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2018-10-11 HRA Regular Meeting Agenda Packet
Agenda Edina Housing and Redevelopment Authority City of Edina, Minnesota Council Chambers Thursday, October 11, 2018 8:15 AM I.Call to Order II.Roll Call III.Approval of Meeting Agenda IV.Community Comment During "Community Comment," the Edina Housing and Redevelopment Authority (HRA) will invite residents to share new issues or concerns that haven't been considered in the past 30 days by the HRA or which aren't slated for future consideration. Individuals must limit their comments to three minutes. The Chair may limit the number of speakers on the same issue in the interest of time and topic. Generally speaking, items that are elsewhere on today's agenda may not be addressed during Community Comment. Individuals should not expect the Chair or Commissioners to respond to their comments today. Instead the Commissioners might refer the matter to sta- for consideration at a future meeting. V.Adoption of Consent Agenda All agenda items listed on the consent agenda are considered routine and will be enacted by one motion. There will be no separate discussion of such items unless requested to be removed from the Consent Agenda by a Commissioner of the HRA. In such cases the item will be removed from the Consent Agenda and considered immediately following the adoption of the Consent Agenda. (Favorable rollcall vote of majority of Commissioners present to approve.) A.Minutes: September 13, 2018 B.Settlement Agreement: 3945 West 49th Street C.North Ramp Expansion: Amended Easement Agreement with LB 49th-1/2 Street LLC D.Resolution No. 2018-08: Requesting Public Hearing for November 20, 2018, for West 76th Street Tax Increment District Financing Plan VI.Reports/Recommendations: (Favorable vote of majority of Commissioners present to approve except where noted) A.Statement Regarding Grandview Green B.Resolution No. 2018-09: Establishing 44th & France 2 Tax Increment Financing District C.4500 France Apartments: Term Sheet for Tax Increment Financing D.Redevelopment Agreement with Pentagon Village, LLC E.A-ordable Housing Sewer and Water Availability Charge Fee Reduction VII.Correspondence A.Correspondence VIII.HRA Commissioners' Comments IX.Executive Director's Comments X.Adjournment The Edina Housing and Redevelopment Authority wants all participants to be comfortable being part of the public process. If you need assistance in the way of hearing ampliDcation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: October 11, 2018 Agenda Item #: IV.A. To:Chair & Commissioners of the Edina HRA Item Type: Minutes From:Sharon Allison, Executive Assistant Item Activity: Subject:Minutes: September 13, 2018 Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the September 13, 2018, minutes of the HRA. INTRODUCTION: ATTACHMENTS: Description Minutes: Sept. 13, 2018 Page 1 MINUTES OF REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY SEPTEMBER 13, 2018 7:30 A.M. I. CALL TO ORDER Chair Hovland called the HRA meeting to order at 7:35 a.m. II. ROLLCALL Answering rollcall were Commissioners Fischer, Chair Hovland, Brindle, and Stewart. Absent: Commissioner Staunton. III. APPROVAL OF MEETING AGENDA Motion made by Commissioner Fischer seconded by Commissioner Stewart approving the Meeting Agenda ITEMS MOVED TO THE BOTTOM OF MEETING AGENDA VI.C Closed Session for Potential Sale of Real Estate Located at 5146 Eden Avenue VI.D. Motion to move back into Open Session Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. IV. COMMUNITY COMMENT - None V. CONSENT AGENDA ADOPTED Motion made by Commissioner Fischer seconded by Commissioner Brindle approving the consent agenda. V.A. Minutes of August 16, 2018 V.B. Adopting the Affordable Housing Policy V.C. Request for Purchase for North Ramp Artwork Signage V.D. Resolution No. 2018-06 Approving Preliminary 2019 Budget and Levy V.E. Resolution No. 2018-07 Requesting the City Council of the City of Edina call for a Public Hearing on the Proposed Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area and the Proposed Establishment of the 44th and France 2 Tax Increment Financing District (a Renewal and Renovation District) VII. CORRESPONDENCE VII.A. RECEIVE PETITION FROM CENTENNIAL LAKES CONDOMINIUM ASSOCIATION Motion made by Commissioner Brindle seconded by Commissioner Stewart receiving petition from Centennial Lakes Condominium Association. Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. VII.B. CORRESPONDENCE - None VIII. HRA COMMISSIONERS’ COMMENTS - None IX. EXECUTIVE DIRECTOR’S COMMENTS IX.A. Project Update Project Update provided by Mr. Neuendorf to keep the HRA and the public informed. IX.B. Clarifying HRA Position Regarding Long-Range Planning for Grandview Green Freeway Lid Director Neal explained that staff prepared a position statement clarifying the HRA’s position regarding long- range planning for the Grandview Green Freeway. Minutes/HRA/September 13, 2018 2 Motion made by Commissioner Fischer seconded by Commissioner Brindle for staff to rewrite the position statement and bring back to the HRA. Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. IX.C. Edina Housing Foundation Board of Directors Vacancy Director Neal explained there was a vacancy because Director Mayo moved out of the City and the bylaws required that directors live in the City. He said the City Council appoints three directors and the HRA appoints two. The HRA directed Director Neal to fill the vacancy within 30 days from the list of candidates that expressed interest last time there was a vacancy and to seek new candidates. VI. REPORTS/RECOMMENDATIONS – (Favorable vote of majority of HRA Board Members present to approve except where noted). VI.A. POTENTIAL SALE OF REAL ESTATE LOCATED AT 5146 EDEN AVENUE Mr. Neuendorf explained that in July, terms sheets was presented and discussed, however, staff was not able to reach an agreement with Frauenshuh. He said an appraisal of the 1.5-acre site was completed by GTRE and the site appraised significantly higher than was listed in the terms sheets. Frauenshuh did not agree with the appraisal. Mr. Neuendorf reminded the HRA that the preliminary agreement with Frauenshuh ends September 28 and a decision was needed by this date. Mr. Dave Anderson addressed the HRA. Mr. Anderson discussed the process they entered into in December and gave a brief history of their relationship that started in 2010 that led to the proposed public/private redevelopment of the site. Regarding the appraisal, Mr. Anderson said he was not taking exception to the price but to what was appraised. He said there was a distinction to the site that must be taken into consideration, i.e. 140 parking units entirely underground, affordable housing, etc. Mr. Mark Vanneli, Bellweather Enterprise, spoke to the dynamic related to the property and explained that land value was one of three approaches in determining value. VI.B. MOTION TO CLOSE MEETING OF THE EDINA HRA AS PERMITTED BY MS.13D.05 SUBDIVISION 3 TO DISCUSS THE POTENTIAL SALE OF REAL PROPERTY LOCATED AT 5146 EDEN AVENUE Motion made by Commissioner Brindle seconded by Commissioner Stewart to close the meeting. Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. VI.C. CLOSED SESSION FOR POTENTIAL SALE OF REAL ESTATE LOCATED AT 5146 EDEN AVENUE VI.D. MOTION TO MOVE BACK TO OPEN SESSION Motion made by Commissioner Stewart seconded by Commissioner Fischer to move back to open session. Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. Motion made by Commissioner Stewart seconded by Commissioner Brindle to not proceed with the preliminary agreement with Frauenshuh. Ayes: Fischer, Hovland, Brindle, Stewart Motion carried. The HRA recommended scheduling a work session to discuss ideas for the site. VII. ADJOURNMENT There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 9:20 a.m. Minutes/HRA/September 13, 2018 3 Respectfully submitted, ___________________________________________ Scott Neal, Executive Director Date: October 11, 2018 Agenda Item #: IV.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:Settlement Agreement: 3945 West 49th Street Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the Settlement Agreement, Permanent Easement Agreement, and License Agreement with the property owners at 3945 West 49th Street and authorize staff to implement the terms of the agreements as outlined in the amended Mitigation Letter. INTRODUCTION: This item pertains to the expansion of the North P arking Ramp, P W 18-001. A Settlement Agreement has been prepared by the City Attorney to resolve a boundary issue between the North Ramp Expansion and a residential neighbor to the north. The neighbors have indicated that they are agreeable to these terms. Staff recommends that the Settlement Agreement, P ermanent Easement and License Agreement be approved. ATTACHMENTS: Description North Ramp Settlement Agreement Date: October 11, 2018 Agenda Item #: IV.C. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:North Ramp Expansion: Amended Easement Agreement with LB 49th-1/2 Street LLC Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the Permanent Easement upon 3930 Market Street to the benefit of LB 49th-1/2 Street LLC. INTRODUCTION: In June, 2018, the Housing and Redevelopment Authority (HRA) and LB 49th-1/2 Street LLC entered into reciprocal easement agreements that allowed both parties to located utilities in limited portions of each others property. These easements were necessitated by the construction of the North Ramp Expansion P W 18-001 and the work was performed by Excel Energy at the request of the Edina HRA. As the project nears completion, the surveyor noted that the as-built location of the overhead power lines extend slightly over the boundary of the original 8 ft by 8 ft easement. In order to complete the project and ensure a clean title, the City Attorney advises that the easement boundary should be modified to a size of 8 ft by 10 ft to include the new overhead power lines. An amended P ermanent Easement has been prepared by the City Attorney and is acceptable to the neighboring property owner. Staff recommends the approval of this P ermanent Easement. ATTACHMENTS: Description Permanent Easement North Ramp and 3948 Market Street Map of existing conditions with 8 x 8 easement AMENDED AND RESTATED GRANT OF PERMANENT EASEMENT THIS AMENDED AND RESTATED GRANT OF PERMANENT EASEMENT is made and entered into as of October 16, 2018 by the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a body politic and corporate under the laws of the State of Minnesota, as grantor, hereinafter referred to as “Grantor”. This instrument amends, restates, and supersedes, in its entirety, that certain Grant of Permanent Easement dated June 14, 2018 and recorded in the records of the Office of the County Recorder for Hennepin County, Minnesota on August 2, 2018 as Document No. A10579788. NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, does hereby grant unto LB 49TH 1/2 STREET, LLC, a Minnesota limited liability company, hereinafter referred to as the “Grantee”, its successors and assigns, a non-exclusive permanent easement for electric utility purposes including lines, a pole, and appurtenances, hereinafter referred to as “public utilities”, over, across, on, under, and through land situated within the County of Hennepin, State of Minnesota, as legally described on the attached Exhibit “A”. INCLUDING the rights of Grantee, its contractors, agents, servants and assigns, to enter upon the permanent easement premises at all reasonable times to construct, reconstruct, inspect, repair, and maintain said public utility systems over, across, on, under, and through the permanent easement premises, together with the right to grade, level, fill, drain and excavate the 2 permanent easement premises, and the further right to remove trees, bushes, undergrowth, and other obstructions interfering with the location, construction, and maintenance of said public utility easement. Grantee shall perform, or require to be performed, all of work on the easement parcel as permitted by this agreement in a commercially reasonable manner. Grantee shall not generate, store, transport, treat, dispose of, release or use any hazardous substances on Grantor’s parcel. Grantee shall keep Grantor’s free and clear of mechanic’s, materialmen’s and other similar liens filed by reason of work, labor, services or materials supplied or claimed to have been supplied in connection with any such work, and shall pay and discharge when due any and all lawful claims upon which such lien may or could be based. Subject to the terms of this agreement, this agreement is binding upon and inures to the benefit of the parties hereto and their respective legal heirs, successors and assigns. This agreement runs with the land as set forth in this agreement. The partners, shareholders, directors, officers and employees of each party hereto, as the case may be, are not liable for any obligation under this agreement. Neither party hereto is liable to the other under, or in connection with, this agreement for any consequential damages, and both parties hereto waive, to the full extent permitted by law, any claim for consequential damages. This agreement, and the rights and obligations of the parties hereto, must be construed and enforced in accordance with the laws of the State of Minnesota. [The balance of this page is intentionally left blank.] [Signature Page to Amended and Restated Grant of Permanent Easement] IN TESTIMONY WHEREOF, the parties hereto have signed this document as of the day and year first above written. GRANTOR: HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: _________________________________ James B. Hovland, Its President By: _________________________________ Robert J. Stewart, Its Secretary Attest: ______________________________ Scott Neal, Its Executive Director STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _____ day of _______________, 2018, by James B. Hovland, Robert J. Stewart, and Scott Neal, respectively the President, Secretary and Executive Director of Housing and Redevelopment Authority of Edina, Minnesota, a body politic and corporate under the laws of the State of Minnesota, on behalf of the entity. _____________________________________ Notary Public [Signature Page to Amended and Restated Grant of Permanent Easement] GRANTEE: LB 49TH 1/2 STREET, LLC By ___________________________________ _________________________________ Its ______________________________ STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _____ day of _______________, 2018, by ____________________, the _______________________ of LB 49th 1/2 Street, LLC, a Minnesota limited liability company, on behalf of the entity. _____________________________________ Notary Public THIS INSTRUMENT WAS DRAFTED BY: Dorsey & Whitney LLP (ACS) 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 EXHIBIT “A” TO AMENDED AND RESTATED GRANT OF PERMANENT EASEMENT Legal description of the subject Property: Lot 1, Block 1, EDINA MARKET STREET, Hennepin County, Minnesota. Legal description of easement area: A permanent easement for public utility purposes (including utility lines, utility poles, and appurtenances) over, across, on, under, and through the North 10.00 feet of the West 8.00 feet of Lot 1, Block 1, EDINA MARKET STREET, Hennepin County, Minnesota. [Property address: 3930 Market Street, Edina, MN 55424; PIN 18.028.24.14.0141; abstract and torrens] Date: October 11, 2018 Agenda Item #: IV.D. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:Resolution No. 2018-08: Requesting Public Hearing for November 20, 2018, for West 76th Street Tax Increment District Financing Plan Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Motion approving Resolution 2018-08, recommending that a public hearing be scheduled for the November 20, 2018, City Council meeting, to consider a new tax increment financing district for 4100 West 76th Street. INTRODUCTION: This item pertains to the consideration of a new Tax Increment Financing District to provide financing for an affordably-priced housing development located at 4100 West 76th Street. Related to this request is a modification to the budget in the Southdale 2 Tax Increment Financing Plan. This resolution requests that the City Council schedule a public hearing for November 20, 2018, to consider these actions. Staff recommends approval of Resolution No. 2018-08. ATTACHMENTS: Description Resolution No. 2018-08 RESOLUTION NO. 2018-08 REQUESTING THE CITY COUNCIL OF THE CITY OF EDINA CALL FOR A PUBLIC HEARING ON THE PROPOSED MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE SOUTHEAST EDINA REDEVELOPMENT PROJECT AREA, THE PROPOSED MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE SOUTHDALE 2 TAX INCREMENT FINANCING DISTRICT, AND THE PROPOSED ESTABLISHMENT OF THE WEST 76TH STREET TAX INCREMENT FINANCING DISTRICT (A HOUSING DISTRICT) BE IT RESOLVED, by the Board of Commissioners (the "Board") of the Edina Housing and Redevelopment Authority (the "HRA") as follows: WHEREAS, the HRA and City Council ("Council") of the City of Edina, Minnesota ("City") previously established the Southeast Edina Redevelopment Project Area pursuant to Minnesota Statutes, Sections 469.001 through 469.047, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and WHEREAS, the HRA and City Council established the Southdale 2 Tax Increment Financing District in 2012 to facilitate private reinvestment in the renovation of the Southdale Center mall and surrounding property; and WHEREAS, the Southdale 2 Tax Increment Financing Plan was modified in 2016 to remove certain property and permit additional expenditures to assist the 66 West Apartments affordable housing project; and WHEREAS, in an effort to provide additional funding for affordable housing within the City the HRA proposes modifications to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area (“Redevelopment Plan Modification”) and Tax Increment Financing Plan for the Southdale 2 Tax Increment Financing District (“Southdale 2 TIF Plan Modification”), and the establishment of the West 76th Street Tax Increment Financing District and adoption of a Tax Increment Financing Plan therefor (the Redevelopment Plan Modification, Southdale 2 TIF Plan Modification and the West 76th Street TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.1794 and Sections 469.001 to 469.047, and Minnesota Session Laws 2017, Chapter 1, Sections 11 and 16, inclusive, as amended; and NOW, THEREFORE BE IT RESOLVED by the Board as follows: 1. The HRA hereby requests that the City Council call for a public hearing on November 20, 2018, to consider the proposed Plans and cause notice of said public hearing to be given as required by law. 2. The HRA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the proposed Plans are in accordance with the Comprehensive Plan of the City, prior to the date of the public hearing. 3. The Executive Director of the HRA is hereby directed to submit a copy of the Plans to the Council for its approval. 4. The HRA affirms the transmission of the Plans to Hennepin County and Independent School District No. 273 and No. 280 in which the Southeast Edina Redevelopment Project Area is located no later than October 19, 2018. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plans and related documents and to undertake other actions necessary to bring the Plans before the Council. Approved by the Board on October 11, 2018. ATTEST: _______________________________ James B. Hovland, Chair _______________________________ Robert J. Stewart, Secretary STATE OF MINNESOTA) COUNTY OF HENNEPIN) SS CITY OF EDINA ) CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby certify that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Edina Housing and Redevelopment Authority at its Regular Meeting of October 11, 2018, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this ______________ day of ___________________, 2018. Executive Director Date: October 11, 2018 Agenda Item #: V.A. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:Statement Regarding Grandview Green Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Motion to approve language recommended to be included in the 2018 Comprehensive Plan regarding Grandview Green, a future redevelopment concept in the Grandview District. INTRODUCTION: In recent years, the Housing and Redevelopment Authority has conducted preliminary planning studies to explore a future redevelopment concept referred to as Grandview Green. This far-term concept would potentially use the MnDOT and City land more efficiently and create a new infrastructure element that would serve as the catalyst for future economic growth and future community amenities. A limited portion of Highway 100 would be covered with a "freeway lid" that could serve as new public space. Approximately 8-acres of tax-exempt land that is owned by MnDOT and the City could potentially be redeveloped and put into productive use to help pay for the infrastructure improvements. If deemed viable, this is a complex concept that would require coordination among several government agencies and private sector investors. There are no immediate plans to fund or construct this future public/private redevelopment concept. Based on the general direction provided by members of the HRA, staff has prepared a statement to include in the 2018 Comprehensive Plan. This statement reflects the general intention to retain this concept as something for future exploration and consideration but provides no funding for engineering design or construction. In recent months, there has been some confusion and uncertainty in the community about the scope and timing of this concept. T he City's website will be updated to clarify the scope and status of this future redevelopment concept. Staff recommends that this statement be approved for consideration in the 2018 Comprehensive Plan. ATTACHMENTS: Description Statement Regarding Grandview Green DRAFT 9-13-2018 statement with mark up Meeting Handout Language recommended to be included in the 2018 Comprehensive Plan regarding Grandview Green October 11, 2018 INSERT in Land Use Chapter in the MXC Grandview area, with reference in the Implementation Chapter: While important for regional mobility and commerce, the state highways that divide the City into four primary quadrants have inadvertently created barriers that hinder connectivity among some of Edina’s local neighborhoods. In the future, alternative redesigns could be considered to better connect neighborhoods on opposite sides of highways. Expanded bridges frequently referred to as “land bridges” or “highway lids” are one means to unify neighborhoods by increasing access on local roads and trails without hindering regional mobility on the limited access highways. Potential opportunities to take advantage of existing topography to better connect local neighborhoods exist at a few points along Highway 100 and Highway 62. The Edina Housing and Redevelopment Authority has conducted a preliminary concept study of the feasibility of constructing a “lid” (referred to as Grandview Green) over a limited portion of Highway 100 in the Grandview Commercial District. The construction of the lid, if viable, will deliver upon the Seven Guiding Principles established on page 7 of the Grandview District Development Framework. In addition to enhancing local transportation routes, the conceptual studies indicate that additional public green space can be created and un-used MnDOT highway right-of-way can be transformed into productive uses without hindering regional transportation needs. It is recognized that a long-term concept such as this will be dependent on improvements to current transit systems and transportation-related technologies and will require the coordination of several governmental agencies and the support of the local community. Additional community engagement as well as substantial engineering design is required in order to establish the parameters of a redevelopment project that satisfies the needs of the impacted stakeholders and delivers a community benefit. The City shall continue to consider this Grandview Green concept as one means of improving the Grandview Commercial District. Language recommended to be included in the 2018 Comprehensive Plan regarding Grandview Green September 13, 2018 October 11, 2018 INSERT in Land Use Chapter in the MXC Grandview area, with reference in the Implementation Chapter: While important for regional mobility and commerce, the state highways that divide the City into four primary quadrants have inadvertently created barriers that hinder connectivity among some of Edina’s local neighborhoods. In the future, alternative redesigns could be considered to better connect neighborhoods on opposite sides of highways. Expanded bridges frequently referred to as “land bridges” or “highway lids” are one means to unify neighborhoods by increasing access on local roads and trails without hindering regional mobility on the limited access highways. Potential opportunities to take advantage of existing topography to better connect local neighborhoods exist at a few points along Highway 100 and Highway 62. The Edina Housing and Redevelopment Authority has conducted a preliminary concept study of the feasibility of constructing a “lid” (referred to as Grandview Green) over a limited portion of Highway 100 in the Grandview Commercial District. The initial studies indicate that this long-term concept has viability to be successfully financed and constructed. The construction of the lid, if viable, will deliver upon the Seven Guiding Principles established on page 7 of the Grandview District Development Framework. In addition to enhancing local transportation routes, the conceptual studies indicate that additional public green space can be created and un-used MnDOT highway right-of-way can be transformed into productive uses without hindering regional transportation needs. It is recognized that a long-term concept such as this requires will be dependent on improvements to current transit systems and transportation-related technologies and will require the coordination of several governmental agencies and the support of the local community. Additional community engagement as well as substantial engineering design is required in order to establish the parameters of a redevelopment project that satisfies the needs of the impacted stakeholders and delivers a community benefit. The City shall continue to consider this Grandview Green concept as one means of improving the Grandview Commercial District. Redline showing r e q u e s t e d c h a n g e s from the 9-13-20 1 8 d r a f t Language recommended to be included in the 2018 Comprehensive Plan regarding Grandview Green October 11, 2018 INSERT in Land Use Chapter in the MXC Grandview area, with reference in the Implementation Chapter: While important for regional mobility and commerce, the state highways that divide the City into four primary quadrants have inadvertently created barriers that hinder connectivity among some of Edina's local neighborhoods. In the future, alternative redesigns could be considered to better connect neighborhoods on opposite sides of highways. Expanded bridges frequently referred to as "land bridges" or "highway lids" are one means to unify neighborhoods by increasing access on local roads and trails without hindering regional mobility on the limited access highways. Potential opportunities to take advantage of existing topography to better connect local neighborhoods exist at a few points along Highway 100 and Highway 62. The Edina Housing and Redevelopment Authority has conducted a preliminary concept study of the feasibility of constructing a "lid" (referred to as Grandview Green) over a limited portion of Highway 100 in the Grandview Commercial District. The construction of the lid, if viable, would help accomplish many of will deliver upon the Seven Guiding Principles established on page 7 of the Grandview District Development Framework. TIn addition to enhancing local transportation routes, the conceptual studies conducted to date, suggestindicatc that additional public green space can be created and un-used MnDOT highway right-of- way can be transformed into productive uses without hindering regional transportation needs. The 2016 Grandview Transportation Study It--i-s-characterized recognized that the concept of a "lid" in the Grandview District as a a-"Far Term Plan"long term concept (i.e., beyond 30 years) that could not happen before such as this will be dependent on improvements to current transit systems and transportation-related technologies occur. Moreover, pursuing a concept like a "Lid" ac-will require the coordination of several governmental agencies and the support of the local community. Additional community engagement as well as substantial engineering design is required in order to establish the parameters of a redevelopment project that satisfies the needs of the impacted stakeholders and delivers a community benefit. Accordingly, although the city's long-term planning should continue The City shall continue to consider this Grandview Green concept as one potential means of improving the Grandview Commercial District at some point in the future, it is not a part of near or mid-term changes envisioned for this District. Date: October 11, 2018 Agenda Item #: V.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:Resolution No. 2018-09: Establishing 44th & France 2 Tax Increment Financing District Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve Resolution 2018-09 INTRODUCTION: This item pertains to the creation of a new Tax Increment Financing District to support the redevelopment of properties at 4500 France Avenue and to deliver public benefits related to that project. Implementation of this Resolution is contingent upon final approval by the City Council after a P ublic Hearing scheduled for October 16, 2018. Staff recommends the approval of this Resolution. ATTACHMENTS: Description Staff Report Resolution No. 2018-09 44 France 2 TIF parcel map Draft 44 France 2 TIF Plan 10-10-18 October 11, 2018 Chair & Commissioners of the Edina HRA Bill Neuendorf, Economic Development Manager Resolution No. 2018-09: Establishing 44th & France 2 Tax Increment Financing District Information / Background: The City and Housing and Redevelopment Authority are considering entering into a Redevelopment Agreement with Orion Investments to provide financial assistance using Tax Increment Financing (TIF). The proposed project is located at 4500 France Avenue, 3905 and 3907 Sunnyside Road. Most of these properties are vacant. The developer (Ted Carlson with Orion Investments) recently was granted preliminary rezoning and site plan approval for a mixed-use development that consists of approximately 46 new housing units, 7,000 square feet of commercial space and two levels of indoor parking. Tax Increment Financing is one of the financial tools available to the City to encourage new investment in a manner that enhances the property tax base and achieves other community goals. TIF uses new property taxes (aka incremental taxes) that are generated by a new project to pay for some of the costs associated with the new project. The existing tax base continues to be distributed to the school, city, county and other taxing agencies. The use of TIF is governed by Minnesota Statutes that have evolved over several decades. These laws provide a number of protections to ensure that financial incentives are not over-used or mis-used. The City of Edina has historically used TIF to a lesser extent than typically allowed by State Law. In this case, staff recommends that a new TIF District be created so that the financial gap of the proposed 4500 France Apartment project can be bridged. This will allow a new project to proceed resulting in short- term and long-term benefits to the surrounding neighborhood and the broader Edina community. This recommendation is based on the following: • District is located within the boundaries of the Southeast Edina Redevelopment Project Area • District complies with the State requirements for a “redevelopment and renewal” district STAFF REPORT Page 2 • This new District does not push Edina near the limit set in State Law for the total use of TIF in any one community • Redevelopment within the District can promptly address the vacant buildings before they become a safety problem and negative influence on surrounding residential and commercial properties • Redevelopment can promptly address some of the community goals identified in the August 2018 44th and France Small Area Plan This recommendation also comes with limitations to ensure that the funds shared with the Developer are justified and serve as an incentive that rewards a project that has delivered clear public benefits. The benefits of the 4500 France Avenue Apartments have been described in a separate staff report. This report is limited to the establishment of a new TIF District only. The following elements are fundamental in the proposed establishment of the new 44th & France 2 TIF District: • Creation of a new 15-year TIF District (NOT a 26-year District) • Boundaries limited to 1-acre site that is most likely to redevelop quickly (NOT the whole 5-acre neighborhood node) • District certified before assessed valuation reflects the ‘vacant’ nature of the building o Base taxes continue to support School, City, County and other agencies Although not every goal identified in the 44th and France Small Area Plan can be solved by the 4500 France Apartment project, several goals can addressed and significant improvements can be achieved promptly. These include: o Removal of vacant buildings o New construction at a limited scale o Remediation of environmental contaminants o New shared public parking (approx. 40 stalls) o Bury overhead utility lines throughout majority of 44th & France neighborhood node o Widen sidewalks o Improve streetscape with landscaping and streetscape elements o Create new outdoor public space o Provide new public art installation o Comply with affordable-housing policy The August 2018 Small Area Plan recommends that a new District Parking Facility and shared District Stormwater Facility be considered near 44th and France. These future concepts have merit, but at this time, the City does not have site control or funding available to achieve these larger-scale improvements. The proposed redevelopment of 4500 France makes significant progress in addressing the broader concerns by potentially delivering improvements to the green space, public parking and stormwater conditions that have existed in the 44th & France area for several generations. If favorable conditions exist in the future, this TIF District could be expanded or a different TIF District created to address those community goals. STAFF REPORT Page 3 Ehlers Associates, the City’s public finance advisor has prepared a Tax Increment Financing Plan to establish the parameters of the new TIF District. This Plan has been reviewed by the City’s special counsel for redevelopment matters – Dorsey & Whitney to ensure compliance with State Law. This TIF Plan also includes a site investigation completed on the City’s behalf by Stantec, a consulting with expertise in planning, engineering, architecture and redevelopment. This Plan has been distributed to affected taxing agencies, including the Edina School District and Hennepin County in accordance with the process identified in State Law. As of the writing of this staff report, no concerns have been expressed regarding the creation of the 44th and France 2 TIF District. Staff recommends that Resolution 2018-09 be approved. RESOLUTION NO. 2018-09 ESTABLISHING THE 44TH AND FRANCE 2 TAX INCREMENT FINANCING DISTRICT AND APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Edina Housing and Redevelopment Authority (the "HRA") and the City of Edina (the "City") that the HRA adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan Modification") for the Southeast Edina Redevelopment Project Area (the "Project Area") and establish the 44th and France 2 Tax Increment Financing District (the "District") and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1794, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the Board's consideration; and WHEREAS, the HRA has investigated the facts relating to the Plans and has caused the Plans to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Plans. The HRA has also requested the City Planning Commission to provide for review of and written comment on the Plans and that the Council schedule a public hearing on the Plans upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: 1. The HRA hereby finds that the District is in the public interest and is a "renewal and renovation district" under Minnesota Statutes, Section 469.174, Subd. 10a, and finds that the adoption of the proposed Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota which is already built up and that the adoption of the proposed Plans will help provide employment opportunities in the State and in the preservation and enhancement of the tax base of the City and the State and thereby serves a public purpose. 2. The HRA further finds that the Plans will afford maximum opportunity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 3. The boundaries of the Project Area are not being expanded. 4. The reasons and facts supporting the findings in this resolution are described in the Plans. 5. The HRA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. 6. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Plans, as presented to the HRA on this date, are hereby approved, established and adopted and shall be placed on file in the office of the Executive Director of the HRA. 7. Upon approval of the Plans by the City Council, the staff, the HRA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of any project or a Development Agreement with any developer. 8. Upon approval of the Plans by the City Council, the Executive Director of the HRA is authorized and directed to forward a copy of the Plans to the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. 9. The Executive Director of the HRA is authorized and directed to forward a copy of the Plans to the Hennepin County Auditor and request that the Auditor certify the original tax capacity of the District as described in the Plans, all in accordance with Minnesota Statutes 469.177. Approved by the Board on October 11, 2018. ATTEST: _______________________________ James Hovland, Chair __________________________ Robert J. Stewart, Secretary STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) SS CITY OF EDINA CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby certify that the attached and foregoing Resolution is a true ad correct copy of the Resolution duly adopted by the Edina Housing and Redevelopment Authority at its Regular Meeting of October 11, 2018, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this____________ day of ________________, 2018. ___________________________________ Executive Director 0702824440068 0702824440070 0702824440069 0702824440067 0702824440066 SUNNYSIDE RDFRANCE AVE/Engineering Dept.September 2018 44th and France 2 TIF District Southeast Edina Redevelopment Project Area 44th and France 2 TIF District As of October 10, 2018 Draft for Public Hearing Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area and the Tax Increment Financing Plan for the establishment of the 44th and France 2 Tax Increment Financing District (a renewal and renovation district) within the Southeast Edina Redevelopment Project Area Edina Housing and Redevelopment Authority City of Edina Hennepin County State of Minnesota Public Hearing: October 16, 2018 Adopted: Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com Table of Contents (for reference purposes only) Section 1 - Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4 Foreword.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4 Section 2 - Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District. . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-1. Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-2. Statutory Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-3. Statement of Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-4. Redevelopment Plan Overview.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired . . 2-2 Subsection 2-6. Classification of the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 Subsection 2-7. Duration and First Year of Tax Increment of the District.. . . . . . . . . . . 2-4 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements. . . . . . . . . . . . . . . . 2-4 Subsection 2-9. Sources of Revenue/Bonds to be Issued. . . . . . . . . . . . . . . . . . . . . . . 2-6 Subsection 2-10. Uses of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6 Subsection 2-11. Fiscal Disparities Election.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7 Subsection 2-12. Business Subsidies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8 Subsection 2-13. County Road Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions.. . . . . . . . . . . . . . . . . 2-9 Subsection 2-15. Supporting Documentation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12 Subsection 2-16. Definition of Tax Increment Revenues. . . . . . . . . . . . . . . . . . . . . . . . 2-12 Subsection 2-17. Modifications to the District.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12 Subsection 2-18. Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13 Subsection 2-19. Limitation of Increment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13 Subsection 2-20. Use of Tax Increment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14 Subsection 2-21. Excess Increments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-15 Subsection 2-22. Requirements for Agreements with the Developer. . . . . . . . . . . . . . . 2-15 Subsection 2-23. Assessment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-15 Subsection 2-24. Administration of the District.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-16 Subsection 2-25. Annual Disclosure Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-16 Subsection 2-26. Reasonable Expectations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-16 Subsection 2-27. Other Limitations on the Use of Tax Increment. . . . . . . . . . . . . . . . . 2-16 Subsection 2-28. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-17 Appendix A Project Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Appendix B Map of the Southeast Edina Redevelopment Project Area and the 44th and France 2 TIF District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 Appendix C Description of Property to be Included in the District.. . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1 Appendix D Estimated Cash Flow for the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1 Appendix E Minnesota Business Assistance Form.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1 Appendix F Renewal and Renovation Qualifications for the District. . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 Appendix G Findings Including But/For Qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1 Section 1 - Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area Foreword The following text represents a Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for the Southeast Edina Redevelopment Project Area. Generally, the substantive changes include the establishment of the 44th and France 2 Tax Increment Financing District. Municipal Action Taken Based upon the statutory authority described in the Redevelopment Plan, the public purpose findings by the City Council and for the purpose of fulfilling the City’s development objects as set forth in the Redevelopment Plan, the City Council has created, established and designated the Southeast Edina Redevelopment Plan pursuant to and in accordance with the requirements of Minnesota Statutes, Section 469.001 to 469.047. The original and amended Southeast Edina Redevelopment Plan documents and amendments have designated the Southeast Edina Redevelopment Plan as a redevelopment project and also a tax increment financing plan for tax increment districts created prior to 1988. The Centennial Lakes Tax Increment Financing District was created in 1988 pursuant to Tax Increment Financing Plan 88-1, which was subsequently renamed the Centennial Lakes Tax Increment District and referred to by Hennepin County as District #1203 and #1249. For purposes of clarification, this modification will refer to the Southeast Edina Redevelopment Plan as the Southeast Edina Redevelopment Project Area Plan pursuant to Minnesota Statutes 469.002. The following municipal action has been taken with regard to the Southeast Edina Redevelopment Project Area Plan: September 29, 1977: The Housing and Redevelopment Authority of Edina (the “HRA”) approved the Southeast Edina Redevelopment Project Area Plan. October 5, 1981: The Southeast Edina Redevelopment Project Area Plan was amended to identify project costs and bonded indebtedness incurred to finance those costs. May 6, 1985: The HRA and the City approved an amendment to the Southeast Edina Redevelopment Project Area Plan which includes the establishment of an interest reduction program and enlarges the project area to include the “1985 Project Area.” August 19, 1985: The HRA and the City approve d the First Amendment to the 1985 Amendment to the Southeast Edina Redevelopment Project Area Plan to enlarge the 1985 Project Area and to authorize the issuance of additional bonds to acquire land within the enlarged 1985 Project Area. 1987: The HRA and City approved the 1987 Amendments to the Southeast Edina Redevelopment Plan to enlarge the project area to include the 1987 Project Area. 1988: The HRA and City approved the 1988 Amendments to the Southeast Edina Redevelopment Plan that provide an Interest Reduction Program in the amount of $2,500,000 to assist in the financing and construction of housing units, and authorize the HRA and City to incur bonded indebtedness. February 21, 2012: The HRA and City expand the Southeast Edina Project Area. Edina Housing and Redevelopment Authority Modification to the Redevelopment Plan forthe Southeast Edina Redevelopment Project Area 1-4 April 17, 2012: The HRA and City establish the Southdale 2 Tax Increment Financing District. February 18, 2014: The HRA and City establish the Pentagon Park Tax Increment Financing District. March 2, 2016: The HRA and City establish the Grandview 2 Tax Increment Financing District. April 5, 2016: The HRA and City modify the Tax Increment Financing Plan for the Southdale 2 Tax Increment Financing District and establish the 66 West Tax Increment Financing District. June 20, 2017: The HRA and City establish the 50th and France 2 Tax Increment Financing District. (AS MODIFIED OCTOBER 16, 2018) October 16, 2018: The HRA and City are establishing the 44th and France 2 Tax Increment Financing District. For further information, a review of the Redevelopment Plan for the Southeast Edina Redevelopment Project Area is recommended. It is available from the HRA Executive Director at the City of Edina. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within the Southeast Edina Redevelopment Project Area. Edina Housing and Redevelopment Authority Modification to the Redevelopment Plan forthe Southeast Edina Redevelopment Project Area 1-5 Section 2 - Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District Subsection 2-1. Foreword The Edina Housing and Redevelopment Authority (the "HRA"), the City of Edina (the "City"), staff and consultants have prepared the following information to establish the 44th and France 2 Tax Increment Financing District (the "District"), a renewal and renovation tax increment financing district, located in the Southeast Edina Redevelopment Project Area. Subsection 2-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur or to promote a greater degree of development that allows City objectives to be fulfilled. To this end, the HRA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.001 to 469.047, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area, originally adopted September 29, 1977, and modified from time to time. Subsection 2-3. Statement of Objectives The District currently consists of five parcels of land and adjacent and internal rights-of-way. As a part of the City’s vision for the 44th and France Commercial Area, the District is being created to facilitate the redevelopment of underutilized, vacant, and obsolete structures to facilitate construction of approximately 46 new housing units and 7,000 square feet of street level commercial space in the City. Please see Appendix A for further District information. The HRA is considering an agreement with Orion Investments as the developer at the time of preparation of the TIF Plan. Redevelopment activities are proposed to begin in 2018 with substantial completion by 2020. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Southeast Edina Redevelopment Project Area. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Southeast Edina Redevelopment Project Area and the District. Subsection 2-4. Redevelopment Plan Overview Pursuant to the Redevelopment Plan and authorizing state statutes, the HRA or City is authorized to undertake the following activities within the District: 1. Property to be Acquired - Selected property located within the District may be acquired by the HRA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-1 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the HRA or City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The HRA or City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6. Classification of the District The HRA and City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, find that the District, to be established, is a renewal and renovation district pursuant to M.S., Section 469.174, Subd. 10a as defined below: (a) "Renewal and renovation district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that: (1) (i) parcels consisting of 70 percent of the area in the district are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures; (ii) 20 percent of the buildings are structurally substandard; and (iii)30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or otheridentified hazards to the health, safety, and general well-being of the community; and (2) The conditions described in clause (1) are reasonably distributed throughout the geographic area of the district. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-2 (b) For purposes of determining whether a building is structurally substandard, whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures, or whether noncontiguous areas qualify, the provisions of subdivision 10, paragraphs (b) through (f) apply. M.S., Section 469.174, Subd. 10(b) through (f): (b) For purposes of this subdivision, "structurally substandard" shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. (c) A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. (d) A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) or by the improvement described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements of paragraph (e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph (e) were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirement of paragraph (e) and that after demolition and clearance the authority intended to include the parcel within a district; and (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by § 469.177, subdivision 1, paragraph (f). Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-3 M.S., Section 469.174, Subd. 10(a)(1) continued: (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots or other similar structures. (f) For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph (a) to be included in the district, and the entire area of the district must satisfy paragraph (a). In meeting the statutory criteria the HRA and City rely on the following facts and findings: • The District is a renewal and renovation district consisting of five parcels. • An inventory shows that parcels consisting of more than 70 percent of the area in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. • An inspection of the buildings located within the District finds that more than 20 percent of the buildings are structurally substandard as defined in the TIF Act. (See Appendix F). • An inspection of the buildings located within the District finds that more than 30 percent of the buildings require substantial renovation or clearance to remove existing conditions such as defined in the TIF Act. (See Appendix F) Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 15 years after receipt of the first increment by the HRA or City (a total of 16 years of tax increment collection). The HRA or City elects to receive the first tax increment in 2021, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2036, or when the TIF Plan is satisfied. The HRA or City reserves the right to decertify the District prior to the legally required date. Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2018 for taxes payable 2019. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2021) the amount by which the original value has increased or decreased as a result of: Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-4 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the HRA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2019, assuming the request for certification is made before June 30, 2019. The ONTC and estimate of the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within the Southeast Edina Redevelopment Project Area, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table below. The HRA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2021. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion (PTC)$299,297 Original Estimated Net Tax Capacity (ONTC)$28,800 Fiscal Disparities Contribution $22,301 Estimated Captured Tax Capacity (CTC)$248,196 Original Local Tax Rate 1.12296 Pay 2018 Estimated Annual Tax Increment (CTC x Local Tax Rate) $278,714 Percent Retained by the HRA 100% Tax capacity includes a 1% inflation factor for the duration of the District. The tax capacity included in thischart is the estimated tax capacity of the District in year 16. The tax capacity of the District in year one isestimated to be $56,875. Pursuant to M.S., Section 469.177, Subd. 4, the HRA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City has reviewed the area to be included in the District and determined no building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-5 Subsection 2-9. Budgeted Sources of Revenue/Bonds to be Issued The total estimated tax increment revenues for the District are calculated in Appendix D and are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $3,890,260 Interest $194,513 TOTAL $4,084,773 The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The HRA or City reserves the right to incur bonds or other indebtedness to help achieve the objectives of the TIF Plan. As currently proposed, the projects within the District will be financed by a pay-as-you-go note issued to reimburse the Developer for the funding of qualified redevelopment costs. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The HRA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $2,884,407. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Further information can be found in Appendix D. Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate the redevelopment and construction of approximately 46 housing units and 7,000 square feet of commercial space. The HRA and City have determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The HRA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the table below. These estimates establish the maximum amount permitted to be expended, but the City/HRA is not obligated to expend this full amount. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-6 USES OF TAX INCREMENT FUNDS TOTAL Site Improvements/Preparation $959,000 Utilities $723,000 Construction of Affordable Housing $194,513 Other Qualifying Improvements $813,381 Administrative Costs (up to 10%)$194,513 PROJECT COST TOTAL $2,884,407 Interest $1,200,366 PROJECT AND INTEREST COSTS TOTAL $4,084,773 The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan as permitted by M.S. Section 469.175, Subd. 4. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant to M.S., Section 469.1763, Subd. 2, no more than 20 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of the Southeast Edina Redevelopment Project Area, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. Pursuant to M.S., Section 469.1763, Subd. 2(d), the HRA and City may elect to increase by up to ten percentage points the permitted amount of expenditures for activities located outside the geographic area of the District. The HRA and City intend to pool tax increment paid by property within the District to be used to assist housing that meets the requirements contained in M.S., Section 469.1763, Subd. 2(d). Subsection 2-11. Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the City may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b, (within the District) are followed, the following method of computation shall apply: (1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial-industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to M.S., Section 276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured tax capacity and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-7 (2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the less of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority. The city chooses to calculate fiscal disparities by clause b. According to M.S., Section 469.177, Subd. 3: (c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b). Subsection 2-12. Business Subsidies M.S. Section 116J.993 to 116J.995 defines a business subsidy as a “grant, contribution of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient, any reduction or deferral of any tax or any fee, any guarantee of any payment under any loan, lease or other obligation, or any preferential use of government facilities given to a business.” Also included in the definition are many forms of economic assistance. Some forms of assistance, such as tax increment for redevelopment and housing, are specifically excluded from business subsidy requirements. Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than $150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-8 (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration; and (23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The HRA will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-13. County Road Costs Pursuant to M.S., Section 469.175, Subd. 1a, the county board may require the HRA or City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. The county roads in the vicinity of the District include France Avenue (County Road 17). The HRA and the City are aware that the county could claim that tax increment should be used for county roads, even after the public hearing. If the county elects to use increments to improve county roads, it must notify the HRA or City within forty-five days of receipt of the TIF Plan submitted September 14, 2018. In the opinion of the HRA, City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads. Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the HRA or City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-9 IMPACT ON TAX BASE IF “BUT FOR” NOT MET 2017/Pay 2018 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) Upon Completion Percent of CTC to Entity Total Hennepin County 1,685,924,784 248,196 0.0147% City of Edina 125,242,169 248,196 0.1982% Edina Independent School District ISD No. 273 103,546,097 248,196 0.2397% IMPACT ON TAX RATES IF “BUT FOR” NOT MET Pay 2018 Extension Rates Percent of Total Rate CTC Potential Annual Taxes Hennepin County 0.428080 38.12% 248,196 106,248 City of Edina 0.278490 24.80% 248,196 69,120 Edina Independent School District ISD No. 273 0.309720 27.58% 248,196 76,871 Other 0.106670 9.50% 248,196 26,475 Total 1.122960 100.00%278,714 The estimates listed above display the captured tax capacity (CTC) when all construction anticipated in Appendix A is completed. The tax rate used for calculations is the actual Pay 2018 rate as obtained from Hennepin County. The total net capacity for the entities listed above are based on actual Pay 2018 figures. The District will be certified under the actual Pay 2019 rates, which were unavailable at the time this TIF Plan was prepared, assuming the request for certification is made prior to June 30, 2019. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $3,890,260; (2) Probable impact of the District on city provided services and ability to issue debt. Based upon input from the Edina Police Department, an impact of the District on police protection is not expected. The City Police Department does track all calls for service including property-type calls and crimes. With any addition of new residents or businesses, police calls for service will be increased. New developments add an increase in traffic and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment. Based upon input from the Edina Fire Department, the probable impact of the District on fire protection is not expected to be significant. The City expects some increased costs of inspections and that the development will generate a minor increase in EMS calls, depending on the occupancy mix of the residential units. Typically new buildings compliant with building and fire codes generate few fire calls, if any, and are of superior construction beneficial to the mission of the Fire Department. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-10 Based upon input from the Edina Engineering Department, the impact of the District on public infrastructure is expected to be minimal. The redevelopment is not expected to require additional public infrastructure to address its impact to traffic movement in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, costs associated with street maintenance, sweeping, plowing, lighting and sidewalks are expected to be neutral. The redevelopment in the District is expected to contribute an estimated $323,516 in sanitary sewer (SAC) and water (WAC) connection fees. It is not anticipated that there will be any general obligation debt issued in relation to this District, therefore there will be no impact on the City’s ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. M.S. Section 469.175 Subd. 2 (b) requires the TIF Plan to calculate “the estimated amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district’s share of the total local tax rate for a taxing jurisdictions remained the same.” The amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school district’s share of the total local tax rate for all taxing jurisdictions remained the same, is $1,072,934. The amount is calculated by multiplying the total estimated increment of $3,890,260 by the percent of the total tax rate attributable to the school district based on its Pay 2018 tax rate of 27.58% (4) Estimated amount of tax increment attributable to county levies. M.S., Section 469.175 Subd. 2(b) requires the TIF Plan to calculate “the estimated amount of tax increments over the life of the District that would be attributable to county levies, assuming the county’s share of the total local tax rate for all taxing jurisdictions remained the same.” The amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,482,967. The amount is calculated by multiplying the total estimated increment of $3,890,260 by the percent of the total tax rate attributable to the county based on its Pay 2018 tax rate of 38.12%; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. At this time, no requests for additional information from the county or school district regarding the proposed redevelopment for the District have been received Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-11 Subsection 2-15. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings that are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the HRA and City's findings: • Traffic Impact Study: 4500 France Apartments. Sprack Consulting. June, 2018. • Renewal and Renovation TIF Qualifications Report. Stantec, 2018. • Small Area Plan for the City of Edina’s 44th & France Neighborhood Node, 2018. • France Avenue Apartments Site Plan, 2018. Subsection 2-16. Definition of Tax Increment Revenues Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the authority with tax increments; 3. Principal and interest received on loans or other advances made by the authority with tax increments; 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; Subsection 2-17. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the HRA or City; 5. Increase in the estimate of the cost of the District, including administrative expenses, that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the HRA or City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 4(f), the geographic area of the District may be reduced, but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a renewal and renovation district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 10a, must be documented in writing and retained. The requirements of this paragraph do not apply if (1) the only Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-12 modification is elimination of parcel(s) from the District and (2)(A) the current net tax capacity of the parcel(s) eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or (B) the HRA agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The HRA or City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 2-18. Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the HRA or City, other than: 1. Amounts paid for the purchase of land; 2. Amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the District; 3. Relocation benefits paid to or services provided for persons residing or businesses located in the District; 4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or 5. Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses (1) to (3). Administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. For districts for which certification was requested after July 31, 2001, pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits of M.S., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently 0.36 percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-19. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-13 escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to M.S., Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel, and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The HRA or City or a property owner must improve parcels within the District by approximately June 2023 and report such actions to the County Auditor. Subsection 2-20. Use of Tax Increment The HRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. To pay the principal of and interest on bonds issued to finance a project; 2. To finance, or otherwise pay public redevelopment costs of the the Southeast Edina Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; 4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5. To pay principal and interest on any loans, advances or other payments made to or on behalf of the HRA or City or for the benefit of the Southeast Edina Redevelopment Project Area by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-14 purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment Fund of said District. The HRA or City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, other qualifying improvements, and administration. Remaining increment funds will be used for HRA or City administration (up to 10 percent) and for the costs of public improvement activities or qualifying affordable housing outside the District. Subsection 2-21. Excess Increments Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the following: 1. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. Pursuant to M.S., Section 469.176, Subd. 2, “The authority shall annually determine the amount of excess increments for a district, if any. This determination must be based on the tax increment financing plan in effect on December 31 of the year and the increment and other revenues received as of December 31 of the year. The authority must spend or return the excess increments under paragraph (c) within nine months after the end of the year.” In addition, the HRA or City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in the Southeast Edina Redevelopment Project Area or the District. Subsection 2-22. Requirements for Agreements with the Developer The HRA or City will review any proposal for private development to determine its conformance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the development with City plans and ordinances. The HRA or City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 25 percent, by acreage, of the property to be acquired in the project area as set forth in the TIF Plan shall at any time be owned by the HRA or City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 25 percent of the acreage, the HRA or City concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the HRA or City should the development or redevelopment not be completed. Subsection 2-23. Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8, the HRA or City may enter into a written assessment agreement Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-15 in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 2-24. Administration of the District Administration of the District will be handled by the HRA Executive Director. Subsection 2-25. Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HRA or City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-26. Reasonable Expectations As required by the TIF Act, in establishing the District, the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon HRA and City staff awareness of the feasibility of developing the project site(s) within the District. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Subsection 2-27. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay public redevelopment costs of the the Southeast Edina Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-16 2. Pooling Limitations. At least 80 percent of tax increments from the District must be expended on activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not more than 20 percent of said tax increments may be expended, through a development fund or otherwise, on activities outside of the District except to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. Pursuant to M.S., Section 469.1763, Subd. 2, the HRA and City may elect to increase by up to ten percentage points the permitted amount of expenditures for activities located outside the geographic area of the District for qualifying housing purposes. Therefore, the pooling limitations with respect to this District are increased to not more than 30 percent of tax increment from the District. 3. Five Year Limitation on Commitment of Tax Increments. Revenues derived from tax increments paid by properties in the District shall be deemed to have satisfied the percent test set forth in paragraph (2) above only if the five year rule set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District, 70 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. 4. Renewal and Rennovation District. At least 90 percent of the revenues derived from tax increment from a renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under M.S., Section 469.176 Subd. 4j. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary for development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the HRA or City, including the cost of preparation of the development action response plan, may be included in the qualifying costs. Pursuant to M.S., Section 469.1763, Subd. 2d, expenditures that meet the requirement as affordable housing are legally permitted expenditures of the district notwithstanding M.S., Section 469.176 Subd. 4j. Subsection 2-28. Summary The Edina Housing and Redevelopment Authority is establishing the District to preserve and enhance the tax base, redevelop substandard areas, and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113, telephone (651) 697-8500. Edina Housing and Redevelopment Authority Tax Increment Financing Plan for the 44th and France 2 Tax Increment Financing District 2-17 Appendix A Project Description In 2018, the HRA received application from Orion Investments seeking to acquire and redevelop a vacant and underutilized area within the 44th and France Commercial Area consisting of approximately 1-acre of vacant commercial property (former Edina Cleaners site) and adjacent rental housing. The proposed $29 million mixed-use redevelopment project will consist of 46-units of primarily market-rate rental housing, 7,000 square feet of first floor commercial space, and supporting parking infrastructure. It is anticipated that three of the housing units will be designated for occupancy and rent restricted to residents earning 50% of Area Median Income. The redevelopment addresses several of the goals identified within the 2018 Small Area Plan for the City of Edina’s 44th & France Neighborhood Node, including: • Remove vacant buildings from a prominent corner; • Construct a mixed-use building at a scale recommended by the Small Area Plan; • Remediate soil contaminants from previous users; • Improve storm water conditions on the site; • Provide approximately 40 stalls of shared public parking located on the street level of the project; • Bury overhead utilities throughout the majority of the Neighborhood Node; • Improve the sidewalk and streetscape along portions of France Ave. and Sunnyside Rd.; • Provide an outdoor public plaza for use by the community; • Provide public art; • Provide 3 units of affordably-priced housing for at least 15-years; and • Provide $160,000 in direct financial contribution to the Edina Affordable Housing Fund The redevelopment is expected to start as early as the close of 2018 and occur over the next 18-months reaching occupancy in 2020. Tax increment from the District will be utilized in conjunction with potential funding from the Metropolitan Council, Minnesota Department of Employment and Economic Development (DEED), and Hennepin County to provide financing for the estimated $29 million private redevelopment project. The HRA proposes to issue a pay-as-you-go TIF Note to the developer to reimburse qualifying costs necessary to facilitate the redevelopment. Appendix A-1 XXX XX'-X" T.O. XXX EL = XX'- X" SECTION AND ELEVATION REF INTERIOR ELEVATION REF DETAIL REF WALL TYPE WINDOW TYPE ELEVATION REF SPOT ELEVATION REF FLOOR FINISH TRANSITION REF X X X AX.X X X X X X X X X X EXTERIOR ELEVATION KEYNOTE REF ROOM NAME AND NUMBER DOOR NUMBER SECTION KEYNOTE REF REVISION NUMBER FIRE EXTINGUISHER CABINET FIRE EXTINGUISHER - WALL MOUNTED ROOM X XXX XX XX Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:53 AMT1.1 TITLE SHEET 217525 ESG ESG France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 PROJECT TEAM SYMBOLS LEGENDPROJECT LOCATION DRAWING INDEX France Ave Apartments OWNER/DEVELOPER:Orion Investments 4530 West 77th Street, Edina, MN 55436 Ph: 612-812-7788 ARCHITECT:Elness Swenson Graham Architects, Inc. 500 Washington Ave. South, Suite 1080 Minneapolis, MN 55415 Ph: 612-339-5508 Fx: 612-339-5382 CONTRACTOR:T.B.D. CIVIL ENGINEER:Sunde Engineering, PLLC. 10830 Nesbit Avenue South Bloomington, MN 55437 Ph: 952-881-3344 Fx: 952-881-1913 LANDSCAPE ARCHITECT:Damon Faber 401 2nd Ave. N, Suite 410 Minneapolis, MN 55401 Ph: 612-332-7522 STRUCTURAL ENGINEER:T.B.D. MECHANICAL ENGINEER:T.B.D. PLUMBING ENGINEER:T.B.D. ELECTRICAL ENGINEER:T.B.D. 4500 France Ave S, Edina MN 55410 Vicinity Site Location DRAWING INDEX DRAWING NUMBER DRAWING NAME PREL REZONE & SITE PLAN SUB 7/27/18GENERAL INFORMATION T1.1 TITLE SHEET * CIVIL C1.0 DEMOLITION PLAN * C1.1 SITE LAYOUT PLAN * C1.2 GRADING, DRAINAGE, UTILITY AND EROSION CONTROL PLAN * C1.3 NOTES AND DETAILS * C1.4 STORMWATER POLLUTION PREVENTION PLAN * LANDSCAPE L010 GENERAL NOTES & SCHEDULES * L110 MATERIALS & LAYOUT PLAN * L160 LANDSCAPE PLAN * L410 ENLARGED PLAN - PUBLIC PLAZA * L420 SITE SECTION & RENDERINGS * L500 LANDSCAPE DETAILS * ARCHITECTURAL A0.0 SITE IMAGES * A0.1 ARCHITECTURAL SITE PLAN * A0.2 PARKING & FIRST LEVEL PLAN * A0.3 LEVEL 2 & 3 FLOOR PLAN * A0.4 LEVEL 4 & ROOF PLAN * A0.5 EXTERIOR ELEVATIONS * A0.6 EXTERIOR ELEVATIONS * A0.7 EXTERIOR MATERIALS * A0.8 PERSPECTIVE VIEWS * A0.9 PERSPECTIVE VIEWS * A0.10 PERSPECTIVE VIEWS SURVEY 1 ALTA/NSPS LANDTITLE SURVEY * SURVEY 2 TOPOGRAPHIC SURVEY * UNIT MIX & SQUARE FOOTAGES No. Description Date France Avenue SouthSunnyside AvenueParking Entry/Exit Outline of Building Above Transformer Public Pocket Park -Refer to Landscape Drawings 4 ' - 0 3/32 "Parking Entry/Exit 2' - 6 " 5' - 6 " 7' - 6 " 5' - 6"7' - 3"1' - 9"1' - 0" 9' - 2 " 6' - 6" 6 0 ' - 7"Existing House 11' - 0 1 / 2 " 1 0 ' - 7 " 2 6 ' - 4 1/2"20' - 4 1/2"9 ' - 0 " D N 2 5 ' - 4"2 2 ' - 8 "22 ' - 6 "9' - 0" 8' - 0 " 2 8' - 7"1 4' - 9 1/ 2 " 2' - 0 1 / 2 " 6' - 6 1/2" Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:43 AMA0.1 ARCHITECTURAL SITE PLAN 217525 Author Checker 07/24/18 France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 1/16" = 1'-0"A0.1 1 FIRST LEVEL FLOOR PLAN No. Description Date France Avenue SouthSunnyside Avenue17,496 SF Public Parking 3,587 SF Restaurant Parking Entry/Exit Outline of Building Above 604 SF Trash 1,311 SF Retail 1,649 SF Retail 872 SF 1 BR 1,197 SF 2 BR Transformer 2,566 SF Lobby Public Pocket Park -Refer to Landscape Drawings 627 SF Service 209 SF Storage Service C o rrido rParking Entry/Exit 29,561 SF Parking Elec Rm W aterRoom Transformer location at grade above 1,250 SF Storage Wall Bicycle Storage Parking Entry/Exit Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:46 AMA0.2 PARKING & FIRST LEVEL PLAN 217525 ESG ESG France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 1/16" = 1'-0"A0.2 1 FIRST LEVEL FLOOR PLAN 1/16" = 1'-0"A0.2 2 PARKING LEVEL FLOOR PLAN No. Description Date Elec 1,263 SF 2 BR 1,350 SF 2 BR 1,488 SF 2 BR 1,280 SF 2 BR 1,489 SF 2 BR 735 SF 1 BR 1,413 SF 2 BR 806 SF 1 BR 1,040 SF 1 BR DEN Tr 1,428 SF 2 BR Amenity Terrace 919 SF 1 BR 1,168 SF 2 BR 1,197 SF 2 BR 1,425 SF 2 BR 1,432 SF 2 BR 725 SF 1 BR Club Room 930 sf Fitness Women Men P rivateTerraceP riv ate Terra ce Priv ate Terra ce P riv ate T errace Storage Yoga Elec 1,263 SF 2 BR 806 SF 1 BR 1,488 SF 2 BR 1,280 SF 2 BR 1,488 SF 2 BR 1,425 SF 2 BR 1,428 SF 2 BR 731 SF 1 BR 737 SF 1 BR 737 SF 1 BR 1,415 SF 2 BR 1,040 SF 1 BR DEN Tr 737 SF 1 BR 1,168 SF 2 BR 919 SF 1 BR 1,197 SF 2 BR 608 SF Storage 725 SF 1 BR 1,432 SF 2 BR 1,350 SF 2 BR Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:47 AMA0.3 LEVEL 2 & 3 FLOOR PLAN 217525 Author Checker 07/24/18 France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 1/16" = 1'-0"A0.3 1 SECOND LEVEL FLOOR PLAN 1/16" = 1'-0"A0.3 2 THIRD LEVEL FLOOR PLAN No. Description Date 2,493 SF 2 BR 1,838 SF 2 BR 1,263 SF 2 BR 1,432 SF 2 BR 1,462 SF 2 BR 1,506 SF 2 BR 1,631 SF 2 BR 1,280 SF 2 BR Elec Roof of Level Below Tr 253 SF Elevator Lobby 749 SF Rooftop Patio Screened Restaurant Mechanical Corral Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:48 AMA0.4 LEVEL 4 & ROOF PLAN 217525 Author Checker 07/24/18 France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 1/16" = 1'-0"A0.4 1 MP-04 City Submittal 1/16" = 1'-0"A0.4 2 ROOF LEVEL City Submittal No. Description Date 1A 1B6 7 543B 12 3C 6 8B 9 5 3A 3B 3B10 10 10 5 245 11 1C 8A 7 6 7 4 3C 6 8B 3B1B 1A 4 6 3A 5 3B 1A 1B 5 4 8B 3C 7 24 8A 3B 3B 10 7 1C1B 12 451B1C 2A 7 9 2 75 4 612 9 2 4 5 7B4 7 1A 29 3C 12 7B 5 4 EXTERIOR MATERIAL KEY 1A BRICK MASONRY COLOR 1 1B BRICK MASONRY COLOR 2 3A 3B 2 4 7 PREFABRICATED METAL BALCONY SYSTEM METAL PANEL-ZINC FINISH METAL COMPOSITE PANEL -BLACK 3 COAT CEMENTITIOUS STUCCO -NATURAL GREY COLOR FIBER CEMENT PANEL -CHARCOAL COLOR 8A METAL SLATTED PARKING SCREENING 6 STOREFRONT -ANODIZED ALUMINUM BLACK 5 COMPOSITE WINDOW 3C PREFINISHED METAL PANEL -BLACK 8B LOUVERED MECHANICAL SCREEN 9 METAL CAP FLASHING -BLACK 1C BURNISHED BLOCK MASONRY 10 CHANNEL EDGED ENTRY CANOPY 11 ALUMINUM OVERHEAD GARAGE DOOR W/ GLASS LITES 12 PREFINISHED ALUMINUM GUARDRAIL SYTEM LEVEL 1 100' - 0" LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0" LOWER LEVEL 90' - 0" T.O. ELEVATOR CORE 160' - 0"13' - 0"11' - 4"10' - 4"10' - 4"15' - 0"10' - 0"LEVEL 1 100' - 0" LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0" LOWER LEVEL 90' - 0" T.O. ELEVATOR CORE 160' - 0"13' - 0"11' - 4"10' - 4"10' - 4"15' - 0"10' - 0"LEVEL 1 100' - 0" LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0" T.O. ELEVATOR CORE 160' - 0"13' - 0"11' - 4"10' - 4"10' - 4"15' - 0"LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0" T.O. ELEVATOR CORE 160' - 0"13' - 0"11' - 4"10' - 4"10' - 4"LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0" T.O. ELEVATOR CORE 160' - 0"13' - 0"11' - 4"10' - 4"10' - 4"LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8"10' - 4"10' - 4"LEVEL 2 115' - 0" LEVEL 3 125' - 4" LEVEL 4 135' - 8" ROOF LEVEL 147' - 0"11' - 4"10' - 4"10' - 4"Signature Typed or Printed Name License # Date PROJECT NUMBER DRAWN BY CHECKED BY ORIGINAL ISSUE: REVISIONS: KEY PLANNOT FOR CONSTRUCTIONI hereby certify that this plan, specification, or report was prepared by me or under my direct supervision and that I am a duly licensed architect under the laws of the State of Minnesota 7/27/2018 10:49:50 AMA0.5 EXTERIOR ELEVATIONS 217525 ESG ESG France Ave Apartments France Ave Apartments 4500 France Ave S, Edina MN 55410 PRELIMINARY REZONING & SITE PLAN SUBMITTAL 7/27/2018 1/16" = 1'-0"A0.5 1 East Elevation 1 1/16" = 1'-0"A0.5 2 East Elevation 2 1/16" = 1'-0"A0.5 3 West Elevation 1/16" = 1'-0"A0.5 4 South Elevation 1/16" = 1'-0"A0.5 5 Internal Elevation 3 1/16" = 1'-0"A0.5 6 Internal Elevation 2 1/16" = 1'-0"A0.5 7 Internal Elevation 1 No. Description Date Appendix B Map of the Southeast Edina Redevelopment Project Area and the 44th and France 2 TIF District Appendix B-1 æ ¹» ¹» æ æ æ æ æ¹»æ æ ¹º¹º ¹º ñ ñ ñ ¹»æ æ æ ¹º ¹º æ æ ¹º æ æ ¹º ¹º æ æ æ ñ æ ¹º ñ æ ñTRACY AVEVERNON AVEWOODDALE AVEHANSEN RDVALLEY VIEW RD70TH ST W FRANCE AVE S44th & France 2 Mud Lake LakeEdina Mirro r L a k e Lake Cornelia ArrowheadLake HighlandsLake IndianheadLake Mel o d y L a k e LakePamela HawkesLake Harvey Lake Centennial Lake Minneha h a C r e e k Nine Mile Creek Nine Mile C r e e k Canadian Pacific RailroadCanadian Pacific RailroadCityHall St Peters Lutheran Church & School FireStation Public Works &Park Maintenance GraceChurchPublicLibrary ConcordSchool EdinaCovenant CorneliaSchool ColonialChurch HighlandSchool CalvaryLutheran EdinaHighSchool Our Lady ofGrace Church& School SouthviewJr High CrossviewLutheran CountrysideSchool St Albans Episcopal Valley ViewJr High Creek Valley School NormandaleLutheran ColonyParkBaptist St PatricksCatholic CreekValley Baptist NormandaleElementary St StephensEpiscopal EdinaCommunityCenter GoldenYearsMontessor CalvinChristianSchool GoodSamaritanMethodist EdinaMorningsideChurch ChristPresbyterianChurch ChapelHillsCongregtional Shepard of the HillsLutheran Edina Community Lutheran Church FireStationBLAKE RDSCHAEFER RDVERNON AVECAHILL RD66TH ST W YORK AVE SINTERLACHEN BLVD MALONEY AVE 44TH ST W 50TH ST W 54TH ST W 58TH ST W GLEASON RD70TH ST W 76TH ST W DEWEY HILL RD VALLEY VI E W R D VALLEY VIEW RD MINNESOTA DR78TH ST W I-494 I-494 HWY 100HWY 169HWY 169HWY 100HWY 62 HWY 62 /Engineering Dept.September 2018 44th and France 2 TIF District Southeast Edina Redevelopment Project Area 44th and France 2 TIF District 0702824440068 07 0 2 8 2 4 4 4 0 0 7 0 07 0 2 8 2 4 4 4 0 0 6 9 0702824440067 0702824440066 SUNNYSIDE RDFRANCE AVE/Engineering Dept.September 2018 44th and France 2 TIF District Southeast Edina Redevelopment Project Area 44th and France 2 TIF District Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel(s) listed below. Parcel Numbers Address Owner 0702824440066 4500 France Private Owner 0702824440067 4500 France Private Owner 0702824440068 3903 Sunnyside Rd Private Owner 0702824440069 3905 Sunnyside Rd Private Owner 0702824440070 3907 Sunnyside Rd Private Owner Appendix C-1 Appendix D Estimated Cash Flow for the District Appendix D-1 10/4/2018 Base Value Assumptions - Page 1 44th and France 2 TIF Projection- 1% Inflation City of Edina, MN Mixed Use - 46-unit Apartment; 7,000 rsf Retail Redevelopment ASSUMPTIONS AND RATES DistrictType:Renewal and Renovation District Name/Number:ISD 273 / WD 3County District #:Exempt Class Rate (Exempt)0.00% First Year Construction or Inflation on Value 2019 Commercial Industrial Preferred Class Rate (C/I Pref.)Existing District - Specify No. Years Remaining First $150,000 1.50%Inflation Rate - Every Year:1.00%Over $150,000 2.00%Interest Rate:4.75%Commercial Industrial Class Rate (C/I)2.00%Present Value Date:1-Aug-20 Rental Housing Class Rate (Rental)1.25%First Period Ending 1-Feb-21 Affordable Rental Housing Class Rate (Aff. Rental)Tax Year District was Certified:Pay 2019 First $121,000 0.75%Cashflow Assumes First Tax Increment For Development:2021 Over $121,000 0.25%Years of Tax Increment 16 Non-Homestead Residential (Non-H Res. 1 Unit)Assumes Last Year of Tax Increment 2036 First $500,000 1.00%Fiscal Disparities Election [Outside (A), Inside (B), or NA]Inside(B)Over $500,000 1.25%Incremental or Total Fiscal Disparities Incremental Homestead Residential Class Rate (Hmstd. Res.)Fiscal Disparities Contribution Ratio 32.2123%Pay 2018 First $500,000 1.00%Fiscal Disparities Metro-Wide Tax Rate 145.0950%Pay 2018 Over $500,000 1.25%Maximum/Frozen Local Tax Rate: 112.296%Pay 2018 Agricultural Non-Homestead 1.00%Current Local Tax Rate: (Use lesser of Current or Max.)112.296%Pay 2018State-wide Tax Rate (Comm./Ind. only used for total taxes)43.8650%Pay 2018Market Value Tax Rate (Used for total taxes)0.22182%Pay 2018 Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Map ID PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap.0702824440066 4500 France 64,100 0 64,100 100%64,100 Pay 2019 C/I 1,282 Rental 801 0702824440067 4500 France 310,100 1,000 311,100 100%311,100 Pay 2019 C/I 6,222 C/I Pref.5,472 0702824440068 4500 France 945,000 1,000 946,000 100%946,000 Pay 2019 C/I Pref.18,170 Rental 11,825 0702824440069 Res 280,000 126,100 406,100 100%406,100 Pay 2019 Non-H Res. 1 Unit 4,061 Rental 5,076 0702824440070 Res 294,000 156,000 450,000 100%450,000 Pay 2019 Non-H Res. 1 Unit 4,500 Rental 5,625 1,893,200 284,100 2,177,300 2,177,300 34,235 28,800 Note: 1. Base values are for pay 2019 based upon review of County website on 9.10.2018. Area/ Phase Tax Rates BASE VALUE INFORMATION (Original Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\EDINA\Housing Economic Redevelopment\TIF\TIF Districts\44th & France 2 - 2018\TIF Runs\4500 France TIF Run Final 10.3.2018 10/4/2018 Base Value Assumptions - Page 2 44th and France 2 TIF Projection- 1% Inflation City of Edina, MN Mixed Use - 46-unit Apartment; 7,000 rsf Retail Redevelopment Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full TaxesArea/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2019 2020 2021 2022 PayableApartments339,804 339,804 46 15,631,000 Rental 195,388 4,248 29%100%100%100%2022Retail471471 6,972 3,287,000 C/I Pref.64,990 9 0%100%100%100%2022TOTAL18,918,000 260,378 Note: 1. Market values are based upon the Assessor's preliminary estimate provided 7.27.2018. TIF Projections are based on existing Pay 2018 local tax rates. Total Fiscal Local Local Fiscal State-wide Market Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./UnitApartments195,388 0 195,388 219,412 0 0 34,673 254,085 5,523.59Retail64,990 20,935 44,055 49,472 30,375 27,850 7,291 114,989 16.49TOTAL260,378 20,935 239,443 268,885 30,375 27,850 41,964 369,074 Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted. Total Property Taxes 369,074 Current Market Value - Est.2,177,300less State-wide Taxes (27,850)New Market Value - Est.18,918,000less Fiscal Disp. Adj.(30,375) Difference 16,740,700 less Market Value Taxes (41,964)Present Value of Tax Increment 2,565,757less Base Value Taxes (30,361) Difference 14,174,943Annual Gross TIF 238,523 Value likely to occur without Tax Increment is less than:14,174,943 WHAT IS EXCLUDED FROM TIF?MARKET VALUE BUT / FOR ANALYSIS TAX CALCULATIONS PROJECT INFORMATION (Project Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\EDINA\Housing Economic Redevelopment\TIF\TIF Districts\44th & France 2 - 2018\TIF Runs\4500 France TIF Run Final 10.3.2018 10/4/2018 Tax Increment Cashflow - Page 3 44th and France 2 TIF Projection- 1% Inflation City of Edina, MN Mixed Use - 46-unit Apartment; 7,000 rsf Retail Redevelopment TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin.Semi-Annual Semi-Annual PERIOD% of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.36%10%Increment Value Yrs.Year Date- - - - 02/01/21100%56,875 (28,800) - 28,076 112.296%31,528 15,764 (57) (1,571) 14,136 13,488 0.5 2021 08/01/21100%56,875 (28,800) - 28,076 112.296%31,528 15,764 (57) (1,571) 14,136 26,663 1 2021 02/01/22100%260,378 (28,800) (19,172) 212,406 112.296%238,523 119,262 (429) (11,883) 106,949 124,028 1.5 2022 08/01/22100%260,378 (28,800) (19,172) 212,406 112.296%238,523 119,262 (429) (11,883) 106,949 219,134 2 2022 02/01/23100%262,981 (28,800) (19,381) 214,800 112.296%241,212 120,606 (434) (12,017) 108,155 313,081 2.5 2023 08/01/23100%262,981 (28,800) (19,381) 214,800 112.296%241,212 120,606 (434) (12,017) 108,155 404,848 3 2023 02/01/24100%265,611 (28,800) (19,593) 217,219 112.296%243,928 121,964 (439) (12,152) 109,372 495,496 3.5 2024 08/01/24100%265,611 (28,800) (19,593) 217,219 112.296%243,928 121,964 (439) (12,152) 109,372 584,040 4 2024 02/01/25100%268,267 (28,800) (19,806) 219,661 112.296%246,671 123,335 (444) (12,289) 110,602 671,503 4.5 2025 08/01/25100%268,267 (28,800) (19,806) 219,661 112.296%246,671 123,335 (444) (12,289) 110,602 756,937 5 2025 02/01/26100%270,950 (28,800) (20,022) 222,128 112.296%249,441 124,721 (449) (12,427) 111,844 841,327 5.5 2026 08/01/26100%270,950 (28,800) (20,022) 222,128 112.296%249,441 124,721 (449) (12,427) 111,844 923,758 6 2026 02/01/27100%273,659 (28,800) (20,240) 224,620 112.296%252,239 126,120 (454) (12,567) 113,099 1,005,181 6.5 2027 08/01/27100%273,659 (28,800) (20,240) 224,620 112.296%252,239 126,120 (454) (12,567) 113,099 1,084,714 7 2027 02/01/28100%276,396 (28,800) (20,460) 227,136 112.296%255,065 127,533 (459) (12,707) 114,366 1,163,273 7.5 2028 08/01/28100%276,396 (28,800) (20,460) 227,136 112.296%255,065 127,533 (459) (12,707) 114,366 1,240,009 8 2028 02/01/29100%279,160 (28,800) (20,682) 229,678 112.296%257,919 128,960 (464) (12,850) 115,646 1,315,804 8.5 2029 08/01/29100%279,160 (28,800) (20,682) 229,678 112.296%257,919 128,960 (464) (12,850) 115,646 1,389,840 9 2029 02/01/30100%281,952 (28,800) (20,907) 232,245 112.296%260,802 130,401 (469) (12,993) 116,938 1,462,968 9.5 2030 08/01/30100%281,952 (28,800) (20,907) 232,245 112.296%260,802 130,401 (469) (12,993) 116,938 1,534,398 10 2030 02/01/31100%284,771 (28,800) (21,133) 234,838 112.296%263,714 131,857 (475) (13,138) 118,244 1,604,951 10.5 2031 08/01/31100%284,771 (28,800) (21,133) 234,838 112.296%263,714 131,857 (475) (13,138) 118,244 1,673,867 11 2031 02/01/32100%287,619 (28,800) (21,362) 237,457 112.296%266,655 133,327 (480) (13,285) 119,563 1,741,935 11.5 2032 08/01/32100%287,619 (28,800) (21,362) 237,457 112.296%266,655 133,327 (480) (13,285) 119,563 1,808,423 12 2032 02/01/33100%290,495 (28,800) (21,594) 240,102 112.296%269,625 134,812 (485) (13,433) 120,894 1,874,093 12.5 2033 08/01/33100%290,495 (28,800) (21,594) 240,102 112.296%269,625 134,812 (485) (13,433) 120,894 1,938,239 13 2033 02/01/34100%293,400 (28,800) (21,827) 242,773 112.296%272,625 136,312 (491) (13,582) 122,239 2,001,594 13.5 2034 08/01/34100%293,400 (28,800) (21,827) 242,773 112.296%272,625 136,312 (491) (13,582) 122,239 2,063,479 14 2034 02/01/35100%296,334 (28,800) (22,063) 245,471 112.296%275,654 137,827 (496) (13,733) 123,598 2,124,601 14.5 2035 08/01/35100%296,334 (28,800) (22,063) 245,471 112.296%275,654 137,827 (496) (13,733) 123,598 2,184,304 15 2035 02/01/36100%299,297 (28,800) (22,301) 248,196 112.296%278,715 139,357 (502) (13,886) 124,970 2,243,270 15.5 2036 08/01/36100%299,297 (28,800) (22,301) 248,196 112.296%278,715 139,357 (502) (13,886) 124,970 2,300,868 16 2036 02/01/37 Total 3,904,316 (14,056) (389,026) 3,501,234 Present Value From 08/01/2020 Present Value Rate 4.75%2,565,757 (9,237) (255,652) 2,300,868 Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\EDINA\Housing Economic Redevelopment\TIF\TIF Districts\44th & France 2 - 2018\TIF Runs\4500 France TIF Run Final 10.3.2018 Appendix E Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form (MBAF) should be used to report and/or update each calendar year's activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.mn.us/Community/subsidies/MBAFForm.htm for information and forms. Appendix E-1 Appendix F Renewal and Renovation Qualifications for the District Appendix F-1 Final Report of Inspection Procedures and Results For Determining Qualifications of a Tax Increment Financing (TIF) District as a Renewal and Renovation District Edina HRA Proposed TIF District Edina, Minnesota Stantec Project No. 193804402 October 9, 2018 Page 2 Table of Contents PART 1 Executive Summary 3 Purpose of Evaluation 3 Scope of Work 3 Conclusion 4 PART 2 Minnesota Statute 469.174, Subdivision 10 Requirements 4 PART 3 Procedures Followed 6 PART 4 Findings 7 A. Coverage Test 7 B. Condition of Building Test 8 1. Replacement Cost 8 2. Code Deficiencies 8 3. System Condition Deficiencies 9 C. Distribution of Substandard Structures 11 D. Conclusion 11 PART 5 Team Credentials 12 APPENDIX A Map of Proposed TIF District Hennepin County Property Maps APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Code Deficiency Estimated Replacement Costs APPENDIX D Photographs Page 3 PART 1 – EXECUTIVE SUMMARY PURPOSE OF EVALUATION Stantec was retained by the City of Edina HRA to inspect and evaluate the properties within a Tax Increment Financing Renewal and Renovation District (“TIF District”) proposed to be established by the City. The proposed TIF District is located in the City of Edina, in a general area between Sunnyside Road on the west, and France Avenue South on the east (Figure 1). The purpose of Stantec’s work was to determine whether the proposed district meets the statutory requirements for coverage, and whether buildings on four of the five parcels, located within the proposed TIF District, meet the qualifications required for a Renewal and Renovation District. Figure 1 – Proposed TIF District SCOPE OF WORK The proposed district consists of five (5) parcels containing two (2) commercial buildings, two (2) residential buildings, and one (1) on-grade paved parking lot. All the buildings in the proposed district received an onsite interior and exterior inspection. Building Code and Condition Deficiency Reports for each building inspected by Stantec are in Appendix B. Page 4 CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Renewal and Renovation District under Minnesota Statutes, Section 469.174, Subdivision 10, it is our professional opinion that the proposed TIF District does qualify as a Renewal and Renovation District. The remainder of this report describes our process and findings in detail. PART 2 – MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS The properties were inspected in accordance with the following requirements under Minnesota Statutes, Section 469.174, Subdivision 10a, which states: Interior Inspection "The municipality may not make such determination [that the building is structurally substandard] without an interior inspection of the property..." Exterior Inspection and Other Means "An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard." Documentation "Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3(1)." Qualification Requirements Minnesota Statutes, Section 469.174, Subdivision 10(a)requires two tests for occupied parcels: 1. Coverage Test ”…parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures.” The coverage required by the parcel to be considered occupied is defined under Minnesota Statutes, Section 469.174, Subdivision 10(e), which states: " For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar structures.” Page 5 2. Condition of Building Test …”20 percent of the buildings are structurally substandard; and 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community; and (2) the conditions described in clause (1) are reasonably distributed throughout the geographic area of the district.” 1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b), which states: “For purposes of this subdivision, "structurally substandard" shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance.” Definition of Substantial Renovation Substantial renovation, for purposes of Minnesota Statutes, Section 469.174, Subdivision 10(c), is defined as renovation with costs exceeding 15 percent of the building's replacement value. Buildings are not eligible to be considered structurally substandard unless they meet certain additional criteria, as set forth in Subdivision 10(c) which states: "A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. Items of evidence that support such a conclusion include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section Page 6 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the provisions of this paragraph is a necessary, but not a sufficient, condition to determining that the building is substandard." "Items of evidence that support such a conclusion include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence." PART 3 – PROCEDURES FOLLOWED Stantec performed interior and exterior inspections for both commercial buildings and both residential buildings within the proposed TIF District on September 26, 2018 and October 3, 2018. Visual observations were made of all levels of all properties and structures, with physical measurements taken where necessary. Area calculations and construction data are based upon information from various sources, as noted. Page 7 PART 4 – FINDINGS A. Coverage Test 1. The total square foot area of each parcel in the proposed TIF District was obtained from Hennepin County Property Map GIS mapping, and site verification. 2. The total square foot area of buildings and site improvements on the parcels in the proposed TIF District was obtained from City records, Hennepin County Property Map GIS mapping, and site verification. 3. The percentage of coverage for each parcel in the proposed TIF District was computed to determine if the 15 percent minimum requirement was met. The total square footage of parcels meeting the 15 percent requirement was divided into the total square footage of the entire district to determine if the 70 percent requirement was met. Findings: The proposed TIF District met the coverage test under Minnesota Statutes, Section 469.174, Subdivision 10(e), which resulted in parcels consisting of 100 percent of the area of the proposed TIF District being occupied by buildings, streets, utilities or paved drives or parking lots (Figure 2). This exceeds the 70 percent area coverage requirement for the proposed TIF District under Minnesota Statutes, Section 469.174, Subdivision 10(a) (1). Figure 2 – Coverage Test Aerial View Page 8 B. Condition of Building Test 1. Replacement Cost The first step in evaluating a building to determine if it is substandard to a degree requiring substantial renovation or clearance is to determine its replacement cost. This is the cost of constructing a new structure of the same square footage and type on site. Replacement costs were researched using R.S. Means Cost Works square foot models for 2018. A replacement cost was calculated by first establishing building use (office, retail, residential, etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain the appropriate median replacement cost, which factors in the costs of construction in Edina, Minnesota. Replacement cost includes labor, materials, and the contractor's overhead and profit. Replacement costs do not include architectural fees, legal fees or other “soft" costs not directly related to construction activities. Replacement cost for each building is tabulated in Appendix C. 2. Code Deficiencies The next step in evaluating a building is to determine what code deficiencies exist with respect to such building. Code deficiencies are those conditions for a building which are not in compliance with current building codes applicable to new buildings in the State of Minnesota. Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building cannot be considered structurally substandard if its code deficiencies are not at least 15 percent of the replacement cost of the building. Thus, it was necessary to determine the extent of code deficiencies for each building in the proposed TIF District. The evaluation was made by reviewing all available information with respect to such buildings contained in City Building Inspection records and making interior and exterior inspections of the buildings. Stantec utilized the 2015 Minnesota State Building Code as the official code for our evaluations. The Minnesota State Building Code is a series of provisional codes written specifically for Minnesota only requirements, adoption of several international codes, and amendments to the adopted international codes. After identifying the code deficiencies in each building, we used R.S. Means Cost Works 2018; Unit and Assembly Costs to determine the cost of correcting the identified deficiencies. We were then able to compare the correction costs with the replacement cost of each building to determine if the costs for correcting code deficiencies meet the required 15 percent threshold. Page 9 Finding: Two (2) of the four (4) buildings/structures (50 percent) in the proposed TIF District contained code deficiencies exceeding the 15 percent threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c). A complete Building Code and Condition Deficiency report for each building/structure in the proposed TIF District can be found in Appendix B of this report. 3. System Condition Deficiencies System condition deficiencies are a measurement of defects or substantial deterioration in site elements, structure, exterior envelope, mechanical and electrical components, fire protection and emergency systems, interior partitions, ceilings, floors, and doors. The evaluation was made by reviewing all available information contained in City records; and making interior and exterior inspections of the buildings. Stantec only identified system condition deficiencies that were visible upon our inspection of the building or contained in City records. We did not consider the amount of "service life" used up for a particular component unless it was an obvious part of that component's deficiencies. Minnesota Statutes, Section 469.174, Subdivision 10(c), provides for the minimum threshold of code deficiencies that must be met in order to consider a building substandard. If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), then in order for such building to be "structurally substandard" under Minnesota Statutes, Section 469.174, Subdivision 10(b), the building's defects or deficiencies should be of sufficient total significance to justify substantial renovation or clearance." Based on this definition, Stantec re-evaluated each of the buildings that met the code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to determine if the total deficiencies warranted "substantial renovation or clearance" based on the criteria we outlined above. Finding: In our professional opinion, two (2) of the four (4) buildings/structures (50 percent) in the proposed TIF District are structurally substandard to a degree requiring substantial renovation or clearance, because of defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance as described below: Page 10 Edina Cleaners – 4500 France Avenue South – Parcel 0702824440066 This parcel is a paved parking lot. Edina Cleaners – 4500 France Avenue South – Parcel 0702824440067 This building was found to be structurally substandard with code deficiencies that exceed the 15 percent of the building replacement value criteria as defined by Minnesota Statutes, Section 469.174, Subdivision 10 (b) and (c). Edina Cleaners – 4500 France Avenue South – Parcel 0702824440068 This building was found to be structurally substandard with code deficiencies that exceed the 15 percent of the building replacement value criteria as defined by Minnesota Statutes, Section 469.174, Subdivision 10 (b) and (c). Private Residence – 3905 Sunnyside Road – Parcel 0702824440069 This residence has code and condition deficiencies, but they are not significant enough to reach the required 15 percent of building replacement value criteria as defined by Minnesota Statutes, Section 469.174, Subdivision 10 (b) and (c). Private Residence – 3907 Sunnyside Road – Parcel 0702824440070 This residence has code and condition deficiencies, but they are not significant enough to reach the required 15 percent of building replacement value criteria as defined by Minnesota Statutes, Section 469.174, Subdivision 10 (b) and (c). Page 11 C. Distribution of Substandard Structures Much of this report has focused on the condition of individual buildings as they relate to requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also important to look at the distribution of substandard buildings throughout the geographic area of the proposed TIF District. Finding: The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District (Figure 3). Figure 3 – Distribution of Substandard Structures (shown hatched green) D. CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Renewal and Renovation District under Minnesota Statutes, Section 469.174, Subdivision 10a, it is our professional opinion that the proposed TIF District does qualify as a Renewal and Renovation District. The remainder of this report describes our process and findings in detail. Page 12 PART 5 – TEAM CREDENTIALS Bruce P. Paulson, AIA – Senior Project Manager/Inspector Bruce has more than 42 years of architectural experience as project architect, project manager, and project designer for municipal, governmental, educational, commercial, hospitality, and healthcare clients. He is involved with all phases of the architectural process, from pre-design through construction administration, including specialty consulting in investigations for buildings, building condition surveys, TIF inspections, code reviews, estimating, and specification writing. APPENDIX A Hennepin County Property Map Comments: 1 inch = 50 feet PARCEL ID: 0702824440066 OWNER NAME: 4500 France Avenue Llc PARCEL ADDRESS: 4500 France Ave S, Edina MN 55410 PARCEL AREA: 0.03 acres, 1,393 sq ft A-T-B: Abstract SALE PRICE: SALE DATA: SALE CODE: ASSESSED 2017, PAYABLE 2018 PROPERTY TYPE: Vacant Land-Commercial HOMESTEAD: Non-Homestead MARKET VALUE: $27,900 TAX TOTAL: $5,744.70 ASSESSED 2018, PAYABLE 2019 PROPERTY TYPE: Vacant Land-commercial HOMESTEAD: Non-homestead MARKET VALUE: $64,100 This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is notsuitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2018 Hennepin County Property Map Comments: 1 inch = 50 feet PARCEL ID: 0702824440067 OWNER NAME: 4500 France Avenue Llc PARCEL ADDRESS: 4500 France Ave S, Edina MN 55410 PARCEL AREA: 0.15 acres, 6,741 sq ft A-T-B: Abstract SALE PRICE: SALE DATA: SALE CODE: ASSESSED 2017, PAYABLE 2018 PROPERTY TYPE: Commercial-Non Preferred HOMESTEAD: Non-Homestead MARKET VALUE: $425,700 TAX TOTAL: $19,720.36 ASSESSED 2018, PAYABLE 2019 PROPERTY TYPE: Commercial-non Preferred HOMESTEAD: Non-homestead MARKET VALUE: $311,100 This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is notsuitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2018 Hennepin County Property Map Comments: 1 inch = 50 feet PARCEL ID: 0702824440068 OWNER NAME: 4500 France Avenue Llc PARCEL ADDRESS: 3903 Sunnyside Rd, Edina MN 55424 PARCEL AREA: 0.47 acres, 20,544 sq ft A-T-B: Torrens SALE PRICE: $975,968 SALE DATA: 02/2017 SALE CODE: Excluded From Ratio Studies ASSESSED 2017, PAYABLE 2018 PROPERTY TYPE: Commercial-Preferred HOMESTEAD: Non-Homestead MARKET VALUE: $520,400 TAX TOTAL: $25,221.64 ASSESSED 2018, PAYABLE 2019 PROPERTY TYPE: Commercial-preferred HOMESTEAD: Non-homestead MARKET VALUE: $946,000 This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is notsuitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2018 Hennepin County Property Map Comments: 1 inch = 50 feet PARCEL ID: 0702824440069 OWNER NAME: Ryann S Doucette PARCEL ADDRESS: 3905 Sunnyside Rd, Edina MN 55424 PARCEL AREA: 0.2 acres, 8,659 sq ft A-T-B: Abstract SALE PRICE: $375,000 SALE DATA: 08/2016 SALE CODE: Warranty Deed ASSESSED 2017, PAYABLE 2018 PROPERTY TYPE: Residential HOMESTEAD: Non-Homestead MARKET VALUE: $400,500 TAX TOTAL: $6,127.04 ASSESSED 2018, PAYABLE 2019 PROPERTY TYPE: Residential HOMESTEAD: Non-homestead MARKET VALUE: $406,100 This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is notsuitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2018 Hennepin County Property Map Comments: 1 inch = 50 feet PARCEL ID: 0702824440070 OWNER NAME: Ryann S Doucette PARCEL ADDRESS: 3907 Sunnyside Rd, Edina MN 55424 PARCEL AREA: 0.2 acres, 8,590 sq ft A-T-B: Abstract SALE PRICE: $378,000 SALE DATA: 01/2014 SALE CODE: Warranty Deed ASSESSED 2017, PAYABLE 2018 PROPERTY TYPE: Residential HOMESTEAD: Non-Homestead MARKET VALUE: $434,200 TAX TOTAL: $7,529.48 ASSESSED 2018, PAYABLE 2019 PROPERTY TYPE: Residential HOMESTEAD: Non-homestead MARKET VALUE: $450,000 This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is notsuitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2018 APPENDIX B CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT BUILDING CONDITION AND CODE DEFICIENCIES REPORT October 9, 2018 Property ID No. & Property Address: 0702824440066 4500 France Avenue South Inspection Date(s) and Time(s): 9-26-18, 1:00 p.m. and 10-3-18, 3:00 p.m. Inspection Type: Exterior. Summary of Conditions: On-grade paved parking lot. Type of Construction: Asphalt pavement. Structure Size(s): 1,393 SF Summary of Conditions: Paved parking lot appears to be in good condition. • There are no buildings on this parcel that would require an inspection. CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT BUILDING CONDITION AND CODE DEFICIENCIES REPORT October 9, 2018 Property ID No.: 0702824440067 4500 France Avenue South Inspection Date(s) and Time(s): 9-26-18, 1:00 p.m. and 10-3-18, 1:00 p.m. Inspection Type: Interior and exterior. General Description of Property: Commercial Building; originally a service garage; converted to a dry cleaners Type of Construction: Exterior masonry bearing walls, cast-in-place concrete foundation and floor slab, wood-framed roof. Date of Construction: Original building constructed in 1928. Structure Size(s): 6,532 square feet main level; partial basement within building footprint Summary of Deficiencies: It is our professional opinion that this building is Structurally substandard because: o Estimated cost to correct building code deficiencies is more than 15% of the estimated replacement cost. Estimated Replacement Cost: $1,059,560.00 Estimated Cost to Correct Building Code Deficiencies: $405,298.00 Percentage of Replacement Cost for Building Code Deficiencies: 38.3% Description of Condition Deficiencies • Exterior doors (4) currently swing into the building and all are 32” wide doors. Current code requires exterior exit doors to swing in direction of egress travel and provide a minimum 32” clear width when open to 90 degrees. • Current code requires all outswinging exit doors to have a structural stoop with frost footings to prevent heaving which could restrict the door swing and access/egress capability. • Only one of the four exterior doors is aligned with existing exterior grade. The remaining three doors will require re-grading of existing parking lot and/or sidewalks for the doors to comply with ADA requirements for an accessible route. • Stair to partial basement level does not comply with current code for tread depth and riser height. • Restroom is not in compliance with ADA guidelines. Per current code two restrooms are required to accommodate an occupant load of 66. • All exterior windows are single-glazed. • All exterior walls are uninsulated. • Wood roof framing is not fire-retardant treated. • Fully adhered EPDM roofing membrane system has failed at several locations, causing water intrusion damage to the wood roof framing members. • The existing roof is under-insulated. • The existing lighting system does not comply with current codes for daylight harvesting and energy-efficiency. • The existing mechanical system does not comply with current codes for ventilation. CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT BUILDING CONDITION AND CODE DEFICIENCIES REPORT October 9, 2018 Property ID No.: 0702824440068 4500 France Avenue South Inspection Date(s) and Time(s): 9-26-18, 1:00 p.m. and 10-3-18, 1:00 p.m. Inspection Type: Interior and exterior. General Description of Property: Commercial Building (originally a theater) and paved parking lot; currently a dry cleaners Type of Construction: Exterior masonry bearing walls, cast-in-place concrete foundation and floor slab, wood-framed roof. Date of Construction: Original building constructed in 1936. Structure Size(s): 7,427 square feet main level; partial basement within building footprint; partial second floor within building footprint Summary of Deficiencies: It is our professional opinion that this building is Structurally substandard because: o Estimated cost to correct building code deficiencies is more than 15% of the estimated replacement cost. Estimated Replacement Cost: $1,397,260.00 Estimated Cost to Correct Building Code Deficiencies: $380,478.00 Percentage of Replacement Cost for Building Code Deficiencies: 27.2% Description of Condition Deficiencies • Exterior doors (3) currently swing into the building and all are 32” wide doors. Current code requires exterior exit doors to swing in direction of egress travel and provide a minimum 32” clear width when open to 90 degrees. • Current code requires all outswinging exit doors to have a structural stoop with frost footings to prevent heaving which could restrict the door swing and access/egress capability. • Three door openings have been infilled. One at the south wall providing egress from the main theater space and the other two in the east wall providing egress from the stage. The existing openings are 64” wide. Each opening will need one new 36” wide outswinging door with a structural stoop with frost footings to prevent heaving which could restrict the door swing and access/egress capability. • Stair to partial basement level does not comply with current code for tread depth and riser height. • Stair to partial upper floor level does not comply with current code for tread depth and riser height. • Restrooms are not in compliance with ADA guidelines. Per current code two restrooms are required to accommodate an occupant load of 75. • All exterior windows are single-glazed. • All exterior walls are uninsulated. • Wood roof framing is not fire-retardant treated. • The existing roof is under-insulated. • The existing lighting system does not comply with current codes for daylight harvesting and energy-efficiency. • The existing mechanical system does not comply with current codes for ventilation. • Parking lot pavement needs full replacement CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT BUILDING CONDITION AND CODE DEFICIENCIES REPORT October 9, 2018 Property ID No.: 0702824440069 3905 Sunnyside Road Inspection Date(s) and Time(s): 9-26-18, 1:00 p.m. and 10-3-18, 1:00 p.m. Inspection Type: Interior and exterior. General Description of Property: Residential home with detached garage Type of Construction: Wood-framed construction, stucco exterior, asphalt shingles. Date of Construction: Original building constructed in 1936. Structure Size(s): 873 square feet main level with 86 square foot porch; full basement and partial upper level 379 square foot garage Summary of Deficiencies: It is our professional opinion that this building is Not Substandard because: o Estimated cost to correct building code deficiencies is less than 15% of the estimated replacement cost. Estimated Replacement Cost: $507,625.00 Estimated Cost to Correct Building Code Deficiencies: $18,146.00 Percentage of Replacement Cost for Building Code Deficiencies: 3.6% Description of Condition Deficiencies • Exterior walls are under-insulated. • Attic space/roof is under-insulated. • Asphalt shingles on house and garage are in need of replacement. CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT BUILDING CONDITION AND CODE DEFICIENCIES REPORT October 9, 2018 Property ID No.: 0702824440070 3907 Sunnyside Road Inspection Date(s) and Time(s): 9-26-18, 1:00 p.m. and 10-3-18, 1:00 p.m. Inspection Type: Interior and exterior. General Description of Property: Residential home with detached garage Type of Construction: Wood-framed construction, stucco exterior, asphalt shingles. Date of Construction: Original building constructed in 1928. Structure Size(s): 1,052 square feet main level; full basement and partial upper level; 246 square foot garage Summary of Deficiencies: It is our professional opinion that this building is Not Substandard because: o Estimated cost to correct building code deficiencies is less than 15% of the estimated replacement cost. Estimated Replacement Cost: $562,500.00 Estimated Cost to Correct Building Code Deficiencies: $21,773.00 Percentage of Replacement Cost for Building Code Deficiencies: 3.8% Description of Condition Deficiencies • Windows are single-pane glazing. • Exterior walls are under-insulated. • Attic space/roof is under-insulated. APPENDIX C CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT ESTIMATED REPLACEMENT COSTS 1 Property ID No. & Property Address: 0702824440066 4500 France Avenue South Paved parking lot. Estimated Cost to Correct Building Code Deficiencies: $0.00 Property ID No. & Property Address: 0702824440067 4500 France Avenue South Replace exterior doors (4) Remove existing doors and frames – 4 @ $150/EA $600.00 Widen existing openings – 4 @ $3,500/EA $14,000.00 New 3’ wide aluminum entrance door and frame $2,025.00 New 3’ wide flush hollow metal insulated door and frame 3 @ $2,905/EA $8,715.00 West front entrance stoop upgrade Demo existing sidewalk – 3 CY @ $370/CY $1,110.00 New concrete footing – 2 CY @ $395/CY $790.00 New 8” CMU walls – 56 SF @ $11.75/SF $658.00 New concrete stoop/ramp – 2.5 CY @ $370/CY $925.00 East front entrance stoop upgrade Demo existing sidewalk – 3 CY @ $370/CY $1,110.00 New concrete footing – 2 CY @ $395/CY $790.00 New 8” CMU walls – 56 SF @ $11.75/SF $658.00 New concrete stoop/ramp – 2.5 CY @ $370/CY $925.00 West entrance stoop upgrade Demo existing sidewalk – 3 CY @ $370/CY $1,110.00 New concrete footing – 2 CY @ $395/CY $790.00 New 8” CMU walls – 56 SF @ $11.75/SF $658.00 New concrete stoop/ramp – 2.5 CY @ $370/CY $925.00 East entrance stoop upgrade Demo existing sidewalk – 3 CY @ $370/CY $1,110.00 New concrete footing – 2 CY @ $395/CY $790.00 New 8” CMU walls – 56 SF @ $11.75/SF $658.00 New concrete stoop/ramp – 2.5 CY @ $370/CY $925.00 Upgrade stairs to partial basement level – 16 Risers @ $650/riser $10,400.00 Replace handrails at stairs to basement and upper levels 58 LF @ $35/LF $2,030.00 Restroom upgrade – demolition and new construction Male Restroom – 1 water closet, 1 lavatory 60 SF @ $425/SF $25,500.00 Female Restroom – 1 water closet, 1 lavatory 60 SF @ $425/SF $25,500.00 Replace existing single-glazed windows with new thermally- Improved frames and insulating glass – 346 SF @ $89/SF $30,794.00 Insulate exterior masonry walls – 4,860 SF @ $14/SF $68,040.00 Install fire sprinkler system to protect the wood roof framing 6,532 SF @ $6.03/SF $39,388.00 Replace fully adhered EPDM system with new fully adhered EPDM roofing system with R-31.25 insulation 6,532 SF @ $12.50/SF $81,650.00 Replace lighting system – 6,532 SF @ $8.25/SF $53,889.00 HVAC System upgrade – 6,532 SF @ $7.50/SF $48,990.00 Ventilation System upgrade – 6,532 SF @ $5.25/SF $34,293.00 Estimated Cost to Correct Building Code Deficiencies: $405,298.00 CITY OF EDINA PROPOSED EDINA HRA TIF DISTRICT ESTIMATED REPLACEMENT COSTS 2 Property ID No. & Property Address: 0702824440068 4500 France Avenue South Replace exterior doors (6) Remove existing doors and frames – 6 @ $150/EA $900.00 Widen existing openings – 2 @ $3,500/EA $7,000.00 New 3’ wide flush hollow metal insulated door and frame 6 @ $2,905/EA $17,430.00 Exit door stoop upgrade (6) Demo existing sidewalk – 3 CY @ $370/CY x 6 $6,660.00 New concrete footing – 2 CY @ $395/CY x 6 $4,740.00 New 8” CMU walls – 56 SF @ $11.75/SF x 6 $3,948.00 New concrete stoop/ramp – 2.5 CY @ $370/CY x 6 $5,550.00 Insulate exterior masonry walls - 6,050 SF @ $14/SF $84,700.00 Replace single pane glazing with thermally improved frames and insulated glass – 164 SF @ $89/SF $14,596.00 Insulate roof – 7,427 SF @ $5.50/SF $40,849.00 Restroom upgrade – demolition and new construction Male Restroom – 1 water closet, 1 lavatory 60 SF @ $425/SF $25,500.00 Female Restroom – 1 water closet, 1 lavatory 60 SF @ $425/SF $25,500.00 Upgrade stairs to partial basement levels and partial upper level 44 Risers @ $650/riser $28,600.00 Replace handrails at stairs to basement and upper levels 124 LF @ $35/LF $4,340.00 HVAC System upgrade – 7,427 SF @ $7.50/SF $55,703.00 Ventilation System upgrade – 7,427 SF @ $5.25/SF $38,992.00 Replace pavement in parking lot and re-stripe – 834 SY @ $18.55/SY $15,470.00 Estimated Cost to Correct Building Code Deficiencies: $380,478.20 Property ID No. & Property Address: 0702824440069 3905 Sunnyside Road Insulate exterior walls – 1,305 SF @ $5.50/SF $7,178.00 Insulate attic/roof – 873 SF @ $2.75/SF $2,400.00 Replace asphalt shingles – 1,428 SF @ $6.00/SF $8,568.00 Estimated Cost to Correct Building Code Deficiencies: $18,146.00 Property ID No. & Property Address: 0702824440070 3907 Sunnyside Road Replace existing single-glazed wood windows with new metal clad wood windows with insulating glass 12 double-hung @ $575/EA $6,900.00 6 awning @ $475/EA $2,850.00 Insulate exterior walls – 1,660 SF @ $5.50/SF $9,130.00 Insulate attic/roof – 1,052 SF @ $2.75/SF $2,893.00 Estimated Cost to Correct Building Code Deficiencies: $21,773.00 APPENDIX D EDINA HRA PROPOSED TIF DISTRICT 193804402 1 EXISTING CONDITIONS PHOTOS Photo 1: Pavement condition at parking lot Photo 2: Pavement condition at parking lot Photo 3: Pavement condition at parking lot Photo 4: Not used EDINA HRA PROPOSED TIF DISTRICT 193804402 2 EXISTING CONDITIONS PHOTOS Photo 5: Edina Cleaners north wall Photo 6: Edina Cleaners east and north walls Photo 7: Edina Cleaners west wall Photo 8: Edina Cleaners stair at partial basement EDINA HRA PROPOSED TIF DISTRICT 193804402 3 EXISTING CONDITIONS PHOTOS Photo 9: Edina Cleaners only restroom Photo 10: Edina Cleaners windows at north wall Photo 11: Edina Cleaners windows at east wall Photo 12: Edina Cleaners windows at west wall EDINA HRA PROPOSED TIF DISTRICT 193804402 4 EXISTING CONDITIONS PHOTOS Photo 13: Edina Cleaners uninsulated exterior walls and exposed wood roof framing Photo 14: Edina Cleaners uninsulated exterior walls and exposed wood roof framing Photo 15: Edina Cleaners uninsulated exterior walls and exposed wood roof framing Photo 16: Edina Cleaners exposed wood roof framing EDINA HRA PROPOSED TIF DISTRICT 193804402 5 EXISTING CONDITIONS PHOTOS Photo 17: Edina Cleaners uninsulated exterior walls and exposed wood roof framing Photo 18: Edina Cleaners fully adhered EPDM roofing system Photo 19: Edina Cleaners fully adhered EPDM roofing system damage at roof drain Photo 20: Edina Cleaners fully adhered EPDM roofing system damage at roof drain EDINA HRA PROPOSED TIF DISTRICT 193804402 6 EXISTING CONDITIONS PHOTOS Photo 21: Edina Cleaners exterior door opening infilled Photo 22: Edina Cleaners exterior doors at west wall Photo 23: Edina Cleaners exterior doors at east wall (two infilled) Photo 24: Edina Cleaners exterior doors at south wall EDINA HRA PROPOSED TIF DISTRICT 193804402 7 EXISTING CONDITIONS PHOTOS `+ Photo 25: Edina Cleaners main level space and stairs to partial upper level Photo 26: Edina Cleaners stair to partial upper level Photo 27: Edina Cleaners stair to partial basement Photo 28: Edina Cleaners stair to partial basement EDINA HRA PROPOSED TIF DISTRICT 193804402 8 EXISTING CONDITIONS PHOTOS Photo 29: Edina Cleaners restroom Photo 30: Edina Cleaners restroom missing urinals Photo 31: Edina Cleaners single-glazed windows Photo 32: Edina Cleaners single-glazed windows EDINA HRA PROPOSED TIF DISTRICT 193804402 9 EXISTING CONDITIONS PHOTOS Photo 33: Edina Cleaners uninsulated exterior walls Photo 34: Edina Cleaners uninsulated exterior walls Photo 35: Edina Cleaners uninsulated exterior walls and damaged doors Photo 36: Edina Cleaners exposed wood roof framing EDINA HRA PROPOSED TIF DISTRICT 193804402 10 EXISTING CONDITIONS PHOTOS Photo 37: Edina Cleaners exposed wood roof framing Photo 38: Edina Cleaners exposed wood roof framing Photo 39: Edina Cleaners parking lot with wood screen fence Photo 40: Edina Cleaners south wall and parking lot EDINA HRA PROPOSED TIF DISTRICT 193804402 11 EXISTING CONDITIONS PHOTOS Photo 41: 3905 Sunnyside Road exterior Photo 42: 3905 Sunnyside Road roof shingles at garage Photo 43: 3905 Sunnyside Road roof shingles at garage Photo 44: 3905 Sunnyside Road roof shingles at house EDINA HRA PROPOSED TIF DISTRICT 193804402 12 EXISTING CONDITIONS PHOTOS Photo 45: 3907 Sunnyside Road exterior Photo 46: 3907 Sunnyside Road single-glazed windows Photo 47: 3907 Sunnyside Road single-glazed windows Photo 48: 3907 Sunnyside Road single-glazed windows Appendix G Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for 44th and France 2 Tax Increment Financing District (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that 44th and France 2 Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10a. The District consists of five parcels, with plans to redevelop the area for rental housing and commercial/industrial purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures; at least 20 percent of the buildings in the District, not including outbuildings, are structurally substandard; and at least 30 percent of the other buildings in the District require substantial renovation or clearance. (See Appendix F of the TIF Plan.) 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the redevelopment proposed in the TIF Plan meets the City's objectives for redevelopment. The existing property contains vacant and substandard buildings whose renovation requires high costs related to demolition, remediation and reconstruction. The redevelopment also requires substantial investment toward public improvements such as local transportation and utility infrastructure and shared public parking. The combination of limited amounts of property available for expansion adjacent to the existing redevelopment site, height/density limitations, and the cost of financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. The developer for the redevelopment provided a proforma outlining project sources and uses as well as projected rent, vacancy and financing assumptions. City staff and the City’s financial advisor reviewed the information and have determined that the project is not feasible without assistance due to anticipated rent levels and market returns not supporting the redevelopment costs for this site. The term of assistance for the Appendix G-1 redevelopment project is expected to be less than the maximum 16-year term of a renewal and renovation district. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: This finding is justified on the grounds that the development intensity and tax base created on currently vacant and/or underutilized property requires site and public improvement costs that are improbable without public assistance. Specifically, the cost of site preparation, demolition, remediation, and public improvements to include underground parking and utilities will add significantly to the total redevelopment cost of any development in this area. Site and public improvements costs necessary to sustain the approved density have made redevelopment infeasible without tax increment assistance. The City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0. b. If the proposed development occurs, the total increase in market value will be $16,740,700. c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $2,565,757. d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $14,174,943 (the amount in clause b less the amount in clause c) without similar tax increment assistance. 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Southeast Edina Redevelopment Project Area by private enterprise. Appendix G-2 The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, the renovation of substandard properties, increased tax base of the State, addressing several of the goals identified within the City’s 44th and France Neighborhood land use and development plans, and add a high-quality development to the City which also expands the availability of safe and decent life-cycle housing in the City. But-For Analysis Current Market Value $2,177,300 New Market Value - Estimate $18,918,000 Difference $16,740,700 Present Value of Tax Increment $2,565,757 Difference $14,174,943 Value Likely to Occur Without TIF is Less Than: $14,174,943 Appendix G-3 Date: October 11, 2018 Agenda Item #: V.C. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:4500 France Apartments: Term Sheet for Tax Increment Financing Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Motion to approve the Term Sheet as negotiated by staff and authorize staff to prepare a full TIF Redevelopment Agreement based on the terms contained therein. INTRODUCTION: This item pertains to the redevelopment of vacant buildings at the southwest corner of Sunnyside and France Avenue. Based on input provided at previous HRA meetings, a term sheet has been prepared. These terms address the financial gap in the Developer's pro forma. The terms are sufficient to provide a market return to the Developer while delivering many benefits to the community. The Term Sheet has been prepared by staff with input from legal and financial advisors at Dorsey & Whitney and Ehlers Associates. T he Developer is agreeable to these terms. Staff recommends that the term sheet be approved. ATTACHMENTS: Description Staff Report: 4500 France Term Sheet 4500 France Apartments TIF Term Sheet October 11, 2018 Chair and Members of the Edina Housing and Redevelopment Authority Bill Neuendorf, Economic Development Manager 4500 France Apartments: Term Sheet for Tax Increment Financing Information / Background: Earlier this year, Ted Carlson of Orion Investments, the potential Developer of the 4500 France Avenue site requested the assistance of the City to support mixed-use redevelopment of the vacant property. The two primary buildings have been vacant for nearly one year after Edina Cleaners sold their retail business and moved their industrial operations to a different facility in Saint Louis Park. Staff has been discussing the potential use of Tax Increment Financing (TIF) and grants to address a financial gap in the pro forma for several months. The Housing and Redevelopment Authority was briefed on the Developer’s request on May 10, 2018. At that time, members of the HRA Board opined that this might be an appropriate project to provide TIF assistance so that the vacant building could be replaced before it became a nuisance for the neighborhood and so that larger community goals (identified in the recently completed Small Area Plan) could be achieved. Since the May 2018 briefing, the developer has revised their pro forma and successfully applied for grant funds from the Minnesota Department of Employment and Economic Development (DEED). With grant funds and TIF support, the financial gap appears to be manageable. Staff and advisors (Ehlers Associates) have reviewed the project financial pro forma and confirmed that without TIF support, the project does not achieve a market-rate return and appears to be unfeasible. Based on the significant level of public benefit achieved by this redevelopment project, staff is supportive of the limited use of Tax Increment Financing. Key benefits and limitations of assistance are summarized below: • Creation of a new 15-year TIF District o instead of a 26-year District o certified before assessed valuation reflects the ‘vacant’ nature of the building STAFF REPORT Page 2 o boundaries limited to 1-acre site (rather than 5 acre District) that is most likely to redevelop quickly o Base taxes continue to support School, City, County and other agencies • Developer bears the up-front financial risk o Interest rate fluctuations, labor and material cost increases, and unforeseen expenses o Must act promptly or the TIF Agreement will default • City TIF support by means of a pay-as-you-go TIF Note o Principal amount not to exceed $2,295,000 (8% of cost) o Note repaid only from “incremental taxes” generated from the completed project o If developer fails to deliver, no payments are made o Any excess profit to be recaptured through standard ‘lookback’ provisions • Although not every goal identified in the 44th and France Small Area Plan can be solved by this one project, several goals can addressed or substantially completed promptly. These include o Removal of vacant buildings o New construction at a limited scale o Remediation of environmental contaminants o New shared public parking (approx. 40 stalls) o Bury overhead utility lines throughout majority of 44th & France neighborhood node o Widen sidewalks o Improve streetscape with landscaping and streetscape elements o Create new outdoor public space o Provide new public art installation o Comply with affordable-housing policy The August 2018 Small Area Plan recommends that a new District Parking Facility and shared District Stormwater Facility be considered near 44th and France. These future concepts have merit, but at this time, the City does not have site control or funding available to achieve these larger-scale improvements. The proposed redevelopment of 4500 France makes significant progress in addressing the broader concerns by potentially delivering improvements to the green space, public parking and stormwater conditions that have existed in the 44th & France area for several generations. A Term Sheet is attached for the full consideration of the Housing and Redevelopment Authority. These terms will also be presented to the City Council. Staff recommends the approval of the Term Sheet and authorization to prepare a full Redevelopment Agreement based on the approved terms. 4500 France Apartments Proposed Term Sheet – Tax Increment Financing October 11, 2018 1) Purpose and Scope a. This “Term Sheet” identifies basic business points that establish the framework of the potential use of public funds to support private redevelopment of vacant and underutilized properties within the City of Edina and to provide certain public benefits in and adjacent to the property. This document is intended to serve as the general framework of a future Redevelopment Agreement that is executed by the Developer, City and Edina HRA. b. This document is intended for discussion purposes with the Board of the Edina HRA. Based on the response and direction provided by the HRA Board, the City staff is prepared to engage third-party legal and finance professionals to prepare a full legal contract (the Redevelopment Agreement). c. City and HRA Out of Pocket Costs – The Developer has completed the City’s TIF Policy Form and agreed to pay for the City’s staff and out-of-pocket costs in evaluating this request for Tax Increment Financing. The City has engaged Dorsey & Whitney, Ehlers Associates and Stantec to provide assistance in preparing the necessary studies and evaluations. Developer will submit funds in advance and held in escrow. These funds will be used to pay third-party consultants. Any excess / un-used funds will be returned to the Developer. 2) Project Ownership a. Two developers are partnering on this project. The lead Developer is Orion Investments - 4530 West 77th Street, Suite 365, Edina, Minnesota 55435. Ted Carlson is the principal. Nino Pedrelli with State Street Realty Advisors, LLC is the co-developer. 3) Project Description a. Location – Consists of five parcels located at the southwest corner of the France Avenue and Sunnyside Road intersection. Addresses include: 4500 France and 3903 Sunnyside (formerly Edina Cleaners), 3905 and 3907 Sunnyside (single family residences). The project site is approximately 1.05 acres in area. b. Existing Conditions – the site consists of two vacant buildings, most recently occupied by Edina Cleaners but vacant since late 2017. The site also includes two single-family residences – one was owner-occupied, the other a rental property. The properties have been inspected by Stantec and found to be in a condition that qualifies them as a “Renewal and Renovation” TIF District as defined under MN Statutes. 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 2 c. Redevelopment Project – The Project is described in the planning documents submitted to the City of Edina and granted preliminary rezoning and site plan approvals on October 2, 2018. d. Minimum Improvements – construction of a new mixed-use structure as described in the documents referenced by the preliminary rezoning and site plan approval by Edina City Council on October 2, 2018, but generally consisting of approximately 46 new housing units, approximately 7,000 square feet of commercial space with structured parking and streetscape improvements. Certain public improvements related to the project and required as part of the City approvals will be installed, funded, and managed by the Developer with partial reimbursement using incremental property taxes generated from the Project. e. Public Benefits – address several of the goals identified in the 2018 Small Area Plan including: i. Remove vacant buildings from a prominent corner ii. Construct a mixed-use building at a scale recommended by the Small Area Plan iii. Remediate soil contaminants from previous users iv. Improve storm water conditions on the site v. Provide approximately 40 stalls of shared public parking located on the street level of the Project vi. Bury overhead utilities throughout the majority of the Neighborhood Node vii. Improve the sidewalk and streetscape along portions of France Ave and Sunnyside Rd viii. Provide an outdoor public plaza for use by the community ix. Provide public art x. Provide 3 units of affordably-priced housing for at least 15-years xi. Provide $160,000 in direct financial contribution to the Edina Affordable Housing Fund xii. Donate existing building elements that are salvageable to a non-profit or similar group for re-use 4) Project Timeline a. This timeline identifies the general time frame envisioned for the redevelopment project. Firm deadlines will be included in the Redevelopment Agreement. Failure to meet the ‘no later than’ deadlines will be considered a default of the Redevelopment Agreement. 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 3 Description of Work Commencement Date Completion Date Anticipated No Later Than Anticipated No Later Than Final Zoning Approvals Summer 2018 10/31/2018 Fall 2018 12/31/2018 Real Estate Closing na na October 2018 3/31/2019 Demolition & Salvage Winter 2018/2019 3/31/2019 Spring 2019 6/30/2019 Site Remediation Winter 2018 / 2019 7/1/2019 Fall 2019 10/31/2019 Foundation Spring 2019 11/1/2019 Fall 2019 12/31/2019 Shell Construction Fall 2019 1/1/2020 Fall 2020 10/31/2020 Commercial Tenant Improvements Fall 2020 Na Fall 2021 na Certificate of Occupancy Na Na Summer 2020 3/31/2021 5) Project Budget a. The Redevelopment Project is estimated to cost $28.7 million, including land assembly, soft costs and hard costs. b. Preliminary estimates of Sources and Uses are attached. 6) Project Financing a. The equity partner has made a soft commitment with a firm commitment pending. b. Several construction lenders – including Bridgewater Bank and Tradition Bank have expressed interest in funding the Project. A firm commitment is pending. c. Multiple grants will be pursued. To date, one grant has been awarded. d. The limited scale and challenges associated with the site and its existing conditions results in a financial gap. “But for” reimbursement of some eligible expenses using incremental property taxes generated from the site, the project will not move forward. e. The estimated financial gap is based upon the anticipated NOI calculated with an estimated assessed market value of approximately $18.9 M upon stabilization. 7) New Tax Increment District a. The HRA will engage third-party consultants to prepare the TIF-related documentation. b. The City & HRA will consider the creation of a new 15-year Renewal & Renovation TIF District on the project site. c. The TIF District may be expanded or modified at the discretion of the City and HRA to achieve more of the community goals expressed in the Small Area Plan provided that any TIF Note awarded to the Project can be satisfied per the terms of the Redevelopment Agreement. 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 4 8) TIF Assistance a. The Project as a whole must be evaluated and the “but for” must be demonstrated. The Developer will provide all information necessary to demonstrate that the Project satisfies the ‘but for’ test in MN Statute om the City’s sole determination. b. Any TIF assistance issued will be in accordance with the City’s TIF Policy dated April 19, 2011. c. Creation of the TIF District and any TIF Assistance provided shall comply with all applicable MN Statutes. 9) Qualified Costs a. The Project Budget includes many costs that are qualified as TIF-eligible expenses per Minnesota Statute. These costs are summarized below. Note that only a portion of “qualified” costs will actually be agreed to be “reimbursable” to the project. Description of Qualified Cost Estimated Amount 1 Transit / Streetscape $100,000 2 Affordable Housing $0 3 Demolition $189,000 4 Structured Parking $1,430,000 5 Streetscape improvements (France Ave. and Sunnyside Rd.) $200,000 6 Environmental Remediation $170,000 7 Public Plaza $825,000 8 Removal of Overhead Utilities $400,000 9 TIF-related Professional Fees $150,000 Total = $3,464,000 10) Reimbursable Costs a. Based on review of the project pro forma, up to $2.295 million of project costs are intended to be reimbursable. This will be adequate to bridge the financial gap without over-subsidizing the project. b. The types of reimbursable costs include: Description of Reimbursable Costs 1 Structured Parking 2 Demolition 3 Environmental Remediation 4 Streetscape and public realm improvements 5 Removal of Overhead Utilities 6 TIF-related Professional Fees Total not to exceed $2,295,000 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 5 11) Notice of Commencement – Developer to provide “go ahead” letter when all private financing has been committed to allow the construction to proceed. 12) TIF Note – A single pay-as-you-go TIF Note will be issued only upon completion of the Project. a. The preliminary principal value of the Note is based on preliminary estimates regarding reimbursable costs and total project costs. The final principal value of the TIF Note shall be based on the actual costs expended to complete the Project and shall not exceed $2,295,000.00. b. The Note shall bear interest at the same rate as the primary financing loan but shall not exceed 5.0% (4.75% is anticipated). c. The City/HRA will make payments on the Note using standard procedures: two annual payments based on actual incremental property taxes generated from the site, paid and received by the City. Assuming Project completion in 2020, the first payments would occur in 2021. d. The current estimate of incremental cash flow is based on an annual inflationary increase of 1% of the assessed valuation of the property. This estimate is hypothetical and the City does not guarantee that such funds will be available. 13) Certificate of Completion – A Certificate of Completion will be required as a condition of awarding the TIF Note. Developer shall provide complete access to final costs so that City staff can confirm the actual costs incurred to complete the Project. A Certificate of Occupancy, executed public easements, and acceptance of public improvements (by City or County engineers, as appropriate) shall also be required to earn the Certificate of Completion. 14) Look Back Provisions a. Final level of assistance to be sized upon completion of the Project b. Lookback required annually and upon a sale of any portion of the property c. Annual yield on cost limited to 7.0% d. Excess profits (above 7.0%), if any, will be deducted from the principal to retire the TIF Note as early as possible e. In the event of a sale prior to the termination of the TIF Note, the IRR shall not exceed 16%. Any overage will be considered “excess profits” and deducted from the principal to retire the TIF Note as early as possible. 15) City Administrative Costs – City to retain standard 10% per Minnesota statute. 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 6 16) Fiscal Disparities – the City’s ‘fiscal disparity’ obligation for the redevelopment site will be paid for from property taxes generated from the Project. This will be included in the calculation of available tax increment to pay off the TIF Note. 17) Other Terms and Conditions a. Affordable Housing i. The HRA or related entity shall have first right of refusal to purchase the affordably-priced units in the event that the Project is converted from rental units to condominiums. The purchase price would be based on affordability of a 30-year mortgage for a household earning 120% Area Median Income (AMI). ii. The Developer and HRA agree to discuss the potential extension of the 15-year affordability term about one-year in advance of the expiration of the affordability term. Both parties agree to negotiate in good faith to lengthen the term of affordability. iii. In addition to the 15-year land use restriction placed on the affordably-priced units, failure to lease these units at qualified rates to qualified households shall be considered a default of the Redevelopment Agreement b. Grants – the City/HRA agrees to sponsor grant applications that provide financial support for the Projects. Costs of preparing the grant applications shall be borne by the Developer. City staff shall have the final authority to review and submit the grant applications to Metropolitan Council, Minnesota Department of Employment and Economic Development and Hennepin County per the terms of the grant programs. i. Hennepin County ERF is due November 1st c. Public Easements – permanent public easements will be required for the public parking, public plazas and public sidewalks d. Maintenance District – the Developer is agreeable to the creation of a future Maintenance District / Special Service District per MN Statute 428a.01 to 428a.101 to address maintenance costs related to the sidewalks and streetscapes throughout the neighborhood node. Such a District will not include the costs to operate and maintain the public parking and public plaza. The scope and timing of this District requires agreement of other commercial property owners. e. City and HRA Approval of Significant Changes – changes to the Project that impact scope or design are subject to City review using the typical City procedure. f. Performance Bonds – bonds or other security will be required for work in the public way and for the elements with a public easement. g. The City shall not restrict the Developers’ ability to appeal property tax assessments below the amount estimated in calculation of tax increment. 18) Default and Cure – standard default provisions will apply. Each default will have a cure period. 4500 France Apartments Proposed Term Sheet October 11, 2018 Page 7 Financial Sources Amount Percent Comment Developer Equity $ 1,091,000 4% Deferred fees Partner Equity $ 8,774,650 30% Financing $18,321,921 64% Grants $ 535,000 2% DEED, Met. Council, Hennepin County, TBD TOTAL $28,772,571 100% Uses Amount Percent Comment Acquisition and Site Costs $4,550,000 15.8% Hard Costs $20,710,866 72.6% includes Construction Costs, Permits & Fees Soft Costs $2,486,205 8.6% Includes design and other Professional Services Financing Costs $884,500 3.0% TOTAL $28,772,571 100% Prepared October 8, 2018 Date: October 11, 2018 Agenda Item #: V.D. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:Redevelopment Agreement with Pentagon Village, LLC Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the Pentagon South Redevelopment Agreement with Pentagon Village, LLC; approve the first amendment to the 2014 Master Redevelopment Agreement and authorize staff to implement the terms of the Agreements. INTRODUCTION: This item pertains to the redevelopment of the 12-acre site commonly referred to as "Pentagon Park South". Based on the terms negotiated over the past year, a Redevelopment Agreement has been prepared to provide public financing to make the redevelopment viable. Staff recommends that the Redevelopment Agreement be approved. Staff also recommends that the First Amendment to the Master Redevelopment Agreement be approved. ATTACHMENTS: Description Staff Report - Pentagon South RDA Redevelopment Agreement First Amendment - Pentagon Revival Memo of Redev Agreement - Pentagon Village October 11, 2018 Chair and Members of the Edina Housing and Redevelopment Authority Bill Neuendorf, Economic Development Manager Redevelopment Agreement with Pentagon Village, LLC Information / Background: In May 2014, the City entered into a Master Redevelopment Agreement with Pentagon Revival, LLC to promote significant redevelopment of several properties within the 42-acre Pentagon Park office development. Since that time, the Developer – Hillcrest Properties –has been pursuing many different options to achieve a critical mass of projects that would create a new destination in Edina. While the Master Development Agreement placed a strong emphasis on new office development, the Twin Cities office market did not lend itself to that original vision. The current proposal focuses exclusively on the 12-acre property located on the south side of West 77th Street, immediately adjacent to Highway 100/Normandale Drive. Hillcrest Properties has teamed with Solomon Real Estate to bring together a multi-phase, multi-site project that is anticipated to deliver new retail space, new hotel space, and new office space arranged around a public plaza that is connected with a variety of roads and sidewalks. The City Council recently granted final rezoning approvals for this “south parcel”. It should be noted that the proposed residential development on the north side of West 77th Street did not secure zoning approvals and is NOT a part of this Redevelopment Agreement. The attached Redevelopment Agreement is based on the terms previously discussed and approved by the Edina Housing and Redevelopment Authority (HRA) on July 26, 2018. Over the past year, these terms have been discussed at length by City staff, City advisors and the HRA Board before mutually agreeable terms were identified. In recent months, the City’s special counsel – Dorsey & Whitney has worked with the Developer’s attorney (Siegel Brill) to transform the terms into a full Redevelopment Agreement that is mutually agreeable to City STAFF REPORT Page 2 staff and the Developers. City staff members and Ehlers Associates have served integral roles to unsure that the City’s interests are upheld in the execution of this Agreement. Broadly, the agreement is structured with the following key elements: 1) Developer must invest at least $100 million in the site (actual number is likely to be higher) 2) Up to $18.1 million in future incremental taxes will be used to reimburse the developer for project expenses 3) Up to 3 separate TIF Notes, awarded based on specific work to be completed by specific deadlines 4) Any Note must be issued by July 15, 2019 based on evidence of work completed and costs incurred as verified by City staff 5) Note “A” not to exceed $9 million based on site preparation for the entire 12 acres and initiation of two retail buildings along West 77th Street 6) Note “B” not to exceed $5.4 million based on costs to build a 500+ stall parking deck that enables future construction of two hotels 7) Note “C” not to exceed $3.7 million based on costs to construct the fourth major building on the site – most likely a new office building 8) TIF Notes to be repaid using only incremental taxes generated from the South parcel 9) Developer to deliver private buildings and public elements as detailed in the site plans approved by City Council 10) Developer to deliver permanent public easements for the 1-acre plaza, approx. 500 stall parking deck and access drives and walks through the site 11) Previously-agreed upon “lookback” provisions apply to ensure that the amount of TIF assistance received is not excessive 12) Developer to execute a “minimum assessment agreement” to ensure that a minimum value is generated from the site regardless of the business climate and timing for tenants to execute leases 13) City to bear no financial risk 14) Developer to bear the upfront risk of preparing five building-ready “pads” in advance of securing binding leases and sales contracts 15) Developer to bear the risk of future price increases for labor and materials 16) Developer must act promptly to secure full repayment of the TIF Notes STAFF REPORT Page 3 Related to the South Parcel Redevelopment Agreement, an amendment has been prepared to the 2014 Master Agreement. This amendment removes the South Parcel from the scope of the old Agreement and confirms that the Developer has cured the default that has existed since late 2017. At some point in the future, it may be advantageous to terminate the 2014 Agreement since it will have minimal impact if the north parcels remain in their current state. Representatives from the Developer’s team and the City’s advisors will be in attendance to answer any questions you may have about the final agreements. The redevelopment of the 12-acre South Parcel brings many short and medium term benefits to the surrounding commercial, industrial and residential properties. Redevelopment also brings long-term benefits to the broader Edina community including: • New retail and professional services • New business opportunities • New lodging opportunities to benefit residents and employers • New job opportunities • Creation of a new 21st century gateway to Edina from Highway 100 • Significant increase in property tax base with minimal generation of school-aged children • Additional lodging taxes • New outdoor plaza for the enjoyment of the general public • New structured parking options for the benefit of the local businesses, hotel guests and general public • Improved storm water storage and filtration conditions • Updated streetscape with landscaping, public art and enhanced transit facilities Based on these significant public benefits and minimal risk to the City, staff recommends that the Redevelopment Agreement be approved. Staff also recommends that the First Amendment to the 2014 Master Redevelopment Agreement be approved. 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) REDEVELOPMENT AGREEMENT by and among CITY OF EDINA, MINNESOTA, HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, and PENTAGON VILLAGE, LLC Dated as of October 16, 2018 THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 -i- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) TABLE OF CONTENTS Page ARTICLE I DEFINITIONS ............................................................................................................3 Section 1.1 Definitions..........................................................................................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES ........................................................10 Section 2.1 Representations and Warranties of the City .....................................................10 Section 2.2 Representations and Warranties of the Authority ............................................10 Section 2.3 Representations and Warranties of Redeveloper .............................................11 ARTICLE III LAND USE AND DEVELOPMENT CONTROLS ...............................................12 Section 3.1 Restrictions on Development ...........................................................................12 Section 3.2 Zoning and Land Use Approvals .....................................................................13 Section 3.3 Building and Construction Permits ..................................................................13 Section 3.4 City/Authority Approval ..................................................................................13 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS .......................................13 Section 4.1 Minimum Improvements .................................................................................13 Section 4.2 Public Art .........................................................................................................15 Section 4.3 Submission and Approval of Evidence of Financing ......................................15 Section 4.4 Construction and Inspection of Minimum Improvements ...............................15 Section 4.5 Effect of Delay .................................................................................................15 Section 4.6 Additional Responsibilities of Redeveloper ....................................................15 Section 4.7 Park Maintenance Fee ......................................................................................16 Section 4.8 Certificate of Completion ................................................................................16 ARTICLE V [RESERVED] ..........................................................................................................16 ARTICLE VI PROJECT TIMELINE AND DEFAULT ...............................................................16 Section 6.1 Commencement and Completion of Minimum Improvements .......................16 Section 6.2 Defaults ............................................................................................................17 ARTICLE VII DEVELOPER REIMBURSEMENT OBLIGATIONS; QUALIFIED REDEVELOPMENT COSTS; PERFORMANCE REVIEW ...........................................18 Section 7.1 Redeveloper Reimbursement Obligations .......................................................18 Section 7.2 Project Redevelopment Costs ..........................................................................18 Section 7.3 Parking Redevelopment Costs .........................................................................19 Section 7.4 TIF Lookback...................................................................................................19 ARTICLE VIII TIF ASSISTANCE...............................................................................................23 -ii- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Section 8.1 TIF Notes; Conditions of Issuance; Limitations on Reimbursement of Qualified Redevelopment Costs ......................................................................23 Section 8.2 Preconditions to Payment and Accrual of Interest under TIF Notes ...............24 Section 8.3 Minimum Assessment Agreement ...................................................................26 Section 8.4 Tax Increment Eligibility .................................................................................27 Section 8.5 Assignment of Note .........................................................................................27 ARTICLE IX ENCUMBRANCE OF THE PROJECT AREA .....................................................28 Section 9.1 Encumbrance of the Project Area ....................................................................28 Section 9.2 Copy of Notice of Default to Mortgagee .........................................................29 Section 9.3 Mortgagee’s Option to Cure Events of Default ...............................................29 Section 9.4 Events of Default Under Mortgage ..................................................................30 Section 9.5 Subordination of Agreement ............................................................................30 Section 9.6 Unit Mortgages ................................................................................................31 ARTICLE X INSURANCE AND CONDEMNATION................................................................31 Section 10.1 Insurance ..........................................................................................................31 Section 10.2 Condemnation ..................................................................................................31 ARTICLE XI REDEVELOPER COVENANTS ...........................................................................32 Section 11.1 Maintenance and Operation of the Minimum Improvements ..........................32 Section 11.2 Business Subsidy Agreement ...........................................................................32 Section 11.3 Property Tax Matters .......................................................................................32 ARTICLE XII TRANSFER LIMITATIONS AND INDEMNIFICATION .................................32 Section 12.1 Representation as to the Minimum Improvements ..........................................32 Section 12.2 Limitation on Transfers....................................................................................33 Section 12.3 Hotel Developer ...............................................................................................34 Section 12.4 Indemnification ................................................................................................35 Section 12.5 Limitation .........................................................................................................35 ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES ......................................................35 Section 13.1 Events of Default Defined ...............................................................................35 Section 13.2 Redeveloper Events of Default ........................................................................35 Section 13.3 City and Authority Events of Default ..............................................................36 Section 13.4 Cure Rights ......................................................................................................36 Section 13.5 Authority Remedies on Redeveloper Events of Default ..................................36 Section 13.6 City Remedies on Redeveloper Events of Default ..........................................37 Section 13.7 Redeveloper Remedies on City or Authority Events of Default......................37 Section 13.8 No Remedy Exclusive......................................................................................37 Section 13.9 No Additional Waiver Implied by One Waiver ...............................................37 Section 13.10 Reimbursement of Attorneys’ Fees .................................................................37 -iii- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) ARTICLE XIV ADDITIONAL PROVISIONS ............................................................................38 Section 14.1 Conflicts of Interest..........................................................................................38 Section 14.2 Titles of Articles and Sections .........................................................................38 Section 14.3 Notices and Demands ......................................................................................38 Section 14.4 Counterparts .....................................................................................................39 Section 14.5 Law Governing ................................................................................................39 Section 14.6 Legal Opinions .................................................................................................39 Section 14.7 Consents and Approvals ..................................................................................39 Section 14.8 Representatives ................................................................................................39 Section 14.9 Superseding Effect ...........................................................................................39 Section 14.10 Relationship of Parties .....................................................................................39 Section 14.11 Term .................................................................................................................40 Section 14.12 Provisions Surviving Rescission or Expiration................................................40 Section 14.13 Memorandum of Agreement ............................................................................40 Section 14.14 Conflicts Between this Agreement and the Development Contract ................40 Section 14.15 Limited Liability ..............................................................................................40 Section 14.16 Estoppel Certificates ........................................................................................40 Section 14.17 Time is of the Essence .....................................................................................41 -iv- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) LIST OF EXHIBITS EXHIBIT A Project Area Map EXHIBIT B-1 Legal Description of Project Area EXHIBIT B-2 Plat of Pentagon Village, Hennepin County, Minnesota EXHIBIT C Form of Parking Facilities Easement Agreement EXHIBIT D TIF Pro Forma EXHIBIT E Element TIF Pro Forma EXHIBIT F Form of TIF Note EXHIBIT G Form of Certificate of Completion EXHIBIT H Memorandum of Redevelopment Agreement EXHIBIT I TIF Lookback Example EXHIBIT J Form of Plaza Easement Agreement EXHIBIT K Form of Minimum Assessment Agreement -1- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) REDEVELOPMENT AGREEMENT (Pentagon South) THIS REDEVELOPMENT AGREEMENT (this “Agreement”) is made and entered into October 16, 2018 (“Effective Date”), by and among the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (the “City”), the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”) and PENTAGON VILLAGE, LLC, a Minnesota limited liability company (the “Redeveloper”). RECITALS WHEREAS, the capitalized terms used, but not defined, in these Recitals have the meanings given in Article I of this Agreement; and WHEREAS, under TIF Act, the Authority is authorized to finance certain eligible redevelopment costs of a redevelopment project with tax increment revenues derived from a tax increment financing district established within a redevelopment project area; and WHEREAS, the Authority and City established the Pentagon Park Tax Increment Financing District (redevelopment district) pursuant to Resolution No. 2014 – 2 (the “TIF District”), which TIF District encompasses approximately 42 acres of land located along 77th Street West between Minnesota Highway 100 and Parklawn Avenue (the “Redevelopment Area”), as such Redevelopment Area is more particularly described in Redevelopment Plan; and WHEREAS, the City and the Authority established the TIF District having determined that the Redevelopment Area, is currently underutilized, with obsolete structures and physical arrangements, substantial vacant areas and building vacancies, poor soils and potential contamination, inconsistent legal restrictions on redevelopment and outdated and inadequate public infrastructure and circulation; and having analyzed current land use in the Redevelopment Area, including a building-by-building structural analysis, and after appropriate hearings and notices, the City adopted findings and determined that the TIF District is in the public interest and is a “redevelopment district” under the TIF Act; and WHEREAS, consistent with the TIF Act, the City and the Authority held public hearings to consider the need and desirability for adoption of a tax increment financing plan and the creation and establishment of the Project Area as a tax increment financing district pursuant to the TIF Act, and determined that absent such authorization and the provision of certain funds to undertake various qualified redevelopment activities, the redevelopment contemplated herein would not be undertaken, and as a consequence the City and the Authority may adopt a TIF plan; and WHEREAS, the City and the Authority adopted findings determining that redevelopment would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of the tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the project tax increments for the maximum duration of the TIF District permitted by the TIF Plan, that the -2- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Redevelopment Plan conform to the general plan for the development or redevelopment of the City as a whole and that the Redevelopment Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the TIF District by private enterprise; and WHEREAS, a component of the proposed Redevelopment Plan is to develop an area of the City which is already built up, to provide employment opportunities, to improve the tax base and to improve the general economy of the State; and Whereas, the Redevelopment Area is subject to that certain Master Redevelopment Agreement dated May 20, 2014 by and among the City, the Authority, and Pentagon Revival, LLC, a Delaware limited liability company (“Master Redeveloper”), as amended by that certain First Amendment to Master Redevelopment Agreement dated as of an even date herewith (collectively the “Master Redevelopment Agreement”), pursuant to which Master Redeveloper proposed a redevelopment project covering approximately 42 acres in the Project Area on which the Master Redeveloper demolished and cleared existing blighted structures, and proposed to construct certain improvements that included, without limitation, a mixed-use hotel, office, medical and supporting retail elements, as well as a potential housing component, all driven by market demand; and WHEREAS, pursuant to the First Amendment to the Master Redevelopment Agreement, the Project Area hereunder was released from the larger “Project Area” defined in the Master Redevelopment Agreement, Master Redeveloper designated Redeveloper as the redeveloper of the Project Area hereunder, and the Authority and the City accepted such designation, WHEREAS, pursuant to City Council Resolution No. 2018-62 (“Pentagon South Approval Resolution”) and City Ordinance No. 2018-11 (“Pentagon South PUD Ordinance”), the City has now approved Redeveloper’s application for the rezoning of approximately 12 acres of the Redevelopment Area, referred to herein as the “Project Area” (being that area of the Redevelopment Area bound to the north by 77th Street West, to south by Viking Drive, to the east Computer Avenue, and to the west Minnesota Highway 100/Normandale Boulevard) to a planned unit development, and the City has approved the Final Plat, Pentagon South Final Development Plan, and Pentagon South Development Contract for a portion of the Project Area; and WHEREAS, Redeveloper now proposes to construct certain Minimum Improvements on the Project Area pursuant to the terms and conditions of the Pentagon South Approval Resolution, Pentagon South PUD Ordinance, the Pentagon South Final Development Plan, the Pentagon South Development Contract (collectively, the “Pentagon South City Approvals”), and this Agreement; and WHEREAS, as part of the Project, Redeveloper has agreed to construct and pay for certain street improvements and related City infrastructure improvements associated with the Project Area defined as the “Public Infrastructure Improvements” in this Agreement; and WHEREAS, upon satisfaction of certain conditions set forth in this Agreement, the Authority will provide Redeveloper TIF Assistance in accordance with Article VIII of this Agreement in connection with Redeveloper’s construction and development of the Project; and WHEREAS, the City and the Authority believe that the Project is in the best interests of -3- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) the residents of the City. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the others as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: “Acquisition Costs” means the allocable cost of acquisition of a building or buildings within the Project Area existing at the time of TIF District certification. “actually incurred or committed” means Redeveloper (or its predecessors as to any pre-development costs) has expended Qualified Redevelopment Costs, entered into binding contracts for Qualified Redevelopment Costs, or otherwise complied with the requirements of the Five-Year Rule, in order to qualify for TIF Assistance in accordance with the TIF Act, this Agreement, and the applicable TIF Note. “Affiliate” means one or more special purpose entities formed to develop a Phase or Element and which have common ownership with Redeveloper. “Agreement” means this Redevelopment Agreement. “Authority” means the Housing and Redevelopment Authority of Edina, Minnesota. “Authority Representative” means the Executive Director of the Authority or his or her designee. “Available Tax Increment” means 90% of the Tax Increment received and retained by the Authority from the County during any applicable time frame. “Board” means the Board of Commissioners of the Authority. “Certificate of Completion” means the certificates in substantially the form attached as Exhibit G, signed by the Authority Representative, to be issued pursuant to the terms of Section 4.8. “City” means the City of Edina. “City Consultants” means the financial, engineering, legal, TIF eligibility and other similar advisors to the City and the Authority regarding the Project. “City Council” means the City Council of the City. “City Parties” means the City and the Authority, and their respective members, employees, agents, independent contractors and attorneys. -4- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) “Commencement” with respect to a particular Element of the Minimum Improvements means the date of the first actual physical construction to the Project Area of an applicable Element (including, specifically, pouring footings and foundations), and with respect to the Plaza Element and the Project Site Work the start of actual physical construction of the Plaza Element and/or the Project Site Work, as applicable, pursuant to any applicable building or construction permits. “Completion” means (i) with respect to a particular Element which is part of the Minimum Improvements, or the Plaza Element or the Project Site Work, Redeveloper’s receipt of a Certificate of Completion from the Authority for that Element, the Plaza Element, or the Project Site Work, as applicable and (ii) with respect to a particular Element which is not part of the Minimum Improvements, the issuance to Redeveloper of a final certificate of occupancy from the City’s buildings inspections division. “Controlling Interest Transfer” means a transfer by Redeveloper of an Element Property to an entity in which a party other than Redeveloper or an Affiliate has more than a 50% interest. “County” means the County of Hennepin, Minnesota. “Cost Submission Deadline” has the meaning set forth in Section 8.1(b). “Cure Rights” means the rights to cure a Default as specified in Section 13.4 before such Default is deemed to be an Event of Default. “Default” means an act or omission by the City, the Authority or Redeveloper which becomes an Event of Default under this Agreement if it is not cured. “Effective Date” means the date first set forth above. “Element” means a vertically constructed improvement to the Project Area, which is allowed under the Pentagon South PUD Ordinance and approved by the City pursuant to the Pentagon South Final Development Plan, including without limitation, the Retail Element, Hotel Element 1, and Hotel Element 2, or a different Element approved by the City. “Element Property” means a Lot, shown on the Final Plat, on which an Element will be constructed. “Element TIF Pro Forma” will be substantially in the form attached as Exhibit E and shall include fees payable to or charged by Redeveloper, Affiliates, and any third party, which fees will be commercially reasonable and common in the market place, and may include (i) tenant improvements and project management fee, (ii) space planning/design management fee, (iii) construction financing costs, (iv) financing, origination and guarantee fees, (v) marketing fees related to leasing, (vi) project management fee, (vii) development fees, and (viii) administrative overhead. “Engineer’s Certification” means with respect to the Plaza Element and the Project Site Work, a written certification by a licensed professional engineer engaged by Redeveloper to the Authority and the City that the Plaza Element and/or the Project Site Work, as applicable, has been constructed and/or installed in conformance with the Pentagon South Final Development Plan and -5- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Pentagon South Development Contract, and the City engineer has reviewed and accepted such certification. “Environmental Law” means any federal, state or local law, rule, regulation, ordinance, or other legal requirement relating to (a) a Release or threatened Release of any Hazardous Material, (b) pollution or protection of public health or the environment or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Materials. “Event of Default” means any of the events by the City, the Authority or Redeveloper described in Article XIII. “Final Plat” means the plat of Pentagon Village, Hennepin County, Minnesota, which subdivides the Project Area, a copy of which is attached hereto as Exhibit B-2. “Financing Commitment” means a financing commitment or letter of interest from a mortgage lender for a Phase, or portion of a Phase, in a form reasonably satisfactory to the Authority. The Authority acknowledges and agrees that a financing commitment will be conditioned on items customarily required by lenders (including, without limitation, adequate financial statements, environmental review, appraisals, surveys and title). “Five-Year Rule” means Minnesota Statutes, Section 469.1763, Subd. 3. “Go-Ahead Letter” means Redeveloper’s letters to the City and the Authority indicating that the Financing Commitment for the relevant Element or Phase has been received by Redeveloper and Redeveloper is prepared to proceed with the relevant Element or Phase. “Hazardous Material” means petroleum, asbestos-containing materials, and any substance, waste, pollutant, contaminant or material that is defined as hazardous or toxic in any Environmental Law. “Hotel Developer” has the meaning set forth in Section 12.3(a). “Hotel Element 1” has the meaning set forth in Section 4.1(a)(2). “Hotel Element 2” has the meaning set forth in Section 4.1(a)(3). “IRR” means the internal rate of return for an Element, Phase or the Project (as applicable) as calculated in the TIF Pro Forma attached as Exhibit D, where the IRR is calculated as the annual return on the cash flow over the applicable period. “Land Carrying Costs” means an agreed upon rate of 6% annually on Acquisition Costs for any Element Property from the time of TIF District certification until the closing on the Transfer of the final Element Property. “Law” means federal, state, or local governmental or quasi-governmental laws, ordinances, rules, codes, regulations, directives, orders and/or requirements. “Lot” or “Lots” means Lots 1 through 5, Block 1, Pentagon Village, according to the Final -6- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Plat, or any further subdivision of said Lots that creates a separate tax parcel with a separate legal description. Whenever, in this Agreement, a portion of the Project Area is referenced by number (e.g., Lot 1), such reference shall be to the Lot number as set forth in the Final Plat. “Market Value” means the market value of real property as determined by the assessor of the County in accordance with Minnesota Statutes, Section 273.11 (or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). “Master Redeveloper” means Pentagon Revival, LLC, a Delaware limited liability company. “Master Redevelopment Agreement” means that certain Master Redevelopment Agreement dated May 20, 2014 by and among the City, the Authority, and the Original Redeveloper. “Memorandum of Agreement” means the document described in Section 14.13 and substantially in the form shown in Exhibit H. “Minimum Improvements” means, collectively the Phase 1A Minimum Improvements, the Phase 1B Minimum Improvements, the Phase 1C Minimum Improvements, and the Phase 2 Minimum Improvements (which for purposes of clarity, does not include the Projected Phase 2 Improvements). “Mortgage” means any mortgage loan that is secured, in whole or in part, by any portion of the Project Area, and which is an approved encumbrance under Article IX. “Parking Element” mean the approximately 522-stall parking structure to be integrated into Hotel Element 2, and extraordinary site work and site preparation directly associated with the construction of the Parking Element. “Parking Facilities Easement” a permanent, public easement for access and use of the Parking Element to be granted by Redeveloper to the City pursuant to an easement agreement in the form attached as Exhibit C. “Parking Redevelopment Costs” means those Project-related costs specified in Section 7.3, initially paid by Redeveloper from Redeveloper’s own sources and eligible for TIF Assistance. “Pentagon South Approval Resolution” means City Council Resolution No. 2018-62. “Pentagon South City Approvals” means, collectively, the Pentagon South Approval Resolution, the Pentagon South Development Contract, the Pentagon South Final Development Plan, and the Pentagon South PUD Ordinance. “Pentagon South Development Contract” means that certain Development Contract Pentagon Village dated August 8, 2018 entered into by and between the City and Redeveloper, and recorded against the Project Area. “Pentagon South Final Development Plan” means the Final Development Plan for Lots -7- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) 1 through 5, approved by the City pursuant to the Pentagon South Approval Resolution, including, without limitation, (a) the plan set titled “Final Development Plan Site Improvements for Pentagon Village, Edina, MN” prepared by Westwood Professional Services, Inc. under Project number 0013450.00 dated April 9, 2018 and (b) the illustrative two-dimensional renderings of the Project Area and Minimum Improvements prepared by RSP Architects and presented to the City in connection with the City’s granting of the Pentagon South City Approvals. “Pentagon South PUD Ordinance” means City Ordinance No. 2018-11. “Phase(s)” means the phases of the Minimum Improvements described in this Agreement. “Phase 1A” has the meaning set forth in Section 4.1(a)(1). “Phase 1B” has the meaning set forth in Section 4.1(a)(2). “Phase 1C” has the meaning set forth in Section 4.1(a)(3). “Phase 2” has the meaning set forth in Section 4.1(a)(4). “Phase 1 Minimum Improvements” means, collectively, the Phase 1A Minimum Improvements, the Phase 1B Minimum Improvements, and the Phase 1C Minimum Improvements. “Phase 1A Minimum Improvements” has the meaning set forth in Section 4.1(a)(1). “Phase 1B Minimum Improvements” has the meaning set forth in Section 4.1(a)(2). “Phase 1C Minimum Improvements” has the meaning set forth in Section 4.1(a)(3). “Phase 2 Minimum Improvements” has the meaning set forth in Section 4.1(a)(4). “Plaza Easement” a permanent, public easement for access and use of the Plaza Element to be granted by Redeveloper to the City pursuant to an easement agreement in the form attached as Exhibit J. “Plaza Element” has the meaning set forth in Section 4.1(a)(1)(ii). “Plaza Public Art” means the two installations of public art within the Plaza Element as shown in the Pentagon South Final Development Plan, each of which shall be permanent sculptures or similar art installations. “Project” means the Minimum Improvements under this Agreement. “Project Area” means the area illustrated on the Project Area Map and legally described on Exhibit B-1. “Project Area Map” means the Project Area map attached hereto as Exhibit A. “Project Redevelopment Costs” means those Qualified Redevelopment Costs listed in -8- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Section 7.2, initially paid by Redeveloper from Redeveloper’s own sources and eligible for TIF Assistance. “Project Site Work” has the meaning set forth in Section 4.1(a)(1)(iii). “Projected Phase 2 Improvements” has the meaning set forth in Section 4.1(a)(4). “Public Art” means, collectively, the Plaza Public Art and the 77th Street Public Art. “Public Infrastructure Improvements” means those certain public infrastructure improvements to be constructed as part of Phase 1A, and including in the Site Work Element pursuant to and as specifically described in the Pentagon South Development Contract as follows: (a) 77th Street West and Commercial Driveway Access: (i) install eastbound right turn lane on 77th Street, (ii) install driveway access exiting the site with northbound left turn lane, northbound left turn / thru lane and northbound right turn lane, and (iii) subject to any private agreements, restriping of the existing exit lanes of the Burgundy Building and 4820 West 77th Street with a southbound left turn lane and southbound right turn/thru lane; and (b) 77th Street and Computer Drive: (i) install eastbound right turn lane on 77th Street, and (ii) install at grade pedestrian improvements at 77th Street. “Public Recreational Property” means any publicly owned park land and/or future regional trails established in close proximity to the Project Area, including Fred Richards Park. “Public Transit Improvements” means (a) two bus stops along 77th Street West, each of which shall include a covered shelter with bench, lighting and a trash can (subject to a final design approved by Metro Transit); sized to accommodate regular, express, or future rapid- transit service; and to be maintained by Redeveloper; and (b) accommodations (but not improvements) for a future bus stop on Computer Avenue or Viking Drive. “Qualified Redevelopment Activities” mean the Project-related activities eligible for TIF Assistance, as authorized by this Agreement and the TIF Act. “Qualified Redevelopment Costs” means, collectively, the Project Redevelopment Costs and the Parking Redevelopment Costs related to Redeveloper’s Qualified Redevelopment Activities. “Redeveloper” means Pentagon Village, LLC, a Minnesota limited liability company. “Redevelopment Plan” means the redevelopment plan for the Southeast Edina Redevelopment Project Area originally adopted by the Authority pursuant to Resolution No. 2014-2 in accordance with Minnesota Statutes, Section 469.027 and originally approved by the City Council pursuant to Resolution No. 2014-23 in accordance with Minnesota Statutes, Sections 469.028 and 469.175, subdivision 3, as such redevelopment plan has been amended from time to time. “Retail Element” has the meaning set forth in Section 4.1(a)(1)(i). “Special Assessments” mean assessments levied against any portion of the Project Area or -9- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) other benefited property, by the City for purposes of paying for 77th Street Work. “Stabilization Costs” means property improvement and operating costs incurred by Redeveloper (or its predecessors) on buildings which exist within the Project Area prior to demolition in accordance with this Agreement to maximize rental rates prior to demolition, less (i) net rental revenues generated by those buildings during that period and (ii) grants for demolition, remediation, and other activities related to stabilization. “State” means the State of Minnesota. “Tax Increment” means the tax increment generated from parcels specifically within the Project Area and remitted to the Authority pursuant to the TIF Act. “TIF” means tax increment financing. “TIF Act” means Minnesota Statutes, Sections 469.174 to 469.1799, as amended. “TIF Assistance” means reimbursement of Qualified Redevelopment Costs through payments from the Authority to Redeveloper of Available Tax Increment under one or more TIF Notes, pursuant to the terms and conditions of Article VIII of this Agreement and the TIF Act. “TIF District” means the Pentagon Park Tax Increment Financing District established by the Authority pursuant to Resolution No. 2014 – 2. “TIF Note(s)” or “Note(s)” means “TIF Note A”, “TIF Note B”, and/or “TIF Note C” (as each such TIF Note is defined in Section 8.1), to be issued by the Authority to Redeveloper, in substantially the form attached hereto as Exhibit F in accordance with the terms and conditions of this Agreement. “TIF Plan” means the Tax Increment Financing plan for the TIF District adopted by the Authority in accordance with Minnesota Statutes, Section 469.175 pursuant to Resolution No. 2014 – 2. “TIF Pro Forma” means the detailed TIF pro forma attached as Exhibit D. “Transfer” means any sale, assignment, conveyance, or any trust or power, or transfer in any other mode or form of or with respect to any portion of the Project Area or any Element. “Unavoidable Delays” means delays, outside the control of the party claiming its occurrence, which are the direct result of (a) unusually severe or prolonged bad weather, (b) acts of God, fire or other casualty to the Project, (c) litigation commenced by third parties which directly results in delays, (d) acts of any federal, State, or local government unit which directly result in delays, (e) strikes, other labor trouble, or (f) delays in delivery of materials. “77th Street Public Art” means the three installations of public art along 77th Street West as shown in the Pentagon South Final Development Plan, each of which shall be permanent sculptures or similar art installations. -10- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (a) The City is a Minnesota municipal corporation and has the power to enter into this Agreement and carry out its obligations hereunder. The City has duly authorized the execution, delivery and performance of this Agreement. (b) Other than items disclosed by the City to Redeveloper before the execution of this Agreement, there is not pending, nor to the best of the City’s knowledge is there threatened, any suit, action or proceeding against the City before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the City to perform its obligations hereunder, or as contemplated hereby or thereby, or the validity or enforceability of this Agreement. (c) To the best of the City’s knowledge and belief, no member of the City Council or officer of the City, has either a direct or indirect financial interest in this Agreement, nor will any City Councilmember or officer of the City, benefit financially from this Agreement within the meaning of Minnesota Statutes, Section 469.009, as amended. (d) The City will reasonably cooperate with Redeveloper with respect to any litigation commenced by third parties with respect to the Project; however, this provision does not obligate the City to incur costs, except as otherwise provided in this Agreement or elsewhere. (e) The execution, delivery and performance of this Agreement, and any other documents, instruments or actions required or contemplated pursuant to this Agreement by the City does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not conflict with or constitute on the part of the City a material breach of, default under or violation of any existing (i) agreement or instrument to which the City is a party or by which the City or any of its property is or may be bound, (ii) legislative act, charter or other proceeding or action establishing or relating to the establishment of the City or its officers or its resolutions, or (iii) order, decree, statute, rule or regulation of any court or of any state or Federal regulatory body having jurisdiction over the City. Section 2.2 Representations and Warranties of the Authority. The Authority makes the following representations and warranties: (a) The Authority is a public body corporate and politic and a governmental subdivision of the State, duly organized and existing under State law and the Authority has the authority to enter into this Agreement and carry out its obligations hereunder. (b) Except as provided in this Agreement, the Authority agrees to retain all of the captured net tax capacity of the Project Area to finance the Qualified Redevelopment Costs as provided in this Agreement, and will elect that the duration of the TIF District will be the maximum duration permitted by the TIF Act. The Authority will not voluntarily take any action to reduce the amount of captured tax capacity retained to finance the Qualified Redevelopment Costs or to -11- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) reduce the duration of the TIF District until the amount paid to Redeveloper from Available Tax Increment reaches the maximum amount specified in Section 8.1. (c) The execution, delivery and performance of this Agreement and any other documents or instruments required pursuant to this Agreement by the Authority does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not, conflict with or constitute on the part of the Authority a material breach of, default under or violation of any existing (i) agreement or instrument to which the Authority is a party or by which the Authority or any of its property is or may be bound, (ii) legislative act, constitution or other proceeding establishing or relating to the establishment of the Authority or its officers or its resolutions, or (iii) order, decree, statute, rule or regulation of any court or of any state or Federal regulatory body having jurisdiction over the Authority. (d) Other than items disclosed by the Authority to Redeveloper before execution of this Agreement, there is not pending, nor to the best of the Authority’s knowledge is there threatened, any suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the Authority to perform its obligations hereunder, or as contemplated hereby or thereby, or the validity or enforceability of this Agreement. (e) To the best of the Authority’s knowledge and belief, no member of the Board of the Authority or officer of the Authority, has either a direct or indirect financial interest in this Agreement, nor will any Commissioner of the Authority or officer of the Authority, benefit financially from this Agreement within the meaning of Minnesota Statutes, Section 469.009, as amended. (f) The Authority will reasonably cooperate with Redeveloper with respect to any litigation commenced by third parties with respect to the Project; however, this provision does not obligate the Authority to incur costs, except as otherwise provided in this Agreement or elsewhere. Section 2.3 Representations and Warranties of Redeveloper. Redeveloper represents and warrants that: (a) Redeveloper is a limited liability company organized and in good standing under the laws of the State of Minnesota, is qualified to do business, and is in good standing, in the State, is not in violation of any provisions of its operating agreement or other organizational documents or the laws of the State, has power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its members. (b) The execution and delivery of this Agreement and the consummation of the transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do not and will not conflict with or result in a breach of any material terms or conditions of Redeveloper’s organizational documents, any restriction or any agreement or instrument to which Redeveloper is now a party or by which it is bound or to which any property of Redeveloper is subject, and do not and will not constitute a default under any of the foregoing or a violation of any order, decree, statute, rule or regulation of any court or of any state or Federal regulatory body having jurisdiction -12- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) over Redeveloper or its properties, including its interest in the Minimum Improvements, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of Redeveloper contrary to the terms of any instrument or agreement to which Redeveloper is a party or by which it is bound. (c) To the best of Redeveloper’s knowledge and belief, the execution and delivery of this Agreement will not create a conflict of interest prohibited by Minnesota Statutes, Section 469.009, as amended. (d) Redeveloper (or its Affiliates) currently has fee title to the Project Area. (e) Redeveloper would not construct the Minimum Improvements, but for the execution of this Agreement and the TIF Assistance for the Qualified Redevelopment Costs and other public assistance contemplated to be made available hereunder. (f) Redeveloper shall reasonably cooperate with the City and the Authority with respect to any litigation commenced by third parties with respect to the Project; however, this provision does not obligate Redeveloper to incur costs, except as otherwise provided in this Agreement or elsewhere. (g) Other than items disclosed by Redeveloper to the City and the Authority before execution of this Agreement, there are no pending or threatened legal proceedings, of which Redeveloper has notice, contemplating the liquidation or dissolution of Redeveloper or threatening its existence, or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning the authority of Redeveloper to execute and deliver this Agreement or the validity of this Agreement. (h) Redeveloper has not received any notice from any local, state or federal official that the activities of Redeveloper or the Authority with respect to the Project Area may or will be in violation of any Environmental Law, except as has been identified in any report, audit, inspection or survey, undertaken by or provided to the City and the Authority. Redeveloper represents, based solely on the information provided to Redeveloper by its environmental consultant, Braun Intertec, and the public records of the Minnesota Pollution Control Agency, that: (i) it is not aware of any state or federal claim filed or planned to be filed by any party relating to any violation of any local, state or federal Environmental Law, regulation or review procedure; and (ii) it is not aware of any violation of any local, state or federal law, regulation or review procedure which would give any person a valid claim under any Environmental Law, including the Minnesota Environmental Rights Act or the Minnesota Environmental Policy Act. (i) Redeveloper reasonably expects that it will be able to obtain private financing in an amount sufficient, together with funds provided by the Authority and any other public agencies, to enable Redeveloper to successfully construct the Minimum Improvements and fund the Public Infrastructure Improvements, as provided herein. ARTICLE III LAND USE AND DEVELOPMENT CONTROLS Section 3.1 Restrictions on Development. Redeveloper may not construct or permit -13- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) construction on any Element or Phase until Redeveloper satisfies the following conditions: (a) Redeveloper executes and records the Pentagon South Development Contract against the Project Area, and causes any lien holder affecting any of the property to subject its interest as provided in this Agreement and in the Pentagon South Development Contract; (b) Redeveloper satisfies all of the conditions established by the City in the Pentagon South Final Development Plan; and (c) Redeveloper satisfies all of the conditions in the Pentagon South Development Contract and obtains approval of and records the Final Plat. Section 3.2 Zoning and Land Use Approvals. Nothing in this Agreement shall limit the authority of the City with respect to zoning and land use approvals. Redeveloper has obtained all land use and zoning approvals necessary for the Minimum Improvements, including, without limitation, the Pentagon South Final Development Plan and the Pentagon South Development Contract. All zoning and land use approvals shall be by the City Council or the City Planning Commission in accordance with the ordinances of the City. Section 3.3 Building and Construction Permits. Nothing in this Agreement shall limit the governmental authority of the City with respect to its building and construction permitting process for the Minimum Improvements. Redeveloper shall comply with all applicable building codes and construction requirements and shall be responsible for obtaining all building permits and other applicable construction permits prior to construction. Section 3.4 City/Authority Approval. Unless the City Council determines otherwise in its discretion, whenever this Agreement provides for approval by the City or the Authority, such approval shall be given by, respectively, the City Manager or the Executive Director of the Authority (or in either case his/her designee), unless (a) this Agreement explicitly provides for approval by the City Council or the Board of the Authority, (b) approval by the Council or Board is required by law or (c) the approval, in the opinion of the City Manager or the Executive Director, would result in a material change in the terms of this Agreement. ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1 Minimum Improvements. (a) The Project includes the Minimum Improvements, which shall be constructed by Developer consistent with the Pentagon South City Approvals as a condition to the continuance of this Agreement and the City’s and Authority’s obligations hereunder, including the granting of TIF Assistance to Redeveloper in accordance with this Agreement. (1) The Phase referred to herein as “Phase 1A” shall consist of the following Minimum Improvements, to be developed in accordance with the Pentagon South City Approvals (collectively, the “Phase 1A Minimum Improvements”): (i) an approximately 7,500 square foot retail/restaurant building and an -14- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) approximately 4,300 square foot retail/restaurant building, with associated surface parking (collectively, “Retail Element”); (ii) an approximately one acre outdoor green space with a water feature, the Plaza Public Art, related hardscaping and other pedestrian amenities, together with all sidewalks, paths, trails, and roads which provide access to the primary Plaza Element space, all to be constructed and installed by Redeveloper in accordance with the Pentagon South City Approvals (including, without limitation, adherence to the scale, scope, design, appearance, quality, and finishes depicted in the Pentagon South Final Development Plan) and which shall be open and accessible to the public pursuant to the terms and conditions of the Plaza Easement (the “Plaza Element”); (iii) all site preparation for the entire Project Area (including soil correction, demolition, abatement and environmental remediation); all site infrastructure for the entire Project Area, including utilities, grading, internal roads, surface parking, Public Transit Improvements (for which Redeveloper shall, in good faith, collaborate and coordinate with Metro Transit with respect to the final design, location, construction, and maintenance of such Public Transit Improvements), the 77th Street Public Art, bicycle access improvements, district marker signs, other signage; and the Public Infrastructure Improvements, all to be constructed and installed by Redeveloper in accordance with the Pentagon South City Approvals, but specifically excluding the Parking Element or any other structured parking (collectively, the “Project Site Work”). (2) The Phase referred to herein as “Phase 1B” shall consist of at least one additional Element, which such Element shall consist of at least 100,000 square feet of gross building area, to be developed and constructed in accordance with the Pentagon South City Approvals (the “Phase 1B Minimum Improvements”). This Element is anticipated to be, but is not required hereunder to be the 4-story, approximately 193-room dual-branded hotel, with associated surface parking (“Hotel Element 1”) as approved by the City in the Pentagon South City Approvals. (3) The Phase referred to herein as “Phase 1C” shall consist of at least one additional Element consisting of at least 100,000 square feet of gross building area, to be developed and constructed in accordance with the Pentagon South City Approvals (the “Phase 1C Minimum Improvements”). This Element is anticipated to be, but is not required hereunder to be the 4-story, approximately 153-room extended stay hotel, together with the Parking Element (collectively, “Hotel Element 2”), as approved by the City in the Pentagon South City Approvals. (4) The Phase referred to herein as “Phase 2” shall consist of at least one additional Element consisting of at least 100,000 square feet of gross building area, to be developed and constructed in accordance with the Pentagon South City Approvals (the “Phase 2 Minimum Improvements”). This Element is anticipated to be, but is not required hereunder to be, (A) an approximately 5-story office building containing approximately 125,000 square feet or (B) an approximately 5-story office buildings containing -15- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) approximately 100,000 square feet, with an integrated parking structure with approximately 1,000 parking stalls, each of which Redeveloper currently anticipates that, based on current market conditions, will be developed and constructed on Lot 5 (which may be subdivided into 2 lots to allow for construction of two office buildings) (collectively the “Projected Phase 2 Improvements”). (b) The Minimum Improvements and the Projected Phase 2 Improvements are depicted in the Project Area Map attached as Exhibit A. (c) Market Value of Minimum Improvements. It is anticipated that upon completion, the Minimum Improvements will have a Market Value of approximately $100,000,000.00. Section 4.2 Public Art. In addition to the requirements for the Public Art set forth in Section 4.1 above, Redeveloper shall (a) engage a professional art consultant experienced in public art visioning, commissioning, and implementation in connection with the creation of the Public Art and (b) invest no less than $100,000, in the aggregate, in and for the Public Art (exclusive of fees paid to such professional art consultant and exclusive of costs for other aspects of the Plaza Premises and Project Site Work which are installed in connection with or ancillary to the Public Art, but which do not directly form a part of such Public Art). Section 4.3 Submission and Approval of Evidence of Financing. No later than issuance of the applicable construction or building permit for an Element or Phase, Redeveloper shall provide a Go-Ahead Letter for such Element or Phase. The Go-Ahead Letter will be reasonably acceptable to the Executive Director of the Authority. Section 4.4 Construction and Inspection of Minimum Improvements. The Minimum Improvements will be constructed according to the Pentagon South City Approvals. Prior to delivery of any Certificate of Completion to Redeveloper, upon the request of the Authority, Redeveloper shall provide the Authority and the City with reasonable access to the Project Area. During the construction and marketing of the Minimum Improvements, Redeveloper shall deliver progress reports to the Authority upon written request from the Authority. Section 4.5 Effect of Delay. Redeveloper acknowledges that if there is a delay in Qualified Redevelopment Costs being actually incurred or committed or if construction of the Minimum Improvements is delayed, due to Unavoidable Delays or for any other reason, this could affect the amount of Qualified Redevelopment Costs and the amount of Available Tax Increment and thus the total amount which may be available to pay the TIF Note. Redeveloper acknowledges that if there is a delay in Qualified Redevelopment Costs being actually incurred or committed and/or if the Completion of the construction of the Minimum Improvements is delayed, due to Unavoidable Delays or for any other reason, there will be no compensation to Redeveloper or any other party for any reduction in the amount available to pay or refund the TIF Note. Section 4.6 Additional Responsibilities of Redeveloper. Subject to Cure Rights: (a) Redeveloper shall ensure that those Phases and Elements of the Minimum Improvements that are completed are constructed, operated, and maintained in substantial accordance with the terms of this Agreement, the Pentagon South City Approvals, and all local, State, and federal laws and regulations (including, but not limited to zoning, building code and -16- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) public health laws and regulations); (b) Redeveloper shall obtain, in a timely manner, all required permits, licenses, and approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and Federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed; and (c) Redeveloper shall not construct any building or other structures on, over, or within the boundary lines of any public utility easement unless such construction is provided for in such easement or has been approved by the utility involved. Section 4.7 Park Maintenance Fee . If a Lot within the Project Area is improved with an Element containing residential units (which does not include hotel or extended stay rooms or suites), the City may assess and collect from the owner of each such residential unit (including Redeveloper, if applicable) a maintenance fee for the support and benefit of the Fred Richards Park. The City may not assess and collect such park maintenance fee in accordance with this section until the City has completed the wetland restoration/lake feature and installation and/or creation of integrated walking paths and all trails amenities throughout Fred Richards Park, reasonably consistent with the Master Plan for the Fred Richards Park. The initial amount of such maintenance fee shall not exceed $7.50 per residential unit per month, and may be increased annually by an amount not to exceed 1.5% per annum. In no event will the City’s power to assess the park maintenance fee under this section be deemed a waiver, replacement, alternative, or other impairment to the City’s right to assess any park dedication fee in accordance applicable Law in connection with the initial approval of any residential Element to be developed within the Project Area. Section 4.8 Certificate of Completion. Redeveloper shall notify the Authority when the final certificate of occupancy (exclusive of tenant build-outs) is received for each Element, and the Engineer’s Certification is obtained by Redeveloper for the Plaza Element and the Project Site Work. Upon receipt of the final certificate of occupancy for an Element of the Minimum Improvements, or the City engineer’s approval of the Engineer’s Certification for the Plaza Element or the Project Site Work, as applicable, the Authority will furnish to Redeveloper a recordable Certificate of Completion in the form of Exhibit G, certifying the completion of that Element, Plaza Element, or the Project Site Work, as applicable. ARTICLE V [RESERVED] ARTICLE VI PROJECT TIMELINE AND DEFAULT Section 6.1 Commencement and Completion of Minimum Improvements. The chart below is Redeveloper’s current anticipated timeline for the Commencement and Completion of the Minimum Improvements and the remaining Projected Phase 2 Improvements. The Commencement and Completion dates for the Minimum Improvements shall be substantially in accordance with the below timeline, and failure to meet such dates shall be a Default as described in Section 6.2. The actual completion of the remaining Phase 2 Minimum Improvements will be -17- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) driven by market conditions and failure to meet the below dates for the remaining Projected Phase 2 Minimum Improvements will not be a Default under this Agreement. Redeveloper shall notify the Authority of material changes to the following Commencement and Completion dates. Redeveloper shall periodically provide the Authority with written notification related to meeting proposed construction benchmarks. Minimum Improvements Timeline Minimum Improvements Commencement Completion Phase 1A Retail Element No later than July 31, 2019 No later than December 31, 2020 Plaza Element No later than March 1, 2019 No later than 12 months following Completion of the Project Site Work Project Site Work No later than December 1, 2018 No later than December 31, 2019 Phase 1B Second Element (Hotel Element 1 anticipated) July 1, 2019 preferred, but no later than July 1, 2020 No later than June 30, 2021 Phase 1C Parking Element No later than December 31, 2018 No later than July 31, 2020 Third Element (Hotel Element 2 anticipated) No later than September 1, 2019 No later than December 31, 2021 Phase 2 Fourth Element July 1, 2019 preferred, but no later than October 1, 2021 No later than October 1, 2023 Projected Phase 2 Improvements Commencement Completion Fifth Element June 1, 2019 preferred N/A Second parking element June 1, 2019 preferred N/A Sixth Element June 1, 2019 preferred N/A Section 6.2 Defaults. Redeveloper’s failure to satisfy Commencement or Completion obligations of the Minimum Improvements by the applicable date listed above shall be a Default under this Agreement. Following Commencement, construction of any Element, any other -18- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) component of the Minimum Improvements must continue in a sequence consistent with normal construction practices. For purposes of clarity, the Redeveloper’s failure to satisfy Commencement or Completion obligations of the Projected Phase 2 Improvements (as opposed to the Minimum Improvements) by the applicable date listed in the last three rows of the above table shall not be a Default under this Agreement. ARTICLE VII DEVELOPER REIMBURSEMENT OBLIGATIONS; QUALIFIED REDEVELOPMENT COSTS; PERFORMANCE REVIEW Section 7.1 Redeveloper Reimbursement Obligations. Redeveloper is obligated to pay all reasonable out of pocket costs of the City and the Authority for the City Consultants in connection with the Project, including but not limited to costs of the development of this Agreement, the Redevelopment Plan, the TIF Plan and creation of the TIF District, the Pentagon South Final Development Plan, the Pentagon South Development Contracts, architectural and engineering studies for the Project, fiscal analysis, legal fees and all costs and expenses related thereto. Redeveloper must pay such costs monthly upon presentation of invoices and other documentation of such costs, not more than 45 days after the request for payment is delivered to Redeveloper. All such costs will be Project Redevelopment Costs pursuant to the TIF Pro Forma. The hourly rates of the City Consultants will be charged at the standard, regular rates paid by the City at the time such charges are paid. Section 7.2 Project Redevelopment Costs. (a) The costs eligible for TIF Assistance as Project Redevelopment Costs include the following: Project Redevelopment Cost Estimated Amount (i) General site preparation, including soil correction, studies and improvements (including piling); storm water management studies and storm water management related improvements (reduced by any grant funds received for storm water management), studies, berm(s), soil relocation as part of site preparation, all Project Site Work and any additional site preparation work attributable to the Parking Element. $6,222,000 (ii) Demolition, abatement and environmental remediation (including asbestos, lead-based paint and hazardous materials) required within the Project Area (reduced by any grant funds received for this work). $822,000 (iii) Costs associated with site preparation for and the construction of the Plaza Element. $500,000 (iv) Design costs, construction costs, and inspection fees $500,000 -19- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) related to the Public Infrastructure Improvements (v) Pre-development planning, engineering, legal and consulting costs related to the Project Area, costs related to application of Tax Increment Financing, the Master Redevelopment Agreement, this Agreement, and Pentagon South Development Contract (including predevelopment costs of the City/Authority paid by Redeveloper), all in amounts which are commercially reasonable and common in the marketplace. $1,104,000 $9,148,000 (b) The actual amount of Project Redevelopment Costs within each of the foregoing categories may be reallocated among such categories provided that Redeveloper provides reasonable evidence of the actual amounts of Project Redevelopment Cost actually incurred or committed in each such category. Section 7.3 Parking Redevelopment Costs. (a) The costs eligible for TIF Assistance as Parking Redevelopment Costs include the following: Parking Redevelopment Costs Estimated Amount (i) Costs associated with the development and construction of the Parking Element (which may include professional third party fees which are commercially reasonable and common in the marketplace) $9,386,000 $9,386,000 Section 7.4 TIF Lookback. (a) Generally. The financial assistance to Redeveloper under this Agreement is based on certain assumptions regarding likely costs and expenses associated with constructing the Minimum Improvements, as well as proceeds to be derived by Redeveloper from the sale of Element Property. Specifically, the maximum aggregate principal amount of the TIF Notes has been determined based on the amount of assistance needed to make the Project financially feasible, as shown in the TIF Pro Forma attached as Exhibit D. The Authority and Redeveloper agree that those assumptions will be reviewed at the times described in this section, and that the amount of TIF Assistance provided herein may be adjusted in accordance with this section. Such review will be based on an Element TIF Pro Forma. Any fees which are paid to Redeveloper, as reflected in an Element TIF Pro Forma, will be commercially reasonable and common in the market place. (b) Redeveloper as Phase Developer. -20- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (i) Within 60 days after a Controlling Interest Transfer of any Element Property, Redeveloper shall submit a certified cost and revenue analysis for the Controlling Interest Transfer of that Element Property to the Authority in the form of an Element TIF Pro Forma attached as Exhibit E and prepared in accordance with generally accepted accounting principles. This analysis will include (1) a fair market value determination regarding the Element Property subject to the Controlling Interest Transfer, and (2) without limitation, all Acquisition Costs, Stabilization Costs, Land Carrying Costs, Project Redevelopment Costs, and all other improvement costs allocated to the Element Property subject to the Controlling Interest Transfer. Redeveloper shall provide to the Authority any reasonable and relevant background documentation, prepared in accordance with generally accepted accounting principles, related to the financial data, upon request. The Authority at its cost may retain an accountant to audit the submitted Element TIF Pro Forma. (ii) The amount by which the actual IRR for a Controlling Interest Transfer of an Element Property shown in an updated TIF Pro Forma required under Section 7.4(b)(i) exceeds the percentages shown in Section 7.4(b)(ii)(2) – (4) below is referred to as the “Project Excess Percentage.” Redeveloper will be obligated to pay to the Authority, subject to Section 7.4(b)(iii), the Project Excess Percentage in an amount not to exceed 25% of the Project Excess Percentage to be capped by an amount not to exceed 25% of the issued TIF Notes (to be calculated pursuant to Section 7.4(b)(ii)(2) – (4)), plus interest calculated against the adjusted cumulative total of any amounts Redeveloper is obligated to pay to the Authority under this Section 7.4(b)(ii) at a rate of 6% compounded annually until the date determined in accordance with Section 7.4(b)(iii) (the “Phase Developer TIF Adjustment”). For the sake of clarity, the Phase Developer TIF Adjustment will be recalculated as of each date an Element TIF Pro Forma identified in Section 7.4(b)(i) is submitted to the Authority for the purposes of calculating the applicable principal amount against which interest will be charged. In determining the Phase Developer TIF Adjustment the following shall apply: (1) If the IRR realized from the Controlling Interest Transfer of an Element Property is less than 16% then there is no Phase Developer TIF Adjustment. (2) If the IRR realized from the Controlling Interest Transfer of an Element Property is 16% or more, but less than 18% then the Phase Developer TIF Adjustment is limited to 10% of the Tax Increment as further limited in this Section 7.4(b)(ii). (3) If the IRR realized from the Controlling Interest Transfer of an Element Property is 18% or more, but less than 20% then the Phase Developer TIF Adjustment is limited to 15% of the Tax Increment as further limited in this Section 7.4(b)(ii). (4) If the IRR realized from the Controlling Interest Transfer of an Element Property is 20% or more then the Phase Developer TIF Adjustment is limited to 25% of the Tax Increment as further limited in this Section 7.4(b)(ii). (iii) Upon the earlier date to occur of (a) 365 days from the Transfer of the last -21- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Element Property or (b) August 18, 2034, Redeveloper shall submit an updated TIF Pro Forma to account for all Controlling Interest Transfers subject this Section 7.4(b), which will be subject to the calculation of a cumulative total Phase Developer TIF Adjustment. To the extent this amount exceeds the IRR amounts set forth in Section 7.4(b)(ii), Redeveloper shall pay the Authority in accordance with Section 7.4(e) the amounts at set forth in Section 7.4(b), less the Phase Developer TIF Adjustment, if any, for all Phases. (iv) The purpose of the Phase Developer TIF Adjustment is to reimburse the Authority for payments that have been made to Redeveloper or to limit future payments to be made under the TIF Notes, in the amount as defined in Section 7.4(b)(iii) from the Controlling Interest Transfer, if any, of the Element Property. The Phase Developer TIF Adjustment is based on IRR for a Controlling Interest Transfer and is not based on an annual cash on cost calculation or analysis on Redeveloper’s development and operation of an Element, Phase or the Project. The Phase Developer TIF Adjustment for a particular Element Property is a one-time adjustment following a Controlling Interest Transfer of that Element Property and, therefore, that Element Property is not subject to a Phase Constructor TIF Adjustment under Section 7.4(c) and the Authority shall have no right to any Phase Excess Amount (as that term is defined in Section 7.4(c)) regarding such Element Property if such Element Property has been improved and developed prior to the expiration of the cumulative total Phase Developer TIF Adjustment under Section 7.4(b)(iii). Provided, however, if a subsequent Transfer of such Element Property is made to Redeveloper and Redeveloper improves and develops the Element Property, the Element Property is then subject only to a Phase Constructor TIF Adjustment. (c) Master Redeveloper as Phase Constructor. (i) Within 60 days after Completion of an Element, Redeveloper shall submit certified cost and revenue analysis to the Authority in the form of an Element TIF Pro Forma and prepared in accordance with generally accepted accounting principles. Redeveloper shall provide to the Authority any reasonable and relevant background documentation, prepared in accordance with generally accepted accounting principles, related to the financial data, upon request. The Authority may retain an accountant to audit the submitted Element TIF Pro Forma, at Redeveloper’s cost. (ii) If a Transfer of an Element by Redeveloper occurs within three years from the date of Completion of such Element, Redeveloper shall submit an updated TIF Pro Forma, which will be subject to the calculation of the Phase Constructor TIF Adjustment in Section 7.3(c)(iii). Any Transfer by Redeveloper following the third anniversary of Completion, is at no time subject to a Phase Constructor TIF Adjustment. (iii) The amount by which the actual IRR shown in an updated Element TIF Pro Forma required under Section 7.4(c)(ii) exceeds the percentages shown in Section 7.4(c)(iii)(2) – (4) below is referred to as the “Phase Excess Amount.” Redeveloper will be obligated to pay to the Authority in accordance with Section 7.4(e) the Phase Excess Amount in an amount not to exceed 25% of the Phase Excess Amount to be capped by an amount not to exceed 25% of the issued TIF Notes (to be calculated pursuant to Section 7.4(c)(iii)(2) – (4)), plus interest calculated against the adjusted cumulative total of any -22- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) amounts Redeveloper is obligated to pay to the Authority under this Section 7.4(c)(iii) at a rate of 6% compounded annually until the date determined in accordance with Section 7.4(d) (the “Phase Constructor TIF Adjustment”). For the sake of clarity, the Phase Constructor TIF Adjustment will be recalculated as of each date an Element TIF Pro Forma identified in Section 7.4(c)(ii) is submitted to the Authority for the purposes of calculating the applicable principal amount against which interest will be charged. In determining the Phase Constructor TIF Adjustment the following shall apply: (1) If the IRR realized from the Transfer of the Element is less than 16% then there is no Phase Constructor TIF Adjustment. (2) If the IRR realized from the Transfer of the Element is 16% or more, but less than 18% then the Phase Constructor TIF Adjustment is limited to 10% of the Tax Increment as further limited in this Section 7.4(c)(iii). (3) If the IRR realized from the Transfer of the Element is 18% or more, but less than 20% then the Phase Constructor TIF Adjustment is limited to 15% of the Tax Increment as further limited in this Section 7.4(c)(iii). (4) If the IRR realized from the Transfer of the Element is 20% or more then the Phase Constructor TIF Adjustment is limited to 25% of the Tax Increment as further limited in this Section 7.4(c)(iii). (d) In addition, upon the earlier date to occur of (i) 365 days from the Transfer of the last Element Property, (ii) three years from the date of Completion for the last Element Property or (iii) August 18, 2034, Redeveloper shall submit an updated TIF Pro Forma to account for all Transfers subject to Section 7.4(c), which shows the cumulative total of all Phase Constructor TIF Adjustments. To the extent that the aggregate IRR realized from any Transfers exceeds the IRR amounts set forth in Section 7.4(c), Redeveloper shall pay the Authority in accordance with Section 7.4(e) the amounts as set forth in Section 7.4(c), less the Phase Constructor TIF Adjustment, if any, for all Phases. (e) If the Authority determines that either a Phase Developer TIF Adjustment or a Phase Constructor TIF Adjustment is required, then (i) the Authority may elect to either require payment from Redeveloper to the Authority of the Phase Developer TIF Adjustment or the Phase Constructor TIF Adjustment or (ii) the Authority may elect to have the Phase Developer TIF Adjustment or the Phase Constructor TIF Adjustment applied to reduce the outstanding principal amount of the TIF Note (as a deemed prepayment) in accordance with the terms of the TIF Note. (f) The purpose of the Phase Constructor TIF Adjustment is to reimburse the Authority for payments that have been made to Redeveloper under the TIF Notes or to limit future payments to be made to Redeveloper under the TIF Notes, in the amount determined under Section 7.4(c) from the Transfer of Element Property for which Redeveloper has achieved Completion. The Phase Constructor TIF Adjustment is based on IRR for a Transfer of an Element or Phase and is not based on an annual cash on cost determination of Redeveloper’s operation of an Element, Phase or the Project. (g) For purposes of clarity, an example of the calculation of a hypothetical Phase -23- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Developer TIF Adjustment is attached hereto as Exhibit I. The sample calculations included in this example could also be applied for determination of the Phase Constructor TIF Adjustment. ARTICLE VIII TIF ASSISTANCE Section 8.1 TIF Notes; Conditions of Issuance; Limitations on Reimbursement of Qualified Redevelopment Costs. (a) TIF Notes. In order for Redeveloper to obtain the TIF Assistance contemplated by this Agreement, the Authority shall issue, subject to the terms and conditions of this Agreement, up to three “pay-as-you-go” TIF Notes to Redeveloper in the aggregate maximum original principal amount of up to $18,100,000, plus simple interest on the unpaid principal balance thereof at a rate of 6%, as follows: (i) a TIF Note for Project Redevelopment Costs up to the maximum principal amount of $9,000,000 (“TIF Note A”); (ii) a TIF Note for Parking Redevelopment Costs and additional Project Redevelopment Costs not included in TIF Note A up to the maximum principal amount of $5,400,000 (“TIF Note B”); and (iii) a TIF Note for additional Parking Redevelopment Costs and/or additional Project Redevelopment Costs not included in TIF Note A or TIF Note B up to the maximum principal amount of $3,700,000 (“TIF Note C”). (b) Timing and Conditions of Issuance. The Authority shall issue the TIF Notes no later than July 15, 2019, provided that Redeveloper provides evidence reasonably satisfactory to the Authority that Redeveloper has satisfied each of the following conditions: (i) Redeveloper has actually incurred or committed Project Redevelopment Costs and/or Parking Redevelopment Costs, as applicable, in an amount equal to at least the amount of the requested TIF Note(s) on or before June 30, 2019 (the “Cost Submission Deadline”); (ii) final execution of the Redevelopment Agreement and recording of a memorandum of the Redevelopment Agreement in the applicable land records no later than October 31, 2018; and (iii) issuance of grading permit and commencement of grading of the entire Project Area by no later than May 15, 2019, provided that Redevelopers shall use commercially reasonable efforts to commence such work in the third or fourth quarter of 2018. (c) Payments and Interest Accrual. Payments upon and accrual of interest on the unpaid principal balance of each TIF Note will commence upon the satisfaction of the conditions applicable to each TIF Note as set forth in Section 8.2. -24- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (d) No Representation or Warranty. Payments of principal and interest under the TIF Notes shall be payable solely from Available Tax Increment from the Project. The Authority does not represent or warrant the amounts of Available Tax Increment that will be available for payment principal and interest under the TIF Notes. The Authority will not reimburse Redeveloper for Qualified Redevelopment Costs from Authority revenues, other than from Available Tax Increment, nor guaranty the amount of money which Redeveloper will receive as a reimbursement, such amount being payable solely from the Available Tax Increment in accordance with this Section. (e) Allocation of Available Tax Increment. The Authority will calculate Available Tax Increment for the Project Area as a whole, and the Authority will allocate such Available Tax Increment, pro rata, to principal and interest payments on any outstanding TIF Note(s) for which payments and accrual of interest has commenced in accordance with Section 8.2 below. (f) Five-Year Rule. Redeveloper acknowledges and the Authority certifies that July 15, 2019 is the end of the five-year period following certification of the TIF District, and such date is the statutory deadline for Redeveloper to comply with the Five-Year Rule. However, in order for the Authority to issue any TIF Note(s) by such statutory deadline, Redeveloper shall provide the Authority evidence of all Qualified Redevelopment Costs as soon as reasonably practicable after such Qualified Redevelopment Costs are actually incurred or committed, but no later than the Cost Submission Deadline. Promptly following the Effective Date, Redeveloper shall provide the Authority with evidence of all Qualified Redevelopment Costs incurred by Redeveloper prior to the Effective Date. The Authority will use commercially reasonable efforts to review, process, and approve evidence of additional Qualified Redevelopment Costs submitted by Redeveloper after the Cost Submission Deadline, but Redeveloper acknowledges and agrees that the Authority makes no representation, warranty, promise, or guaranty that such costs incurred, or evidence thereof submitted to the Authority, later than the Cost Submission Deadline will be available as a Qualified Redevelopment Costs hereunder, such date being the date which is five years following the certification of the TIF District. Section 8.2 Preconditions to Payment and Accrual of Interest under TIF Notes. (a) Notwithstanding the earlier issuance of the TIF Notes pursuant to the Section 8.1(b), the commencement of payment of Available Tax Increment and accrual of interest under each TIF Note is subject to Redeveloper’s satisfaction of each of the following conditions: (i) The following conditions are applicable to each TIF Note: (1) Redeveloper has satisfied all conditions of Section 8.1(b) with respect to the applicable TIF Note; (2) Redeveloper is not in Default under the terms of this Agreement; (3) Redeveloper has issued any applicable Go-Ahead Letter with respect to the Element and/or Phase to be constructed; (4) Redeveloper has not allowed a Material Deviation (as such term is defined below) from the Pentagon South Final Development Plan which remains uncured. -25- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) A “Material Deviation” for purposes of this clause (4) equates to an objective deviation from the Pentagon South Final Development Plan, and not a subjective determination that the intent of the Pentagon South Final Development Plan is not met or there are minor variations to the final architecture or the color of building materials, excluding any deviation or amendment to the Pentagon South Final Development Plan that is approved by the City; and (5) the Authority’s receipt of an updated TIF Pro Forma sufficient to allow the Authority to adopt a resolution finding that the “but for” requirement continues to be satisfied (including, if necessary to satisfy the “but for” requirement, Redeveloper’s delivery of a Minimum Assessment Agreement in order to achieve the Minimum Valuation, as described in Section 8.3 below). (ii) The following conditions are applicable to TIF Note A: (1) Commencement of construction of both components of the Retail Element; (2) Completion of the Project Site Work, including the site preparation for the Plaza Element; (3) Completion of the Plaza Element, the granting to the City of the Plaza Easement, and opening the Plaza Element to the public pursuant to the terms of the Plaza Easement agreement no later than 12 months following Redeveloper’s satisfaction of the conditions set forth in clauses (1) and (2) above; provided that Redeveloper shall grant the Plaza Easement and open the Plaza Element as provided above promptly following the Completion of the Plaza Element; and further provided that payments and accrual of interest under TIF Note A will commence following Redeveloper’s satisfaction of the conditions set forth in clauses (1) and (2) above, but if Completion of the Plaza Element, the granting of the Plaza Easement, and opening of the Plaza as provided above has not occurred within such 12-month period, it shall be an automatic Event of Default until the Completion of the Plaza Element, the granting of the Plaza Easement, and opening of the Plaza as provided above occurs, and the Authority may suspend payments and accrual of interest under TIF Note A until such Event of Default is so cured. (iii) The following conditions are applicable to TIF Note B: (1) The satisfaction of all conditions to the issuance and the commencement of interest and payment with respect to TIF Note A in accordance with this Section 8.2; (2) Completion of the Retail Element; (3) Commencement of at least the second Element (i.e., the Phase 1B Minimum Improvements), which such Element must consist of at least 100,000 square feet of gross building area pursuant to the Pentagon South Development Plan; (4) Completion of the Parking Element; and -26- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (5) Granting to the City of the Parking Facilities Easement as soon as reasonably practical following the Completion of the Parking Element and the opening of the Parking Element to the public pursuant to the terms of the Parking Facilities Easement (which the City and the Authority acknowledge and agree may not occur until construction of the associated commercial Element has progressed to a point where the Parking Element can be opened for parking purposes in accordance with applicable Law), but no later than 12 months following Completion of the Parking Element. (iv) The following conditions are applicable to TIF Note C: (1) The issuance of TIF Note A and TIF Note B by the Authority to the Redeveloper in accordance with this Section 8.2; (2) Completion of the Phase 1B Minimum Improvements; (3) Completion of at least the third Element (i.e., the Phase 1C Minimum Improvements), which such Element must consist of at least 100,000 square feet of gross building area, pursuant to the Pentagon South Final Development Plan; and (4) Commencement of at least the fourth Element, which such Element must consist of at least 100,000 square feet of gross building area, pursuant to the Pentagon South Final Development Plan. This is anticipated to be the first building in Phase 2. (b) Following satisfaction of each of the conditions set forth in paragraph (a) above, interest will begin to accrue on the applicable TIF Note pursuant to the terms of each TIF Note and the Authority will commence making payments to Redeveloper of Available Tax Increment under the applicable TIF Note on the next occurring “Payment Date” (as defined in the applicable TIF Note). Section 8.3 Minimum Assessment Agreement. If, by the date on which payment of Available Tax Increment and interest under each TIF Note is otherwise due pursuant to the terms and conditions of Section 8.2, the improvements to the Project Area which have reached completion have not, collectively, increased the Market Value of the Project Area to an amount of at least $19,031,100 in the aggregate (“Minimum Valuation”), then, in order for the TIF Assistance provided by the Authority under this Agreement to comply with the requirements set forth in Section 469.175, Subd. 3, of the TIF Act, Redeveloper shall enter into one or more minimum assessment agreements (each a “Minimum Assessment Agreement”), in substantially the same form attached as Exhibit K with respect to all or a portion of the Project Area sufficient to satisfy the Minimum Valuation until such time as the Minimum Valuation is achieved by additional improvements to the Project Area. For purposes of clarity, Redeveloper may achieve the Minimum Valuation through the Completion of Elements of the Minimum Improvements and/or the Completion of other Elements or improvements to the Project Area, including Projected Phase 2 Improvements and/or the approximately 19,000 square foot retail/office Element with associated parking located at the intersection of West 77th and Computer Avenue as shown on the Project Area Map, so long as the Minimum Improvements and/or other improvements which have reached Completion have collectively increased the market value of the Project Area to an amount at least $19,031,000 in the aggregate. Payments of Available Tax Increment shall not be made and interest -27- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) shall not accrue under the TIF Notes until the Minimum Valuation is achieved through the Minimum Assessment Agreements or otherwise. The Minimum Assessment Agreements will be sized and allocated across all five Lots of the Project Area approximately in the following per-Lot minimum valuations: Lot 1 - $5,250,000; Lot 2 - $3,250,000; Lot 3 - $3,250,000; Lot 4 - $1,600,000; and Lot 5 - $5,650,000. Section 8.4 Tax Increment Eligibility. Upon any Event of Default regarding any obligation under this Agreement related to the construction of an Element or other component of the Minimum Improvements, at the election of the Authority, payment of Available Tax Increment may be suspended on any TIF Note for which payment is conditioned upon the Commencement or Completion of construction for such Element or other component of the Minimum Improvements to which the Event of Default relates. For purposes of clarity, and by way of example and not limitation, if there is an Event of Default related to Redeveloper’s failure to cause the Commencement of the second Element (as part of Phase 1B pursuant to Section 6.1, the Commencement of which is a condition to the payment of Available Tax Increment and accrual of interest under TIF Note B pursuant to Section 8.2(a)(iii)(3)) and Redeveloper has previously satisfied all conditions to the payment of Available Tax Increment and accrual of interest under TIF Note A, then the Authority will not be entitled to suspend payments under TIF Note A pursuant to this Section 8.4 or otherwise exercise any applicable remedy under Article XIII that results in the suspension or redirection of payments due under Note A. Section 8.5 Assignment of Note. No TIF Note shall be assignable or transferable without the prior written consent of the Authority; provided, however, that such consent shall not be withheld if: (a) the assignee or transferee delivers to the Authority a written instrument acknowledging the limited nature of the Authority’s payment obligations under the TIF Note; and (b) the assignee or transferee executes and delivers to the Authority a certificate, in form and substance reasonably satisfactory to the Authority, pursuant to which, among other things, such assignee or transferee represents: (i) that the TIF Note is being acquired for investment for such assignee’s or transferee’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof; (ii) that the assignee or transferee has no present intention of selling, granting any participation in, or otherwise distributing the same; (iii) that the assignee or transferee is an “accredited investor” within the meaning of Rule 501 of the Regulation D under the Securities Act of 1933, as amended; (iv) that the assignee or transferee, either alone or with such assignee’s or transferee’s representatives, has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of the prospective investment in the TIF Note and the assignee or transferee is able to bear the economic consequences thereof; -28- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (v) that in making its decision to acquire the TIF Note, the assignee or transferee has relied upon independent investigations made by the assignee or transferee and, to the extent believed by such assignee or transferee to be appropriate, the assignee’s or transferee’s representatives, including its own professional, tax and other advisors, and has not relied upon any representation or warranty from the Authority, or any of its officers, employees, agents, affiliates or representatives, with respect to the value of the TIF Note; (vi) that the Authority has not made any warranty, acknowledgment or covenant, in writing or otherwise, to the assignee or transferee regarding the tax consequences, if any, of the acquisition and investment in the TIF Note; (vii) that the assignee or transferee or its representatives have been given a full opportunity to examine all documents and to ask questions of, and to receive answers from, the Authority and its representatives concerning the terms of the TIF Note and such other information as the assignee or transferee desires in order to evaluate the acquisition of and investment in the TIF Note, and all such questions have been answered to the full satisfaction of the assignee or transferee; (viii) that the assignee or transferee has evaluated the merits and risks of investment in the TIF Note and has determined that the TIF Note is a suitable investment for the assignee or transferee in light of such party’s overall financial condition and prospects; (ix) that the TIF Note will be characterized as “restricted securities” under the federal securities laws because the TIF Note is being acquired in a transaction not involving a public offering and that under such laws and applicable regulations such securities may not be resold without registration under the Securities Act of 1933, as amended, except in certain limited circumstances; and (x) that no market for the TIF Note exists and no market for the TIF Note is intended to be developed. (c) Notwithstanding Sections (a) and (b) above, Redeveloper may assign and pledge the TIF Note(s) to secure any loan financing the costs of the Project and may transfer such TIF Note(s) to: (i) any entity controlling, controlled by or under common control with Redeveloper; (ii) any entity in which the majority equity interest is owned by the parties that have a majority equity interest in Redeveloper; or (iii) any Affiliate. ARTICLE IX ENCUMBRANCE OF THE PROJECT AREA Section 9.1 Encumbrance of the Project Area. -29- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (a) Until the Completion of all Phases of the Minimum Improvements and Public Infrastructure Improvements, neither Redeveloper, nor any successor in interest to Redeveloper, will engage in any financing or any other transaction creating any mortgage (a “Mortgage”) or other encumbrance or lien upon the Project Area, or portion thereof, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Project Area except for the purpose of obtaining funds only to the extent necessary for constructing the Public Infrastructure and constructing and developing the Minimum Improvements (including, but not limited to, land and building acquisition, labor and materials, professional fees, real estate taxes, construction interest, organization, marketing and other direct or indirect costs of Minimum Improvements, costs of constructing the Minimum Improvements, and an allowance for contingencies). (b) This restriction on encumbrance shall terminate with respect to any Element or Phase of the Minimum Improvements, upon delivery of the Certificate of Completion for such Element or Phase of the Minimum Improvements. Redeveloper or any successor in interest to the Minimum Improvements or portion thereof, may sell or engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum Improvements or portion thereof for which a Certificate of Completion has been obtained, without obtaining the prior written approval of the Authority. Section 9.2 Copy of Notice of Default to Mortgagee. If the Authority delivers any notice or demand to Redeveloper, or any successor in interest to Redeveloper, with respect to any Default under this Agreement, the Authority will use its best efforts to also deliver a copy of such notice or demand to the mortgagee of any Mortgage at the address of such mortgagee provided to the Authority in a written notice from Redeveloper, any successor in interest to Redeveloper or the mortgagee, provided that failure of the Authority to give any such notice shall not limit the Authority’s ability to exercise any of its remedies hereunder. Section 9.3 Mortgagee’s Option to Cure Events of Default. (a) Upon the occurrence of an Event of Default, the mortgagee under any Mortgage will have the right at its option, to cure or remedy such Event of Default within the cure periods set forth herein. An individual or entity who acquires title to all or a portion of the Minimum Improvements through the foreclosure of a mortgage or deed in lieu of foreclosure on such portion of the Project Area remains subject to each of the restrictions set forth in this Agreement and remains subject to all of the obligations of Redeveloper, or any successor in interest to Redeveloper, under the terms of this Agreement, but the purchaser at a foreclosure sale or grantee under a deed in lieu of foreclosure nor any subsequent transferee from a mortgagee shall have no personal liability for a breach of such obligations under this Agreement so long as: (i) The party acquiring title through foreclosure or deed in lieu of foreclosure observes all of the restrictions set forth in the Agreement; (ii) The party who acquired title through foreclosure or deed in lieu of foreclosure does not undertake or permit any other party to undertake any Minimum Improvements on the portion of the Project Area it owns; -30- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) (iii) The City has no obligation to approve any plans for Minimum Improvements of a portion of the Minimum Improvements the foreclosing mortgagee (or mortgagee obtaining a deed in lieu of foreclosure) owns or to issue any related building permits. The purpose of this Section is to permit a foreclosing lender (or mortgagee or purchaser obtaining a deed in lieu of foreclosure or a subsequent transferee) to hold title to the portion of the Project Area it acquires through foreclosure or deed in lieu of foreclosure, subject to, but without personal liability for the obligations under this Agreement, until it can sell the portion it holds to a third party who will assume the obligations of Redeveloper under the terms of this Agreement and proceed with the construction of the Minimum Improvements pursuant to the terms of this Agreement. If, rather than passively holding title to the portion of the Project Area it acquires through foreclosure or deed in lieu of foreclosure, the foreclosing lender (or mortgagee obtaining a deed in lieu of foreclosure or subsequent transferee) or other purchaser at a foreclosure sale desires to sell portions of the Project Area for construction of the Minimum Improvements, the purchaser at the foreclosure sale must assume and perform each of the obligations of Redeveloper, or the applicable successor to the interest of Redeveloper, under this Agreement as to the portion of the Project subject to foreclosure. This Section does not restrict the authority of the Authority to pursue its rights under any outstanding security, exercise remedies otherwise available under this Agreement or suspend the performance of the obligations of the Authority or Redeveloper under this Agreement as otherwise allowed. The Authority agrees to reasonably cooperate with any foreclosing lender (or mortgagee obtaining a deed in lieu of foreclosure) or other purchaser at a foreclosure sale in pursuing the Minimum Improvements in accordance with this Agreement. Unless acting other than passively holding title as described above in this Section, a lender or an independent third party that purchases at a foreclosure sale will have no liability for breach under this Agreement. Section 9.4 Events of Default Under Mortgage. Redeveloper, or its successor or assign, will use commercially reasonable efforts to obtain an agreement from any mortgagee under a Mortgage that in the event Redeveloper is in default under any Mortgage, the mortgagee will use commercially reasonable efforts, within 30 days after it becomes aware of any such default and prior to exercising any remedy available to it due to such default, to notify the Authority in writing of (i) the fact of default; (ii) the elements of default; and (iii) the actions required to cure the default. Redeveloper, or its successor or assign, will use its commercially reasonable efforts to obtain an agreement in any such Mortgage, that if, within the time period required by the Mortgage, the Authority cures any default under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based on such default, provided that failure of Redeveloper or its successors or assigns to obtain such an agreement from any such mortgagee shall not constitute a breach of this Agreement. Section 9.5 Subordination of Agreement. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the Authority agrees to subordinate the provisions hereof to the documents executed in connection with any Mortgage securing a Financing Commitment, provided that such subordination shall not deprive the Authority or otherwise limit any of the Authority’s remedies which do not create a lien on the Project Area, except for Special Assessments, upon the occurrence of an Event of Default by Redeveloper. -31- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Section 9.6 Unit Mortgages. The provisions of this Article do not apply to loans and mortgages to a purchaser of a unit in a common interest community within the Minimum Improvements. ARTICLE X INSURANCE AND CONDEMNATION Section 10.1 Insurance. (a) Redeveloper, and any successor in interest to Redeveloper, shall obtain and continuously maintain insurance on the Minimum Improvements and, from time to time at the request of the Authority, furnish proof to the Authority that the premiums for such insurance have been paid and the insurance is in effect. The insurance coverage described below is the minimum insurance coverage that Redeveloper must obtain and continuously maintain, provided that Redeveloper shall obtain the insurance described in clause (i) below prior to the commencement of construction of the Minimum Improvements (excluding excavation and footings): (i) Builder’s risk insurance, written on the so-called “Builder’s Risk—Completed Value Basis,” in an amount equal to 100% of the insurable value of the applicable Element at the date of completion, and with coverage available in non-reporting form on the so-called “all risk” form of policy. (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner’s/Contractor’s Policy naming the Authority, and the City as an additional insured, with limits against bodily injury and property damage of not less than $2,500,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used), written on an occurrence basis. (iii) Workers compensation insurance, with statutory coverage. (b) All insurance required in this Article shall be obtained and continuously maintained by responsible insurance companies selected by Redeveloper or its successors that are authorized under the laws of the State to assume the risks covered by such policies. Unless otherwise provided in this Article, each policy must contain a provision that the insurer will not cancel nor modify the policy without giving written notice to the insured at least 10 days before the cancellation or modification becomes effective. Not less than 15 days prior to the expiration of any policy, Redeveloper, or its successor or assign, must renew the existing policy or replace the policy with another policy conforming to the provisions of this Article. In lieu of separate policies, Redeveloper or its successor or assign, may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein. (c) Redeveloper, its successor or assign, agrees to notify the Authority promptly in the case of damage exceeding $500,000 in amount to, or destruction of the Minimum Improvements or any Element resulting from fire or other casualty. Section 10.2 Condemnation. In the event that title to or possession of Project Area or the Minimum Improvements, or both, or any material part thereof, is threatened with a taking -32- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) through the exercise of the power of eminent domain, Redeveloper, or its successor or assign, will notify the Authority of the threatened taking with reasonable promptness. ARTICLE XI REDEVELOPER COVENANTS Section 11.1 Maintenance and Operation of the Minimum Improvements. Redeveloper, and its successors or assigns, will, at all times during the term of this Agreement, maintain and operate the Minimum Improvements (or the applicable portion thereof) in a safe and secure way and in compliance with this Agreement and applicable Law. Redeveloper, or its successors or assigns, will pay all of the reasonable and necessary expenses of the operation and maintenance of the Minimum Improvements, including all premiums for insurance insuring against loss or damage thereto and adequate insurance against liability for injury to persons or property arising from the construction of the Minimum Improvements as required pursuant to this Agreement. During construction of the Minimum Improvements, Redeveloper, or its successors or assigns, shall not knowingly cause any person working in or attending the Minimum Improvements for any purpose, or any tenant of the Minimum Improvements, to be exposed to any hazardous or unsafe condition; provided that such party shall not be in Default hereunder if it has required the contractors employed to perform work on the Minimum Improvements to take such precautions as may be available to protect the persons in and around the Minimum Improvements from hazards arising from the work, and has further required each such contractor to obtain and maintain liability insurance protecting against liability to persons for injury arising from the work. The expenses of operation and maintenance of the Minimum Improvements shall be borne solely by Redeveloper, its successors or assigns. Section 11.2 Business Subsidy Agreement. The Authority and Redeveloper have determined that a business subsidy agreement within the meaning of the Minnesota Business Subsidy Act, Minnesota Statutes, Sections 116J.993 through 116J.995 is not required in accordance with the exception contained in the Minnesota Business Subsidy Act, Minnesota Statutes, Section 116J.993, subd. 3(17), because Redeveloper’s investment in the purchase of the Project Area and site preparation thereon is 70% or more of the assessor’s current year’s estimated market value for the Project Area. Section 11.3 Property Tax Matters. Redeveloper shall not, during the term of the TIF District, cause a reduction in the real property taxes paid in respect of the Project Area through: (a) willful destruction of the Project Area or any part thereof; or (b) willful refusal to reconstruct damaged or destroyed property. Redeveloper shall not, during the term of the TIF District, petition or seek reduction in market value (to a market value below $19,031,100 for the entire Project area). or property taxes on any portion of the Project Area under any Law, or apply for a deferral of property tax on any portion of the Project Area pursuant to any Law. ARTICLE XII TRANSFER LIMITATIONS AND INDEMNIFICATION Section 12.1 Representation as to the Minimum Improvements. Redeveloper represents to the City and the Authority that by executing this Agreement, it intends on developing the Minimum Improvements and not for the purpose of speculation in land holding. Redeveloper -33- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) acknowledges that, in view of the importance of the general welfare of the City and the Authority, and the substantial financing and other public aids that have been made available by the City and the Authority for the purpose of making such Minimum Improvements possible, the qualifications and identity of Redeveloper are of particular concern to the Authority. Redeveloper further acknowledges that the City and the Authority are willing to enter into this Agreement with Redeveloper because of the qualifications and identity of Redeveloper. Section 12.2 Limitation on Transfers. (a) Until Redeveloper achieves Completion of an Element, Redeveloper shall not Transfer any of its right, title, and interest in and to this Agreement, all or any part of the Project Area or the Minimum Improvements, without the express written approval of the Authority, provided that the consent of the Authority shall not be required for any of the following: (i) granting of a mortgage or other security interests in the Project Area as provided in Article IX hereof; and (ii) leasing the Minimum Improvements and other improvements made to the Project Area in the normal course of business in a manner consistent with the Pentagon South City Approvals. (b) If the Authority’s consent to a transfer is required pursuant to this Section 12.2, the Authority shall be entitled to require, as conditions to its approval of any sale, assignment, conveyance, use or transfer of any rights, title, and interest in and to this Agreement, the Project Area or the Minimum Improvements that: (i) Any proposed transferee shall not be exempt from the payment of real estate taxes and shall have the qualifications and financial responsibility, as determined by the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by Redeveloper; (ii) Any proposed transferee, by instrument in writing reasonably satisfactory to the Authority and in form recordable among the land records shall, for itself and its successors and assigns, and expressly for the benefit of the Authority have expressly assumed all of the obligations of Redeveloper (or such part thereof as is appropriate for one particular Phase or Element) under this Agreement and agree to be subject to all the conditions and restrictions to which Redeveloper is subject as the same relate to the Phase or Element to be transferred; (iii) Redeveloper must submit all instruments and other legal documents involved in effecting transfer to the Authority; and (iv) The transferee must demonstrate, in a manner satisfactory to the Authority, its ability to perform all assumed obligations in this Agreement. (c) In the absence of specific written agreement by the Authority to the contrary, no such Transfer or consent by the Authority thereof shall be deemed to relieve Redeveloper or any other party bound in any way by this Agreement or otherwise with respect to its obligations under -34- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) this Agreement. Section 12.3 Hotel Developer. (a) Lot 2 and Lot 3 Transfers. The Authority and the City acknowledge that Redeveloper desires to Transfer Lot 2 and Lot 3 (together with any Minimum Improvements then constructed thereon) to separate developers and/or operators with expertise in the development, construction and operation of first-class hotels (each a “Hotel Developer”) for the purpose of such Hotel Developers developing, constructing and/or the operating Hotel Element 1 and Hotel Element 2, respectively. Unless a Hotel Developer is a Pre-Approved Hotel Developer (as defined herein), Redeveloper shall obtain the Authority’s prior written consent for each such Transfer to a Hotel Developer, which such consent shall not be unreasonably conditioned, delayed or withheld; provided, however, in determining whether to consent to either such Transfer to a Hotel Developer, the Authority may take into account the following: (i) whether the Hotel Developer is, in the Authority’s reasonable judgement, reputable and has the experience, qualifications, expertise and financial capacity to construct, develop, and/or operate, Hotel Element 1 or Hotel Element 2, as applicable, in conformance with this Agreement, the Pentagon South City Approvals, and applicable Law; and (ii) whether the Authority has received evidence, acceptable to the Authority in its reasonable discretion, that the final plans for the Hotel Element 1 and Hotel Element 2, as applicable conform to the Pentagon South City Approvals, including, without limitation, adherence to the scale, scope, design, appearance, quality, and finishes depicted in the Pentagon South Final Development Plan. (b) Subject to Section 12.3(b) and (c) below, Authority hereby consents to (without any further required consent) the transfer of Lot 2 to Hawkeye Hotels, Inc., an Iowa corporation (or its affiliates) and Lot 3 to WaterWalk RE Development Services, LLC, a Kansas limited liability company or its affiliates) for construction of the respective hotels as identified on the Pentagon South City Approvals. (c) No Release of Redeveloper. No Transfer to a Hotel Developer shall, or be deemed to, release Redeveloper from its obligations and responsibilities hereunder. Notwithstanding such Transfers, Redeveloper shall continue to be responsible for fulfilling, or causing the applicable Hotel Developer to fulfill, all obligations of Redeveloper under this Agreement related to Lot 2, Lot 3, Hotel Element 1, and Hotel Element 2 (including granting the Parking Easement to the City if a Hotel Developer becomes the owner of the Parking Element). Any failure by a Hotel Developer to adhere to the requirements and deadlines for construction of Hotel Element 1 or Hotel Element 2 (including the Commencement and Completion dates set forth in Section 6.1) shall be a Redeveloper Default hereunder and failure of the applicable condition to payment of Available Tax Increment and accrual interest under the applicable TIF Note pursuant to Section 8.2. Any other Default or Event of Default hereunder caused by an act or omission of a Hotel Developer shall be Default or Event of Default of Redeveloper hereunder. (d) Right of Reversion. As further assurance to the Completion of Hotel Element 1 and -35- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Hotel Element 2 hereunder, in connection with each transfer to a Hotel Developer, Redeveloper shall retain a right of reversion in any Lot, Element, and/or other improvement conveyed to such Hotel Developer, exercisable by Redeveloper in the event that the Hotel Developer related to the construction of Hotel Element 1 or Hotel Element 2, as applicable, does not commence and complete the applicable Hotel Element on dates required by Redeveloper. Any such right of reversion retained by Redeveloper shall be subject to and subordinate to all rights of the Authority pursuant to this Agreement. Notwithstanding the foregoing, at the closing of the conveyance of any Lot, Element, and/or other improvement to a Hotel Developer, and if requested by Redeveloper, Redeveloper and the City and Authority shall enter into a “stand aside” agreement pursuant to which the Authority shall permit Redeveloper to proceed under Redeveloper’s reversion right so long as Redeveloper repossesses the Lot and improvements thereon owned by a defaulting Hotel Developer and proceeds reasonably to complete the applicable Element, both within reasonable time. Such “stand aside” agreement shall be in form and substance acceptable to the City and Authority and Redeveloper. Section 12.4 Indemnification. (a) Redeveloper releases and covenants and agrees that the City Parties shall not be liable for and agree, jointly and severally, to indemnify and hold harmless the City Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements constructed by Redeveloper to the extent not attributable to the negligence of the City Parties. (b) Except for negligence of the City Parties, Redeveloper agrees to indemnify the City Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including reasonable attorney’s fees), actions or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of Redeveloper (or if other persons acting on their behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements constructed by Redeveloper; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the Authority in this Agreement. Section 12.5 Limitation. All covenants, stipulations, promises, agreements and obligations of the City, the Authority or Redeveloper contained in this Agreement shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City, the Authority and Redeveloper, and not of any governing body member, officer, agent, servant or employee of the City, the Authority or Redeveloper in the individual capacity thereof. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES Section 13.1 Events of Default Defined. Subject to applicable cure periods, “Events of Default” under this Agreement include any one or more of the events listed in Sections 13.2 and 13.3. Section 13.2 Redeveloper Events of Default. The following shall be Events of Default -36- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) for Redeveloper: (a) subject to Unavoidable Delays and Cure Rights, Redeveloper’s failure to achieve Commencement and Completion of any the Phase 1 Minimum Improvements by the applicable dates set forth in accordance with Section 6.1; (b) if Redeveloper is obligated to convey the Plaza Easement and/or Parking Facilities Easement to the City in accordance with this Agreement, failure by Redeveloper to so convey the Plaza Easement and/or Parking Facilities Easement to the City for a period of 10 business days after written notice of such failure from the City or the Authority; (c) subject to Cure Rights, failure by Redeveloper to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, and the continuation of such failure for a period of 30 days after written notice of such failure from any party hereto; and (d) prior to the delivery of a Certificate of Completion with respect to any Element or Phase of the Minimum Improvements owned by Redeveloper, Redeveloper shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or State law; or (ii) make an assignment for the benefit of its creditors; or (iii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudication of Redeveloper, as a bankrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law shall be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof; or a receiver, trustee or liquidator of Redeveloper, or of the Minimum Improvements, or part thereof, shall be appointed in any proceeding brought against Redeveloper, and shall not be discharged within 90 days after such appointed, or if Redeveloper shall consent to or acquiesce in such appointment. Section 13.3 City and Authority Events of Default. Subject to Cure Rights and Unavoidable Delays, the failure of the City or the Authority to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, and the continuation of such failure for a period of 30 days after written notice of such failure from any party hereto shall be an Event of Default for the City or the Authority. Section 13.4 Cure Rights. If a Default occurs under Section 13.2(a) or (c) or under Section 13.3 which reasonably requires more than 30 days to cure, such Default shall not constitute an Event of Default, provided that the curing of the Default is promptly commenced upon receipt by the defaulting party of the notice of the Default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that the defaulting party keeps the non-defaulting party well informed at all times of its progress in curing the Default; provided in no event shall such additional cure period extend beyond 120 days. Section 13.5 Authority Remedies on Redeveloper Events of Default. Whenever any Event of Default occurs by Redeveloper, the Authority may take any one or more of the following -37- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) actions: (a) terminate this Agreement (but not any previously issued TIF Note, as regards that Element or Phase), except the Authority will have no right to terminate this Agreement as a result of a default under Sections 4.6 and 11.1, except as otherwise provided herein; (b) exercise its rights under Section 8.2(a)(ii)(3), Section 8.2(a)(iii)(3), and/or Section 8.4 of this Agreement regarding Redeveloper’s TIF eligibility; (c) suspend performance under this Agreement until it receives assurances from Redeveloper, deemed adequate by the Authority, that Redeveloper will cure the Event of Default and continue its performance under this Agreement, withhold the Certificate of Completion for any Element or Phase of the Minimum Improvements not yet delivered, and take whatever action at law or in equity may appear necessary or desirable to the Authority to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of Redeveloper under this Agreement; and (d) the Authority shall have all remedies normally available at law and in equity to enforce performance of this Agreement including a right to specific performance. Section 13.6 City Remedies on Redeveloper Events of Default. Whenever any Event of Default occurs by Redeveloper, the City may suspend performance of its obligations under this Agreement and take whatever action at law or in equity may appear necessary or desirable to the City to enforce performance and observance of any obligation, agreement, or covenant of Redeveloper under this Agreement, including an action for specific performance. Section 13.7 Redeveloper Remedies on City or Authority Events of Default. Whenever any Event of Default occurs by the City or the Authority, Redeveloper, may take whatever action at law or in equity may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the City or the Authority under this Agreement, including an action for specific performance. Section 13.8 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City, the Authority or Redeveloper is intended to be exclusive of any other available remedy or remedies unless otherwise expressly stated, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article XIV. Section 13.9 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by any party and thereafter waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 13.10 Reimbursement of Attorneys’ Fees. In the event of any enforcement -38- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) action hereunder following an Event of Default, the prevailing party, in addition to other relief, shall be entitled to an award of attorney’s fees and costs. The City, Authority and Redeveloper waive their right to a jury trial on the issues of who is the prevailing party and the reasonable amount of attorneys’ fees and costs to be awarded to the prevailing party. Those issues will be decided by the trial judge upon motion by one or both parties, such motion to be decided based on the record as of the end of the jury trial augmented only by the testimony and/or affidavits from the attorneys and their staff. The parties agree that, subject to the trial judge’s discretion, the intent of this clause is to have all issues related to the award of attorneys’ fees and costs decided by the trial judge as quickly as practicable. ARTICLE XIV ADDITIONAL PROVISIONS Section 14.1 Conflicts of Interest. No member of the Board or other official of the Authority shall have any financial interest, direct or indirect, in this Agreement, the TIF District or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City or the Authority shall be personally liable to the City or the Authority in the event of any Default or breach by Redeveloper or successor or on any obligations under the terms of this Agreement. Section 14.2 Titles of Articles and Sections. Any titles of the several parts, Articles and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 14.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and in the case of Redeveloper, is addressed to or delivered personally to Redeveloper at: Pentagon Village, LLC Attn: Jay Scott 8560 Kelzer Pond Drive Victoria, MN 55386 with a copy to: Anthony J. Gleekel Siegel Brill P.A. 100 Washington Avenue South, Suite 1300 Minneapolis, MN 55401 In the case of the Authority, is addressed to or delivered personally to the Authority at: Housing and Redevelopment Authority of Edina, Minnesota Attention: Executive Director 4801 W. 50th Street -39- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) Edina, MN 55424 with a copy to: Jay R. Lindgren Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 In the case of the City, is addressed to or delivered personally to the City at City of Edina Attention: City Manager 4801 W. 50th Street Edina, MN 55424 with a copy to: Jay R. Lindgren Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 14.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 14.5 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. Section 14.6 Legal Opinions. Upon execution of this Agreement, each party shall, upon request of the other parties, supply the other parties with an opinion of its legal counsel to the effect that this Agreement is legally issued or executed by, and valid and binding upon, such party, and enforceable in accordance with its terms. Section 14.7 Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld. All consents or approvals shall be in writing in order to be effective. Section 14.8 Representatives. Except as otherwise provided herein, all approvals and other actions required of or taken by the Authority shall be effective upon action by the Authority Representative. All actions required of or taken by Redeveloper shall be effective upon action by a duly authorized officer of its general partner. Section 14.9 Superseding Effect. This Agreement reflects the entire agreement of the parties with respect to the items covered by this Agreement, and supersedes in all respects all prior agreements of the parties, whether written or otherwise, with respect to the items covered by this Agreement. Section 14.10 Relationship of Parties. Nothing in this Agreement is intended, or shall be -40- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) construed, to create a partnership or joint venture among or between the parties hereto, and the rights and remedies of the parties hereto shall be strictly as set forth in this Agreement. Section 14.11 Term. The term of this Agreement shall be effective from the day and year first above written until the earlier of (a) the date this Agreement is terminated, (b) payment in full of the TIF Notes, or (c) date of termination of the TIF District. Section 14.12 Provisions Surviving Rescission or Expiration. Section 12.4 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 14.13 Memorandum of Agreement. Neither party shall cause this Agreement to be recorded or filed in the real estate records of Hennepin County. However, Redeveloper shall cause a Memorandum of Agreement to be so recorded or filed in the form attached hereto as Exhibit H, and hereby incorporated herein by reference upon execution of this Agreement upon that portion of the Minimum Improvement Area owned by Redeveloper. At the time of execution of this Agreement the parties hereto will also execute and acknowledge the Memorandum of Agreement. At such time as Redeveloper further acquires fee title to any additional portion of the Project Area, Redeveloper shall cause the Memorandum to be recorded against the additional portion of the Project Area and shall record such Memorandum of Agreement in the office of the County Recorder and/or Registrar of Titles in and for Hennepin County, Minnesota, as the case may be. Section 14.14 Conflicts Between this Agreement and the Development Contract. In the event of any inconsistency or conflict between the requirements of this Agreement and the Pentagon South Development Contract, the provisions of the Pentagon South Development Contract shall control; provided, however, that for the purposes of Section 9.3 of this Agreement regarding Events of Default that authorize the Authority to withhold payments on any TIF Assistance, this Agreement controls. Except with respect for such inconsistent provisions, neither agreement is intended to amend or supersede the other agreement. Section 14.15 Limited Liability. Notwithstanding anything to contrary provided in this Agreement, it is specifically understood and agreed, such agreement being the primary consideration for the execution of this Agreement by Redeveloper, that (a) there should be absolutely no personal liability on the part of any director, officer, manager, member, employee or agent of Redeveloper or the City or Authority with respect to any terms, covenants and conditions in this Agreement; (b) Redeveloper and the City and the Authority waive all claims, demands and causes of action against the other parties’ directors, officers, managers, members, employees and agents in any Event of Default, by either party, as the case may be, of any of the terms, covenants and conditions of this Agreement to be performed by either party; and (c) Redeveloper and the City or the Authority, as the case may be, shall look solely to the assets of the other party for the satisfaction of each and every remedy in the Event of Default by any party, as the case may be, of any of the terms, covenants and conditions of this Agreement such exculpation of liability to be absolute and without any exception whatsoever. Section 14.16 Estoppel Certificates. Each party, respectively, agrees that at any time and from time to time within 10 business days after receipt of a written request by the other party, to -41- 4848-0306-6223\12 Redevelopment Agreement (Pentagon South) execute, acknowledge and deliver to such party a statement in writing and in such form as will enable it to be recorded in the proper office for the recordation of deeds and other instruments certifying: (a) that this Agreement is unmodified and in full force and effect or, if there have been modifications, that the same are in full force and effect as modified and identifying the modifications; (b) that no party is in default under any provisions of this Agreement or, if there has been a default, the nature of such default; (c) that all work to be performed, under this Agreement or any related agreement has been performed or, if not so performed, specifying the work to be performed; and (d) as to any other matter that the requesting party, a prospective purchaser or assignee or a prospective mortgagee or other lender shall reasonably request. It is intended that any such statement may be relied upon by any person, prospective mortgagee of, or assignee of any mortgage, upon such interest. Any such statement on behalf of the City may be executed by the City Manager without City Council approval and any such statement on behalf of the Authority may be executed by the Executive Director without Authority Board approval. Section 14.17 Time is of the Essence. Time is of the essence of this Agreement and each and every term and condition hereof; provided, however, that if any date herein set forth for the performance of any obligations by Redeveloper, City or Authority or for the delivery of any instrument or notice as herein provided should not be on a business day, the compliance with such obligations or delivery shall be deemed acceptable on the next following business day. [SIGNATURES APPEAR ON FOLLOWING PAGES] [Signature Page to Redevelopment Agreement (Pentagon South)] IN WITNESS WHEREOF, the City, the Authority and Redeveloper have caused this Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written. CITY OF EDINA, MINNESOTA By James B. Hovland, Mayor By Scott H. Neal, City Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 2018, by James B. Hovland and Scott H. Neal the Mayor and City Manager, respectively, of the City of Edina, Minnesota, on behalf of the City of Edina. Notary Public [Signature Page to Redevelopment Agreement (Pentagon South)] HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By James B. Hovland, Chair By Robert J. Stewart, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 2018, by James B. Hovland and Robert J. Stewart, the Chair and Secretary, respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public [Signature Page to Redevelopment Agreement (Pentagon South)] PENTAGON VILLAGE, LLC a Minnesota limited liability company By Its STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of ______, 2018, by ________, the _________________ of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public LIST OF EXHIBITS EXHIBIT A Project Area Map EXHIBIT B-1 Legal Description of Project Area EXHIBIT B-2 Plat of Pentagon Village, Hennepin County, Minnesota EXHIBIT C Form of Parking Facilities Easement Agreement EXHIBIT D TIF Pro Forma EXHIBIT E Element TIF Pro Forma EXHIBIT F Form of TIF Note EXHIBIT G Form of Certificate of Completion EXHIBIT H Memorandum of Redevelopment Agreement EXHIBIT I TIF Lookback Example EXHIBIT J Form of Plaza Easement Agreement EXHIBIT K Form of Minimum Assessment Agreement A-1 EXHIBIT A Project Area Map [See Attached] Phone(952) 937-5150 12701 Whitewater Drive,Suite#300Fax(952) 937-5822 Minnetonka, MN 55343TollFree(888) 937-5150 B-1-1 4830-5121-8034\1 EXHIBIT B-1 Legal Description of Project Area Lots 1 through 5, Block 1, Pentagon Village, Hennepin County, Minnesota B-2-1 EXHIBIT B-2 Plat of Pentagon Village, Hennepin County, Minnesota [See Attached] C-1 4830-7341-8354\7 EXHIBIT C Form of Parking Facilities Easement Agreement PARKING FACILITIES EASEMENT AGREEMENT between THE CITY OF EDINA, MINNESOTA and PENTAGON VILLAGE, LLC Dated as of ________________ ___, 20____ THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 C-2 4830-7341-8354\7 PARKING FACILITIES EASEMENT AGREEMENT (Pentagon South) THIS PARKING FACILITIES EASEMENT AGREEMENT (this “Agreement”) is made and entered into this ___ day of ____________, 20____ (“Effective Date”), by and between the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (the “City”), and PENTAGON VILLAGE, LLC, a Minnesota limited liability company (“Owner”). RECITALS: WHEREAS, the Housing and Redevelopment Authority of Edina, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”), the City, and Owner, as “Redeveloper”, are parties to that certain Redevelopment Agreement dated October 16, 2018 (the “Contract”); and WHEREAS, such Contract provides for the redevelopment by Owner of the Project Area (as defined in the Contract) and located within the Pentagon Park Tax Incremental Financing district, established by the Authority pursuant to Resolution No. 14 – 2014 – 2, in coordination with the Authority and with the cooperation and assistance of the City; and WHEREAS, the Contract provides for the expenditure of public and other funds for certain Minimum Improvements to assist in the redevelopment of the Project Area; and WHEREAS, such Minimum Improvements include a 3-level, approximately 522-space parking structure (the “Parking Facility”, and defined in the Contract as the Parking Element) which such Parking Facility is integrated into, connected to, and forming a part of that certain [153-room hotel] located above the Parking Facility (the “Associated Commercial Element”), which such Parking Facility and Associated Commercial Element are located on certain real property within the Project Area legally described on the attached Exhibit A (“the Burdened Property”); and WHEREAS, the City and Owner have agreed in the Contract that Owner shall grant an easement to the City pursuant to which the Parking Facility will be permanently open and accessible to the general public for parking purposes pursuant to the terms and conditions of this Agreement; and WHEREAS, the essential purpose of the Parking Facility is to support and promote commercial activity within the Project Area by serving the private parking needs of the Associated Commercial Element and other commercial elements within the Project Area, and the rights granted to the City and the general public by Owner in this Agreement are in recognition of the tax increment financing assistance provided by the City and the Authority used to finance the construction of the Parking Facility; and WHEREAS, Owner has agreed to own, operate, manage, and maintain the Parking Facility pursuant to the terms of this Agreement; and WHEREAS, the City and Owner deem it to be in their interests and in furtherance of the C-3 4830-7341-8354\7 economic development and redevelopment plan for the Project Area reflected in the Contract to enter into this Agreement; and WHEREAS, all capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Contract. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the others as follows: ARTICLE I GRANT OF EASEMENT Section 1.1 Easement Premises. Owner hereby grants and conveys to the City, for the benefit of the City and the general public: (a) a non-exclusive, perpetual public easement over, across, upon and through all levels and areas of the Parking Facility, together with and including all ancillary amenities, components, and fixtures directly related to such vehicular parking use located thereon and therein for the users of the Parking Facility in general and as required by, or reasonably inferable from, the Final Development Plan, Development Contract, and the Contract (e.g., bike racks and storage units, bike repair facilities and equipment, EV charging stations) (collectively, the “Parking Premises”) for the purpose of the general public utilizing the parking stalls within the Parking Facility for vehicular parking and utilizing such other amenities, components, and fixtures of the Parking Premises for their respective intended purposes, all in accordance with and subject to the terms and conditions of this Agreement, and (b) a non-exclusive, perpetual public easement over, across, upon and through those certain portions of the Project Area which provide pedestrian and vehicular access to and from public rights of way, streets, alleys, public spaces, and easements appurtenant and/or used in connection with the Parking Premises located on the Project Area and adjoining or contiguous to the Parking Premises, including all roads, driveways, parking lots, exterior concourses, passageways, sidewalks and stairways providing such means of access (but excluding all such areas or means of access intended to serve as exclusively private access to, or for the sole benefit of, the Associated Commercial Element and/or any other commercial element within the Project Area), all as [legally described and/or depicted] on the attached Exhibit B (collectively, the “Access Premises”, and together with the Parking Premises, collectively the “Easement Premises”), all in accordance with and subject to the terms and conditions of this Agreement. The Easement Premises do not include the air rights lying above the Parking Facility. [NTD: The final description and/or depiction of the Access Premises will be determined after construction of site improvements, and such Access Premises will be consistent with the non-exclusive ingress/egress routes available to all parcels in the Project Area and otherwise sufficient to provide the public reasonable means of access to and from the Parking Premises.] C-4 4830-7341-8354\7 ARTICLE II TERM Section 2.1 Term. The easements granted hereby, and each reservation, covenant, condition and restriction contained in this Agreement, shall be effective as of the date hereof, shall be perpetual, and shall remain in effect until affirmatively released by the City. Such release shall be evidenced by the recording of a release or termination of this Agreement in the real estate records of Hennepin County, Minnesota, at which time this Agreement shall terminate, subject to reconciliation of expenses and obligations incurred through the date of release or termination and the continuation of those provisions that specifically survive termination of this Agreement, and the Parking Facility and any other areas of the Easement Premises shall thereafter belong to and be under the sole control of Owner. ARTICLE III USE OF EASEMENT PREMISES Section 3.1 Operation and Control of Easement Premises. During the term of this Agreement, Owner shall operate the Easement Premises, and the Parking Facility as a whole, in accordance with this Agreement and all applicable governmental laws, ordinances, regulations and orders pertaining to parking facilities generally from time to time, at Owner’s sole cost and expense. Subject to the terms of this Agreement, Owner has full authority and control over the management, operation, and use of the Easement Premises and the Burdened Property. Owner is entitled to keep and retain as its own property all income and revenue produced from the use and operation of the Easement Premises during the term of this Agreement and shall have no obligation to report to or account to the City for any such income or revenue or with respect to expenses incurred by Owner in its use and operation of the Easement Premises; provided, however, parking within the Parking Facility by the general public shall be free of charge and Owner shall not charge any fee for the use of the Parking Facility pursuant to this Agreement. Owner may engage such employees, agents, or independent contractors as it may deem advisable to conduct the management, repair, maintenance, and operation of the Easement Premises from time to time during the term of this Agreement. Except as specifically set forth herein, Owner is entitled to make all decisions and to execute all agreements, in its sole discretion, with respect to the Parking Facility so long as such decisions and agreements do not violate the provisions of this Agreement, the Contract, the approved Final Development Plan, or any applicable governmental laws, ordinances, regulations or orders, as each of the foregoing may be amended and so long as each of the foregoing remains in effect. Section 3.2 Signage. Owner shall install and maintain a prominent, permanent “Parking” sign at or near each vehicular entrance to the Parking Facility, such that an ordinary member of the general public would be reasonably expected to understand or expect that parking is available to the general public within the Parking Facility (provided that such “Parking” sign, may, but does not need to explicitly state that such parking is “public”). Owner shall also install and maintain in the main lobby or foyer of the Parking Facility a permanent placard (to be no smaller than approximately 8 1/2 by 11 inches) which states that the public parking available in the Parking Facility is provided in partnership with the City and the Authority. The final design C-5 4830-7341-8354\7 and wording of such placard shall be subject to the prior reasonable approval of the City Manager. Section 3.3 Waste, Nuisance, Damage, Disfigurement or Injury to Easement Premises. Neither the City nor Owner shall knowingly or willfully commit or suffer to be committed any waste or damage in or upon the Easement Premises, or any disfigurement or injury to any improvements hereafter erected or located upon the Easement Premises, or any part thereof, or the fixtures and/or equipment thereof. Owner, in its use and occupancy of the Easement Premises, shall not knowingly and willfully commit or suffer to be committed any act or thing which constitutes a public nuisance. Usual and normal wear and tear, damage by the elements, unavoidable casualty or depreciation and diminution over time shall not be considered “waste,” “nuisance,” “damage, “disfigurement,” or “injury.” Section 3.4 Owner’s Reservation of Certain Rights. The City’s easement rights under this Agreement shall be subject to the following reservations as well as the other applicable provisions contained in this Agreement: (a) Owner reserves the right to designate and reserve (including by the posting of appropriate signage and/or by the erection of physical barriers) up to 10% of the parking stalls within the Parking Facility for exclusive use by and for Owner, or its tenants, occupants, and/or other users of the Associated Commercial Element (or any other commercial element within the Project Area), and/or their respective permittees or invitees; (b) [To the extent certain amenities, components, and/or fixtures of the Parking Facility are intended for the exclusive use of Owner, or its tenants, occupants and/or other users of the Associated Commercial Element, and/or their respective permittees or invitees, Owner reserves the right to reserve the same for exclusive use by such parties and not provide the same to the general public.] [NTD: The preceding will be revised prior to execution of this Agreement to more specifically describe the Parking Facility amenities, if any, which are intended for the exclusive use of such Owner/tenant-related parties.] (c) Owner reserves the right to close-off any portion of the Easement Premises for such reasonable period of time as may be legally necessary, in the opinion of Owner’s counsel, to prevent the acquisition of prescriptive rights by anyone; provided, however, that prior to closing-off any portion of the Easement Premises, Owner shall give as much written notice as reasonably practicable of its intention to do so; (d) Owner reserves the right at any time and from time to time to exclude and restrain any private party from access to the Parking Facility for cause and on a non- discriminatory basis; (e) Owner reserves the right to temporarily erect or place barriers in and around areas on the Easement Premises or the Burdened Property which are being constructed and/or repaired in order to ensure either safety of persons or protection of property; (f) Subject to the terms of the Contract, Owner reserves the right to redesign, redevelop, renovate and otherwise change the Easement Premises so long as (i) Owner obtains all requisite governmental approvals, (ii) such changes do not diminish the overall quality, quantity, and/or size of the Easement Premises (or any of its component parts) C-6 4830-7341-8354\7 beyond a de minimis extent, and (iii) such changes do not otherwise adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent; (g) Owner reserves the right to adopt and enforce reasonable rules and regulations (as the same may be revised from time to time, collectively “Rules”) for the safe, efficient, and orderly use and operation of the Easement Premises, so long as such Rules are applied on a non-discriminatory basis and do not adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent. ARTICLE IV MAINTENANCE OF THE EASEMENT PREMISES Section 4.1 Maintenance. At all times during the term hereof, Owner, at its cost and expense, shall keep and maintain the Parking Facility and Access Premises in good condition and repair in a first-class manner, similar to that of other structured parking facilities located within other first-class, multi-use projects in the Minneapolis-Saint Paul metropolitan area, which such maintenance shall include, without limitation, the following: (a) all repairs, replacements, renewals, alterations, additions and betterments thereto, interior and exterior, structural and non-structural, ordinary and extraordinary, and foreseen and unforeseen, all as may be necessary to keep the Parking Facility in the condition and repair required by this Agreement; (b) maintaining all drive and parking surfaces in a smooth and evenly-covered condition, which maintenance work shall include cleaning, sweeping, restriping, repairing and resurfacing the same; (c) maintaining in good working order (including cleaning and painting as necessary), repairing, and replacing as necessary the Access Premises; (d) maintaining in good working order, repairing, and replacing as necessary all ventilation and mechanical systems; (e) maintaining in good working order, repairing, and replacing as necessary any automated parking system; (f) maintaining in good working order, repairing, and replacing as necessary all domestic water, sewer, storm water, gas, electricity, power, heat, telephone, other communications service, commercially reasonable security and safety systems, and any and all other utility or similar services used, rendered, or supplied, upon, at, from, or in connection with the Parking Facility; (g) periodic removal of all papers, debris, filth, refuse, ice and snow, provided all sweeping shall be at appropriate intervals during such times as shall not unreasonably interfere with the use of the Easement Premises; C-7 4830-7341-8354\7 (h) placing, keeping in repair, replacing and repainting any appropriate directional signs or markers, within or associated with the Parking Facility and Accesses Premises; and (i) operating, keeping in repair, cleaning and replacing when necessary such Parking Facility lighting facilities as may be reasonably required, including without limitation all lighting necessary or appropriate for Parking Facility security. It is distinctly understood that the preceding shall not require maintenance and/or repair of the Parking Facility and the Access Premises and/or improvements hereinafter erected thereon in perfect condition or is a condition equal to new at all times, but Owner shall use commercially reasonable efforts to keep and maintain the same in such condition as to minimize, so far as is practicable, by reasonable care, maintenance, replacement, and repair, the effects of use, decay, injury, and destruction of the same or any part thereof, the City recognizing that depreciation and diminution by reason of ordinary wear and tear, age, use, and environmental factors is unavoidable and expected. Section 4.2 No Obligation of the City to Repair or Maintain. The City shall have no obligation of any kind, expressed or implied, to repair, rebuild, restore, reconstruct, modify, alter, replace, or maintain the Easement Premises or any part thereof. ARTICLE V UTILITIES Section 5.1 Utility Charges. During the term of this Agreement, Owner shall pay, or cause to be paid, when the same become due, all charges for water, sewer usage, storm water, gas, electricity, power, heat, telephone, or other communications service and any and all other utility or similar services used, rendered, supplied, or consumed in, upon, at, from, or in connection with the Easement Premises, or any part thereof. ARTICLE VI TAXES AND ASSESSMENTS Section 6.1 Payment of Taxes and Assessments. Owner shall pay, or cause to be paid, before becoming delinquent, all real estate taxes, charges, assessments, and levies, assessed and levied by any governmental taxing authority during the term of this Agreement against the Parking Facility, Associated Commercial Element, and the Access Premises. Nothing contained in this Agreement shall require Owner to pay any franchise, estate, inheritance, excise, succession, capital levy, or transfer tax of the City or any income, excess profits or revenue tax payable by the City under this Agreement. Subject to the terms of the Contract, Owner shall have the right and option, at any time but solely at Owner’s expense, to pay any real estate taxes or assessments in installments or under protest or in a similar manner, or to contest the levy or amount of the same in appropriate legal or administrative proceedings. ARTICLE VII C-8 4830-7341-8354\7 INDEMNIFICATION, INSURANCE Section 7.1 Indemnification of the City. Except to the extent caused by the willful misconduct or negligence of the City, its employees or agents, or the general public, or arising out of the default by the City and its officers, employees or agents, of obligations made pursuant to a contract with Owner, including this Agreement, Owner hereby covenants and agrees to assume and to indemnify and save harmless the City and its employees from and against any and all claims, demands, actions, damages, costs, expenses, reasonable attorneys’ fees, and liability in connection with the loss of life, personal injury and/or damage to property, to the extent arising from or out of the design or initial construction, maintenance and operation of the Easement Premises, or in connection with the use or occupancy of the Easement Premises, or any part thereof, by Owner, or to the extent arising out of the breach of Owner’s obligations hereunder. Section 7.2 Property Insurance. At all times during the term hereof, Owner, at its sole cost and expense, shall keep the Parking Facility, Associated Commercial Element, the Access Premises, and all alterations, extensions, and improvements thereto and replacements thereof, insured, with such deductibles as Owner deems appropriate, against loss or damage by fire and against those casualties covered by extended coverage insurance and against vandalism and malicious mischief and against such other risks, of a similar or dissimilar nature, as are customarily covered with respect to improvements similar in construction, general location, use, and occupancy to such improvements, at commercially reasonable coverage levels, to be reviewed from time to time by Owner. Section 7.3 Personal Property. All property of every kind and character which Owner may keep or store in, at, upon, or about the Easement Premises shall be kept and stored at the sole risk, cost, and expense of Owner. Section 7.4 Liability Insurance. During the term of this Agreement, Owner shall procure and maintain continuously in effect (or shall cause the same to occur), the following policies of insurance of the kind and minimum amounts as are customarily maintained with respect to parking facilities and improvements similar to those located on the Easement Premises, at commercially reasonable coverage levels, to be reviewed from time to time by Owner: (a) insurance against liability (including passenger elevator liability) for injuries to or death of any person or damage to or loss of property arising out of or in any way relating to the use, occupancy, or condition of the Easement Premises, or any part thereof, including insuring the indemnification obligations set forth in Section 7.1 above, which such insurance shall provide that the City is an additional insured; (b) garage keepers’ liability insurance including coverage for: (i) Fire and explosion; (ii) Theft (of entire vehicle); and (iii) Riot, civil commotion, malicious mischief, and vandalism; and C-9 4830-7341-8354\7 (c) robbery and hold-up insurance. Section 7.5 General Insurance Requirement. All insurance required in this Agreement shall be placed with financially sound and reputable insurers licensed to transact business in the State of Minnesota. Owner shall, within a commercially reasonable time following the City’s request therefor, furnish the City with copies of policies evidencing all such insurance or a certificate or certificates of the respective insurers stating that such insurance is in force and effect. Each policy of insurance herein required shall contain a provision that the insurer shall not cancel it without giving written notice to the City at least 10 days before the cancellation becomes effective. The insurance coverage herein required may be provided by a blanket insurance policy or policies. Section 7.6 No Obligation of the City for Insurance. At no time and under no circumstances shall the City be required to take out, maintain in force and effect, or pay for any type of insurance coverage with reference to the protection of and/or ownership of and/or occupancy of and/or a suit relating to the Easement Premises and/or any improvements hereafter located thereon. ARTICLE VIII ASSIGNMENT Section 8.1 Assignment by the City. During the term of this Agreement, the City may not assign or transfer its interest under this Agreement without the prior written consent of Owner. Section 8.2 Assignment by Owner. During the term of the Contract, Owner may not assign or otherwise transfer its interest under this Agreement, except as provided in the Contract. The City shall recognize and approve any successors or assigns of Owner in accordance with the terms and provisions of the Contract. Following the full and final payment of the TIF Notes issued under the terms of the Contract, Owner may assign this Agreement without consent of the City. ARTICLE IX CASUALTY Section 9.1 Destruction. In the event that all or any part of the Parking Facility and/or Access Premises are destroyed by fire or other casualty, and subject to a determination by the relevant mortgage lender, Owner shall promptly rebuild or reconstruct the same to the extent insurance proceeds are available or, in the event insurance proceeds are not sufficient to reconstruct the same, to the extent insurance proceeds combined with any contributions by Owner toward reconstruction are available. If Owner rebuilds or reconstructs the Parking Facility and/or Access Premises, the proceeds from any and all insurance policies covering risks against loss or damage shall be used to rebuild or reconstruct. ARTICLE X EMINENT DOMAIN C-10 4830-7341-8354\7 Section 10.1 Major Condemnation. If all of the Parking Facility is taken, acquired, or condemned by eminent domain for any public or quasi-public use or purpose, this Agreement shall terminate as of the date of vesting of title in the condemning authority. ARTICLE XI DEFAULT AND TERMINATION Section 11.1 Default by the City. If the City fails to perform any of its obligations under this Agreement, and fails to cure such default after 90 days’ written notice of such default, then in such case Owner may (a) declare the termination of this Agreement and re-enter and take possession of the Easement Premises or (b) pursue all available remedies at law and in equity. In such case, or at such time as this Agreement is terminated pursuant hereto, the City agrees to execute and deliver to Owner a written termination of this Agreement in recordable form, which termination agreement will be filed in the official records of Hennepin County, Minnesota. Section 11.2 Default by Owner. If Owner fails to perform any of its obligations under this Agreement, and fails to cure such default after 90 days’ written notice of such default or, if such default cannot reasonably be cured within such 90 days, fails to commence curative action and thereafter diligently complete the same, then, in such case, the City may pursue all available remedies at law and in equity. ARTICLE XII MISCELLANEOUS Section 12.1 Waiver. The waiver by any party hereto of any breach or default of any provisions anywhere contained in this Agreement shall not be deemed to be a waiver of any subsequent breach or default thereof. No provision of this Agreement shall be deemed to have been waived by any party hereto unless such waiver is in writing and signed by the party charged with any such waiver. Section 12.2 Amendments. Except as otherwise herein provided, and not otherwise, no subsequent alteration, amendment, change, waiver, discharge, termination, deletion, or addition to this Agreement shall be binding upon either party unless in writing and signed by both parties. Owner and the City agree to join in and consent to amendments to this Agreement, to the extent such amendments are reasonably required by Owner’s relevant mortgage lender encumbering the Easement Premises, provided; however, that Owner and the City shall not be required to enter into any amendment which does not adequately protect the legitimate interest and security of the Authority or the City with respect to the redevelopment of the Project Area as contemplated in the Contract. Section 12.3 Joinder; Permitted Encumbrance. Except for the mortgagee consent attached hereto, this Agreement does not require the joinder or approval of any other person and each of the parties respectfully has the full, unrestricted and exclusive legal right and power to enter into this Agreement for the term and upon the provisions herein recited and for the use and purposes hereinabove set forth. This Agreement shall constitute a permitted encumbrance under C-11 4830-7341-8354\7 any loan agreement heretofore or hereafter entered into between Owner and any construction lender or permanent lender. Section 12.4 Estoppel Certificate. Each party, respectively, agrees that at any time and from time to time, within ten business days after receipt of a written request by the other party, to execute, acknowledge and deliver to such party a statement in writing and in such form as will enable it to be recorded in the proper office for the recordation of deeds and other instruments certifying as of the date of such certification: (a) that this Agreement is unmodified and in full force and effect or, if there have been modifications, that the same are in full force and effect as modified and identifying the modifications; (b) that no party is in default under any provisions of this Agreement or, if there has been a default, the nature of such default; (c) that all work to be performed, under this Agreement or any related agreement has been performed or, if not so performed, specifying the work to be performed; and (d) as to any other factual matter that the requesting party or a prospective mortgagee or other lender shall reasonably request. It is intended that any such statement may be relied upon by any person, prospective mortgagee of, or assignee of any mortgage, upon such interest. Any such statement on behalf of the City may be executed by the City Manager without City Council approval. Section 12.5 Dedication. Nothing contained in this Agreement will be deemed to be a gift or dedication of any portion of the Easement Premises to the general public, except as explicitly set forth in this Agreement. Section 12.6 Notices. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is (a) dispatched by registered or certified mail, postage prepaid, return receipt requested, (b) sent by recognized overnight courier (such as Federal Express), or (c) delivered personally, as follows: In the case of Owner: Pentagon Village, LLC Attn: Jay Scott 8560 Kelzer Pond Drive Victoria, MN 55386 with a copy to: Anthony J. Gleekel Siegel Brill P.A. 100 Washington Avenue South Minneapolis, MN 55401 In the case of the City: City of Edina Attn: City Manager 4801 W. 50th Street Edina, MN 55424 with a copy to: Jay R. Lindgren C-12 4830-7341-8354\7 Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 12.1 Dispute Resolution. Owner and the City will use the following special dispute resolution process for those unresolved disputes or the lack of agreement following a request for consent or approval, before exercising any applicable legal remedies. Upon the occurrence of such an unresolved dispute, Jay Scott (or his successor or delegate), as Owner’s representative, and the City Manager (or its delegate), as the City’s representative, shall promptly meet in person and explore resolution until either party determines that effective resolution is not possible without more formal dispute resolution. Owner and the City, through their respective representative shall complete this special dispute resolution process in good faith before resorting to any other applicable legal process or remedy. The foregoing notwithstanding, the special dispute resolution process, as set forth in this section, shall be deemed a failure if such dispute or matter is not resolved within 30 days of the initial written request by a party to commence the process, at which time the parties may pursue any other applicable legal remedies. Section 12.2 No Third Party Beneficiary. This Agreement is not intended to give or confer any benefits, rights, privileges, claims, action or remedies to any person or entity. Section 12.3 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 12.4 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. Section 12.5 Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld. All consents or approvals shall be in writing in order to be effective. Section 12.6 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by any party and thereafter waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 12.7 Survival. The easements granted hereby and each reservation, covenant, condition and restriction contained in this Agreement will run with the land and will be binding upon, and inure to the benefit of, as the case may be, Owner and the City and their respective successors and assigns. [Remainder of page intentionally left blank; signature pages follow] C-13 Signature Page to Parking Facilities Easement Agreement (Pentagon South) 4830-7341-8354\7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CITY: CITY OF EDINA, MINNESOTA By: ___________________, Mayor By: ___________________, City Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 20___, by ____________ and ____________, the Mayor and City Manager respectively, of the City of Edina, Minnesota, on behalf of the City. Notary Public C-14 Signature Page to Parking Facilities Easement Agreement (Pentagon South) 4830-7341-8354\7 OWNER: PENTAGON VILLAGE, LLC a Minnesota limited liability company By: _________________________________ Name: ______________________________ Its__________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of ______, 20___, by , the of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public C-15 Exhibit A to Parking Facilities Easement Agreement (Pentagon South) 4830-7341-8354\7 EXHIBIT A Legal Description of the Burdened Property [A legal description of the Burdened Property; Lot 3, Pentagon Village is the Lot that would contain the Parking Facility per the Pentagon South City Approvals.] C-16 Exhibit B to Parking Facilities Easement Agreement (Pentagon South) 4830-7341-8354\7 EXHIBIT B [Legal Description and/or Depiction] of the Access Premises [To be inserted] C-17 4830-7341-8354\7 CONSENT AND SUBORDINATION The undersigned, ___________________, a ___________________, holder of that certain [Mortgage] executed by Pentagon Village, LLC, a Minnesota limited liability company, dated ________________, 20____, filed ________________, 20____, as Document No. ___________, in the office of the County Recorder in and for Hennepin County, Minnesota, and filed ________________, 20____, as Document No. ___________, in the office of the Registrar of Titles in and for Hennepin County, Minnesota, in favor of ________________ (the “Mortgage”), hereby consents to the foregoing Parking Facilities Easement Agreement (Pentagon South) (the “Easement Agreement”), and hereby subjects and subordinates the Mortgage and all of its right, title and interest in and to the Easement Agreement. ___________________________________, a ___________________ By: Name: Title: STATE OF ______________ ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of ____________, 201___, by ____________________, the _________________ of ___________________, a ___________________, on behalf of the ___________________. Notary Public D-1 EXHIBIT D TIF PRO FORMA [See Attached] EXHIBIT D - TIF PRO FORMA City of Edina Construction: 2014 Pentagon Village Redvelopment Agreement Occupied: 2014 Full Redevlopment Sale: SOURCES % OF TOTAL % OF FINANCE TOTALS DEVELOPER FINANCING - Loans 66.88% 66.88%73,493,971 DEVELOPER EQUITY 32.15% 32.15%35,325,981 0 AMOUNT FINANCED 99.02%108,819,952 GRANT #1 1,073,100 GRANT #2 0 EXTERNAL EQUITY 0.00%0 TOTAL SOURCES 100.00%109,893,052 USES PER S.F. % OF TOTAL SUBTOTAL TOTALS ACQUISITION COSTS 0 Land Acquisition 2.98% 3,280,000 3,405,438 Land Commission 0.21% 229,023 Stabilization (103,585) SITE COSTS Site Improvement Costs (Demo/Soils/Storm/Green Space) 8.16% 8,971,558 23,410,738 Parking Ramps 10.82% 11,886,000 Infrastructure Costs (Public ROW Improvements) 0.61% 668,238 Professional Services 0.63% 694,213 Sitework Development Fee 1.08% 1,190,729 CONSTRUCTION COSTS 58,943,953 Retail Construction 3.12% 3,433,100 Retail/Office Construction 3.86% 4,245,000 Office 1 Construction 29.34% 32,240,985 Office 2 Construction 17.31% 19,024,868 TENANT IMPROVEMENTS 12,187,220 Tenant Improvements - Retail 0.85% 936,770 Tenant Improvements - Office 10.24% 11,250,450 SOFT COSTS PREDEVELOPMENT COSTS 2,052,900 Architect & Civil 1.66% 1,820,000 Governmental 0.01% 7,500 LLC Insurance (Builders Risk + Liability) 0.00% 3,500 City Application Fees & Traffic Study 0.10% 105,500 Survey & Soil Testing 0.11% 116,400 INTEREST EXPENSE 2,207,000 Construction Costs 2.01% 2,207,000 Land Carrying Cost 0 GOVERNMENTAL FEES 0 Park Dedication Fees 0 Special Assessments 0 LEGAL 0.52% 570,000 570,000 REAL ESTATE TAXES 1.28% 1,406,530 1,406,530 FINANCING 491,250 Title Insurance/Mortgage Registration 0 Financing, Origination and Guarantee Fees 0.03% 33,750 Bank/Borrower Legal 0 Recording & Closing Costs 0.12% 127,500 Loan Costs (Construction) 0.30% 330,000 LEASING 3,094,595 Leasing Commissions - Tenant Rep 1.36% 1,491,667 Leasing Commissions - Landlord Rep 1.00% 1,093,771 Leasing Commissions - Solomon 0.46% 509,158 OPENING CONTINGENCY 0.06% 65,000 65,000 OFFICE OVERHEAD 0 CAM,RET & Mgmt 0 DEVELOPER FEE 1.87% 2,058,428 2,058,428 MISC 0 0 Total Soft Costs 11,945,703 TOTAL USES 100.00%109,893,052 D-2 EQUITY REQUIREMENT ASSUMPTION INTERNAL RATE OF RETURN ANALYSIS - EQUITY PARTNERS WITH TIF Year Element Cash Net Total Amount of Equity 35,325,981 Years Year Investment Flow Sales Cash Flow Minimum Rate Of Return - Percent 0.00% Minimum Rate Of Return - Amount 0 1 2014 0 (4,035,838) 0 (4,035,838) 2 2015 0 (480,984) 0 (480,984) 3 2016 0 (395,158) 0 (395,158) SALES ANALYSIS ASSUMPTIONS 4 2017 0 (438,152) 0 (438,152) 5 2018 0 (1,138,528) 0 (1,138,528) Net Operating Income End 2024 Various 6 2019 (791,283) (20,407,948) 13,859,523 (7,339,708) Divided By Cap Rate 6.75%7 2020 (5,132,659) 15,035 0 (5,117,624) Gross sales price 94,632,814 8 2021 (2,362,377) 683,589 0 (1,678,787) Plus Unamortized TIF Note Principal 17,435,762 9 2022 0 1,610,594 4,812,283 6,422,877 Minus Debt - Bank 70,025,244 10 2023 0 1,540,558 8,892,297 10,432,854 Net Sales amount 42,043,331 11 2024 0 893,379 12,113,408 13,006,787 Sales expenses - 2,365,820 12 2025 0 0 0 0 Final Net Amount 39,677,511 Total (8,286,319) (22,153,453) 39,677,511 9,237,739 IRR: 7.35% INTERNAL RATE OF RETURN ANALYSIS - WITHOUT TIF Element Cash Net Total Years Year Investment Flow Sales Cash Flow 1 2014 0 (4,035,838) 0 (4,035,838) 2 2015 0 (480,984) 0 (480,984) 3 2016 0 (395,158) 0 (395,158) 4 2017 0 (438,152) 0 (438,152) 5 2018 0 (1,138,528) 0 (1,138,528) 6 2019 (791,283) (20,407,948) 6,873,750 (14,325,481) 7 2020 (5,115,467) (22,354) 0 (5,137,820) 8 2021 (2,269,623) 313,105 0 (1,956,519) 9 2022 0 958,064 3,099,769 4,057,833 10 2023 0 855,295 4,322,519 5,177,814 11 2024 0 582,417 8,457,586 9,040,003 12 2025 0 0 0 0 Total (8,176,373) (24,210,082) 22,753,624 (9,632,831) IRR: -8.60% D-3 E-1 EXHIBIT E Element TIF Pro Forma [See Attached] EXHIBIT E - SAMPLE ELEMENT TIF PRO FORMA City of Edina Construction:2014 Pentagon Village Redvelopment Agreement Occupied:2014 _________ Element Sale: Site Cost Allocation:21.55% SOURCES % OF TOTAL % OF FINANCE TOTALS DEVELOPER FINANCING - Construction Loan #DIV/0! #DIV/0!0 DEVELOPER EQUITY #DIV/0! #DIV/0!0 0 AMOUNT FINANCED #DIV/0!0 IRR:#NUM! Cash on Cost:#DIV/0! Cash on Cash:#DIV/0! GRANT #1 0 GRANT #2 0 EXTERNAL EQUITY #DIV/0!0 TOTAL SOURCES #DIV/0!0 USES PER S.F. % OF TOTAL SUBTOTAL TOTALS ACQUISITION COSTS 0 Land Acquisition 0 0 Land Commission 0 Stabilization Expenses (Income) 0 SITE COSTS Site Improvement Costs (Demo/Soils/Storm/Green Space) 0 0 Parking Ramp 0 Infrastructure Costs (Public ROW Improvements) 0 Professional Services 0 Sitework Development Fee 0 CONSTRUCTION COSTS 0 Shell Construction 0 General conditions/Builder Profit 0 Permits 0 Misc. Site Work 0 Additional Building & Hardscape; Pylon Signs 0 SAC/WAC 0 Contingency 0 TENANT IMPROVEMENTS 0 Tenant Improvements - A $ 0 Tenant Improvements - B $ 0 SOFT COSTS PREDEVELOPMENT COSTS 0 Architect & Civil 0 Governmental 0 LLC Insurance (Builders Risk + Liability) 0 City Application Fees & Traffic Study 0 Survey & Soil Testing 0 INTEREST EXPENSE 0 Construction Costs 0 Land Carrying Cost 0 GOVERNMENTAL FEES 0 Park Dedication Fees 0 Special Assessments 0 LEGAL 0 0 REAL ESTATE TAXES 0 0 FINANCING 0 Title Insurance/Mortgage Registration 0 Financing, Origination and Guarantee Fees 0 Bank/Borrower Legal 0 Recording & Closing Costs 0 Loan Costs (Construction)0 LEASING 0 Leasing Commissions - Tenant Rep $ 0 Leasing Commissions - Landlord Rep $ 0 Leasing Commissions - Solomon $ 0 OPENING CONTINGENCY 0 0 OFFICE OVERHEAD 0 CAM,RET & Mgmt 0 DEVELOPER FEE 0 0 MISC 0 0 Total Soft Costs 0 TOTAL USES #DIV/0!0 E-2 PROJECT REVENUE ASSUMPTIONS RENT PER TOTAL ANNUAL TYPE SQ. FT.SQ. FT. REVENUE Tenant A 0 Tenant B 0 Other Office 0 Parking 0 Total Rental Income 0 0 Management Fee Income 0.00 0 0 CAM & Insurance Income 0.00 0 0 Real Estate Tax Income 0.00 0 0 Total Other Income 0 0 PROJECT SALE ASSUMPTIONS Total Cost 0 First Year N. O. I. 0 C.A.P Rate 0.00% Sales Expense 0.00% PROJECT DEBT ASSUMPTIONS Private Debt: Lender NOI 0 C.A.P Rate 0.00% C.A.P Loan Amount 0 Max Loan Amount % 0 Amount of Loan - Series A 0 Term Of Loan 0 Rate of Loan 0.00% Monthly Payment - P&I #NUM! Annual Payment #NUM! Amount of Loan - Series B 0 Term Of Loan 0 Rate of Loan 0.00% Monthly Payment #NUM! Annual Payment #NUM! INFLATION ASSUMPTIONS YEAR 2014 2015 2016 2017 2018 Rental Revenue 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Office Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% Retail Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% MONTHS OPERATING 0 YEAR 2019 2020 2021 2022 2023 Rental Revenue 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Office Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% Retail Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% YEAR 2024 2025 2026 2027 2028 Rental Revenue 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Other Income - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - Management Fee 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - CAM & Insurance 0.00% 0.00% 0.00% 0.00% 0.00% Expenses - RE Tax 0.00% 0.00% 0.00% 0.00% 0.00% Office Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% Retail Vacancy 0.00% 0.00% 0.00% 0.00% 0.00% E-3 CASH FLOW - INCOME 2014 2015 2016 2017 2018 Rental Revenue Tenant A 0 0 0 0 0 Tenant B 0 0 0 0 0 Other Office 0 0 0 0 0 Parking 0 0 0 0 0 Total Rental 0000 0 Other Revenue Management Fee Income 0 0 0 0 0 CAM & Insurance Income 0 0 0 0 0 Real Estate Tax Income 0 0 0 0 0 Total Other 0000 0 Gross Revenue 0 0 0 0 0 Office Vacancies 0 0 0 0 0 Retail Vacancies 0 0 0 0 0 Effective Income 0 0 0 0 0 2019 2020 2021 2022 2023 Rental Revenue Tenant A 0 0 0 0 0 Tenant B 0 0 0 0 0 Other Office 0 0 0 0 0 Parking 0 0 0 0 0 Total Rental 0000 0 Other Revenue Management Fee Income 0 0 0 0 0 CAM & Insurance Income 0 0 0 0 0 Real Estate Tax Income 0 0 0 0 0 Total Other 0000 0 Gross Revenue 0 0 0 0 0 Office Vacancies 0 0 0 0 0 Retail Vacancies 0 0 0 0 0 Effective Income 0 0 0 0 0 2024 2025 2026 2027 2028 Rental Revenue Tenant A 0 0 0 0 0 Tenant B 0 0 0 0 0 Other Office 0 0 0 0 0 Parking 0 0 0 0 0 Total Rental 0000 0 Other Revenue 0000 0 0000 0 0000 0 Total Other 0000 0 Gross Revenue 0 0 0 0 0 Office Vacancies 0 0 0 0 0 Retail Vacancies 0 0 0 0 0 Effective Income 0 0 0 0 0 E-4 CASH FLOW - EXPENSES AND DEBT 2014 2015 2016 2017 2018 DEVELOPMENT Property Purchase 0 0 0 0 0 Acquisition Closing Costs / Broker Commissions 0 0 0 0 0 Demo/Abatement/Construction (Net Grants) 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Other Rental (Income) Loss 0 0 0 0 0 Real Estate Tax Refund (Income) 0 0 0 0 0 Legal / Professional Services 0 0 0 0 0 Land Carry Cost at 6% 0 0 0 0 0 Sitework Development Fee 0 0 0 0 0 MANAGEMENT AND OTHER FEES Management Fees (4%) 0 0 0 0 0 CAM & Insurance 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Tenant Improvements 0 0 0 0 0 Leasing Commissions 0 0 0 0 0 TOTAL EXPENSES 0 0 0 0 0 NET OPERATING INCOME 0 0 0 0 0 TIF PAYMENTS 0 0 0 0 0 CASH FLOW AVAILABLE 0 0 0 0 0 DEBT SERVICE (-) - Series A 0 0 0 0 0 CASH FLOW AFTER FINANCING 0 0 0 0 0 RETURN ON INVES.-ANNUAL #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! RETURN ON INVES.-AVERAGE #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 2019 2020 2021 2022 2023 DEVELOPMENT Property Purchase 0 0 0 0 0 Acquisition Closing Costs / Broker Commissions 0 0 0 0 0 Demo/Abatement/Construction (Net Grants) 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Other Rental (Income) Loss 0 0 0 0 0 Real Estate Tax Refund (Income) 0 0 0 0 0 Legal / Professional Services 0 0 0 0 0 Land Carry Cost at 6% (Lookback) 0 0 0 0 0 Sitework Development Fee 0 0 0 0 0 MANAGEMENT AND OTHER FEES Management Fees (4%) 0 0 0 0 0 CAM & Insurance 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Tenant Improvements 0 0 0 0 0 Leasing Commissions 0 0 0 0 0 TOTAL EXPENSES 0 0 0 0 0 NET OPERATING INCOME 0 0 0 0 0 TIF PAYMENTS 0 0 0 0 0 CASH FLOW AVAILABLE 0 0 0 0 0 DEBT SERVICE (-) - Series A 0 0 0 0 0 CASH FLOW AFTER FINANCING 0 0 0 0 0 RETURN ON INVES.-ANNUAL #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! RETURN ON INVES.-AVERAGE #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 2024 2025 2026 2027 2028 DEVELOPMENT Property Purchase 0 0 0 0 0 Acquisition Closing Costs / Broker Commissions 0 0 0 0 0 Demo/Abatement/Construction (Net Grants) 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Other Rental (Income) Loss 0 0 0 0 0 Real Estate Tax Refund (Income) 0 0 0 0 0 Legal / Professional Services 0 0 0 0 0 Land Carry Cost at 6% 0 0 0 0 0 Sitework Development Fee 0 0 0 0 0 MANAGEMENT AND OTHER FEES Management Fees (4%) 0 0 0 0 0 CAM & Insurance 0 0 0 0 0 Real Estate Taxes 0 0 0 0 0 Tenant Improvements 0 0 0 0 0 Leasing Commissions 0 0 0 0 0 TOTAL EXPENSES 0 0 0 0 0 NET OPERATING INCOME 0 0 0 0 0 TIF PAYMENTS 0 0 0 0 0 CASH FLOW AVAIL. FOR DEBT SERVICE 0 0 0 0 0 DEBT SERVICE (-) - Series A 0 0 0 0 0 CASH FLOW AFTER FINANCING 0 0 0 0 0 RETURN ON INVES.-ANNUAL #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! RETURN ON INVES.-AVERAGE #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! ( ANNUAL EQUITY REQUIREMENT INTERNAL RATE OF RETURN ANALYSIS - EQUITY PARTNERS Year Element CASH Net Sale Total Amount of Equity 0 Years Year Investment Flow Price Cash Flow Minimum Rate Of Return - Percent 0.00% Minimum Rate Of Return - Amount 0 1 2014 0 0 2 2015 0 0 3 2016 0 0 SALE ANALYSIS 4 2017 0 0 5 2018 0 0 Net Operating Income End 2024 0 6 2019 0 0 Divided By Cap Rate 0.00%7 2020 0 0 Gross sale price 0 8 2021 0 0 0 Plus TIF Note Principal 0 9 2022 0 0 Minus Debt - Bank 0 10 2023 0 0 Net Sale amount 0 11 2024 0 0 0 Sales expense - 0 12 2025 0 Final amount 0 Total 0 0 0 0 IRR:#NUM! E-6 F-1 4821-1411-8770\6 EXHIBIT F Form of TIF Note LIMITED REVENUE TAX INCREMENT NOTE [A | B | C] (Pentagon South) No. R-_____ $[__________] UNITED STATES OF AMERICA STATE OF MINNESOTA CITY OF EDINA HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA LIMITED REVENUE TAXABLE TAX INCREMENT NOTE Interest Rate Date of Original Issue Maturity Date Registered Owner: ______________________________________________________________ Principal Amount: ______________________________________________________________ The HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA (the “Authority”) acknowledges itself to be indebted and, for value received, promises to pay to the order of PENTAGON VILLAGE, LLC, a Minnesota limited liability company, or its assigns (“Redeveloper”), solely from the source, to the extent and in the manner hereinafter provided, up to the principal amount of this Limited Revenue Taxable Tax Increment Note (this “Note”) as provided herein, together with simple interest thereon accrued on the unpaid principal balance hereof from the Accrual Date (as hereinafter defined), at the rate of interest of six and zero hundredths percent (6.00%) per annum, on the Payment Dates (as hereinafter defined). This Note is executed and delivered in accordance with the terms and conditions of a Redevelopment Agreement dated as of October 16, 2018, by and among the City of Edina, Minnesota (the “City”), the Authority and Redeveloper (the “Redevelopment Agreement”), and an authorizing resolution (the “Resolution”) duly adopted by the Authority on October 12, 2018. This is TIF Note [A | B | C] under the Redevelopment Agreement. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to Redeveloper and mailed to Redeveloper at its postal F-2 4821-1411-8770\6 address within the United States which shall be designated from time to time by Redeveloper. This Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority pursuant to, and in full conformity with, the Constitution and the laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.1794 (the “TIF Act”), and the terms and conditions of the Redevelopment Agreement and a resolution of the Board of the Authority, to aid in financing a “project” (as defined in Minnesota Statutes, Section 469.174, subdivision 8) of the Authority within the Pentagon Park Tax Increment Financing District established by the Authority pursuant to Resolution No. 2014 – 2 (the “TIF District”). Capitalized terms used herein and not otherwise defined herein shall have the meaning given to them in the Redevelopment Agreement. This Note is being issued as of the date hereof at the request of Redeveloper. Notwithstanding the date of issuance of this Note, the accrual of interest and payment of Available Tax Increment (as hereinafter defined) hereunder is fully conditioned upon, and will commence no earlier than the date (the “Accrual Date”) upon which Redeveloper satisfies all requirements and conditions relating to accrual of interest and payment of Available Tax Increment applicable to this Note hereunder and under the Redevelopment Agreement, specifically including, but not limited to, the requirements and conditions set forth in Section 8.2 and Section 8.3 of the Redevelopment Agreement (the “Accrual Requirements”), which such Accrual Date shall be fixed by the Authority and Redeveloper executing an allonge to this TIF Note in substantially the form attached as Exhibit A as soon as reasonable practical after the satisfaction of the applicable Accrual Requirements. The maximum principal amount of this Note attributable to Qualified Redevelopment Costs shall not exceed $[_________________]. Provided Redeveloper has satisfied the Accrual Requirements, principal of and interest on this Note shall be payable solely from and in the amount of Available Tax Increment on each February 1 and August 1 commencing on the first February 1 or August 1 immediately following the Accrual Date and continuing through [February 1, 2044] (the “Payment Dates”). On each Payment Date, the Authority shall apply Available Tax Increment to the payment of principal of and interest on this Note then due; provided, however, that in the event that Available Tax Increment is not sufficient to pay when due the principal of and interest on this Note, the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default under this Note as long as the Authority pays the principal of and interest on this Note to the extent of Available Tax Increment. Redeveloper acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon from Available Tax Increment shall be pari passu in right of payment and in all other respects to the other TIF Notes issued to Redeveloper pursuant to the Redevelopment Agreement, to the extent the Accrual Requirements have been satisfied with respect to such other TIF Notes. All payments made by the Authority on this Note shall be applied first to accrued interest and then to the principal amount of this Note. Interest accruing from the Accrual Date through and including the first Payment Date will be added to principal. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. F-3 4821-1411-8770\6 “Available Tax Increment” means 90% of the tax increment generated from parcels specifically within the Project Area and remitted to the Authority from the County of Hennepin, Minnesota, pursuant to the TIF Act, for the six months before each Payment Date. In the event that Available Tax Increment is not sufficient to pay when due the principal of and interest on this Note, the failure of the Authority to pay the principal of and interest on this Note then due shall not constitute a default hereunder. EXCEPT AS TO THE OBLIGATION TO MAKE PAYMENTS FROM THE AVAILABLE TAX INCREMENT, THIS NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY, OR THE STATE OF MINNESOTA (THE “STATE”), AND NEITHER THE AUTHORITY, THE CITY, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THIS NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT. Upon an Event of Default by Redeveloper under the Redevelopment Agreement, the Authority may exercise the remedies with respect to this Note described in Section 13.5 of the Redevelopment Agreement, the terms of which are incorporated herein by reference, including, without limitation, the suspension or termination of the Authority’s obligation to make any payments under this Note. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. The outstanding principal balance due under this Note shall be subject to redemption and prepayment, in whole or in part, at the option of the Authority and, if redemption is in part, installments of principal shall be applied to reduce the principal to become due on this Note in inverse order of maturity, or, at the written direction of the Authority, pro rata from each maturity. Redeveloper shall never have or be deemed to have the right to compel any exercise of any taxing power of the Authority or the City or any other public body, and neither the Authority nor the City nor any director, commissioner, council member, board member, officer, employee or agent of the Authority or the City, nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. THE AUTHORITY MAKES NO REPRESENTATION, COVENANT, OR WARRANTY, EXPRESS OR IMPLIED, THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY, IN WHOLE OR IN PART, THE PRINCIPAL OF AND INTEREST ON THIS NOTE. NO HOLDER OF THIS NOTE SHALL HAVE RIGHTS AGAINST THE AUTHORITY EXCEPT FOR DISTRIBUTION OF AVAILABLE TAX INCREMENT. This Note shall not be assignable or transferable without the prior written consent of the Authority; provided, however, that such consent shall not be unreasonably withheld or delayed if: (a) the assignee or transferee delivers to the Authority a written instrument acknowledging the limited nature of the Authority’s payment obligations under this Note, and (b) the assignee or F-4 4821-1411-8770\6 transferee executes and delivers to the Authority a certificate, in form and substance reasonably satisfactory to the Authority, pursuant to which, among other things, such assignee or transferee represents (i) that this Note is being acquired for investment for such assignee’s or transferee’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, (ii) that the assignee or transferee has no present intention of selling, granting any participation in, or otherwise distributing the same, (iii) that the assignee or transferee is an “accredited investor” within the meaning of Rule 501 of the Regulation D under the Securities Act of 1933, as amended, (iv) that the assignee or transferee, either alone or with such assignee’s or transferee’s representatives, has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of the prospective investment in this Note and the assignee or transferee is able to bear the economic consequences thereof, (v) that in making its decision to acquire this Note, the assignee or transferee has relied upon independent investigations made by the assignee or transferee and, to the extent believed by such assignee or transferee to be appropriate, the assignee’s or transferee’s representatives, including its own professional, tax and other advisors, and has not relied upon any representation or warranty from the Authority, or any of its officers, employees, agents, affiliates or representatives, with respect to the value of this Note, (vi) that the Authority has not made any warranty, acknowledgment or covenant, in writing or otherwise, to the assignee or transferee regarding the tax consequences, if any, of the acquisition and investment in this Note, (vii) that the assignee or transferee or its representatives have been given a full opportunity to examine all documents and to ask questions of, and to receive answers from, the Authority and its representatives concerning the terms of this Note and such other information as the assignee or transferee desires in order to evaluate the acquisition of and investment in this Note, and all such questions have been answered to the full satisfaction of the assignee or transferee, (viii) that the assignee or transferee has evaluated the merits and risks of investment in this Note and has determined that this Note is a suitable investment for the assignee or transferee in light of such party’s overall financial condition and prospects, (ix) that this Note will be characterized as “restricted securities” under the federal securities laws because this Note is being acquired in a transaction not involving a public offering and that under such laws and applicable regulations such securities may not be resold without registration under the Securities Act of 1933, as amended, except in certain limited circumstances, and (x) that no market for this Note exists and no market for this Note is intended to be developed. Notwithstanding the foregoing, Redeveloper may assign and pledge this Note to secure any Mortgage that is permitted under Section 9.1 of the Redevelopment Agreement and may transfer this Note to (i) any entity controlling, controlled by or under common control with Redeveloper, (ii) any entity in which the majority equity interest is owned by the parties that have a majority equity interest in Redeveloper, or (iii) any Affiliate. This Note is issued pursuant to the Resolution of the Board of the Authority and is entitled to the benefits thereof, which Resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority or the City F-5 4821-1411-8770\6 outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority or the City to exceed any constitutional or statutory limitation thereon. [Remainder of this page intentionally left blank; signatures on following page] F-6 [Signature Page to Tax Increment Note (Pentagon South)] 4821-1411-8770\6 IN WITNESS WHEREOF, the Board of the Housing and Redevelopment Authority of Edina, Minnesota, has caused this Note to be executed by the manual signatures of the Chair and the Executive Director of the Authority, and has caused this Note to be dated as of the date of original issue specified above. Chair Secretary F-7 4821-1411-8770\6 ALLONGE TO LIMITED REVENUE TAX INCREMENT NOTE [A | B | C] (Pentagon South) This Allonge to Limited Revenue Tax Increment Note is attached to that certain Limited Revenue Tax Increment Note dated ____________, 2019, designated as No. R-_____, in the original amount of $___________ (the “TIF Note”), executed by the Housing and Redevelopment Authority of Edina, Minnesota (the “Authority”) to Pentagon Village, LLC, a Minnesota limited liability company. The “Accrual Date” (as defined in the TIF Note) is hereby deemed to be and fixed at _____________, 20___. The undersigned do hereby acknowledge and accept the foregoing Allonge to the TIF Note, fixing the Accrual Date as set forth above. HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By ______________________________ _______________, Chair By _____________________________ _______________, Secretary PENTAGON VILLAGE, LLC, a Minnesota limited liability company By: ______________________________ Name: ___________________________ Its _______________________________ Dated: _______, 20___ Dated: _______, 20___ G-1 4820-0795-5826\1 EXHIBIT G Form of Certificate of Completion CERTIFICATE OF COMPLETION A. PENTAGON VILLAGE, LLC (“Redeveloper”), pursuant to the Redevelopment Agreement by and among the CITY OF EDINA, MINNESOTA (the “City”), the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA (the “Authority”), and Redeveloper, dated effective as of October 16, 2018 (the “Contract”), has agreed to complete the _____________, as defined in and in accordance with the Contract, on that certain real property (the “Property”) located in Hennepin County, Minnesota, described on the attached Exhibit A. B. Redeveloper has substantially completed construction of ___________ as required under the Contract. C. The issuance of this Certificate of Completion by the City and the Authority is not intended nor shall it be construed to be a warranty or representation by the City or the Authority as to the structural soundness of the ___________ including, but not limited to, the quality of materials, workmanship or the fitness of the ___________ for it/their proposed use. NOW THEREFORE, this is to certify that all construction and other physical improvements specified to be done and made by Redeveloper with regard to the ___________ of the Minimum Improvements have been substantially completed, and the provisions of the Agreement imposing obligations on Redeveloper to construct the ___________ on the Property, are hereby satisfied and terminated, and the County Recorder and Registrar of Titles in and for the County of Hennepin and State Minnesota are hereby authorized to record this instrument, to be a conclusive determination of the satisfactory termination of said provisions of the Agreement. Dated: ______________, 20___ [Remainder of page intentionally left blank; signature pages follow] G-2 Signature Page to Certificate of Completion 4820-0795-5826\1 CITY OF EDINA, MINNESOTA By ____________________________________ City Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 201__, by ___________, City Manager of the City of Edina, Minnesota, on behalf of the City of Edina. Notary Public [ G-3 Signature Page to Certificate of Completion 4820-0795-5826\1 HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By ____________________________________ Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 201__, by ___________, the Executive Director of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 H-1 4817-7835-4035\2 EXHIBIT H Memorandum of Redevelopment Agreement MEMORANDUM OF REDEVELOPMENT AGREEMENT THIS MEMORANDUM OF REDEVELOPMENT AGREEMENT (this “Memorandum”) is entered into as of October 16, 2018, by and among the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (“City”); the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“Authority”); and PENTAGON VILLAGE, LLC., a Minnesota limited liability company (“Redeveloper”). RECITALS: A. City, Authority, and Redeveloper (collectively, the “Parties”) have entered into a certain Redevelopment Agreement dated as of October 16, 2018 (the “Contract”), whereby the Parties have agreed to various aspects of the redevelopment of certain real property more particularly described on the attached Exhibit A, together with all improvements, tenements, easements, rights and appurtenances pertaining to such real property, lying and being in Hennepin County, Minnesota (the “Property”). B. The Parties wish to give notice of the existence of the Contract. AGREEMENT: NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The above recitals are incorporated by reference as if fully set forth herein. 2. Capitalized terms, when not defined herein, shall have the meanings ascribed to them in the Contract. 3. The Parties have entered into the Contract to set forth the terms and provisions governing the redevelopment of the Property. 4. This Memorandum has been executed and delivered by the Parties for the purpose of recording and giving notice that a contractual relationship for the redevelopment of the Property has been created between the Parties in accordance with the terms, covenants and conditions of the Contract. 5. The terms and conditions of the Contract are incorporated by reference into this Memorandum as if fully set forth herein. H-2 4817-7835-4035\2 6. This Memorandum may be executed separately in counterparts which, when taken together, shall constitute one and the same instrument. [Remainder of page left blank intentionally; signature pages follow] H-3 [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] IN WITNESS WHEREOF, the Parties have executed this Memorandum as of the date first written above. CITY OF EDINA, MINNESOTA By , Mayor By , City Manager STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _____________, 20___, by __________________ and __________________, the Mayor and the City Manager, respectively, of the City of Edina, Minnesota, on behalf of the City. Notary Public H-4 [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By , Chair By , Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF The foregoing instrument was acknowledged before me this ____ day of ____________, 20___, by _________________ and _________________, the Chair and Secretary respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public H-5 [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] PENTAGON VILLAGE, LLC a Minnesota limited liability company By: _____________________________________ Name: __________________________________ Its: _____________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _____________, 20___, by , the of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street Suite 1500 Minneapolis, MN 55402-1498 I-1 EXHIBIT I TIF Lookback Example [See Attached] EXHIBIT I - TIF LOOKBACK EXAMPLE* City of Edina Pentagon Village Redevelopment Agreement Phase Constructor Issued TIF Note(s): Constructor Lookback Adjustment AB Element Property Completion Transfer Cumulative IRR Cash Flow IRR Phase Excess IRR (IRR > 16%)Excess Profit Max. Adjustment (Excess Profit x 0.25) Note Adjustment % (10%,15%,or 25%) Note Adjustment (TIF Note x Adj. %) TIF Adjustment (Lesser of A or B) Retail Element 2019 2022 1,338,825 16.00% 0.00% - - 0% - - Retail/Office Element 2019 2022 2,317,570 23.21% 7.21% 950,096 237,524 25% 4,525,000 237,524 Office 1 Element 2020 2023 10,351,642 16.00%0.00% - - 0% - - Office 2 Element 2023 2026 14,503,194 15.33%-0.67% (1,024,340) (256,085) 0% - (256,085) Year New Transfer Adjustment 6% Carry Total Cumulative Adjustments Final Constructor TIF Adjustment** 2019 - - 2020 - - - 2021 - - - 2022 237,524 - 237,524 2023 - 14,251 251,775 2024 - 15,107 266,882 2025 - 16,013 282,895 2026 (256,085) 16,974 43,784 2027 - 2,627 46,411 46,411 2028 - 2,785 49,195 2029 - 2,952 52,147 2030 - 3,129 55,276 2031 - 3,317 58,592 2032 - 3,516 62,108 2033 - 3,726 65,834 2034 - 3,950 69,784 2035 - 4,187 73,971 2036 - 4,438 78,410 2037 - 4,705 83,114 2038 - 4,987 88,101 2039 - 5,286 93,387 ** Repayment of the cumulative adjustment to occur as per Section 7.4d. This example assumes Transfer of last Element in 2026. 18,100,000 *This is a hypothetical example to illustrate the method to calculate the Phase Constructor TIF Adjustment in accordance with Section 7.4. In the example above, the Retail/Office Element is completed in 2019 and sold within 3 years in 2022. The cumulative investment and net revenue from operations and sale of $2,317,570 are calculated to an Internal Rate of Return of 23.21%. Of this return, the amount exceeding the Section 7.4 threshold is calculated at $950,096. An adjustment is made based on the lesser of 25% of this overage ($237,524) or 25% of the TIF Note balance ($4,525,000). An adjustment of $237,524 is recorded in 2022 and a 6% interest carry is applied to all outstanding amounts. The cumulative adjustments are compiled until final adjustment per 7.4d: in this example as a final Phase Constructor TIF Adjustment of $46,411 occuring 365 days from the Transfer of the Last Element Property (2027). I-2 EXHIBIT I - TIF LOOKBACK EXAMPLE* City of Edina Pentagon Village Redevelopment Agreement Phase Developer with Controlling Interest Transfer Issued TIF Note(s): Phase Developer Lookback Adjustment AB Element Property Completion Controlling Interest Transfer Cumulative IRR Cash Flow IRR Phase Excess IRR (IRR > 16%)Excess Profit Max. Adjustment (Excess Profit x 0.25) Note Adjustment % (10%,15%,or 25%) Note Adjustment (TIF Note x Adj. %) TIF Adjustment (Lesser of A or B) Hotel 2 N/A 2019 1,110,971 16.56% 0.56% 48,097 12,024 10% 1,810,000 12,024 Hotel 1 N/A 2022 1,057,058 12.82% -3.18% (337,321) (84,330) 0% - (84,330) - - 0% - - - - 0% - - Year New Transfer Adjustment 6% Carry Total Cumulative Adjustments Final Developer TIF Adjustment** 2019 12,024 12,024 2020 - 721 12,746 2021 - 765 13,510 2022 (84,330) 811 (70,009) 2023 - - (70,009) 2024 - - (70,009) 2025 - - (70,009) 2026 - - (70,009) 2027 - - (70,009)- 2028 - - (70,009) 2029 - - (70,009) 2030 - - (70,009) 2031 - - (70,009) 2032 - - (70,009) 2033 - - (70,009) 2034 - - (70,009) 2035 - - (70,009) 2036 - - (70,009) 2037 - - (70,009) 2038 - - (70,009) 2039 - - (70,009) ** Repayment of the cumulative adjustment to occur as per Section 7.4b(iii). This example assumes Transfer of last Element in 2026. 18,100,000 *This is a hypothetical example to illustrate the method to calculate the Phase Developer TIF Adjustment in accordance with Section 7.4. In the example above, the Hotel 2 Property udergoes a controlling interest transfer in 2019. The cumulative investment and net revenue from stabilization and sale of $1,110,971 are calculated to an Internal Rate of Return of 16.56%. Of this return, the amount exceeding the Section 7.4 threshold is calculated at $48,097. An adjustment is made based on the lesser of 25% of this overage ($12,024) or 10% of the TIF Note balance ($1,1810,000). An adjustment of $12,024 is recorded in 2019 and a 6% interest carry is applied to all outstanding amounts. The Hotel 1 Property also undergoes a controlling interest Transfer in 2022 and its adjustment of -$84,330 is added into the cumulative adjustment, now below zero. The cumulative adjustments are compiled until final adjustment per 7.4b(iii): in this example as a final Phase Developer TIF Adjustment of $0 365 days from the transfer of the last Element Property (2027). I-3 J-1 4845-5878-3602\5 EXHIBIT J Form of Plaza Easement Agreement PLAZA EASEMENT AGREEMENT between THE CITY OF EDINA, MINNESOTA and PENTAGON VILLAGE, LLC Dated as of ________________ ___, 20____ THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 J-2 4845-5878-3602\5 PLAZA EASEMENT AGREEMENT (Pentagon South) THIS PLAZA EASEMENT AGREEMENT (this “Agreement”) is made and entered into this ___ day of ____________, 20___ (“Effective Date”), by and between the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (the “City”), and PENTAGON VILLAGE, LLC, a Minnesota limited liability company (“Owner”). RECITALS: WHEREAS, the Housing and Redevelopment Authority of Edina, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”), the City, and Owner, as “Redeveloper”, are parties to that certain Redevelopment Agreement dated October 16, 2018 (the “Contract”); and WHEREAS, such Contract provides for the redevelopment by Owner of the Project Area (as defined in the Contract) and located within the Pentagon Park Tax Incremental Financing district, established by the Authority pursuant to Resolution No. 14 - 2014 – 2, in coordination with the Authority and with the cooperation and assistance of the City; and WHEREAS, the Contract provides for the expenditure of public and other funds for certain Minimum Improvements to assist in the redevelopment of the Project Area; and WHEREAS, such Minimum Improvements include a ground-level, outdoor plaza and amenity area (the “Plaza”; defined in the Contract as the Plaza Element), which such Plaza is located on certain real property within the Project Area legally described on the attached Exhibit A (the “Plaza Property”); and WHEREAS, the City and Owner have agreed in the Contract that Owner shall grant an easement to the City pursuant to which the Plaza will be permanently open and accessible to the general public for its use and enjoyment pursuant to the terms and conditions of this Agreement; and WHEREAS, Owner has agreed to operate, manage, and maintain the Plaza pursuant and subject to the terms and conditions of the Contract and this Agreement; and WHEREAS, the City and Owner deem it to be in their interests and in furtherance of the economic development and redevelopment plan for the Project Area reflected in the Contract to enter into this Agreement; and WHEREAS, all capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Contract. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the others as follows: ARTICLE I. J-3 4845-5878-3602\5 GRANT OF EASEMENTS Section 1.1. Easement Premises. Owner hereby grants and conveys to the City, for the benefit of the City and the general public: (a) a non-exclusive, perpetual public easement over, across, upon and through the Plaza Property, together with and including all (i) surface improvements now or hereafter located thereon, including, without limitation, all paving, sidewalks, pathways, retaining walls, and other hardscapes and (ii) all amenities, components and fixtures now or hereafter located thereon, including, without limitation, all lighting, water features, benches, tables, chairs, fences, planters and plantings, trees, shrubs, landscaping, irrigation systems, and signage, all as required by, or reasonably inferable from, the Final Development Plan, Development Contract, and the Contract (collectively, the “Plaza Premises”) for the purpose of the general public utilizing the Plaza Premises and its components for their respective intended purposes, including use as public gathering and event space, in accordance with and subject to the terms and conditions of this Agreement, and (b) a non-exclusive, perpetual public easement over, across, upon and through those certain portions of the Project Area which provide pedestrian and vehicular access to and from public rights of way, streets, alleys, public spaces, and easements appurtenant and/or used in connection with the Plaza Premises located on the Project Area and adjoining or contiguous to the Plaza Premises, including all roads, driveways, parking lots, exterior concourses, passageways, sidewalks and stairways providing such means of access, all as [legally described and/or depicted] on the attached Exhibit B (collectively, the “Access Premises”, and together with the Plaza Premises, collectively the “Easement Premises”), all in accordance with and subject to the terms and conditions of this Agreement. [NTD: The final description and/or depiction of the Access Premises will be determined after construction of site improvements, and such Access Premises will be consistent with the non-exclusive ingress/egress routes available to all parcels in the Project Area and otherwise sufficient to provide the public reasonable means of access to and from the Plaza Premises.] ARTICLE II. TERM Section 2.1. Term. The easements granted hereby, and each reservation, covenant, condition and restriction contained in this Agreement, shall be effective as of the date hereof, shall be perpetual, and shall remain in effect until affirmatively released by the City. Such release shall be evidenced by the recording of a release or termination of this Agreement in the real estate records of Hennepin County, Minnesota, at which time this Agreement shall terminate, subject to reconciliation of expenses and obligations incurred through the date of release or termination and the continuation of those provisions that specifically survive termination of this Agreement, and J-4 4845-5878-3602\5 the Plaza and any other areas of the Easement Premises shall thereafter belong to and be under the sole control of Owner. ARTICLE III. USE OF EASEMENT PREMISES Section 3.1. Operation and Control of Easement Premises. During the term of this Agreement, Owner shall operate the Easement Premises in accordance with this Agreement and all applicable governmental laws, ordinances, regulations and orders, at Owner’s sole cost and expense. Subject to the terms of this Agreement, Owner has full authority and control over the management, operation, and use of the Easement Premises. Owner is entitled to keep and retain as its own property all income and revenue produced from the use and operation of the Easement Premises during the term of this Agreement and shall have no obligation to report to or account to the City for any such income or revenue or with respect to expenses incurred by Owner in its use and operation of the Easement Premises. Owner may engage such employees, agents, or independent contractors as it may deem advisable to conduct the management, repair, maintenance, and operation of the Easement Premises from time to time during the term of this Agreement. Except as specifically set forth herein, Owner is entitled to make all decisions and to execute all agreements, in its sole discretion, with respect to the Plaza so long as such decisions and agreements do not violate the provisions of this Agreement, the Contract, the approved Final Development Plan, or any applicable governmental laws, ordinances, regulations or orders, as each of the foregoing may be amended and so long as each of the foregoing remains in effect. Section 3.2. Special Events. The easement rights granted hereunder include the right for the City and/or members of the general public (including organizations not affiliated with the City) to reserve and use the Plaza Premises for periodic community special events (e.g., fundraising walks/runs, art fairs, holiday events, community celebrations, etc.), provided that Owner may establish an application and permit process for such special events and require that the sponsor of such special event enter into a standard form license or similar agreement with Owner for the use of the Plaza Premises containing certain conditions, requirements, and restrictions which must be met by the special event’s sponsor (e.g., insurance requirements, clean-up responsibilities, etc.). The terms and conditions of any such permit/application process and all such license/use agreements shall be commercially reasonable and applied to all users and special event sponsors on a non-discriminatory basis. Owner shall be entitled to charge a commercially reasonably use fee for such special events to cover expenses, management, and overhead costs associated with such special events. Section 3.3. Waste, Nuisance, Damage, Disfigurement or Injury to Easement Premises. Neither the City nor Owner shall knowingly or willfully commit or suffer to be committed any waste or damage in or upon the Easement Premises, or any disfigurement or injury to any improvements hereafter erected or located upon the Easement Premises, or any part thereof, or the fixtures and/or equipment thereof. Owner, in its use and occupancy of the Easement Premises, shall not knowingly and willfully commit or suffer to be committed any act or thing which constitutes a public nuisance. Usual and normal wear and tear, damage by the elements, unavoidable casualty or depreciation and diminution over time shall not be considered “waste,” “nuisance,” “damage, “disfigurement,” or “injury.” J-5 4845-5878-3602\5 Section 3.4. Owner’s Reservation of Certain Rights; Easement Use Limitations. The City’s easement rights under this Agreement shall be subject to the following reservations and limitations as well as the other applicable provisions contained in this Agreement: (a) Owner reserves the right to close-off any portion of the Easement Premises for such reasonable period of time as may be legally necessary, in the opinion of Owner’s counsel, to prevent the acquisition of prescriptive rights by anyone; provided, however, that prior to closing-off any portion of the Easement Premises, Owner shall give as much written notice as reasonably practicable of its intention to do so. (b) Owner reserves and retains the right at any time and from time to time to exclude and restrain any person or entity who is using the Easement Premises to engage in disruptive civic, public, charitable or political activities, including, without limitation, (i) exhibiting any placard, sign or notice, (ii) distributing any circular, handbill, placard or booklet, (iii) soliciting memberships, signatures or contributions for private, civic, public, charitable or political purposes, (iv) parading, picketing or demonstrating, or (v) failing to follow Rules (as defined below) relating to the use and operation of the Easement Premises. (c) Owner reserves the right to temporarily erect or place barriers in and around areas on the Easement Premises which are being constructed and/or repaired in order to ensure either safety of persons or protection of property. (d) Owner reserves the right to adopt and enforce reasonable rules and regulations (as the same may be revised from time to time, collectively “Rules”) for the safe, efficient, and orderly use and operation of the Easement Premises, so long as such Rules are applied on a non-discriminatory basis and do not adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent. (e) Owner reserves and retains any and all other property and use rights in and to the Easement Premises (including, without limitation, the right to grant other easements over, under and upon the Easement Premises), so long as such use does not materially and unreasonably interfere with or adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent (it being expressly understood that the use of the Easement Premises for underground utilities, pedestrian traffic, landscaping and/or signage shall be deemed not to materially interfere with such passage or accommodation). (f) Subject to the terms of the Contract, Owner reserves the right to redesign, redevelop, renovate and otherwise change the Easement Premises so long as (i) Owner obtains all requisite governmental approvals, (ii) such changes do not diminish the overall quality, quantity, and/or size of the Easement Premises (or any of its component parts) beyond a de minimis extent, and (iii) such changes do not otherwise adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent. (g) Owner reserves the right to hold or allow private and exclusive events on J-6 4845-5878-3602\5 the Plaza Premises or otherwise periodically exclusively use the Plaza Premises from time to time, so long as not to adversely impact the City’s or the public’s rights to the use of the Easement Premises as set forth in this Agreement beyond a de minimis extent. (h) The use of bicycles, segways, rollerblades, skateboards or other wheeled or motorized devices (other than wheeled and motorized devices utilized by handicapped/disabled persons) shall not be permitted on the Plaza Premises. (i) Nothing in this Agreement shall grant or declare any easements or other rights whatsoever with respect to any interior portions of any Element in the Project Area. ARTICLE IV. MAINTENANCE OF THE EASEMENT PREMISES Section 4.1. Maintenance. At all times during the term hereof, Owner, at its cost and expense, shall keep and maintain the Easement Premises in good condition and repair in a first-class manner, similar to that of other public plazas located within other first-class, multi-use projects in the Minneapolis-Saint Paul metropolitan area, which such maintenance shall include, without limitation, the following: (a) all repairs, replacements, renewals, alterations, additions and betterments thereto, structural and non-structural, ordinary and extraordinary, and foreseen and unforeseen, all as may be necessary to keep the Easement Premises in the condition and repair required by this Agreement; (b) the inspection, repair, replacement, and maintenance of all pedestrian surfaces to a smooth and evenly-covered condition, which obligation includes, without limitation, the cleaning, sweeping, repairing and resurfacing of such pedestrian surfaces; (c) periodic removal of all papers, debris, filth, refuse, ice and snow, provided all sweeping shall be at appropriate intervals during such times as shall not unreasonably interfere with the use of the Easement Premises; (d) maintaining and replacing all landscaping and other vegetation; (e) keeping in repair, replacing and repainting any appropriate directional signs or markers within or associated with the Easement Premises; (f) operating, keeping in repair, cleaning and replacing when necessary such lighting facilities as may be reasonably required, including, without limitation, all lighting necessary or appropriate for Easement Premises security; and (g) maintaining in good working order, repairing, and replacing as necessary all domestic water, sewer, storm water, gas, electricity, power, heat, telephone, other communications service and any and all other utility or similar services used, rendered, or supplied, upon, at, from, or in connection with the Easement Premises. J-7 4845-5878-3602\5 It is distinctly understood that the preceding shall not require maintenance and/or repair of the Easement Premises and/or improvements hereinafter erected thereon in perfect condition or is a condition equal to new at all times, but Owner shall use commercially reasonable efforts to keep and maintain the same in such condition as to minimize, so far as is practicable, by reasonable care, maintenance, replacement, and repair, the effects of use, decay, injury, and destruction of the same or any part thereof, the City recognizing that depreciation and diminution by reason of ordinary wear and tear, age, use, and environmental factors is unavoidable and expected. Section 4.2. No Obligation of the City to Repair or Maintain. The City shall have no obligation of any kind, expressed or implied, to repair, rebuild, restore, reconstruct, modify, alter, replace, or maintain the Easement Premises or any part thereof; provided, however, if the City organizes, sponsors, and carries out a special event on the Plaza Premises, the City will assume responsibility for extraordinary clean-up and repair arising from and related to the use of the Plaza Premises for such special event in accordance with Rules and any standard license agreement for special events on the Plaza Premises adopted by Owner in accordance with Section 3.2 above. ARTICLE V. UTILITIES Section 5.1. Utility Charges. During the term of this Agreement, Owner shall pay, or cause to be paid, when the same become due, all charges for water, sewer usage, storm water, gas, electricity, power, heat, telephone, or other communications service and any and all other utility or similar services used, rendered, supplied, or consumed in, upon, at, from, or in connection with the Easement Premises, or any part thereof. TAXES AND ASSESSMENTS Section 6.1. Payment of Taxes and Assessment. Owner shall pay, or cause to be paid, before becoming delinquent, all real estate taxes, charges, assessments, and levies, assessed and levied by any governmental taxing authority during the term of this Agreement against the Easement Premises. Nothing contained in this Agreement shall require Owner to pay any franchise, estate, inheritance, excise, succession, capital levy, or transfer tax of the City or any income, excess profits or revenue tax payable by the City under this Agreement. Subject to the terms of the Contract, Owner shall have the right and option, at any time but solely at Owner’s expense, to pay any real estate taxes or assessments in installments or under protest or in a similar manner, or to contest the levy or amount of the same in appropriate legal or administrative proceedings. ARTICLE VII. INDEMNIFICATION, INSURANCE Section 7.1. Indemnification of the City. Except to the extent caused by the willful misconduct or negligence of the City, its employees or agents, or the general public, or arising out of the default by the City and its officers, employees or agents of obligations made pursuant to a contract with Owner, including this Agreement, Owner hereby covenants and agrees to assume J-8 4845-5878-3602\5 and to indemnify and save harmless the City and its employees from and against any and all claims, demands, actions, damages, costs, expenses, reasonable attorneys’ fees, and liability in connection with the loss of life, personal injury and/or damage to property, to the extent arising from or out of the design or initial construction, maintenance and operation of the Easement Premises, or in connection with the use or occupancy of the Easement Premises, or any part thereof, by Owner, or to the extent arising out of the breach of Owner’s obligations hereunder. Section 7.2. Property Insurance. At all times during the term hereof, Owner, at its sole cost and expense, shall keep the Easement Premises, and all alterations, extensions, and improvements thereto and replacements thereof, insured, with such deductibles as Owner deems appropriate, against loss or damage by fire and against those casualties covered by extended coverage insurance and against vandalism and malicious mischief and against such other risks, of a similar or dissimilar nature, as are customarily covered with respect to improvements similar in construction, general location, use, and occupancy to the Easement Premises, at commercially reasonable coverage levels, to be reviewed from time to time by Owner. Section 7.3. Personal Property. All property of every kind and character which Owner may keep or store in, at, upon, or about the Easement Premises shall be kept and stored at the sole risk, cost, and expense of Owner. Section 7.4. Liability Insurance. During the term of this Agreement, Owner shall procure and maintain continuously in effect (or shall cause the same to occur), the following policies of insurance of the kind and minimum amounts as are customarily maintained with respect to facilities and improvements similar to those located on the Easement Premises, at commercially reasonable coverage levels, to be reviewed from time to time by Owner: insurance against liability for injuries to or death of any person or damage to or loss of property arising out of or in any way relating to the use, occupancy, or condition of the Easement Premises, or any part thereof, including insuring the indemnification obligations set forth in Section 7.1 above. Such insurance shall provide that the City is an additional insured. Section 7.5. General Insurance Requirement. All insurance required in this Agreement shall be placed with financially sound and reputable insurers licensed to transact business in the State of Minnesota. Owner shall, within a commercially reasonable time following the City’s request therefor, furnish the City with copies of policies evidencing all such insurance or a certificate or certificates of the respective insurers stating that such insurance is in force and effect. Each policy of insurance herein required shall contain a provision that the insurer shall not cancel it without giving written notice to the City at least 10 days before the cancellation becomes effective. The insurance coverage herein required may be provided by a blanket insurance policy or policies. Section 7.6. No Obligation of the City for Insurance. At no time and under no circumstances shall the City be required to take out, maintain in force and effect, or pay for any type of insurance coverage with reference to the protection of and/or ownership of and/or occupancy of and/or a suit relating to the Easement Premises and/or any improvements hereafter located thereon. ARTICLE VIII. J-9 4845-5878-3602\5 ASSIGNMENT Section 8.1. Assignment by the City. During the term of this Agreement, the City may not assign or transfer its interest under this Agreement without the prior written consent of Owner. Section 8.2. Assignment by Owner. During the term of the Contract, Owner may not assign or otherwise transfer its interest under this Agreement, except as provided in the Contract. The City shall recognize and approve any successors or assigns of Owner in accordance with the terms and provisions of the Contract. Following the full and final payment of the TIF Notes issued under the terms of the Contract, full and final payment of the TIF Notes issued under the terms of the Contract Owner may assign this Agreement without consent of the City. ARTICLE IX. CASUALTY Section 9.1. Destruction. In the event that all or any part of the Easement Premises is destroyed by fire or other casualty, and subject to a determination by the relevant mortgage lender, Owner shall promptly rebuild or reconstruct the same to the extent insurance proceeds are available or, in the event insurance proceeds are not sufficient to reconstruct the same, to the extent insurance proceeds combined with any contributions by Owner toward reconstruction are available. If Owner rebuilds or reconstructs the Easement Premises, the proceeds from any and all insurance policies covering risks against loss or damage shall be used to rebuild or reconstruct. ARTICLE X. EMINENT DOMAIN Section 10.1. Major Condemnation. If all of the Plaza Premises is taken, acquired, or condemned by eminent domain for any public or quasi-public use or purpose, this Agreement shall terminate as of the date of vesting of title in the condemning authority. ARTICLE XI. DEFAULT AND REMEDIES Section 11.1. Default by the City. If the City fails to perform any of its obligations under this Agreement, and fails to cure such default after 90 days’ written notice of such default, then in such case Owner may (a) declare the termination of this Agreement and re-enter and take possession of the Easement Premises or (b) pursue all available remedies at law and in equity. In such case, or at such time as this Agreement is terminated pursuant hereto, the City agrees to execute and deliver to Owner a written termination of this Agreement in recordable form, which termination agreement will be filed in the official records of Hennepin County, Minnesota. Section 11.2. Default by Owner. If Owner fails to perform any of its obligations under this Agreement, and fails to cure such default after 90 days’ written notice of such default or, if such default cannot reasonably be cured within such 90 days, fails to commence curative action J-10 4845-5878-3602\5 and thereafter diligently complete the same, then, in such case, the City may pursue all available remedies at law and in equity. ARTICLE XII. MISCELLANEOUS Section 12.1. Waiver. The waiver by any party hereto of any breach or default of any provisions anywhere contained in this Agreement shall not be deemed to be a waiver of any subsequent breach or default thereof. No provision of this Agreement shall be deemed to have been waived by any party hereto unless such waiver is in writing and signed by the party charged with any such waiver. Section 12.2. Amendments. Except as otherwise herein provided, and not otherwise, no subsequent alteration, amendment, change, waiver, discharge, termination, deletion, or addition to this Agreement shall be binding upon either party unless in writing and signed by both parties. Owner and the City agree to join in and consent to amendments to this Agreement, to the extent such amendments are reasonably required by Owner’s relevant mortgage lender encumbering the Easement Premises, provided; however, that Owner and the City shall not be required to enter into any amendment which does not adequately protect the legitimate interest and security of the Authority or the City with respect to the redevelopment of the Easement Premises as contemplated in the Contract. Section 12.3. Joinder; Permitted Encumbrance. Except for the mortgagee consent attached hereto, this Agreement does not require the joinder or approval of any other person and each of the parties respectfully has the full, unrestricted and exclusive legal right and power to enter into this Agreement for the term and upon the provisions herein recited and for the use and purposes hereinabove set forth. This Agreement shall constitute a permitted encumbrance under any loan agreement heretofore or hereafter entered into between Owner and any construction lender or permanent lender. Section 12.4. Estoppel Certificate. Each party, respectively, agrees that at any time and from time to time, within ten business days after receipt of a written request by the other party, to execute, acknowledge and deliver to such party a statement in writing and in such form as will enable it to be recorded in the proper office for the recordation of deeds and other instruments certifying as of the date of such certification: (a) that this Agreement is unmodified and in full force and effect or, if there have been modifications, that the same are in full force and effect as modified and identifying the modifications; (b) that no party is in default under any provisions of this Agreement or, if there has been a default, the nature of such default; (c) that all work to be performed, under this Agreement or any related agreement has been performed or, if not so performed, specifying the work to be performed; and (d) as to any other factual matter that the requesting party or a prospective mortgagee or other lender shall reasonably request. It is intended that any such statement may be relied upon by any person, prospective mortgagee of, or assignee of any mortgage, upon such interest. Any such statement on behalf of the City may be executed by the City Manager without City Council approval. Section 12.5. Dedication. Nothing contained in this Agreement will be deemed to be a J-11 4845-5878-3602\5 gift or dedication of any portion of the Easement Premises to the general public, except as explicitly set forth in this Agreement. Section 12.6. Notices. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is (a) dispatched by registered or certified mail, postage prepaid, return receipt requested, (b) sent by recognized overnight courier (such as Federal Express), or (c) delivered personally, as follows: In the case of Owner: Pentagon Village, LLC Attn: Jay Scott 8560 Kelzer Pond Drive Victoria, MN 55386 with a copy to: Anthony J. Gleekel Siegel Brill P.A. 100 Washington Avenue South Minneapolis, MN 55401 In the case of the City: City of Edina Attn: City Manager 4801 W. 50th Street Edina, MN 55424 with a copy to: Jay R. Lindgren Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 12.7. Dispute Resolution. Owner and the City will use the following special dispute resolution process for those unresolved disputes or the lack of agreement following a request for consent or approval, before exercising any applicable legal remedies. Upon the occurrence of such an unresolved dispute, Jay Scott (or his successor or delegate), as Owner’s representative, and the City Manager (or its delegate), as the City’s representative, shall promptly meet in person and explore resolution until either party determines that effective resolution is not possible without more formal dispute resolution. Owner and the City, through their respective representative shall complete this special dispute resolution process in good faith before resorting to any other applicable legal process or remedy. The foregoing notwithstanding, the special dispute resolution process, as set forth in this section, shall be deemed a failure if such dispute or matter is not resolved within 30 days of the initial written request by a party to commence the process, at J-12 4845-5878-3602\5 which time the parties may pursue any other applicable legal remedies. Section 12.8. No Third Party Beneficiary. This Agreement is not intended to give or confer any benefits, rights, privileges, claims, action or remedies to any person or entity. Section 12.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 12.10. Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. Section 12.11. Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld. All consents or approvals shall be in writing in order to be effective. Section 12.12. No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by any party and thereafter waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 12.13. Survival. The easements granted hereby and each reservation, covenant, condition and restriction contained in this Agreement will run with the land and will be binding upon, and inure to the benefit of, as the case may be, Owner and the City and their respective successors and assigns. [Remainder of page intentionally left blank; signature pages follow] J-13 Signature Page to Plaza Easement Agreement (Pentagon South) 4845-5878-3602\5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CITY: CITY OF EDINA, MINNESOTA By: Its: Mayor By: Its: City Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 20____, by ____________ and ____________, the Mayor and City Manager respectively, of the City of Edina, Minnesota, on behalf of the City. Notary Public J-14 Signature Page to Plaza Easement Agreement (Pentagon South) 4845-5878-3602\5 OWNER: PENTAGON VILLAGE, LLC a Minnesota limited liability company By: _________________________________ Name: ______________________________ Its__________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of ______, 20____, by , the of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public J-15 Exhibit A to Plaza Easement Agreement (Pentagon South) 4845-5878-3602\5 EXHIBIT A Legal Description of the Plaza Property [an approximately one acre parcel within Lot 5, Block 1, Pentagon Village, depicted as “The Plaza” in the Pentagon South Final Development Plan, and to be more particularly described following any necessary further subdivision of said Lot 5] J-16 Exhibit B to Plaza Easement Agreement (Pentagon South) 4845-5878-3602\5 EXHIBIT B [Legal Description and/or Depiction] of the Access Premises [To be inserted] J-17 4845-5878-3602\5 CONSENT AND SUBORDINATION The undersigned, ___________________, a ___________________, holder of that certain [Mortgage] executed by Pentagon Village, LLC, a Minnesota limited liability company, dated ________________, 20____, filed ________________, 201__, as Document No. ___________, in the office of the County Recorder in and for Hennepin County, Minnesota, and filed ________________, 20____, as Document No. ___________, in the office of the Registrar of Titles in and for Hennepin County, Minnesota, in favor of ________________ (the “Mortgage”), hereby consents to the foregoing Plaza Easement Agreement (Pentagon South) (the “Easement Agreement”), and hereby subjects and subordinates the Mortgage and all of its right, title and interest in and to the Easement Agreement. ___________________________________, a ___________________ By: Name: Title: STATE OF ______________ ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of ____________, 20______, by ____________________, the _________________ of ___________________, a ___________________, on behalf of the ___________________. Notary Public K-1 4828-2967-4867\4 EXHIBIT K Form of Minimum Assessment Agreement MINIMUM ASSESSMENT AGREEMENT by and among CITY OF EDINA, MINNESOTA, HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA and PENTAGON VILLAGE, LLC Dated as of ________________ ___, 20___ THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 K-2 4828-2967-4867\4 MINIMUM ASSESSMENT AGREEMENT (Pentagon South) THIS MINIMUM ASSESSMENT AGREEMENT (this “Agreement”) is made and entered into this ___ day of ____________, 20___ (“Effective Date”), by and among the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (the “City”); the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”); and PENTAGON VILLAGE, LLC, a Minnesota limited liability company (“Redeveloper”). RECITALS: WHEREAS, pursuant to Minnesota Statutes, Sections 469.174 to 469.1799, as amended (the “TIF Act”), the Authority and the City established the Pentagon Park Tax Increment Financing District (redevelopment district) (the “TIF District”) pursuant to Authority Resolution No. 2014 – 2, which such TIF District encompasses approximately 42 acres of land located along 77th Street West between Minnesota Highway 100 and Parklawn Avenue (the “Redevelopment Area”), as such Redevelopment Area is more particularly described in the redevelopment plan for the Southeast Edina Redevelopment Project Area originally adopted by the Authority pursuant said resolution; and WHEREAS, Redeveloper is the fee simple owner of that portion of Redevelopment Area legally described as Lots 1 through 5, Block 1, Pentagon Village, Hennepin County, Minnesota, according to the plat thereof (collectively, the “Land”, and when, in this Agreement, a portion of the Land is referenced by Lot and/or number (e.g., “Lot” or “Lot 1”), such reference shall be to a Lot, generally, or a specific numbered Lot, as set forth in said plat of Pentagon Village); and WHEREAS, the City, the Authority, and Redeveloper are parties to that certain Redevelopment Agreement dated October 16, 2018 (the “Contract”), which contemplates that Redeveloper, and/or its successors or assigns, will construct or caused to be constructed certain improvements on each Lot (“Improvements”), which such Improvements may consist of vertical improvements and/or site improvements pursuant to different plans for each individual Lot, which, when taken together, will consist of an integrated, mixed-use project on the Land (collectively, the “Project); and WHEREAS, in connection with Redeveloper’s construction and development of the Improvements, and the Project as a whole, the Authority has agreed to issue certain TIF Notes to Redeveloper, and upon satisfaction of certain conditions set forth in the Contract, the Authority will provide certain TIF Assistance to Redeveloper through payment of Available Tax Increment and interest under and in accordance with such TIF Notes; and WHEREAS, the City, the Authority, and Redeveloper have reviewed certain architectural and engineering plans and specifications for the Improvements (“Plans”); and WHEREAS, pursuant to Minnesota Statutes, Section 469.177, subdivision 8, the City, the Authority, and Redeveloper wish to establish certain minimum assessed values for each Lot, together with associated Improvements for each respective Lot, as set forth herein. K-3 4828-2967-4867\4 NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants, and agreements made by each to the other, do hereby agree as follows: 1. Recitals; Exhibits; Definitions. The foregoing Recitals and the exhibits attached to this Agreement are incorporated by reference as if fully set forth herein. Capitalized terms used but not defined herein shall have the meanings given such terms in the Contract, unless the context hereof clearly requires otherwise. 2. Minimum Assessed Values. (a) Agreed Upon Minimum. As of the date hereof, Redeveloper has satisfied the conditions under the Contract which are necessary for the Authority to be obligated to make payments of Available Tax Increment and interest under TIF Note [A] pursuant to the terms and conditions of such TIF Note and the Contract, but the Land, together with the Improvements which have reached substantial completion as of the date hereof in accordance with the applicable Plans, have not, collectively, caused the market value of the Land and such completed Improvements, as determined by the assessor of the City (the “Assessor”) in accordance with Minnesota Statutes, Section 273.11 (the “Assessed Value”), to be increased to amount of at least $19,031,100 in the aggregate (“Minimum Valuation”) as required by the Contract. Therefore, for the assessments of the Lots and Improvement made as of [____________, 20___], and continuing until the Termination Date (as defined below), the minimum assessed values of the Lots and Improvements for ad valorem tax purposes (the “Minimum Assessed Values”), shall be as follows: Lot Minimum Assessed Value 1 $5,250,000 2 $3,250,000 3 $3,250,000 4 $1,600,000 5 $5,650,000 Total $19,031,100 Such Minimum Assessed Values shall not be reduced by any action taken by Redeveloper (other than a deed in lieu of, or under threat of, condemnation by the City, Hennepin County or other condemning authority), to less than the said amount, and that during the term of this Agreement no reduction of the Assessed Values therefor below said Minimum Assessed Values shall be sought by Redeveloper or granted by any public official or court except in accordance with Minnesota Statutes, Section 469.177, subdivision 8. Redeveloper acknowledges and agrees that the Land and the Project are subject to ad valorem property taxation and that such property taxes constitute taxes on “real property” (as provided in Section 469.174, subdivision 7(d) of the TIF Act) and, to the extent reflecting net tax capacity rates of taxing jurisdictions levied against the captured net tax capacity of the TIF District, tax increment. (b) Term; Termination. This Agreement and the Minimum Assessed Values (or such higher Assessed Values determined by the Assessor in accordance with Section 2(c) below) shall continue in full force and effect until the earlier of (i) the first assessment date (i.e., January K-4 4828-2967-4867\4 2 of a given calendar year) upon which the Assessed Value of the Land and Improvements, collectively, exceeds the Minimum Valuation; (ii) the TIF District is decertified, defeased or terminated in accordance with its terms; or (iii) the date of full and final payment of the TIF Notes issued under the terms of the Contract) (the “Termination Date”). Upon the earlier of such dates, this Agreement shall automatically terminate and the market values of the Lots and associated Improvements for ad valorem tax purposes shall be based on the then Assessed Values of the same. The Authority shall duly execute and record a release of this Agreement upon the written request and sole expense of the Redeveloper or the then holder of fee title to the Land or any applicable Lot. (c) Higher Assessed Values. Nothing in this Agreement shall limit the discretion of the Assessor or any other public official or body having the duty to determine the market value of the Lots, the Land, the Project and other facilities on the Land for ad valorem tax purposes, to assign to one or more Lots, the Land, the Project or to any other improvements constructed on the Land, on a nondiscriminatory basis and treated fairly and equally with all other property so classified in the respective counties, an assessed value in excess of the Minimum Assessed Values specified in Section 2(a) hereof. Subject to the terms of the Contract, Redeveloper shall have the normal remedies available under the law to contest the Assessor’s Assessed Values in excess of said Minimum Assessed Values, but only to the extent of the excess. 3. Filing and Certification. (a) Assessor Certification. The City shall present this Agreement to the Assessor and request the Assessor to execute the certification attached hereto as Exhibit A. Redeveloper shall provide to the Assessor all information relating to the Land, Improvements, and the Project requested by the Assessor for the purposes of discharging the Assessor’s duties with respect to the certification. (b) Filing. Promptly following the Effective Date, Redeveloper shall cause this Agreement and a copy of Minnesota Statutes, Section 469.177, subdivision 8, attached hereto as Exhibit B, to be recorded in the office of the County Recorder or Registrar of Titles of Hennepin County, and shall pay all costs of such recording. 4. Relation to Contract. The covenants and agreements made by Redeveloper in this Agreement are separate from and in addition to the covenants and agreements made by Redeveloper in the Contract and nothing contained herein shall in any way alter, diminish or supersede the duties and obligations of Redeveloper under the Contract. No preamble, recital, or provision of this Agreement is intended to modify the terms of the Contract. 5. Successor. This Agreement shall insure to the benefit of and be binding upon the successors and assigns of the parties. 6. Waiver. Redeveloper hereby waives any rights that it may have to protest or contest the amounts of the assessments set forth herein. 7. Miscellaneous Provisions. K-5 4828-2967-4867\4 (a) Binding Effect/Severability/Counterparts. This Agreement shall inure to the benefit of and shall be binding upon the Authority, the City, and Redeveloper and their respective successors and assigns, and upon all subsequent owners of the Land and the Project. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. (b) Amendments, Changes and Modifications. This Agreement may be amended or any of its terms modified only by written amendment authorized and executed by the Authority, the City, and Redeveloper, and otherwise in compliance with Section 469.177, subdivision 8, of the TIF Act. (c) Further Assurances. The Authority, the City, and Redeveloper shall, from time to time, execute, acknowledge, and deliver, or cause to be executed, acknowledged, or delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Land or the Project, or for carrying out the expressed intention of this Agreement. (d) Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota. (e) Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Sections of this Agreement. [Remainder of page intentionally left blank; signature pages follow] K-6 [Signature Page to Minimum Assessment Agreement (Pentagon South)] 4828-2967-4867\4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CITY OF EDINA, MINNESOTA By _______________, Mayor By _______________, City Manager STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _____________, 20___, by __________________ and __________________, the Mayor and the City Manager, respectively, of the City of Edina, Minnesota, on behalf of the City. Notary Public K-7 [Signature Page to Minimum Assessment Agreement (Pentagon South)] 4828-2967-4867\4 HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By _________________________________ _______________, Chair By ________________________________ _______________, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 20___, by _________________ and _________________, the Chair and Secretary respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. ________________________________ Notary Public K-8 [Signature Page to Minimum Assessment Agreement (Pentagon South)] 4828-2967-4867\4 PENTAGON VILLAGE, LLC, a Minnesota limited liability company By: _________________________________ Name: ______________________________ Its__________________________________ STATE OF _______________ ) ) ss. COUNTY OF _____________ ) The foregoing instrument was acknowledged before me this ___ day of ______________, 20___, by __________________, the _________________ of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public K-9 Exhibit A 4828-2967-4867\4 EXHIBIT A ASSESSOR’S CERTIFICATE The undersigned, being the duly qualified and acting assessor of the City of Edina, Minnesota, hereby certifies that. 1. I am the assessor responsible for the assessment of the Land described in the foregoing Minimum Assessment Agreement (the “Agreement”) dated as of _________________, 20___; 2. I have read the Agreement and I have received and read a duplicate copy of the Contract referred to in the Agreement; 3. I have received and reviewed the Plans for the Improvements agreed to be constructed on the Lots pursuant to the Contract; 4. I have received and reviewed an estimate prepared by Redeveloper of the cost of each Lot and the Improvements to be constructed thereon; 5. I have reviewed the market value previously assigned to the Land, and the minimum assessed values to be assigned to the Lots and/or Improvements by the Agreement is a reasonable estimate; and 6. I hereby certify that the market value assigned to the Lots and/or the Improvements by the Agreement is reasonable and the market value assigned to the Lots and/or the Improvements, for the assessment as of _________, 20___, and continuing throughout the term of the Agreement, shall be not less than $____________. Dated: ____________, 20___ City Assessor, City of Edina, Minnesota K-10 Exhibit B 4828-2967-4867\4 EXHIBIT B MINNESOTA STATUTES, SECTION 469.177, SUBDIVISION 8 Assessment agreements. An authority may enter into a written assessment agreement with any person establishing a minimum market value of land, existing improvements, or improvements to be constructed in a district, if the property is owned or will be owned by the person. The minimum market value established by an assessment agreement may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July 1 of an assessment year, the market value as provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. The assessor shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, shall execute the following certification upon the agreement: The undersigned assessor, being legally responsible for the assessment of the above described property, certifies that the market values assigned to the land and improvements are reasonable. The assessment agreement shall be filed for record and recorded in the office of the county recorder or the registrar of titles of each county where the real estate or any part thereof is situated. After the agreement becomes effective for assessment purposes, the assessor shall value the property under section 273.11, except that the market value assigned shall not be less than the minimum market value established by the assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. The owner of the property may seek, through the exercise of administrative and legal remedies, a reduction in market value for property tax purposes, but no city assessor, county assessor, county auditor, board of review, board of equalization, commissioner of revenue, or court of this state shall grant a reduction of the market value below the minimum market value established by the assessment agreement during the term of the agreement filed of record regardless of actual market values which may result from incomplete construction of improvements, destruction, or diminution by any cause, insured or uninsured, except in the case of acquisition or reacquisition of the property by a public entity. Recording an assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. An assessment agreement may be modified or terminated by mutual consent of the current parties to the agreement. Modification or termination of an assessment agreement must be approved by the governing body of the municipality. If the estimated market value for the property for the most recently available assessment is less than the minimum market value established by the assessment agreement for that or any later year and if bond counsel does not conclude that termination of the agreement is necessary to preserve the tax exempt status of outstanding bonds or refunding bonds to be issued, the modification or termination of the assessment agreement also must be approved by the governing bodies of the county and the school district. A document modifying or terminating an agreement, including records of the municipality, county, and school district approval, must be filed for record. The assessor's review and certification is not required if the document terminates an agreement. A change to an agreement not fully executed before July 1 of an assessment year is not effective for assessment purposes for that assessment year. If an assessment agreement has been modified or prematurely terminated, a person may seek a reduction in market value or tax through the exercise of any administrative or legal remedy. The remedy may not provide for reduction of the market value below the minimum provided under a modified assessment agreement that remains in effect. In no event may a reduction be sought for a year other than the current taxes payable year. 4845-1562-0721\2 FIRST AMENDMENT TO MASTER REDEVELOPMENT AGREEMENT THIS FIRST AMENDMENT TO MASTER REDEVELOPMENT AGREEMENT (“Amendment”) is made and entered into as of October 16, 2018 (“Effective Date”), by and among the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (the “City”), the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”) and PENTAGON REVIVAL, LLC, a Delaware limited liability company (“Master Redeveloper”). RECITALS WHEREAS, the City, the Authority and Master Redeveloper are parties to a Master Redevelopment Agreement dated May 20, 2014 (the “Master Agreement”); and WHEREAS, the Master Agreement allows Master Redeveloper to designate a separate entity (referred to in the Master Agreement as a “Secondary Redeveloper”) to undertake the development and construction any Phase or Element of the Minimum Improvements; and WHEREAS, Master Redeveloper desires to designate PENTAGON VILLAGE, LLC, a Minnesota limited liability company (“South Redeveloper”), as the Secondary Redeveloper for approximately 12 acres of the Project Area, referred to herein as the “South Project Area” and legally described on the attached Exhibit A; and WHEREAS, South Redeveloper is an Affiliate of Master Redeveloper, and the two entities share common ownership; and WHEREAS, pursuant to City Council Resolution No. 2018-62 (“Pentagon South Approval Resolution”) and City Ordinance No. 2018-11 (“Pentagon South PUD Ordinance”), the City has approved South Redeveloper’s application for the rezoning the South Project Area to a planned unit development and has approved a Final Plat, a Final Development Plan, and a final Development Contract for the South Project Area (together with the Pentagon South Approval Resolution and Pentagon South PUD Ordinance, collectively, the “Pentagon South City Approvals”); and WHEREAS, on the same date as this Amendment, the City, the Authority and South Redeveloper have entered into that certain Redevelopment Agreement related to the South Project Area (the “Pentagon South Redevelopment Agreement”); and WHEREAS, South Redeveloper now proposes to construct certain improvements on the South Project Area pursuant to the terms and conditions of the Pentagon South City Approvals and that Pentagon South Redevelopment Agreement; and WHEREAS, upon the terms and conditions set forth in this Amendment, the City and the Authority have agreed to consent to the designation of South Redeveloper as a Secondary Redeveloper of the South Project Area, and the parties hereto have agreed to release the South Project Area from the Master Agreement and otherwise amend the Master Agreement as set forth 2 4845-1562-0721\2 herein. NOW, THEREFORE, in consideration of the promises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 1. Recitals; Definitions. The foregoing recitals are true and accurate and are incorporated herein as part of the agreement of the parties. Any word or term with an initial capital letter shall have the meaning given to it in this Amendment or if not so defined herein shall have the meaning given to it in the Master Agreement. 2. Approval of Secondary Developer and Transfer. Pursuant to Sections 12.2 and 12.3 of the Master Agreement, the City and the Authority hereby consent to (a) the designation of South Redeveloper to undertake the redevelopment of the South Project Area in accordance with Pentagon South City Approvals and Pentagon South Redevelopment Agreement and the Transfer of the South Project Area to South Redeveloper. The City, the Authority and Master Redeveloper acknowledge and agree that such Transfer is not a Controlling Interest Transfer. 3. Release of South Project Area. The South Project Area and all Master Redeveloper’s obligations related thereto are hereby released from the Master Agreement and the same shall hereafter be governed by the Pentagon South Redevelopment Agreement. If there is a conflict between the provisions of the Master Agreement and the provisions of Pentagon South Redevelopment Agreement with respect to the South Project Area, the provisions of the Pentagon South Redevelopment Agreement shall control. 4. Master Redeveloper’s Event of Default. Master Redeveloper’s Event of Default under the Master Agreement for 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, is hereby deemed to have been timely cured in accordance with the Master Agreement, and no Default or Event of Default currently exists under the Master Agreement. 5. Ratification. Except as specifically modified by this Amendment, the terms and provisions of the Master Agreement shall remain in full force and effect. 6. Binding Effect. This Amendment amends and supplements the Master Agreement. If there is a conflict between the provisions of the Master Agreement and this Amendment, the provisions of this Amendment shall control. This Amendment shall be binding upon and inure to the benefit of the City, the Authority, Master Redeveloper, and their respective successors and assigns. 7. Counterparts. This Amendment may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile or email copies shall be deemed originals. [SIGNATURES APPEAR ON FOLLOWING PAGES] [Signature Page to First Amendment to Master Redevelopment Agreement] IN WITNESS WHEREOF, the City, the Authority and Master Redeveloper have caused this Amendment to be duly executed in their names and on their behalf, all on or as of the date first above written. CITY OF EDINA, MINNESOTA By: _____________________________ James B. Hovland, Mayor By: _____________________________ Scott H. Neal, City Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _______________, 2018, by James B. Hovland and Scott H. Neal, the Mayor and City Manager, respectively, of the City of Edina, Minnesota, on behalf of the City of Edina. Notary Public [Signature Page to First Amendment to Master Redevelopment Agreement] HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: ______________________________ James B. Hovland, Chair By: ______________________________ Robert J. Stewart, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _______________, 2018, by James B. Hovland and Robert J. Stewart, the Chair and Secretary, respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public [Signature Page to First Amendment to Master Redevelopment Agreement] PENTAGON REVIVAL, LLC a Delaware limited liability company By: ____________________________________ Name: __________________________________ Its: ____________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _______________, 2018, by __________________, the _______________________ of PENTAGON REVIVAL, LLC, a Delaware limited liability company, on behalf of the limited liability company. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 [Exhibit A to First Amendment to Master Redevelopment Agreement] EXHIBIT A Legal Description of South Project Area Lots 1 through 5, Block 1, Pentagon Village, Hennepin County, Minnesota 1 4817-7835-4035\3 MEMORANDUM OF REDEVELOPMENT AGREEMENT THIS MEMORANDUM OF REDEVELOPMENT AGREEMENT (this “Memorandum”) is entered into as of October 16, 2018, by and among the CITY OF EDINA, MINNESOTA, a Minnesota statutory city (“City”); the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“Authority”); and PENTAGON VILLAGE, LLC., a Minnesota limited liability company (“Redeveloper”). RECITALS: A. City, Authority, and Redeveloper (collectively, the “Parties”) have entered into a certain Redevelopment Agreement dated as of October 16, 2018 (the “Contract”), whereby the Parties have agreed to various aspects of the redevelopment of certain real property more particularly described on the attached Exhibit A, together with all improvements, tenements, easements, rights and appurtenances pertaining to such real property, lying and being in Hennepin County, Minnesota (the “Property”). B. The Parties wish to give notice of the existence of the Contract. AGREEMENT: NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The above recitals are incorporated by reference as if fully set forth herein. 2. Capitalized terms, when not defined herein, shall have the meanings ascribed to them in the Contract. 3. The Parties have entered into the Contract to set forth the terms and provisions governing the redevelopment of the Property. 4. This Memorandum has been executed and delivered by the Parties for the purpose of recording and giving notice that a contractual relationship for the redevelopment of the Property has been created between the Parties in accordance with the terms, covenants and conditions of the Contract. 5. The terms and conditions of the Contract are incorporated by reference into this Memorandum as if fully set forth herein. 6. This Memorandum may be executed separately in counterparts which, when taken together, shall constitute one and the same instrument. [Remainder of page left blank intentionally; signature pages follow] [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] IN WITNESS WHEREOF, the Parties have executed this Memorandum as of the date first written above. CITY OF EDINA, MINNESOTA By James B. Hovland, Mayor By Scott H. Neal, City Manager STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _____________, 2018, by James B. Hovland and Scott H. Neal, the Mayor and the City Manager, respectively, of the City of Edina, Minnesota, on behalf of the City. Notary Public [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By James B. Hovland, Chair By Robert J. Stewart, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF The foregoing instrument was acknowledged before me this ____ day of ____________, 2018, by James B. Hovland and Robert J. Stewart, the Chair and Secretary respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public [Signature Page to Memorandum of Redevelopment Agreement (Pentagon South)] PENTAGON VILLAGE, LLC a Minnesota limited liability company By: _____________________________________ Name: __________________________________ Its: _____________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _____________, 20___, by , the of Pentagon Village, LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street Suite 1500 Minneapolis, MN 55402-1498 Date: October 11, 2018 Agenda Item #: V.E. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:Affordable Housing Sewer and Water Availability Charge Fee Reduction Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve recommendation to reduce fees charged for connecting to the City water and sewer system for residential properties with a minimum of 4 dwelling units. Reduction criteria would align with the Metropolitan Council’s discounts. INTRODUCTION: The intent of this proposed reduction of sewer and water connection fees is to reduce the initial capital expense of developing affordable housing units, whether they are integrated into a market rate development or in a stand alone, 100% affordable housing development. ATTACHMENTS: Description Affordable Housing SAC WAC Fee Reduction October 11, 2018 Chair & Commissioners of the Edina HRA Stephanie Hawkinson, Affordable Housing Development Manager Affordable Housing Sewer and Water Availability Charge Fee Reduction Information / Background: The Metropolitan Council allows for the reduction of fees if certain conditions are met. This proposal would follow the same criteria as the Metropolitan Council. The property owner may decide whether to meet the criteria and seek the discounts. Current (2018) Fees Charged by the City: Sewer Availability Charge (SAC) $2,289.80 Water Availability Charge (WAC) $1,144.90 TOTAL $3,434.70 Example: New development with 80 housing units: $3,434.70 x 80 = $274,776.00 SAC/WAC Fee Proposed Discounts: 1. Apartment/Conservation Discount: Apartments are charged 1 SAC per unit. Apartments with a minimum of 4 units may qualify for a 20% discount if the following conditions are met: • There is no plumbing for laundry facilities in any of the units (generally evidenced by a common laundry facility and no laundry hook-ups in the units). Apartments with fewer than 4 units are not allowed the discount. Assisted living/elderly housing criteria are already discounted so further discounts are not applicable. 2. Publicly Assisted Housing/Conservation Discount: Multi-dwelling publicly-assisted housing units with a minimum of 4 units may qualify for a 25% discount if the following conditions are met: • There is no plumbing for garbage disposals or for dishwashers in any of the units. • The housing is publicly subsidized low-income units. STAFF REPORT Page 2 Multi-dwelling publicly-assisted housing units with fewer than 4 units in the entire building are not allowed the discount. Assisted living/elderly housing criteria are already discounted so further discounts are not applicable. Only the units that are rent restricted are eligible for the discount. Implementing the Reduction: For 2018 the base fee is $3,434.70 per unit. Once the 25% discount of $859 is applied, the publically- assisted housing/conservation discounted SAC/WAC is $2,576. If the apartment/conservation discount also applies, there is an additional $687 discount applied for a total discounted fee of $1,889 per unit. Example with Discount: New development with 80 housing units: $1,889 x 80 = $151,120 fee, a $123,656 savings. Financial Impact: Our expectation is that this will not be widely used, especially in mixed income developments where communal laundry facilities and the absence of dishwashers is less likely. For developments that are 100% affordable, meeting the conditions is more likely and the cost savings could make the development financially feasible. Date: October 11, 2018 Agenda Item #: VI.A. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Sharon Allison, Executive Assistant Item Activity: Subject:Correspondence Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: None. INTRODUCTION: There have been no correspondences since the last meeting.