000
f. The actual amount of TIF Note A will be issued in the amount of
actual TIF eligible expenses incurred by developer on the site within
the general categories in a-e herein, but the principal balance of TIF
Note A shall not exceed $9.0M.
g. Actual amounts within these categories can shift provided that the
developer provides reasonable evidence of the actual amounts in
each category of costs invested in the site
b. Completion of all infrastructure improvements (which does not include
the requirement to construct the parking structure) on the 12-acre site;
c. Commence construction of the two retail buildings on Lot 1; and
d. Completion of the Plaza within 12-months of items (a), (b) and (c) above.
Failure to complete the Plaza by this timeline will temporarily disqualify
Note A for reimbursement and interest accrual until a public easement
or similar use agreement is delivered for the completed Plaza
e. In the event the developer has not completed construction on a second
building element (i.e. hotel, office, etc.)whose expected market value,
together with the retail building (see item “c”), exceeds $19.0 million) by
the time the above three components (the two retail buildings and the
Pentagon Park South - Recommended TIF Participation
July 24, 2018
Page 2
second building) have been satisfied, then the property will be subject to
a minimum assessment agreement (at the time TIF Note A is issued – July
2019). The minimum assessment agreement will be sized to demonstrate
at least $9 million of increased value above the current value. This is
estimated to be $19.0M and will be allocated across all five lots as
follows: Lot 1 - $5,000,000; Lot 2 - $3,000,000; Lot 3 - $3,000,000; Lot 4
- $1,350,000; and Lot 5 - $6,650,000. These estimates are approximate.
The minimum assessment agreement, if implemented, shall terminate after
the developer completes construction of a second (new) building element
on the South Parcel provided that the retail element and the second
building element combined can reasonably be expected to deliver at least
$9 million in increased value for the site (in satisfaction of the ‘but for’
requirements).
In the event that the minimum assessment agreement is not acceptable to
the Assessor, both parties agree to resize or otherwise modify the Note to
comply with the ‘but for’ requirements.
B) TIF Note B - $5.4M will accrue interest and be eligible for payments when
the following conditions are satisfied:
a. Expenditures of approximately $9,386,000 as follows:
a. A Parking Structure
b. Items a, b, c, d and e (if necessary) above (under TIF Note A); and
c. Deliver a public easement for a Parking Structure within 12-
months of items (a) and (b). Failure to deliver this parking
easement by the required deadline will temporarily disqualify Note
B for reimbursement and interest accrual until the public easement
is delivered for the completed parking structure.
d. Commence construction of the second building element at least
100,000 square feet in gross building area. This is the same building
element referenced in Item 2 e above under TIF Note A. A
Parking Structure does not constitute a building element. To
further clarify, an additional element means any use(s) allowed
under the PUD including but not limited to hotel/hospitality,
residential, office, medical, retail, or some combination thereof.
Pentagon Park South - Recommended TIF Participation
July 24, 2018
Page 3
C) TIF Note C - $3.70M will accrue interest and be eligible for payments
when the following conditions are satisfied:
a. Satisfaction of the requirements under TIF Note A and B; and
b. Complete the first, second and third building elements (with elements #2
and #3 each being at least 100,000 square feet in gross building areas
evidenced by the issuance of a Certificate of Occupancy.
c. Commence construction of the fourth element at least 100,000 square
feet in gross building area. This is essentially – the first building in Phase 2.
3. The Look Back provision in the Master Redevelopment Agreement shall remain in place
as previously negotiated and agreed to. Examples shall be prepared to illustrate how the
look back provisions will be applied in different cases of ownership and sales.
4. The City will install the public improvements to W 77th Street outlined in the Engineer’s
Memo dated May 3, 2018 that was part of Resolution 2018-50 more specifically defined as:
• Addition of a northbound left turn lane, southbound striped left turn lane
and eastbound right turn lane at 77th Street and Commercial Access
driveway; and
• Addition of a northbound dual left turn lane and eastbound right turn
lane at 77th Street and Computer Avenue.
The City and Developer shall agree to the specific scope of work to be installed by each
and also to the schedule to begin and complete these improvements.
The cost of these improvements will be assessed back over a 15 year period to the five
(5) lots within Pentagon Village on a pro-rata share basis in accordance with the city
assessment standards.
The property owner(s) shall agree to this assessment in advance, including waiver of the
right to protest assessment amounts and agreement to bear responsibility for 100% of
the City’s costs to design, construct, finance and manage these improvements –
including any necessary costs to acquire property or easements from adjacent property
owners. Contract provisions shall be prepared to ensure that the City is reimbursed for
this work over a period not to exceed ten years. Failure to pay the assessments on any
of the lots owned by developer shall be considered a default of the Development
Contract and TIF Agreement.
END
Dorsey & Whitney LLP
Draft
July 13 2018
Pentagon South Term Sheet July 13, 2018
DRAFT Page 1
Pentagon South Term Sheet
between
Housing and Redevelopment Authority of Edina, Minnesota (the “Authority”)
and
[Solomon/Pentagon JV entity] (“Developer”)
Draft: July 13, 2018
A. Summary of the Project
(1) Purpose and Scope
(a) This term sheet outlines the Authority’s and Developer’s general expectations for the
redevelopment and improvement of the approximately 12.1 acre “South Parcel” of the
existing Pentagon Park Tax Increment Financing redevelopment district (the “TIF
District”), legally described on Exhibit 1 (collectively, the “Redevelopment Site”). The
general terms agreed upon in this Term Sheet will be expanded in a formal
redevelopment agreement or an amendment to the Master Agreement (as defined
herein) among the city of Edina, Minnesota (the “City”), the Authority, and Developer
(“Redevelopment Agreement”).
(b) The redevelopment of the “South Parcel” as described herein is anticipated to be the first
phase in the creation of a vibrant, mixed-use destination and southwest gateway to Edina,
and serve as a catalyst to revive and attract additional investment to the rest of Pentagon
Park and the surrounding area. The Project will promote the growth of property tax base,
new business and employment opportunities, new lodging opportunities, and new
services for area residents and employees. The Project will also include improved public
realm, sidewalks, bicycle infrastructure, transit stops, public art, landscaping and
enhanced opportunities for connection to the Fred Richards Park.
(c) The Redevelopment Site is currently owned by Pentagon South LLC and JUD, LLC, each an
affiliate of Pentagon Revival, LLC (“Master Redeveloper”) and is subject to an existing
Master Redevelopment Agreement between the City, the Authority, and Master
Redeveloper, dated May 20, 2014 (“Master Agreement”). Capitalized terms not defined
herein have the meaning ascribed to such terms in the Master Agreement.
(d) The parties acknowledge that the Project is contingent upon (i) the transfer of the
Development Site from the Master Redeveloper to Developer and (ii) the release of the
Redevelopment Site and the Master Redeveloper from the Master Agreement pursuant
to an amendment to the Redevelopment Agreement in a form mutually acceptable to the
City, the Authority, Developer and Master Redeveloper.
(e) The Authority and Developer intend that certain improvements necessary to support
redevelopment of the Redevelopment Site will be installed by Developer subject to
reimbursement the Qualified Costs (as defined herein) through tax increment financing
(“TIF”) from the TIF District and the requirements of the Minnesota Statutes Section
Dorsey & Whitney LLP
Draft
July 13 2018
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469.174 to 469.1799, as amended (the “TIF Act”).
(2) Description of the Project
(a) Developer anticipates that the Redevelopment Site will be redeveloped in two phases.
(1) The first phase (“Phase I”) will consist of the following improvements (collectively,
the “Phase I Improvements”):
- a 4-story, approximately 193-room dual-branded hotel, with associated
surface parking (“Hotel Element 1”);
- a 4-story, approximately 153-room extended stay hotel (“Hotel Element 2”);
- an approximately 390-space parking structure, integrated into Hotel Element
2 (“Phase I Parking Element”);
- an approximately 7,500 square foot retail/restaurant building and a 4,300
square foot retail/restaurant build, with associated surface parking
(collectively, “Retail Element”);
- an approximately one (1) acre green space/plaza area (“Plaza Element”); and
- Site preparation (including utilities, grading, and internal roads), soil
correction, demolition, abatement and environmental remediation for the
entire Redevelopment Site (“Project Site Work”).
(2) Developer currently anticipates that, based on current market conditions, the
second phase of the redevelopment of the Redevelopment Site (collectively,
“Phase II”) will consist of the following improvements:
- an approximately 19,000 square foot retail/office building, with associated
surface parking (“Retail/Office Element”);
- an approximately 5-story office building containing approximately 125,000
square feet (“First Office Element”); and
- an approximately 5-story office buildings containing approximately 100,000
square feet, with an integrated 1,155-space parking structure (“Second Office
Element”).
The elements to be constructed in Phase II may be modified subject to approval by the
City Council of a resolution and final PUD ordinance (including the “Final Development
Plan”) for Phase II (“Final Phase II Approval Resolution”). However, when complete, Phase
II must include the equivalent of approximately 244,000 square feet of leasable building
space with related parking.
Phase I and Phase II are collectively referred to herein as the “Project”.
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Hotel Element 1 (together with Phase I Parking Element), Hotel Element 2, Retail Element,
Retail/Office Element, Office Element 1, and Office Element 2 are each referred to herein
as a “Commercial Element” and collectively as the “Commercial Elements”.
A preliminary site plan for the Project is attached as Exhibit 2.
(b) The Project will be developed as a planned unit development (PUD). The Preliminary PUD
was approved by the City on June 5, 2018 pursuant to the Resolution (No. 2018-50)
attached hereto as Exhibit 3, including the draft PUD Ordinance 2018-11. The
Redevelopment Agreement is conditioned upon approval by the City Council of a
resolution and final PUD ordinance (including the “Final Development Plan”) for Phase I
(collectively referred to as the “Final Phase I Approval Resolution”) which does not
contain a material deviation from the Phase I Improvements described herein. (The Final
Phase I Approval Resolution is anticipated to occur at the City Council’s July 17, 2018
meeting.)
(c) The City and Developer will negotiate a separate “Development Contract” containing the
City’s land use and engineering regulations for Phase I, which is currently scheduled for
consideration by the City Council on July 17, 2018.
(d) A more detailed description of the proposed land uses and densities for the Project and
projected Project schedule is included in the Project narrative, which is attached as
Exhibit 4). The development objectives summarized in the Project narrative for Phase I
will be included in the Final Phase I Approval Resolution; including, without limitation,
land use and densities on each parcel. The Final Phase I Approval Resolution will control
the improvements constructed by Developer for Phase I; provided, however, the
Redevelopment Agreement is conditioned upon there being no material deviation
between the Final Phase I Approval Resolution and the Phase I Improvements described
herein.
(3) Budget; Financial Assistance
(a) The total cost for all private development and public infrastructure elements of the Phase
I Improvements is estimated to be approximately $69,700,000, including Hotel Element 1
and Hotel Element 2. Developer’s sources and uses for all such costs (excluding the
vertical improvements for Hotel Element 1 and Hotel Element 2, which are to constructed
by a third party) are set forth on the attached Exhibit 5 (the “Sources and Uses Budget”).
(b) Developer is requesting $18,000,000 in TIF assistance from the Authority as reflected in
the Sources and Uses Budget.
(c) The total cost for all private development and public infrastructure elements of Phase II
is estimated to be approximately $78,800,000.
B. TIF Assistance
(1) Basic TIF Requirements
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(a) As part of the TIF assistance process, and prior to issuance of each TIF Note, Phase I and
the Project as a whole must be evaluated and the “but for” must be demonstrated.
Developer will prepare a current annual revenue and expenditure pro forma for Phase I
and the Project as a whole (each a “Pro Forma”) and a current Sources and Uses Budget
prior to execution of the Redevelopment Agreement, prior the issuance of each TIF Note
(as defined below), and such other times as requested by the Authority in accordance
with Section (B)4 (Look Back Provisions) below. Each Pro Forma must demonstrate the
need for TIF assistance. The Sources and Uses Budget must show an amount of applicable
Qualified Costs equal to or greater than the principal amount of each TIF Note.
(b) Any TIF assistance and costs eligible for TIF reimbursement must be in accordance with
the Authority’s Tax Increment Finance Policy, dated April 19, 2011 and the TIF Act.
(2) Five-Year Rule
Developer acknowledges that July 15, 2019 is the end of the five-year period following
certification of the TIF District and such date is the deadline for Developer to expend Qualified
Costs, enter into binding contracts for TIF-eligible costs, or otherwise comply with the
requirements of Minn. Stat. section 469.1763, Subd. 3 (the “Five-Year Rule”), in order to be
reimbursed for such costs in accordance with the Redevelopment Agreement and TIF Note. Such
costs which are not expended or otherwise incurred in accordance with the Five-Year Rule by such
date will not be eligible for TIF reimbursement and the Authority will have no obligation to
otherwise reimburse Developer for such costs.
(3) TIF Note; Reimbursement of Qualified Costs; Administrative Costs
(a) The Authority will reimburse Developer on a pay-as-you-go basis through two to three TIF
notes (each a “TIF Note”, and, collectively the “TIF Notes”) as follows:
(1) a TIF Note in the maximum principal amount of $9,000,000 (“TIF Note A”);
(2) a TIF Note in the maximum principal amount of $5,400,000 (“TIF Note B-1”); and
(3) a TIF Note in the maximum principal amount of $3,600,000 (“TIF Note B-2”).
TIF Note B-1 and TIF Note B-2 may be issued as a single “TIF Note B” if all the pre-
conditions applicable to each such TIF Note have been satisfied.
(b) The Authority will reimburse Developer through the TIF Notes only for costs incurred by
Developer which are authorized under state law and approved by the Authority pursuant
to the Redevelopment Agreement (collectively, “Qualified Costs”), plus simple interest at
a rate of six percent (6%) annually in accordance with each TIF Note.
(c) The Authority will issue TIF Note A for Note A Qualified Costs actually incurred (as
described in subsection (f) below) up to the maximum principal amount for TIF Note A
stated above.
(d) The Authority will issue TIF Note B for Note B Qualified Costs actually incurred (as
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described in subsection (f) below) up to the maximum principal amount for TIF Note B
stated above.
(e) The terms of the TIF Notes will be included in the Redevelopment Agreement and issued
pursuant to the terms thereof. Accrual of interest and payment on the unpaid principal
balance of each TIF Note will commence upon the satisfaction of the conditions set forth
in Section B(3)(l)(1) through (3) with respect to the applicable TIF Note. The Authority
shall take all reasonable steps to promptly issue each TIF Note after Developer’s
satisfaction of the applicable conditions, as time is of the essence.
(f) Qualified Costs for the Project are identified in the Sources and Uses Budget and will
include the following (subject to Developer expending such Qualified Costs prior to the
deadline imposed under the Five-Year Rule), provided the actual amounts may vary within
the individual categories of Qualified Costs within the maximum total amount:
Note A Qualified Costs
Qualified Costs Amount
Soil correction, storm water management,
and flood mitigation $5,222,000
Demolition, abatement and environmental
remediation $822,000
Additional site work attributable to the
Phase I Parking Element $1,500,000
Costs associated with construction of the
Plaza Element $500,000
Pre-development planning, engineering,
legal and consulting costs related to TIF
and Developer contracts applicable to the
Project
$1,104,000
$9,148,000
Note B Qualified Costs
Qualified Costs Amount
Costs associated with construction of the
Phase I Parking Element $10,386,000
$10,386,000
(g) The Authority will make one payment of principal and interest to Developer each six
months on each TIF Note, commencing on the first February 1 or August 1 following the
Developer’s satisfaction of the conditions under Section B(3)(l) with respect to the
applicable TIF Note, for reimbursement of applicable Qualified Costs from 90% of the tax
increment generated from the development of the Redevelopment Site and received by
the Authority from Hennepin County in the six months before each payment date
(“Available Tax Increment”). The Authority will not reimburse Developer from any other
revenue source nor guaranty the amount of money which Developer will receive as a
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reimbursement, such amount being payable solely from the Available Tax Increment.
(h) Ten percent of tax increment generated from the development of the Redevelopment
Site will be retained by the Authority for administrative costs related to the planning,
management and oversight of the TIF District.
(i) Developer may, without the Authority’s consent, collaterally assign Developer’s rights and
obligations under the TIF Note to the holder of any mortgage on the Redevelopment Site
granted by Developer for the purpose of obtaining funds necessary for constructing the
Project. In all other cases, the TIF Note shall not be assignable nor transferable except
upon terms and condition consistent with the Master Agreement. The Authority is not
responsible for calculations or payments for the TIF Note.
(j) The term of the TIF Note will end no later than December 31, 2043 based on the required
decertification date of the TIF District, regardless of the date of first receipt of increment.
(k) The TIF Notes will be issued no later than July 15, 2019, provided that the Developer has
satisfied each of the following requirements by May 15, 2019:
(1) final execution of the Redevelopment Agreement and recording of a
memorandum of the Redevelopment Agreement in the applicable land
records;
(2) adoption of the Final Phase I Approval Resolution;
(3) closing on Developer’s acquisition of the Redevelopment Site;
(4) Issuance of grading permit and commencement of grading of entire
Redevelopment Site.
(l) Notwithstanding the earlier issuance of the TIF Notes payment of Available Tax Increment
and accrual of interest under each TIF Note will be fully conditioned upon satisfaction of
each of the following requirements:
(1) With respect to TIF Note A:
(i) Developer providing evidence satisfactory to the Authority that
the Developer has incurred Note A Qualified Costs equal to at
least the amount of the requested TIF Note A;
(ii) a “Certificate of Completion” for one Commercial Element has
been recorded against the application portion of the
Redevelopment Site;
(iii) the Plaza Element and Project Site Work are substantially
complete in accordance with the Redevelopment Agreement and
the applicable Final Development Plan(s);
(iv) the Authority’s receipt of an updated Pro Forma sufficient to
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demonstrate that the “but for” requirement continues to be
satisfied (including, if necessary to satisfy the “but for”
requirement, Developer’s delivery of a “Minimum Assessment
Agreement” in order to achieve the “Minimum Valuation”, as
described in Section B(4) below); and
(v) no Developer event of default exists under the Redevelopment
Agreement (following the passing of any applicable cure periods
and subject to Section C(8)(b) below).
(2) With respect to TIF Note B-1:
(i) Developer providing evidence satisfactory to the Authority that
the Developer has incurred Note B Qualified Costs equal to at
least the amount of the requested TIF Note B-1;
(ii) Commencement of actual physical construction of at least one
additional (and second overall) Commercial Element [which is
anticipated to be Hotel Element 2, or one or more other
Commercial Elements, integrated with the Phase I Parking
Element, in order for Developer to incur Note B Qualified Costs];
(iii) the Authority’s receipt of an updated Pro Forma sufficient to
demonstrate that the “but for” requirement continues to be
satisfied (including, if necessary to satisfy the “but for”
requirement, Developer’s delivery of a “Minimum Assessment
Agreement” in order to achieve the “Minimum Valuation”, as
described in Section B(4) below); and
(iv) no Developer event of default exists under the Redevelopment
Agreement (following the passing of any applicable cure periods
and subject to Section C(8)(b) below);
(3) With respect to TIF Note B-2:
(i) Developer providing evidence satisfactory to the Authority that
the Developer has incurred Note B Qualified Costs equal to at
least the amount of the requested TIF Note B-2;
(ii) Commencement of actual physical construction of at least one
additional (and third overall) Commercial Element;
(iii) the Authority’s receipt of an updated Pro Forma sufficient to
demonstrate that the “but for” requirement continues to be
satisfied (including, if necessary to satisfy the “but for”
requirement, Developer’s delivery of a “Minimum Assessment
Agreement” in order to achieve the “Minimum Valuation”, as
described in Section B(4) below); and
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(iv) no Developer event of default exists under the Redevelopment
Agreement (following the passing of any applicable cure periods
and subject to Section C(8)(b) below).
(4) But-For Test; Minimum Assessment Agreement
If, by the date on which payments and interest are otherwise due under applicable TIF Note(s),
the Developer’s improvements to the Redevelopment Site have not increased the taxable market
value of the Redevelopment Site by an amount which exceeds the increase in taxable market
value that could reasonably be expected to occur without the use of TIF, consistent with the
requirements set forth in Section 469.175, Subd. 3, of the TIF Act (“Minimum Valuation”), then
Developer shall enter into a minimum assessment agreement (“Minimum Assessment
Agreement”) with respect to all or a portion of the Redevelopment Site sufficient to satisfy the
Minimum Valuation until such time as the Minimum Valuation is achieved by additional
improvements to the Redevelopment Site. Payments shall not be made and interest shall not
accrue on the applicable TIF Note(s) until the Minimum Valuation is achieved through the
Minimum Assessment Agreement or otherwise.
(5) Look Back Provisions
The Redevelopment Agreement will include “look back” provisions consistent with the Master
Agreement to ensure that any TIF assistance was actually needed.
(6) Fiscal Disparities
Developer acknowledges that any of the Authority’s obligations with respect to “Fiscal Disparities”
under Minnesota law that are applicable to the Project will be considered in calculating Available
Tax Increment.
(7) Timeline and Construction Phasing
The chart below is the Developer’s current anticipated timeline for the construction of the Project.
The commencement and completion dates for the Phase I Improvements under the
Redevelopment Agreement shall be substantially in accordance with the below timeline. The
actual completion of the Phase II improvements will be driven by market conditions and failure
to meet the below dates for Phase II improvements will not be a default under the Redevelopment
Agreement. Developer will notify the Authority of material changes to the following estimated
construction dates. Developer will periodically provide the Authority with written notification
related to meeting proposed construction benchmarks. A timeline for completion of all Project
improvements will be included in the Redevelopment Agreement.
Description of Work
Estimated
Commencement
Date
Estimated
Completion Date
Hotel Element 1 (Phase I) Summer 2019 Fall 2020
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Hotel Element 2 and Phase I Parking Element
(Phase I)
Summer 2019
(ramp) Fall 2019
(hotel)
Fall 2019 (ramp)
December 2020
(hotel)
Retail Element (Phase I) Summer 2019 December 2019
Plaza Element (Phase I) Summer 2019 Fall 2019
Project Site Work December 2018 Summer 2019
Retail/Office Element (Phase II) Fall 2019 December 2020
First Office Element (Phase II) Fall 2019 December 2020
Second Office Element (Phase II) Fall 2020 December 2021
C. Additional Terms and Conditions
(1) Public Infrastructure Improvements
(a) Developer will be responsible for the “Phase IA Public Infrastructure Improvements” and
“Phase IB Public Infrastructure Improvements” in accordance with the Master Agreement
and applicable “Public Infrastructure Improvements Plans”.
The chart below is the current anticipated timeline for the required Public Infrastructure
Improvements. Developer will notify the Authority of material changes to the following
estimated construction dates. Developer will periodically provide the Authority with
written notification related to meeting proposed construction benchmarks. A timeline for
completion of the required Public Infrastructure Improvements will be included in the
Final Development Plan approval and the Redevelopment Agreement.
Description of Work
Estimated
Commencement
Date
Estimated
Completion Date
Phase IA Public Infrastructure Improvements
(77th Street, Transit Shelters, Normandale Road
and Viking/Computer Drive)
Phase IB Public Infrastructure Improvements
(77th Street, Transit Shelters, Normandale Road
and Viking/Computer Drive)
(b) Right-of-way improvements to West 77th Street at the entrance to the Redevelopment
Site required by the City engineer in connection with the Final Phase I Approval Resolution
shall be constructed and installed by the City and assessed back to Developer pursuant to
the City’s special assessment powers. Developer will enter into an assessment agreement
(either separately or as part of the Redevelopment Agreement) agreeing to accept such
special assessments, waiving Developer’s rights to protest such special assessments, and
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otherwise meeting all requirements of Minnesota Statutes chapter 429.
(2) Plaza Element; Plaza Easement
The Plaza Element will consist of a minimum one acre green space with fountains, related
hardscaping and other pedestrian amenities consistent with the Final Phase I Approval
Resolution], together with all sidewalks, paths, trails, and roads which provide access to the
primary Plaza Element green space. While the primary purpose of the Plaza Element is to serve
and support the Project and Project tenant, Developer will grant a permanent, public easement
for access and use of the Plaza Element by the public, subject to reasonable, nondiscriminatory
limitations, rules and regulations governing its use adopted by Developer. The Developer will be
responsible for all maintenance of the Plaza Element.
(3) Parking Easement
Developer will grant the City a “Parking Facilities Easement” for the Phase I Parking Element to be
integrated with Hotel Element 2 with the following terms and conditions, which will not materially
interfere with the use of the facility by the hotel guests: [at least __ parking space available 24/7
to the public, permitted park-and-ride public use, permitted bike-and-ride public use]. The
Developer will be responsible for all maintenance of the Phase I Parking Element.
(4) Public Realm/Pedestrian/Bicycling Enhancements
Developer will construct and install the following public enhancements and features pursuant to
the Final Phase I Approval Resolution, all of which will be deemed part of the Project Site Work,
and Developer will grant the City public easements as applicable:
- Public artwork in multiple locations throughout the property;
- Walking and biking trails interconnected throughout the property, to the adjacent
neighborhoods and to the Fred Richards Park and Regional Trail System, including
crosswalks across 77th Street;
- Bike parking stations, and other bicycle infrastructure including a dedicated bicycle repair
facility and/or space;
- EV charging stations; and
- Improved transit stops along W. 77th Street.
The Developer will be responsible for all maintenance of the foregoing public enhancements and
features.
(5) Notice of Commencement; Certificate of Completion
Prior to commencing any development activities for Phase I or Phase II, Developer will
demonstrate to the Authority that Developer has secured adequate financing to complete the
subject element(s) of the Phase I Improvements and/or Phase II Improvements and will issue the
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Authority a “Go Ahead Letter”. The Authority will issue a “Certificate of Completion” for the
elements of the Phase I Improvements and Phase II Improvements in accordance with terms and
conditions consistent with the Master Agreement.
(6) City Approval of Significant Changes
Changes to the Project scope and design that are inconsistent with the Final Development Plan
will be subject to the review and approval by the City pursuant to applicable City regulations, and
for review by the Authority with regards to Qualified Costs.
(7) Performance Bonds
Performance bonds are required for all work in the public way pursuant to applicable City
regulations.
(8) Default by Developer or Authority
(a) Standard default provisions will be applicable. The Redevelopment Agreement will
include remedies to be determined by the Authority and Developer, and will include,
without limitation, the right of the Authority to terminate the Redevelopment Agreement
or the right to deny issuance of any TIF Note.
(b) The Master Redeveloper’s default under the Master Agreement for a failure to commence
“Development Activity” for a period of 24 months (under Section 6.3 of the Master
Agreement), as described in the December 5, 2017 notice of default served by the
Authority, shall be deemed to have been timely cured upon the adoption of the Final
Phase I Approval Resolution.
(9) Preparation of Redevelopment Agreement
a. The Authority and Developer will work diligently to prepare a Redevelopment Agreement
for City Council consideration for execution on July 17, 2018.
b. The Redevelopment Agreement presented to the City Council must be pre-signed by
Developer.
(10) Authority Out-of-Pocket Costs.
Developer will reimburse the Authority for its direct cost of legal and financial consultants as well
as special consultants for TIF inspections, traffic and utility studies. Reimbursement will be made
within 30 days after invoicing.
(11) Grants
Nothing contained in the Redevelopment Agreement, nor the failure of the parties to enter into
a Redevelopment Agreement with respect to the Redevelopment Site, will modify or abridge the
responsibilities and obligation of the Master Redeveloper and/or the Developer under the sub-grant
agreements entered into by the Master Redeveloper with respect to the below grants. Master
Redeveloper and/or the Developer remain responsible for responsibilities and obligation
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Met Council
LCDA Pentagon Revival, South Awarded $448,100 in 2014
$448,100
awarded
$____
reimbursed
Mn DEED
# RDGP-14-0027-o-
FY15
Pentagon Revival
Awarded with term running 9/2014
to 12/2017; work is complete and
developer has been reimbursed;
project must still be delivered to
satisfy outcomes in grant
application
$625,000
awarded
$625,000
reimbursed
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EXHIBIT 1
REDEVELOPMENT SITE LEGAL DESCRIPTION
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EXHIBIT 2
PRELIMINARY PROJECT SITE PLAN
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EXHIBIT 3
Resolution (No. 2018-50)
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EXHIBIT 4
PROJECT NARRATIVE
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EXHIBIT 5
Sources and Uses Budget