HomeMy WebLinkAbout2022-10-13 HRA Regular Meeting PacketAg enda
E dina H ousing and R edevelopm ent Author ity
City of E dina, Minnesota
City Hall, Council Chambers
Thursday, October 13, 2022
7:30 AM
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I.Call to Ord er
II.Roll Call
III.Pledge of Allegia n ce
IV.Ap p roval of Meetin g Agen d a
V.Com m unity Com m en t
Du ring "Com m unity Com m en t," th e Edin a Housing and Redevelop m ent
Au thority (HRA) will in vite resid ents to sh are new issues or con cern s tha t
h aven't been con sid ered in th e p ast 30 da y s b y th e HRA or w h ich a ren't
slated for fu ture consideration . Individ u als m u st lim it their com m ents to
three m inutes. Th e Ch air m a y lim it the num ber of sp ea kers on th e sa m e
issue in th e interest of tim e a n d topic. Gen era lly sp ea king, item s tha t are
elsewhere on tod ay's a genda m a y not b e addressed d u ring Com m unity
Com m en t. In d ividua ls sh ould not expect th e Ch air or Com m issioners to
resp ond to th eir com m en ts toda y . Instead the Com m issioners m ight refer the
m atter to sta. for consideration a t a fu ture m eeting.
VI.Ad option of Con sen t Agenda
All a genda item s listed on the consent a genda a re con sid ered rou tin e and
will be en acted by one m otion. There will be no sepa rate d iscussion of such
item s unless requested to be rem oved from the Con sen t Agenda by a
Com m ission er of the HRA. In su ch ca ses the item w ill b e rem oved from th e
Consent Agen d a and con sid ered im m ediately follow ing the a d option of th e
Consent Agen d a. (Fa vorable rollcall vote of m a jority of Com m issioners
p resent to approve.)
A.Dra ft Septem ber 15, 2022 Regular Meeting Min u tes
VII.Reports/Recom m enda tions: (Favora b le vote of m ajority of Com m ission ers
p resent to approve excep t where n oted)
A.Approva l of Multifam ily A.ord able Housing Prop erty Ta x Relief and Energy
E 8 cient Gra n t Program version 2022
B.$150,000 Ma tch ing Grant to Edin a Housing Founda tion for First Generation
Down Pa y m ent Assistance Program
C.Approve Loan Term s for E d ina In n ovation La b
VIII.HRA Com m issioners' Com m en ts
IX.Executive Director's Com m ents
Th e E d ina Housing a n d Redevelop m ent Au thority wa n ts all pa rticip ants to be
com fortable b ein g pa rt of th e p u b lic p rocess. If y ou n ee d a ssista n ce in the w a y of
h ea ring am pli=ca tion, a n in terp reter, large-p rint docum en ts or som ethin g else,
p lease ca ll 952-927-8861 72 hou rs in advance of the m eeting.
X.Ad jou rn m ent
Date: O c tober 13, 2022 Agenda Item #: VI.A.
To:C hair & C ommis s ioners of the Edina HR A Item Type:
Minutes
F rom:Liz O ls on, Administrative S upport S pecialist
Item Activity:
Subject:Draft S eptember 15, 2022 R egular Meeting Minutes Action
Edina Housing and Redevelopment
Authority
Established 1974
C ITY O F E D IN A
HO US I NG & R EDEVELO P MENT
AUT HO R I T Y
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
A C TI O N R EQ U ES TED:
Approve the minutes from S eptember 15, 2022.
I N TR O D U C TI O N:
AT TAC HME N T S:
Description
Draft Minutes from HRA 09-15-22
Page 1
MINUTES
OF THE REGULAR MEETING OF THE
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
SEPTEMBER 15, 2022
7:30 A.M.
I. CALL TO ORDER
Chair Hovland called the meeting to order at 7:34 a.m. then explained the processes created for
public comment.
II. ROLLCALL
Answering rollcall were Commissioners Anderson, Jackson, Pierce, and Chair Hovland.
Absent: Commissioner Staunton.
III. PLEDGE OF ALLEGIANCE
IV. MEETING AGENDA APPROVED - AS PRESENTED
Motion by Commissioner Jackson, seconded by Commissioner Anderson, approving
the meeting agenda as presented.
Roll call:
Ayes: Anderson, Jackson, Pierce, and Hovland
Motion carried.
V. COMMUNITY COMMENT
No one appeared.
VI. CONSENT AGENDA ADOPTED - AS PRESENTED
Member Jackson made a motion, seconded by Member Pierce, approving the consent
agenda as presented:
VI.A. Approve Draft Minutes of the Special Meeting of September 7, 2022
VI.B. Adopt the Proposed Budget and Establishing the Proposed Tax Levy Payable
2023
Rollcall:
Ayes: Anderson, Jackson, Pierce, and Hovland
Motion carried.
VII. REPORTS AND RECOMMENDATIONS
VII.A. DISCUSSION; PROPOSED UPDATE TO THE TAX INCREMENT FINANCING
POLICY – RECEIVED
Executive Director Neal outlined staff’s request for policy discussions for the items with the goal to
get direction prior to drafting any potential ordinances.
Economic Development Manager Neuendorf stated this item pertained to the policy regarding the
use of Tax Increment Financing, which was last updated in 2011. He outlined the history of TIF in
Edina which had been used since the 1980s. He said staff recommended the policy be updated to
clarify conditions and outcomes to be pursued with TIF then stated the proposed changes were
written to achieve four specific goals: clarify intent/purpose when TIF was used; clarify minimum
expectations and outcomes when TIF was used; clarify process to review and consider TIF in a
manner coordinated with the zoning review process; and increase the application fee from $2,000
to $5,000 to help offset staff expenses while noting the developer would still responsible for all third-
party expenses. He outlined history of percentage of tax capacity retained in TIF districts for Edina
and other cities then outlined reasons for TIF use that included defining public benefit. He said this
Minutes/HRA/September 15, 2022
Page 2
proposal was intended to be discussed in September with final changes considered at a future HRA
meeting.
The Council asked questions and provided feedback.
VII.B. 2022 MODIFICATIONS TO NEW MULTIFAMILY DEVELOPMENT AFFORDABLE
HOUSING POLICY – RECEIVED
Affordable Housing Development Manager Hawkinson stated staff was proposed two changes to the
current Affordable Housing Policy. She shared background that the policy had been created in 2015
with updates almost annually through rents, incomes, and other elements, noting it was a live
document. She outlined the City’s affordable housing goals of creation of 1,804 new affordable units
which was to be accomplished through this policy through 2030 then spoke about the current policy
that offered density bonuses to developments that included affordable housing units but did not
include detail as to how that goal would be achieved. She said developers would often seek up to
the maximum density allowed in the Comprehensive Plan, but could not have a greater density
without a Comprehensive Plan amendment. Ms. Hawkinson stated in order to adhere to the spirit
of allowing density bonuses, staff proposed that developments seeking maximum densities would be
required to include affordable units rather than using the buy-in option then outlined the added
language that the owner/property manager of properties that include affordable units must
cooperate with the City's third-party compliance officer.
The Council asked questions and provided feedback.
VIII. HRA COMMISSIONERS’ COMMENTS – Received
IX. EXECUTIVE DIRECTOR’S COMMENTS – Received
IX.A. OPEN TO BUSINESS MID-YEAR REPORT
X. ADJOURNMENT
Motion made by Commissioner Jackson, seconded by Commissioner Pierce, to adjourn
the meeting at 9:00 a.m.
Roll call:
Ayes: Anderson, Jackson, Pierce, and Hovland
Motion carried.
Respectfully submitted,
Scott Neal, Executive Director
Date: O c tober 13, 2022 Agenda Item #: VI I.A.
To:C hair & C ommis s ioners of the Edina HR A Item Type:
R eport / R ecommendation
F rom:S tephanie Hawkinson, Affordable Housing
Development Manager; G race Hanc ock, S ustainability
Manager
Item Activity:
Subject:Approval of Multifamily Affordable Housing P roperty
Tax R elief and Energy Efficient G rant P rogram
version 2022
Ac tion
Edina Housing and Redevelopment
Authority
Established 1974
C ITY O F E D IN A
HO US I NG & R EDEVELO P MENT
AUT HO R I T Y
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
A C TI O N R EQ U ES TED:
Approve the Multifamily Affordable Housing P roperty Tax R elief and E nergy Efficient G rant P rogram version
2022.
I N TR O D U C TI O N:
I n 2018 and 2019 S taff proposed a property tax relief program, called 4d, to help preserve Naturally Occurring
Affordable H ousing (N O AH ) apartments. Only one property, containing 23 units, signed on. With the passage
of the Climate Action P lan and the associated requirement that apartment buildings must undergo energy bench
marking, staff redesigned the program to help N O AH apartments achieve bench marking goals while also
preserving the affordability of their buildings. N o additional funds are being sought at this time.
AT TAC HME N T S:
Description
Staff Report
Exhibit: CEE Scope of Work
Pres entation
October 13, 2022
Chair & Commissioners of Edina HRA
Stephanie Hawkinson, Affordable Housing Development Manager
Grace Hancock, Sustainability Manager
Approval of 4d Multifamily Affordable Housing Property Tax Relief and Resilient Homes Grant
Program version 2022
Information / Background:
The goal of this program is to preserve housing affordability, support the city’s Climate Action Plan by
reducing energy use, and enhance healthy homes that support tenants and strengthen the bottom line for
property owners.
Healthy, stable, and affordable housing is important for the well-being, prosperity, and security of Edina
residents. Due to housing, economic, and demographic trends, Edina is experiencing an affordable
housing crisis. Already burdened low and moderate income tenants are increasingly paying more than 30
percent of their income on rent and utilities. At the same time, many rental property owners are faced
with increased operating and maintenance costs as well as market opportunities to increase rents.
According to the US Census Bureau, the median gross rent in Edina is $1,442. The Census indicates
Edina has 6,058 renter occupied housing units. Over 42% are households living with a housing cost
burden of over 30%, and of those nearly 47% (19.8% of all renter occupied households) are living with a
housing costs totaling 50% or more of their income.
“Energy Burden” is the percentage of household income that goes toward energy costs (electricity, home
heating, and transportation). Individuals with lower incomes have a much higher likelihood of living under
an energy burden—not only because the energy costs experienced by a lower income household must
be paid for out of a smaller income, but also because lower income individuals frequently live in homes
with higher energy costs due to older building age or lower levels of insulation and energy equipment
efficiency. According to the US Department of Energy, average annual energy costs in Edina range from
just under $900 for some renter households in the second lowest income brackets (30%-60% Area
Median Income) to $2,700 for some homeowners in the highest income brackets (100%+ area median
income).
Comparing those costs against the annual household income identifies the community members living
with high energy burden. In Edina, the energy burden for households below 30% AMI is 7% for renters
and 18% for homeowners. Households in the lowest income brackets (0-30% AMI) in homes built prior
to 2010 (much of Edina building stock) are living with energy burdens from 12% to 29% - the highest
STAFF REPORT Page 2
within that income bracket. Homeowners are able to access funds for home rehabilitations to achieve
health, safety, and energy efficiency improvements via Edina’s Deferred Home Improvement Loan
Program. However, prior to the 4d program outlined in this staff report, owners and occupants of rental
properties did not have a comparable program to reduce the risk of displacement and loss of naturally
occurring affordable housing.
Edina is home to an estimated 38 Naturally Occurring Affordable Housing (NOAH) properties
representing around 2,100 units. 28 of these properties participate in the City’s Efficient Building
Benchmarking and Assessment program thus far. Based on Efficient Buildings program Energy
Assessment rules, 6-10 NOAH properties will be required to receive a no-cost Energy Assessment
annually, to highlight energy saving opportunities and utility rebate availability to offset initial costs.
Purpose of Program:
Incentivizes owners of Naturally Occurring Affordable Housing (NOAH) to keep their rents
affordable thereby preserving affordable housing;
Helps property owners reduce property tax obligation on affordable housing units;
Aligns with City’s Climate Action Plan by improving the energy efficiency of an aging rental stock
to improve longevity and reduce operating costs.
Provides an incentive to property owners to act on Energy Assessment report findings, received
through Edina’s Efficient Buildings Ordinance compliance.
To qualify for the Low-Income Rental Classification, also known as “4d property tax classification”, the
federal government, state of Minnesota or local unit of government must provide financing to the rental
housing property as evidenced by a document recorded against the property. This program provides
City financing in exchange for a land Declaration to preserve affordability.
Program Description:
There are two components to this pilot program:
1. Grant from the City to enroll in the State’s 4d program. This grant is $100 per unit and capped at
$5,000 per building. The building owner must agree to keep the building affordable for five (5) years
to be eligible.
2. Grant from the City’s Affordable Housing Trust Fund to improve energy efficiency of the property
with grants providing 90% of the costs, after rebates, up to $50,000. The building owner must sign a
Declaration to keep the building affordable for at least 10 years to be eligible.
Funding Sources:
Use Affordable Housing Trust Fund Climate Action Fund
4d Registration $30,000
Energy Improvement Grant $180,000
CEE Administration $12,000
Who is eligible?
Owners of market-rate multifamily properties that meet the following criteria:
STAFF REPORT Page 3
At least 20% of the rental units are occupied by and affordable to households whose family income
is at or below 60% of the Area Median Income (for properties with 1 to 4 units, over 50% must be
deemed affordable).
Income qualification is determined upon initial occupancy. Thereafter, increased incomes of tenants
in affordable units will not violate the program requirements.
Existing tenants in units that have program compliant rents do not need to be income qualified.
Buildings can include units with owner occupants, but only rental units are eligible for 4d tax status.
Program Component #1(required):
Qualified building owners that agree to keep a minimum of 20% of units per building affordable to
households making up to 60% of Area Median Income (AMI) will receive approximately 40% property tax
reduction on qualifying units (Low Income Rental Classification, also known as “4d property tax
classification”).
Benefits:
Payment of first year application fee to the State of Minnesota for certification of the 4d property
tax classification ($10/unit).
Grant to each 4d property, in the amount of $100 per affordable unit, capped at $5,000 per
property.
Reduced property tax obligation.
Definition:
Non-4d apartments have a tax capacity of 1.25%
Units classified as 4d that are valued up to $100,000* have a tax capacity rate of 0.75%
Units classified as 4d that are valued greater than $100,000* have a tax capacity rate of 0.25%
* This number is subject to change each year. This is the first tier for taxes paid in 2022
Example:
26-unit building constructed valued at $3,285,300 or $126,358 per unit.
Non-4d property taxes paid in 2022:
Tax Capacity = 41,066
Tax = $50,899.15
Effective Tax Rate = 1.55%
100% Affordable
Tax Capacity = 21,213
Tax = $24,559.87
Effective Tax Rate = 0.75%
Savings to Owners: 52%
27% Affordable
Tax Capacity = 37,225
Tax = $41,601.12
Effective Tax Rate = 1.27%
STAFF REPORT Page 4
Savings to Owner: 18%
* The calculation for the partial affordable is dependent on which units are affordable. If different units (2 or
3 BR units) were used, the calculation would turn out differently.
Impact on Tax Revenue: The City receives approximately 21% of the property taxes collected by the
County. The City tax levy would be established by the City Council. The savings experienced by the
NOAH properties would be redistributed to all other taxable properties.
Program Component #2 (optional)
Benefits:
NOAH property owners receive utility bill relief, lower maintenance needs thanks to new and
efficient equipment
NOAH occupants receive utility bill relief, more comfortable and healthy homes
City makes progress on emission reduction goal of achieving 15% of commercial/industrial buildings
by 2030 meeting a 20% efficiency increase per location.
Example:
26-unit building, 39,000 sq. ft., built in 1968
Project Cost Utility Rebates Resilient Homes
Grant
Cost to owner
Water heater
replacement
$15,000 $650 $13,500
Boiler Tune-up &
insulation
$2,500 $280 $2,250
Efficient Lighting $2,500 $260 $2,250
Wall/Attic
insulation
$20,000 $900 $18,000
Window updates
(from single-pane)
$20,000 None $18,000
TOTAL Project
Cost
$60,000 $2,000 $50,000 $8,000
Up to 90% of project cost would be covered by the City’s Resilient Homes Grant, where utility rebates and
the Resilient Homes Grant do not exceed total project costs.
The final cost to owner would usually be recovered through utility bill savings in 1-5 years.
Process and program requirements:
• Step1 (required) – 4D Program Enrollment:
Property Owner will submit a 2-page 4d program application and rent roll and sign a Participation
Agreement with the City.
o Participation Agreement includes commitment to accept tenant-based assistance and
affirmative fair marketing and prohibits involuntary displacement of existing tenants.
Receive a no-cost energy assessment.
STAFF REPORT Page 5
City will draft and record a declaration against the property that limits the rents and incomes on the
qualified units for up to 10 years. Property owner must limit rent increases to 6% or less annually,
unless the owner provides evidence that a larger rent increase is needed to address deferred
maintenance or unanticipated operating cost increases, and city staff approve an alternative schedule
for rent increases (a recorded document is required for 4d tax classification status).
City will provide a grant to each 4d property, in the amount of $100 per affordable unit, capped at
$5,000 per property. This funding is intended to help property owners cover the cost of the 4d
administrative and reporting requirements associated with the program.
Property Owners will select the percentage of their building to restrict, with a minimum of 20%. If
they select more than 20%, after 5 years and upon request, the City will approve a reduction of the
percentage of restricted units to the minimum level of 20% of the units per building.
Property owner will sign 4d application once declaration is filed.
City will submit signed 4d application, application fee, and declaration to Minnesota Housing on
behalf of the property owner for their first year only. Owners are responsible for submitting annual
applications to Minnesota Housing to renew 4d tax status. See “Annual Owner Compliance” for
additional information.
Step 2 (encouraged) – Resilient Homes Energy Efficiency Grants:
Respond to recruitment message from Center for Energy and Environment (CEE) and receive
assistance on the following process:
o Complete utility program enrollment paperwork
o Work with CEE to answer any utility program questions during the audit application process
and rebate application process
o Review Utility program recommendations and rebates available from energy audit
o Allow CEE to conduct supplementary on-site meetings/walk-through assessments as needed
to identify energy efficiency opportunities not included in utility programs but aligned with
the City and Property owner goals (i.e., beneficial electrification, and health and safety
measures). CEE will work with City to ensure alignment with goals.
o Work with CEE to connect with contractors, apply for utility rebates, and complete City
funding paperwork.
o Estimate energy and carbon savings per property per measure for reporting to the City
o Review customer bids to confirm projects are eligible for the City’s funding
o Submit report to the City to receive grant funds.
City will issue a check in the amount of the approved grant, within 60 days.
Financial Impact:
Program: $225,000 budget – $210,000 approved in 2018 and 2019 for similar program with only one
application drawing $2,500 from the funding source. Climate Action Fund was approved in 2022, $15,000
available for this program, $12,000 committed for 13-month engagement with CEE.
Source of Funds: Affordable Housing Trust Fund, Climate Action Fund
Staff estimates an average multi-family energy efficiency need of $1,000 per unit, or $1,000 per 2,000 square
feet of a building. With this estimate in mind, staff expects an average of $30,000 need per building. This
budget allows an estimated 6 buildings to participate.
What does annual compliance involve?
• To continue to receive 4d status Property Owner is required to submit an annual 4d application to
Minnesota Housing as well as an annual report to the City in a form provided by the City.
STAFF REPORT Page 6
• The owners need to complete these items on annual basis to remain eligible for 4d tax status.
Notes on Area Median Income (AMI), and annual updates to rent and income restrictions:
The City of Edina will publish an annual rent and income schedule, based on the regional 60% AMI standard
that owners can reference to stay in compliance with the program over the 10 year commitment.
60% AMI Maximum Rent Limits, 2022 Program
Studio/Efficiency $1.233
1 Bedroom $1,320
2 Bedrooms $1,584
3 Bedrooms $1,830
Appendix: Scope of work from Center for Energy and Environment
Attachment A
CEE #4008
Edina 4d Scope of Work & Budget
Center for Energy and Environment
November 1, 2022-December 31, 2023
Background:
CEE has served multifamily buildings through energy consulting and Utility programs for over four decades. Their
expertise includes program management and implementation, auditing, testing, engineering, customer engagement,
and quality assurance. CEE continues to connect customers with the latest energy efficiency technologies and best
practices, drawing on experience from leading over 20 multifamily-focused research projects.
Under this scope, the City of Edina (the City) will be contracting with CEE to help recruit and/or guide multifamily
residential property owners enrolled in the Tax Relief Program for Affordable Housing through each step of the energy
efficiency project process, and, with the help of the City, the City’s Resilient Homes Energy Efficiency Grant Program.
Scope of Work:
CEE shall provide the following services between the months of November 1, 2022, to December 31, 2023:
Recruit enrolled 4d property owners to participate in the Resilient Homes Energy Efficiency Grant Program
Assist owners in filling out utility program enrollment paperwork
Act as liaison for utility program questions during the audit application process and rebate application process (if
needed)
Review Utility program recommendations and rebates available
Conduct on-site meetings/walk-through assessments (not a full audit) as needed to identify energy efficiency
opportunities not included in utility programs but aligned with the City and Property owner goals (i.e., beneficial
electrification, and health and safety measures). CEE will work with City to ensure alignment with goals.
Provide project management support to property owners, including but not limited to: connect property owners
with contractors, apply for utility rebates, complete City funding paperwork, etc.
Estimate energy and carbon savings per property per measure for reporting to the City
Review customer bids to confirm projects are eligible for the City’s funding
Submit regular report to the City on progress with each customer, projects approved, estimated energy savings,
project cost, applicable rebates, and cost share
COMPENSATION
Work done under this contract shall not exceed $12,000.
CEE Staff Role Rate/hr* Estimated Hours Estimated Cost
Director 4 $224/hr 10 $2,240
Program Manager 3 $133/hr 10 $1,330
Program Manager 2 $115/hr 50 $5,750
Program Technician 4 $80/hr 30 $2,400
Subtotal: $11,720
Attachment A
CEE #4008
Federal Rate* Estimated mileage Estimated Cost
Mileage $.625/mile 300 $200
Total: $11,920
*CEE will bill the City monthly on a time and mileage basis (per the hourly rates and federal mileage rates provided in
the table above). Rates to be adjusted in July of 2023 to reflect annual rate adjustments. Mileage will be adjusted per
federal schedule
The CITY ofEDINA
Affordable Housing: Preservation
4d Multifamily Affordable Housing Property Tax Relief
and Resilient Homes Grant Program
Housing and Redevelopment Authority
October 13, 2022Stephanie Hawkinson,
Affordable Housing Development Manager
Grace Hancock,
Sustainability Manager
The CITY ofEDINABackground
Housing Strategy Task Force:
•Encourage the preservation, maintenance, and rehabilitation of existing subsidized
and naturally occurring affordable rental and ownership housing (NOAH).
2040 Comprehensive Plan:
•Encourage the preservation, maintenance, and rehabilitation of existing subsidized
and naturally occurring affordable rental and ownership housing (NOAH)
•Increase housing stability and security of residents living in affordable housing.
Climate Action Plan:
•Reduce share of population living in high energy poverty from 29% to 12% by 2030
•Improve total community wide residential, commercial, educational, and industrial
building energy efficiency by 15% for electricity and 15% for natural gas by 2030
www.EdinaMN.gov 2
The CITY ofEDINA
•Develop enhanced program to encourage
preservation of NOAH properties.
•Preserve and enhance affordable housing,
especially near bus service, to prevent
displacement of vulnerable
populations.
•Partner with established Energy
Efficiency Program to accomplish
significant residential energy efficiency
improvements, including reduced
participation costs for low-income
households. Goal: 460 households annually;
15% of buildings by 2030 achieving a
20% efficiency increase per location.
Complementary Workplans
www.EdinaMN.gov 3
Community
Development
4d Tax
Incentive
Program
Engineering Climate Action
Plan
The CITY ofEDINA
Naturally Occurring Affordable
Housing (NOAH)
•Historically have not received
subsidies for construction,
operation, or maintenance
•Rents are below 60% of Area
Median Income (AMI) rent limits
•Many residents have low or
moderate incomes
In Edina, there are 85 apartment
complexes with 4 or more units.
Of these,
37 (44%) are Multifamily NOAH
properties
with affordable rents
* Snapshot in time; July 2022. “Affordable” is defined here as
rents affordable to households with incomes at or below 60%
Area Median Income. The sites may not be 100% affordable
Preservation of NOAH Properties
www.EdinaMN.gov 4
The CITY ofEDINAHousing Cost Burdened
www.EdinaMN.gov 5
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1990 2000 2010 2020
Housing Cost Burden
All Households Owner Households Renter Households
The CITY ofEDINAPreservation Strategy: 4d Program
Property
Owners
•Reduced property
tax obligation
•Access funding to
improve property
City
•Reduce building
emissions
•Preserve NOAH
housing
Residents
•Housing security
•Lower energy
bills
www.EdinaMN.gov 6
Land Use
Declaration
+ Energy
Efficiency
Grants
The CITY ofEDINAWhat is 4d?
•Low Income Rental Classification = .0075% (Non-4d tax capacity is
1.25%)
To qualify for the Low Income Rental Classification, the federal
government, state of Minnesota or local unit of government must
provide financing to the rental housing property as evidenced by a
document recorded against the property.
www.EdinaMN.gov 7
The CITY ofEDINAProperty Owner Commitments:
•5 to 10-year affordability declaration on
property
•At least 20% of units affordable to
households making 60% AMI
•Rent increases limited to 6% annually
Property Owner Incentives:
•40% reduction in property taxes
•$100/affordable unit (cap of
$1,000/property)
•Payment for 1st year listing in state Low
Income Rental Classification
4d Housing Program
www.Edina.ov 8
HH Size 60% Income Unit Size 60% Rent
1 Person $49,320 Studio $1,233
2 Persons $56,340 1 Bedroom $1,320
3 Persons $63,360 2 Bedroom $1,584
4 Person $70,380 3 Bedroom $1,830
5 Persons $76,020 4 Bedroom $2,041
The CITY ofEDINA
Scenario 1:7 units, 27%, classified as 4d and the
remaining 19 units are market rate, or non-4d:
•Tax Capacity = $37,225
•Tax = $41,601
•Effective Tax Rate = 1.27%
Non-4d property taxes paid in 2022:
$3,285,300 x .0125 = 41,066 tax capacity (TC) Taxes = $50,899
Example:
www.EdinaMN.gov 9
26 unit building valued at $3,285,300 or $126,358 per unit.
~$9,288 savings
Scenario 2: 100% of the units are
affordable and classified as 4d
•Tax Capacity = 21,213
•Tax = $24,560
•Effective Tax Rate = 0.75%
~$26,339 savings
The CITY ofEDINAResilient Homes Grant Program
•Meets CAP goals
•Intersection of Budget Values:
Race & Equity, Health-in-all-
policies, Sustainability
•An affordable and efficient home
benefits both the renter and the
property owner
www.EdinaMN.gov 10
The CITY ofEDINAWhy NOAH homes?
•Less efficient than market rate housing (62 kBTU/sq. ft. versus 54
kBTU/sq. ft.)
•Greater energy burden for
households with lower
incomes
•Large portion of NOAH
properties are near transit
routes and amenities.
www.EdinaMN.gov 11
The CITY ofEDINA
•Insulation/air sealing
•Heating system replacements
•Water heater replacements
•Boiler controls
•Any other cost-effective measure
•ASHP conversions
•Health and safety projects
•Electrical upgrades
•Asbestos remediation
•Combustion safety
•Code updates related to EE work
Eligible Projects
www.EdinaMN.gov 12
The CITY ofEDINAExample
Project First
Cost
Utility
Rebates
Resilient
Homes
Grant
Final
Cost to
owner
Annual
Cost
Savings
Annual
Energy
Savings
(kBTU)
Water heater
replacement
$18,000 $650 $15,615 $1,410 $300 42,000
Boiler Tune-
up &
insulation
$1,200 $280 $828 $0 $200 30,000
Efficient
Lighting
$1,300 $260 $936 $0 $500 14,000
Free Direct
Installs
$0 $0 $0 $0 $875 36,000
Total $20,500 $1,190 $18,450 $860 $1,875 122,000
www.EdinaMN.gov 13
26 unit building constructed in 1968, 39,000 sq. ft.
*for qualifying properties, free in-unit appliance replacements
The CITY ofEDINACEE Partnership
•Proactively contact 4d participants to participate in Resilient Homes
Grant Program
•Assist property owners:
•Complete energy audit process
•Supplement audit with health & safety improvement identification
•Complete energy projects: engage contractors and manage projects
•Complete applications for utility rebates and City Resilient Homes
grant.
•Report to City on program success metrics including participation
rate, energy and cost savings for property owners and tenants.
www.EdinaMN.gov 14
The CITY ofEDINAProcess
Market program
www.EdinaMN.gov
Make application
materials available
Receive completed
applications
Submit
to State
in March
Connect Owners to
Energy Assessment
process
Q1
4D
Application
Owner completes
Energy Assessments
Bid projects and
complete, receive
grant funds
Q2
Energy
Plans
Owner completes
utility rebate
program enrollment
& begins projects
Apply for efficiency
grants
Jan
Q3-4
Energy
Projects
Energy
Advisory &
Owner create
Project Plan
Annual 4d
status
check, via
state
The CITY ofEDINAFinancial Information
•Cost of Program = $222,000
•Source of Funds
•Buy-in Funds: $210,000
•Climate Action Fund = $12,000
•Use of Funds =
~$30,000 initial grant to five properties to sign up for 4d classification
~$180,000 energy efficient incentive grants.
~12,000 for CEE Administration and oversight
www.EdinaMN.gov 16
The CITY ofEDINAExpected Impact:
•Preserve NOAH housing.
•-4d classification budget allows for 6 buildings at 50 units each.
•-If owners of smaller buildings apply, more could be served.
•City’s tax levy remains the same.
•-The 4d properties reductions in property taxes would
be spread among all other properties.
•-Theoretically, buildings with affordable rents not
currently in the program are subsidizing MR buildings
taxes.
•Accelerate meeting CAP goals.
•Typical building receiving these services improves efficiency by 15%, reducing energy use
and utility bills for renters and property owners.
www.EdinaMN.gov 17
The CITY ofEDINA
Questions?
www.EdinaMN.gov 18
Date: O c tober 13, 2022 Agenda Item #: VI I.B.
To:C hair & C ommis s ioners of the Edina HR A Item Type:
R eport / R ecommendation
F rom:S tephanie Hawkinson, Affordable Housing
Development Manager Item Activity:
Subject:$150,000 Matc hing G rant to Edina Housing
F oundation for F irs t G eneration Down P ayment
As s is tance P rogram
Edina Housing and Redevelopment
Authority
Established 1974
C ITY O F E D IN A
HO US I NG & R EDEVELO P MENT
AUT HO R I T Y
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
A C TI O N R EQ U ES TED:
Approved a $150,000 grant to the Edina H ousing F oundation for their F irst Generation D ownpayment Assistance
program.
I N TR O D U C TI O N:
T he E dina Housing Foundation is seeking a $150,000 grant to match the $150,000 they committed to the F irst
Generation down payment assistance program. S ince the program's adoption in N ovember 2021, seven home
buyers have benefited from these funds which augment the Come Home 2 Edina program. As the First
Generation loan is forgiven, and the Foundation does not have a revenue stream, they are seeking assistance from
the H R A in order to assistance twice as many home buyers.
AT TAC HME N T S:
Description
Staff Report
First Generation Mortgage
First Generation Note
First Generation Affidavit
October 13, 2022
Chair and Commissioners of the Edina Housing and Redevelopment Authority
Stephanie Hawkinson, Affordable Housing Development Manager
$150,000 Matching Grant to Edina Housing Foundation for First Generation Down Payment
Assistance Program
Information / Background:
In November 2021 the Edina Housing Foundation created a new down payment assistance program to
augment the Come Home 2 Edina loan program:
• Provide $15,000 in addition to the Come Home 2 Edina 2nd Mortgage.
• 0% interest
• $1,000 forgiven each year; fully forgiven after 15-years.
• Secured by 3rd Mortgage.
• Establish First Generation homebuyer through execution of affidavit
• Income and home purchase price limits remain the same as the CH2E program
Funding: $150,000 from Edina Housing Foundation proceeds. The Foundation is seeking to have this
amount matched by the Edina HRA.
Purpose: To aid first generation homebuyers looking for affordable homeownership options in Edina.
Security: The $15,000 First Generation Forgivable Loan will be secured by a loan subordinate to the
Come Home 2 Edina loan.
Purchase Price: Not more than $425,000.
Thus far, six First Generation loans have been originated totally $90,000. Of these six loans, four were used
to buy single family houses and two were used to buy condominiums. The borrowers work in schools; local
government; social service organizations; local restaurants; local daycare centers and actively volunteer for
the City. These six households did not grow up in a homes that were owned by their parents or guardians
and therefore did not benefit from generational wealth that is made possible through homeownership.
The Foundation is seeking a $150,000 grant using Affordable Housing Trust funds to double the impact of
this program. The Foundation would continue administering the program.
STAFF REPORT Page 2
Staff is also seeking authorization to engage an attorney to draft the Grant Agreement and approval for the
Chair and Executive Director to execute the agreement
Budget Impact:
Affordable Housing Trust Fund Estimated Balance Requests
Beginning Balance* $ 8,460,000
Market Street (2019) ($750,000)
4d Pilot Program 2018 - NO TAKERS ($160,000)
4d Pilot Program -2019 ($50,000)
Single Family Ownership Program (2020) ($840,000)
Home Rehabilitation Program (Pilot) ($250,000)
425 Jefferson ($150,000)
Single Family Ownership Program (2021) ($1,500,000)
Home Rehabilitation Program Aug. (2021) ($750,000)
LISC Single Family Partnership Program ($1,260,000)
First Generation Grant ($150,000)
Ending Balance $ 2,900,000
Attachments:
First Generation Affidavit
First Generation Mortgage
First Generation Note
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 1 of 14 pages)
After Recording Return To:
Stephanie Hawkinson
City of Edina
4801 West 50th Street
Edina, MN 55424
[Space Above This Line For Recording Data]
MORTGAGE
(First Generation Homebuyer)
DEFINITIONS
Words used in multiple sections of this document are defined below and other words are defined in
Sections 3, 11, 13, 18, 20 and 21. Certain rules regarding the usage of words used in this document are also
provided in Section 16.
(A) “Security Instrument” means this document, which is dated ________________, together with all
Riders to this document.
(B) “Borrower is _____________________[married or single person]. Borrower is the mortgagor under
this Security Instrument.
(C) “Lender” is the East Edina Housing Foundation. Lender is a Non-profit corporation organized and
existing under the laws of the State of Minnesota. Lender’s address is 4801 West 50th Street, Edina, MN
55424. Lender is the mortgagee under this Security Instrument.
(D) “Note” means the promissory note signed by Borrower and dated of even date herewith. The Note
states that Borrower owes Lender Fifteen Thousand Dollars (U.S. $15,000.00). Borrower has promised to
pay the debt in full upon the sale of the Property. Subject to the terms of the Note, the debt is forgivable
over a period of fifteen (15) years.
(E) “Property” means the property that is described below under the heading “Transfer of Rights in the
Property.”
(F) “Loan” means the debt evidenced by the Note, plus interest, any prepayment charges and late charges
due under the Note, and all sums due under this Security Instrument, plus interest, if applicable.
(G) “Riders” means all Riders to this Security Instrument that are executed by Borrower. The following
Riders are to be executed by Borrower [check box as applicable]:
Adjustable Rate Rider Condominium Rider Second Home Rider
Balloon Rider Planned Unit Development Rider Other(s) [specify]
____________
Family Rider Biweekly Payment Rider
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 2 of 14 pages)
(H) “Applicable Law” means all controlling applicable federal, state and local statutes, regulations,
ordinances and administrative rules and orders (that have the effect of law) as well as all applicable final,
non-appealable judicial opinions.
(I) “Community Association Dues, Fees, and Assessments” means all dues, fees, assessments and other
charges that are imposed on Borrower or the Property by a condominium association, homeowners
association or similar organization.
(J) “Electronic Funds Transfer” means any transfer of funds, other than a transaction originated by check,
draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument,
computer, or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an
account. Such term includes, but is not limited to, point-of-sale transfers, automated teller machine
transactions, transfers initiated by telephone, wire transfers, and automated clearinghouse transfers.
(K) “Escrow Items” means those items that are described in Section 3.
(L) “Miscellaneous Proceeds” means any compensation, settlement, award of damages, or proceeds paid
by any third party (other than insurance proceeds paid under the coverages described in Section 5) for:
(i) damage to, or destruction of, the Property; (ii) condemnation or other taking of all or any part of the
Property; (iii) conveyance in lieu of condemnation; or (iv) misrepresentations of, or omissions as to, the
value and/or condition of the Property.
(M) “Mortgage Insurance” means insurance protecting Lender against the nonpayment of, or default on,
the Loan.
(N) Intentionally deleted.
(O) “RESPA” means the Real Estate Settlement Procedures Act (12 U.S.C. §2601 et seq.) and its
implementing regulation, Regulation X (24 C.F.R. Part 3500), as they might be amended from time to time,
or any additional or successor legislation or regulation that governs the same subject matter. As used in this
Security Instrument, “RESPA” refers to all requirements and restrictions that are imposed in regard to a
“federally related mortgage loan” even if the Loan does not qualify as a “federally related mortgage loan”
under RESPA.
(P) “Successor in Interest of Borrower” means any party that has taken title to the Property, whether or
not that party has assumed Borrower’s obligations under the Note and/or this Security Instrument.
TRANSFER OF RIGHTS IN THE PROPERTY
This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and
modifications of the Note; and (ii) the performance of Borrower’s covenants and agreements under this
Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to
Lender and Lender’s successors and assigns, with power of sale, the following described property located
in the County of Hennepin, State of Minnesota:
_______________________
Which currently has the address of (“Property Address”): _______________________
TOGETHER WITH all the improvements now or hereafter erected on the property, and all
easements, appurtenances, and fixtures now or hereafter a part of the properly. All replacements and
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 3 of 14 pages)
additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security
Instrument as the “Property.”
BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and
has the right to mortgage, grant and convey the Property and that the Property is unencumbered, except for
encumbrances of record. Borrower warrants and will defend generally the title to the Property against all
claims and demands, subject to any encumbrances of record. Borrower further covenants that no consent
of any lender with a prior security interest in the Property need be obtained for Borrower to enter into this
Mortgage and comply with the terms of any agreements with such lender, other than those consents already
obtained.
THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform
covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real
property.
UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
1. Payment of Principal, Escrow Items, Prepayment Charges, and Late Charges. Borrower
shall pay when due the principal of the debt evidenced by the Note and any prepayment charges and late
charges due under the Note. Borrower shall also pay funds for Escrow Items pursuant to Section 3.
Payments due under the Note and this Security Instrument shall be made in U.S. currency. However, if any
check or other instrument received by Lender as payment under the Note or this Security Instrument is
returned to Lender unpaid, Lender may require that any or all subsequent payments due under the Note and
this Security Instrument be made in one or more of the following forms, as selected by Lender: (a) cash;
(b) money order; (c) certified check, bank check, treasurer’s check or cashier’s check, provided any such
check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality, or entity;
or (d) Electronic Funds Transfer.
Payments are deemed received by Lender when received at the location designated in the Note or
at such other location as may be designated by Lender in accordance with the notice provisions in
Section 15. If each periodic payment is applied as of its scheduled due date, then Lender need not pay
interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring
the Loan current. If Borrower does not do so within a reasonable period of time, Lender shall either apply
such funds or return them to Borrower. If not applied earlier, such funds will be applied to the outstanding
principal balance under the Note immediately prior to foreclosure. No offset or claim which Borrower might
have now or in the future against Lender shall relieve Borrower from making payments due under the Note
and this Security Instrument or performing the covenants and agreements secured by this Security
Instrument.
2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all
payments accepted and applied by Lender shall be applied in the following order of priority: (a) principal
due under the Note, if any; (b) amounts due under Section 3. Such payments shall be applied to each
periodic payment in the order in which it became due. Any remaining amounts shall be applied first to late
charges, second to any other amounts due under this Security Instrument, and then to reduce the principal
balance of the Note.
If Lender receives a payment from Borrower for a delinquent periodic payment under the Note
which includes a sufficient amount to pay any late charge due, the payment may be applied to the delinquent
payment and the late charge. If more than one periodic payment under the Note is outstanding, Lender may
apply any payment received from Borrower to the repayment of the periodic payments under the Note if,
and to the extent that, each payment can be paid in full. To the extent that any excess exists after the payment
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 4 of 14 pages)
is applied to the full payment of one or more periodic payments under the Note, such excess may be applied
to any late charges due. Voluntary prepayments shall be applied first to any prepayment charges and then
as described in the Note.
Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under
the Note shall not extend or postpone the due date, or change the amount, of the periodic payments
thereunder, if any.
3. Funds for Escrow Items. Upon demand from Lender, Borrower shall pay to Lender on or before
the fifth (5th) day of each calendar month until the Note is paid in full, a sum (the “Funds”) to provide for
payment of amounts due for: (a) taxes and assessments and other items which can attain priority over this
Security Instrument as a lien or encumbrance on the Property (except for any prior liens listed on Exhibit
A attached hereto); (b) leasehold payments or ground rents on the Property, if any; (c) premiums for any
and all insurance required by Lender under Section 5; and (d) Mortgage Insurance premiums, if any, or any
sums payable by Borrower to Lender in lieu of the payment of Mortgage Insurance premiums in accordance
with the provisions of Section 10. These items are called “Escrow Items.” At origination or at any time
during the term of the Loan, Lender may require that Community Association Dues, Fees, and Assessments,
if any, be escrowed by Borrower, and such dues, fees and assessments shall be an Escrow Item. Borrower
shall promptly furnish to Lender all notices of amounts to be paid under this Section. Borrower shall pay
Lender the Funds for Escrow Items unless Lender waives Borrower’s obligation to pay the Funds for any
or all Escrow Items. Lender may waive Borrower’s obligation to pay to Lender Funds for any or all Escrow
Items at any time. Any such waiver may only be in writing. In the event of such waiver, Borrower shall pay
directly, when and where payable, the amounts due for any Escrow Items for which payment of Funds has
been waived by Lender and, if Lender requires, shall furnish to Lender receipts evidencing such payment
within such time period as Lender may require. Borrower’s obligation to make such payments and to
provide receipts shall for all purposes be deemed to be a covenant and agreement contained in this Security
Instrument, as the phrase “covenant and agreement” is used in Section 9. If Borrower is obligated to pay
Escrow Items directly, pursuant to a waiver, and Borrower fails to pay the amount due for an Escrow Item,
Lender may exercise its rights under Section 9 and pay such amount and Borrower shall then be obligated
under Section 9 to repay to Lender any such amount. Lender may revoke the waiver as to any or all Escrow
Items at any time by a notice given in accordance with Section 15 and, upon such revocation, Borrower
shall pay to Lender all Funds, and in such amounts, that are then required under this Section 3.
Lender may, at any time, collect and hold Funds in an amount (a) sufficient to permit Lender to
apply the Funds at the time specified under RESPA, and (b) not to exceed the maximum amount a lender
can require under RESPA. Lender shall estimate the amount of Funds due on the basis of current data and
reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with Applicable
Law.
The Funds shall be held in an institution whose deposits are insured by a federal agency,
instrumentality, or entity (including Lender, if Lender is an institution whose deposits are so insured) or in
any Federal Home Loan Bank. Lender shall apply the Funds to pay the Escrow Items no later than the time
specified under RESPA. Lender shall not charge Borrower for holding and applying the Funds, annually
analyzing the escrow account, or verifying the Escrow Items, unless Lender pays Borrower interest on the
Funds and Applicable Law permits Lender to make such a charge. Unless an agreement is made in writing
or Applicable Law requires interest to be paid on the Funds, Lender shall not be required to pay Borrower
any interest or earnings on the Funds. Borrower and Lender can agree in writing, however, that interest
shall be paid on the Funds. Lender shall give to Borrower, without charge, an annual accounting of the
Funds as required by RESPA.
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 5 of 14 pages)
If there is a surplus of Funds held in escrow, as defined under RESPA, Lender shall account to
Borrower for the excess funds in accordance with RESPA. If there is a shortage of Funds held in escrow,
as defined under RESPA, Lender shall notify Borrower as required by RESPA, and Borrower shall pay to
Lender the amount necessary to make up the shortage in accordance with RESPA, but in no more than
12 monthly payments. If there is a deficiency of Funds held in escrow, as defined under RESPA, Lender
shall notify Borrower as required by RESPA, and Borrower shall pay to Lender the amount necessary to
make up the deficiency in accordance with RESPA, but in no more than 12 monthly payments.
Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly refund
to Borrower any Funds held by Lender.
4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions
attributable to the Property which can attain priority over this Security Instrument, leasehold payments or
ground rents on the Properly, if any, and Community Association Dues, Fees, and Assessments, if any. To
the extent that these items are Escrow Items, Borrower shall pay them in the manner provided in Section 3.
Other than those liens set forth on Exhibit A, Borrower shall promptly discharge any lien which
has priority over this Security Instrument unless Borrower: (a) agrees in writing to the payment of the
obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is performing
such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal
proceedings which in Lender’s opinion operate to prevent the enforcement of the lien while those
proceedings are pending, but only until such proceedings are concluded; or (c) secures from the holder of
the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument. If Lender
determines that any part of the Property is subject to a lien which can attain priority over this Security
Instrument other than the liens described on Exhibit A, Lender may give Borrower a notice identifying the
lien. Within 10 days of the date on which that notice is given, Borrower shall satisfy the lien or take one or
more of the actions set forth above in this Section 4.
Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or
reporting service used by Lender in connection with this Loan.
5. Property Insurance. Borrower shall keep the improvements now existing or hereafter erected
on the Property insured against loss by fire, hazards included within the term “extended coverage,” and any
other hazards including, but not limited to, earthquakes and floods, for which Lender requires insurance.
This insurance shall be maintained in the amounts (including deductible levels) and for the periods that
Lender requires. What Lender requires pursuant to the preceding sentences can change during the term of
the Loan. The insurance carrier providing the insurance shall be chosen by Borrower subject to Lender’s
right to disapprove Borrower’s choice, which right shall not be exercised unreasonably. Lender may require
Borrower to pay, in connection with this Loan, either: (a) a one-time charge for flood zone determination,
certification and tracking services; or (b) a one-time charge for flood zone determination and certification
services and subsequent charges each time remappings or similar changes occur which reasonably might
affect such determination or certification. Borrower shall also be responsible for the payment of any fees
imposed by the Federal Emergency Management Agency in connection with the review of any flood zone
determination resulting from an objection by Borrower.
If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance
coverage, at Lender’s option and Borrower’s expense. Lender is under no obligation to purchase any
particular type or amount of coverage. Therefore, such coverage shall cover Lender, but might or might not
protect Borrower, Borrower’s equity in the Property, or the contents of the Property, against any risk, hazard
or liability and might provide greater or lesser coverage than was previously in effect. Borrower
acknowledges that the cost of the insurance coverage so obtained might significantly exceed the cost of
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 6 of 14 pages)
insurance that Borrower could have obtained. Any amounts disbursed by Lender under this Section 5 shall
become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest
at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from
Lender to Borrower requesting payment.
All insurance policies required by Lender and renewals of such policies shall be subject to Lender’s
right to disapprove such policies, shall include a standard mortgage clause, and shall name Lender as
mortgagee and/or as an additional loss payee. Lender shall have the right to hold the policies and renewal
certificates. If Lender requires, Borrower shall promptly give to Lender all receipts of paid premiums and
renewal notices. If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for
damage to, or destruction of, the Property, such policy shall include a standard mortgage clause and shall
name Lender as mortgagee and/or as an additional loss payee.
In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender. Lender
may make proof of loss if not made promptly by Borrower. Unless Lender and Borrower otherwise agree
in writing, any insurance proceeds, whether or not the underlying insurance was required by Lender, shall
be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and
Lender’s security is not lessened. During such repair and restoration period, Lender shall have the right to
hold such insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the
work has been completed to Lender’s satisfaction, provided that such inspection shall be undertaken
promptly. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of
progress payments as the work is completed. Unless an agreement is made in writing or Applicable Law
requires interest to be paid on such insurance proceeds, Lender shall not be required to pay Borrower any
interest or earnings on such proceeds. Fees for public adjusters, or other third parties, retained by Borrower
shall not be paid out of the insurance proceeds and shall be the sole obligation of Borrower. If the restoration
or repair is not economically feasible or Lender’s security would be lessened, the insurance proceeds shall
be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any,
paid to Borrower. Such insurance proceeds shall be applied in the order provided for in Section 2.
If Borrower abandons the Property, Lender may file, negotiate and settle any available insurance
claim and related matters. If Borrower does not respond within 30 days to a notice from Lender that the
insurance carrier has offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day
period will begin when the notice is given. In either event, or if Lender acquires the Property under
Section 22 or otherwise, Borrower hereby assigns to Lender (a) Borrower’s rights to any insurance proceeds
in an amount not to exceed the amounts unpaid under the Note or this Security Instrument, and (b) any
other of Borrower’s rights (other than the right to any refund of unearned premiums paid by Borrower)
under all insurance policies covering the Property, insofar as such rights are applicable to the coverage of
the Property. Lender may use the insurance proceeds either to repair or restore the Property or to pay
amounts unpaid under the Note or this Security Instrument, whether or not then due.
6. Occupancy. Borrower shall occupy, establish, and use the Property as Borrower’s principal
residence within 60 days after the execution of this Security Instrument and shall continue to occupy the
Property as Borrower’s principal residence until all amounts secured under this Mortgage are paid in full,
unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld.
7. Preservation, Maintenance and Protection of the Property; Inspections. Borrower shall not
destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property.
Whether or not Borrower is residing in the Property, Borrower shall maintain the Property in order to
prevent the Property from deteriorating or decreasing in value due to its condition. Unless it is determined
pursuant to Section 5 that repair or restoration is not economically feasible, Borrower shall promptly repair
the Property if damaged to avoid further deterioration or damage. If insurance or condemnation proceeds
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 7 of 14 pages)
are paid in connection with damage to, or the taking of, the Property, Borrower shall be responsible for
repairing or restoring the Property only if Lender has released proceeds for such purposes. Lender may
disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as
the work is completed. If the insurance or condemnation proceeds are not sufficient to repair or restore the
Property, Borrower is not relieved of Borrower’s obligation for the completion of such repair or restoration.
Lender or its agent may make reasonable entries upon and inspections of the Property. If it has
reasonable cause, Lender may inspect the interior of the improvements on the Property. Lender shall give
Borrower notice at the time of or prior to such an interior inspection specifying such reasonable cause.
8. Borrower’s Loan Application. Borrower shall be in default if, during the Loan application
process, Borrower or any persons or entities acting at the direction of Borrower or with Borrower’s
knowledge or consent gave materially false, misleading, or inaccurate information or statements to Lender
(or failed to provide Lender with material information) in connection with the Loan. Material
representations include, but are not limited to, representations concerning Borrower’s occupancy of the
Property as Borrower’s principal residence and Borrower’s status as a “First Generation Homebuyer”, as
defined in the Note.
9. Protection of Lender’s Interest in the Property and Rights Under this Security Instrument.
If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument,
(b) there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights
under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture,
for enforcement of alien which may attain priority over this Security Instrument or to enforce laws or
regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is
reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security
Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing
the Property. Lender’s actions can include, but are not limited to: (a) paying any sums secured by a lien
which has priority over this Security Instrument (other than those liens described on Exhibit A);
(b) appearing in court; and (c) paying reasonable attorneys’ fees to protect its interest in the Property and/or
rights under this Security Instrument, including its secured position in a bankruptcy proceeding. Securing
the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or
board up doors and windows, drain water from pipes, eliminate building or other code violations or
dangerous conditions, and have utilities turned on or off. Although Lender may take action under this
Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that
Lender incurs no liability for not taking any or all actions authorized under this Section 9.
Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower
secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of
disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting
payment.
If this Security Instrument is on a leasehold, Borrower shall comply with all the provisions of the
lease. If Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless
Lender agrees to the merger in writing.
10. Mortgage Insurance. If Lender required Mortgage Insurance as a condition of making the
Loan, Borrower shall pay the premiums required to maintain the Mortgage Insurance in effect. If, for any
reason, the Mortgage Insurance coverage required by Lender ceases to be available from the mortgage
insurer that previously provided such insurance and Borrower was required to make separately designated
payments toward the premiums for Mortgage Insurance, Borrower shall pay the premiums required to
obtain coverage substantially equivalent to the Mortgage Insurance previously in effect, at a cost
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 8 of 14 pages)
substantially equivalent to the cost to Borrower of the Mortgage Insurance previously in effect, from an
alternate mortgage insurer selected by Lender. If substantially equivalent Mortgage Insurance coverage is
not available, Borrower shall continue to pay to Lender the amount of the separately designated payments
that were due when the insurance coverage ceased to be in effect. Lender will accept, use and retain these
payments as a non-refundable loss reserve in lieu of Mortgage Insurance. Such loss reserve shall be non-
refundable, notwithstanding the fact that the Loan is ultimately paid in full, and Lender shall not be required
to pay Borrower any interest or earnings on such loss reserve. Lender can no longer require loss reserve
payments if Mortgage Insurance coverage (in the amount and for the period that Lender requires) provided
by an insurer selected by Lender again becomes available, is obtained, and Lender requires separately
designated payments toward the premiums for Mortgage Insurance. If Lender required Mortgage Insurance
as a condition of making the Loan and Borrower was required to make separately designated payments
toward the premiums for Mortgage Insurance, Borrower shall pay the premiums required to maintain
Mortgage Insurance in effect, or to provide a non-refundable loss reserve, until Lender’s requirement for
Mortgage Insurance ends in accordance with any written agreement between Borrower and Lender
providing for such termination or until termination is required by Applicable Law. Nothing in this
Section 10 affects Borrower’s obligation to pay interest at the rate provided in the Note.
Mortgage Insurance reimburses Lender (or any entity that purchases the Note) for certain losses it
may incur if Borrower does not repay the Loan as agreed. Borrower is not a party to the Mortgage Insurance.
Mortgage insurers evaluate their total risk on all such insurance in force from time to time, and may
enter into agreements with other parties that share or modify their risk, or reduce losses. These agreements
are on terms and conditions that are satisfactory to the mortgage insurer and the other party (or parties) to
these agreements. These agreements may require the mortgage insurer to make payments using any source
of funds that the mortgage insurer may have available (which may include funds obtained from Mortgage
Insurance premiums).
As a result of these agreements, Lender, any purchaser of the Note, another insurer, any reinsurer,
any other entity, or any affiliate of any of the foregoing, may receive (directly or indirectly) amounts that
derive from (or might be characterized as) a portion of Borrower’s payments for Mortgage Insurance, in
exchange for sharing or modifying the mortgage insurer’s risk, or reducing losses. If such agreement
provides that an affiliate of Lender takes a share of the insurer’s risk in exchange for a share of the premiums
paid to the insurer, the arrangement is often termed “captive reinsurance.” Further:
(a) Any such agreements will not affect the amounts that Borrower has agreed to pay for Mortgage
Insurance, or any other terms of the Loan. Such agreements will not increase the amount Borrower will
owe for Mortgage Insurance, and they will not entitle Borrower to any refund.
(b) Any such agreements will not affect the rights Borrower has - if any - with respect to the
Mortgage Insurance under the Homeowners Protection Act of 1998 or any other law. These rights may
include the right to receive certain disclosures, to request and obtain cancellation of the Mortgage Insurance,
to have the Mortgage Insurance terminated automatically, and/or to receive a refund of any Mortgage
Insurance premiums that were unearned at the time of such cancellation or termination.
11. Assignment of Miscellaneous Proceeds; Forfeiture. All Miscellaneous Proceeds are hereby
assigned to and shall be paid to Lender.
If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair
of the Property, if the restoration or repair is economically feasible and Lender’s security is not lessened.
During such repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds
until Lender has had an opportunity to inspect such Property to ensure the work has been completed to
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 9 of 14 pages)
Lender’s satisfaction, provided that such inspection shall be undertaken promptly. Lender may pay for the
repairs and restoration in a single disbursement or in a series of progress payments as the work is completed.
Unless an agreement is made in writing or Appl icable Law requires interest to be paid on such
Miscellaneous Proceeds, Lender shall not be required to pay Borrower any interest or earnings on such
Miscellaneous Proceeds. If the restoration or repair is not economically feasible or Lender’s security would
be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument,
whether or not then due, with the excess, if any, paid to Borrower. Such Miscellaneous Proceeds shall be
applied in the order provided for in Section 2.
In the event of a total taking, destruction, or loss in value of the Property, the Miscellaneous
Proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with
the excess, if any, paid to Borrower.
In the event of a partial taking, destruction, or loss in value of the Property in which the fair market
value of the Property immediately before the partial taking, destruction, or loss in value is equal to or greater
than the amount of the sums secured by this Security Instrument immediately before the partial taking,
destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the sums secured by
this Security Instrument shall be reduced by the amount of the Miscellaneous Proceeds multipli ed by the
following fraction: (a) the total amount of the sums secured immediately before the partial taking,
destruction, or loss in value divided by (b) the fair market value of the Property immediately before the
partial taking, destruction, or loss in value. Any balance shall be paid to Borrower.
In the event of a partial taking, destruction, or loss in value of the Property in which the fair market
value of the Property immediately before the partial taking, destruction, or loss in value is less than t he
amount of the sums secured immediately before the partial taking, destruction, or loss in value, unless
Borrower and Lender otherwise agree in writing, the Miscellaneous Proceeds shall be applied to the sums
secured by this Security Instrument whether or not the sums are then due.
If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that the
Opposing Party (as defined in the next sentence) offers to make an award to settle a claim for damages,
Borrower fails to respond to Lender within 30 days after the date the notice is given, Lender is authorized
to collect and apply the Miscellaneous Proceeds either to restoration or repair of the Property or to the sums
secured by this Security Instrument, whether or not then due.
“Opposing Party” means the third party that owes Borrower Miscellaneous Proceeds or the party
against whom Borrower has a right of action in regard to Miscellaneous Proceeds.
Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that, in
Lender’s judgment, could result in forfeiture of the Property or other material impairment of Lender’s
interest in the Property or rights under this Security Instrument. Borrower can cure such a default and, if
acceleration has occurred, reinstate as provided in Section 19, by causing the action or proceeding to be
dismissed with a ruling that, in Lender’s judgment, precludes forfeiture of the Property or other material
impairment of Lender’s interest in the Property or rights under this Se curity Instrument. The proceeds of
any award or claim for damages that are attributable to the impairment of Lender’s interest in the Property
are hereby assigned and shall be paid to Lender.
All Miscellaneous Proceeds that are not applied to restoration or repair of the Property shall be
applied in the order provided for in Section 2.
12. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time for
payment or modification of amortization of the sums secured by this Security Instrument granted by Lender
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 10 of 14 pages)
to Borrower or any Successor in Interest of Borrower shall not operate to release the liability of Borrower
or any Successors in Interest of Borrower. Lender shall not be required to commence proceedings against
any Successor in Interest of Borrower or to refuse to extend time for payment or otherwise modify
amortization of the sums secured by this Security Instrument by reason of any demand made by the original
Borrower or any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or
remedy including, without limitation, Lender’s acceptance of payments from third persons, entities or
Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or
preclude the exercise of any right or remedy.
13. Joint and Several Liability; Co-signers; Successors and Assigns Bound. Borrower
covenants and agrees that Borrower’s obligations and liability shall be joint and several. However, any
Borrower who co-signs this Security Instrument but does not execute the Note (a “co-signer”): (a) is co-
signing this Security Instrument only to mortgage, grant and convey the co-signer’s interest in the Property
under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this
Security Instrument; and (c) agrees that Lender and any other Borrower can agree to extend, modify, forbear
or make any accommodations with regard to the terms of this Security Instrument or the Note without the
co-signer’s consent.
Subject to the provisions of Section 18, any Successor in Interest of Borrower who assumes
Borrower’s obligations under this Security Instrument in writing, and is approved by Lender, shall obtain
all of Borrower’s rights and benefits under this Security Instrument. Borrower shall not be released from
Borrower’s obligations and liability under this Security Instrument unless Lender agrees to such release in
writing. The covenants and agreements of this Security Instrument shall bind (except as provided in
Section 20) and benefit the successors and assigns of Lender.
14. Loan Charges. Lender may charge Borrower fees for services performed in connection with
Borrower’s default, for the purpose of protecting Lender’s interest in the Property and rights under this
Security Instrument, including, but not limited to, attorneys’ fees, property inspection and valuation fees.
In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific
fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge
fees that are expressly prohibited by this Security Instrument or by Applicable Law.
If the Loan is subject to a law which sets maximum loan charges, and that law is finally interpreted
so that the interest or other loan charges collected or to be collected in connection with the Loan exceed the
permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the
charge to the permitted limit; and (b) any sums already collected from Borrower which exceeded permitted
limits will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed
under the Note or by making a direct payment to Borrower. If a refund reduces principal, the reduction will
be treated as a partial prepayment without any prepayment charge (whether or not a prepayment charge is
provided for under the Note). Borrower’s acceptance of any such refund made by direct payment to
Borrower will constitute a waiver of any right of action Borrower might have arising out of such overcharge.
15. Notices. All notices given by Borrower or Lender in connection with this Security Instrument
must be in writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to
have been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s
notice address if sent by other means. Notice to any one Borrower shall constitute notice to all Borrowers
unless Applicable Law expressly requires otherwise. The notice address shall be the Property Address
unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly
notify Lender of Borrower’s change of address. If Lender specifies a procedure for reporting Borrower’s
change of address, then Borrower shall only report a change of address through that specified procedure.
There may be only one designated notice address under this Security Instrument at any one time. Any notice
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 11 of 14 pages)
to Lender shall be given by delivering it or by mailing it by first class mail to Lender’s address stated herein
unless Lender has designated another address by notice to Borrower. Any notice in connection with this
Security Instrument shall not be deemed to have been given to Lender until actually received by Lender. If
any notice required by this Security Instrument is also required under Applicable Law, the Applicable Law
requirement will satisfy the corresponding requirement under this Security Instrument.
16. Governing Law; Severability; Rules of Construction. This Security Instrument shall be
governed by federal law and the law of the jurisdiction in which the Property is located. All rights and
obligations contained in this Security Instrument are subject to any requirements and limitations of
Applicable Law. Applicable Law might explicitly or implicitly allow the parties to agree by contract or it
might be silent, but such silence shall not be construed as a prohibition against agreement by contract. In
the event that any provision or clause of this Security Instrument or the Note conflicts with Applicable Law,
such conflict shall not affect other provisions of this Security Instrument or the Note which can be given
effect without the conflicting provision.
As used in this Security Instrument: (a) words of the masculine gender shall mean and include
corresponding neuter words or words of the feminine gender; (b) words in the singular shall mean and
include the plural and vice versa; and (c) the word “may” gives sole discretion without any obligation to
take any action.
17. Borrower’s Copy. Borrower shall be given one conformed copy of the Note and of this
Security Instrument at the time such documents are executed or within a reasonable time thereafter.
18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18,
“Interest in the Property” means any legal or beneficial interest in the Property, including, but not limited
to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or
escrow agreement, the intent of which is the transfer of title by Borrower at a future date to a purchaser.
If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower
is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender’s prior
written consent, Lender may require immediate payment in full of all sums secured by this Security
Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by
Applicable Law or if Lender consents to the assignment and assumption of the debt hereby secured to the
transferee of the Property or the beneficial interest in Borrower, as the case may be.
If Lender opts to accelerate the Loan, Lender shall give Borrower notice of acceleration. The notice
shall provide a period of not less than 30 days from the date the notice is given in accordance with
Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails
to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this
Security Instrument without further notice or demand on Borrower.
19. Borrower’s Right to Reinstate After Acceleration. If Borrower meets certain conditions,
Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time
prior to the earliest of: (a) five days before sale of the Property pursuant to any power of sale contained in
this Security Instrument; (b) such other period as Applicable Law might specify for the termination of
Borrower’s right to reinstate; or (c) entry of a judgment enforcing this Security Instrument. Those
conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security
Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or
agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited
to, reasonable attorneys’ fees, property inspection and valuation fees, and other fees incurred for the purpose
of protecting Lender’s interest in the Property and rights under this Security Instrument; and (d) takes such
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 12 of 14 pages)
action as Lender may reasonably require to assure that Lender’s interest in the Property and rights under
this Security Instrument, and Borrower’s obligation to pay the sums secured by this Security Instrument,
shall continue unchanged. Lender may require that Borrower pay such reinstatement sums and expenses in
one or more of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check,
bank check, treasurer’s check or cashier’s check, provided any such check is drawn upon an insti tution
whose deposits are insured by a federal agency, instrumentality or entity; or (d) Electronic Funds Transfer.
Upon reinstatement by Borrower, this Security Instrument and obligations secured hereby shall remain fully
effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of
acceleration under Section 18.
20. Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest
in the Note (together with this Security Instrument) can be sold one or more times without prior notice to
Borrower. A sale might result in a change in the entity (known as the “Loan Servicer”) that collects periodic
payments due under the Note and this Security Instrument and performs other mortgage loan servicing
obligations under the Note, this Security Instrument, and Applicable Law. There also might be one or more
changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer,
Borrower will be given written notice of the change which will state the name and address of the new Loan
Servicer, the address to which payments should be made and any other information RESPA requires in
connection with a notice of transfer of servicing. If the Note is sold and thereafter the Loan is serviced by
a Loan Servicer other than the purchaser of the Note, the mortgage loan servicing obligations to Borrower
will remain with the Loan Servicer or be transferred to a successor Loan Servicer and are not assumed by
the Note purchaser unless otherwise provided by the Note purchaser.
Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an
individual litigant or the member of a class) that arises from the other party’s actions pursuant to this
Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by
reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such
notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the
other party hereto a reasonable period after the giving of such notice to take corrective action. If Applicable
Law provides a time period which must elapse before certain action can be taken, that time period will be
deemed to be reasonable for purposes of this paragraph. The notice of acceleration and opportunity to cure
given to Borrower pursuant to Section 22 and the notice of acceleration given to Borrower pursuant to
Section 18 shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this
Section 20.
21. Hazardous Substances. As used in this Section 21: (a) “Hazardous Substances” are those
substances defined as toxic or hazardous substances, pollutants, or wastes by Environmental Law and the
following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and
herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials;
(b) “Environmental Law” means federal laws and laws of the jurisdiction where the Property is located that
relate to health, safety or environmental protection; (c) “Environmental Cleanup” includes any response
action, remedial action, or removal action, as defined in Environmental Law; and (d) an “Environmental
Condition” means a condition that can cause, contribute to, or otherwise trigger an Environmental Cleanup.
Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous
Substances, or threaten to release any Hazardous Substances, on or in the Property. Borrower shall not do,
nor allow anyone else to do, anything affecting the Property (a) that is in violation of any Environmental
Law, (b) which creates an Environmental Condition, or (c) which, due to the presence, use, or release of a
Hazardous Substance, creates a condition that adversely affects the value of the Property. The preceding
two sentences shall not apply to the presence, use, or storage on the Property of smal l quantities of
MINNESOTA-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3024 1/01 (page 13 of 14 pages)
Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to
maintenance of the Property (including, but not limited to, hazardous substances in consumer products).
Borrower shall promptly give Lender written notice of (a) any investigation, claim, demand,
lawsuit or other action by any governmental or regulatory agency or private party involving the Property
and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge, (b) any
Environmental Condition, including but not limited to, any spilling, leaking, discharge, release or threat of
release of any Hazardous Substance, and (c) any condition caused by the presence, use or release of a
Hazardous Substance which adversely affects the value of the Property. If Borrower learns, or is notified
by any governmental or regulatory authority, or any private party, that any removal or other remediation of
any Hazardous Substance affecting the Property is necessary, Borrower shall promptly take all necessary
remedial actions in accordance with Environmental Law. Nothing herein shall create any obligation on
Lender for an Environmental Cleanup.
NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:
22. Acceleration; Remedies. Lender shall give notice to Borrower by certified mail to the
address of the Property or another address designated by Borrower prior to acceleration following
Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to
acceleration under Section 18 unless Applicable Law provides otherwise). The notice shall specify:
(a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the
date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure
the default on or before the date specified in the notice may result in acceleration of the sums secured
by this Security Instrument and sale of the Property. The notice shall further inform Borrower of the
right to reinstate after acceleration and the right to bring a court action to assert the non-existence
of a default or any other defense of Borrower to acceleration and sale. If the default is not cured on
or before the date specified in the notice, Lender at its option may require immediate payment in full
of all sums secured by this Security Instrument without further demand and may invoke the power
of sale and any other remedies permitted by Applicable Law. Lender shall be entitled to collect all
expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to,
reasonable attorneys’ fees.
If Lender invokes the power of sale, Lender shall cause a copy of a notice of sale to be served
upon any person in possession of the Property. Lender shall publish a notice of sale, and the Property
shall be sold at public auction in the manner prescribed by Applicable Law. Lender or its designee
may purchase the Property at any sale. The proceeds of the sale shall be applied in the following
order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys’ fees; (b) to
all sums secured by this Security Instrument; and (c) any excess to the person or persons legally
entitled to it.
23. Release. Upon payment or forgiveness of all sums secured by this Security Instrument, Lender
shall discharge this Security Instrument. Borrower shall pay any recordation costs. Lender may charge
Borrower a fee for releasing this Security Instrument, but only if the fee is paid to a third party for services
rendered and the charging of the fee is permitted under Applicable Law.
24. Waiver of Homestead. Borrower waives all right of homestead exemption in the Property.
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BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this
Security Instrument and in any Rider executed by Borrower and recorded with it.
Witnesses:
(Seal)
__________________________________ - Borrower
Drafted by:
East Edina Housing Foundation
4801 West 50th Street
Edina, MN 55424
[Space Below This Line For Acknowledgement]
NOTE
(First Generation Homebuyer)
________________, 20__ Edina, Minnesota
___________________________________________________________________________________________
[Property Address]
1. BORROWER’S PROMISE TO PAY
Subject to the loan forgiveness described below, in return for a loan that I, the undersigned Borrower, have received,
I promise to pay U.S. $15,000.00 (this amount is called “Principal”), to the order of the Lender, together with interest
on the Principal at the rate or rates specified below, and any and all other sums which I may owe the Note Holder
pursuant to this Note (the “Note”). The Lender is the East Edina Housing Foundation, a Non-profit corporation
organized and existing under the laws of the State of Minnesota. I will make all payments under this Note in the
form of cash, check or money order.
2. ACKNOWLEDGMENTS
I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer
and who is entitled to receive payments under this Note is called the “Note Holder.”
I acknowledge that the loan evidenced by this Note is being made to me as a “First Generation Homebuyer”,
meaning that each of the following statements are true:
a. I do not currently own a home, nor have I previously owned a home;
b. My parents and/or legal guardian do not currently own a home, nor have they previously owned a
home;
c. My spouse, if applicable, does not currently own a home and has not previously owned a home; and
d. My spouse’s parents and/or legal guardian do not own a home, nor have they previously owned a
home.
I understand that the loan evidenced by this Note is reserved for First Generation Homebuyers and Lender
is relying on my statements above in connection with the Lender making this loan
I understand that it will be default under the Note if any of my statements above are false and I am not a
First General Homebuyer and, upon such a default, the Note Holder may require me to pay immediately the full
amount of the Principal, without any forgiveness as described below, plus interest at the rate stated below accruing
from the date hereof until the Principal is paid in full.
I acknowledge that the loan evidenced by this Note is being made to purchase certain real property (herein
called the “Property”), and that this Note is secured by a mortgage on the Property (the “Mortgage”).
3. INTEREST
The Principal shall be interest free except upon the occurrence of a default, as describe below. Upon the
occurrence and during the continuance of any default, any unpaid and unforgiven Principal shall, at the option of
the Note Holder, bear interest at a rate of five percent (5%) simple interest per annum until paid in full.
4. FORGIVENESS; PAYMENTS
So long as no default has occurred and is continuing, (i) no payments of Principal or interest thereon shall
be due and payable under this Note and (ii) on each one (1) year anniversary of the date of this Note (each such
anniversary, a “Partial Forgiveness Date”), $1,000.00 of the Principal shall automatically be forgiven and the
Principal reduced accordingly as of each such Partial Forgiveness Date, such that on the fifteenth (15th) Partial
Forgiveness Date (the “Maturity Date”), absent any such uncured default, the entire Principal balance shall have
been fully forgiven and reduced to zero ($0.00).
If a default occurs and is not cured as provided below, the Note Holder may require me to pay immediately
the full amount of Principal which has not been paid or forgiven.
5. BORROWER’S RIGHT TO PREPAY
If permitted by law, Borrower may elect to prepay this Note, in which event Borrower shall pay any
outstanding and unforgiven Principal due hereon, plus accrued interest, if any.
6. LOAN CHARGES
If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the
loan charges collected or to be collected in connection with this loan exceed the permitted limits, then: (a) any such
loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums
already collected from me which exceeded permitted limits will be refunded to me. The Note Holder may choose
to make this refund by reducing the Principal I owe under this Note or by making a direct payment to me. If a refund
reduces Principal, the reduction will be treated as a partial prepayment of Principal.
7. BORROWER’S FAILURE TO PAY AS REQUIRED
(A) Late Charge for Overdue Payments
If the Note Holder has not received the full amount of any payment by the end of five calendar days after
the date it is due, I will pay a late charge to the Note Holder. The amount of the charge will be 10% of my overdue
payment of principal. I will pay this late charge promptly but only once on each late payment.
(B) Default
If I do not pay any amount payable under Note on the date it is due, I will be in default.
If I am not a First Generation Homebuyer (as defined above), I will be in default.
If I fail to perform any obligation required to be performed under the Mortgage, I will be in default.
If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue
amount or if I do not perform the unperformed obligation by a certain date, the Note Holder may require me to pay
immediately the full amount of Principal which has not be en paid or forgiven. That date must be at least 30 days
after the date on which the notice is mailed to me or delivered by other means.
(D) No Waiver By Note Holder
Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as
described above, the Note Holder will still have the right to do so if I am in default at a later time.
(E) Payment of Note Holder’s Costs and Expenses
If the Note Holder has required me to pay immediately in full as described anywhere in this Note, the Note
Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent
not prohibited by applicable law. Those expenses include, for example, reasonable attorneys’ fees.
8. GIVING OF NOTICES
Unless applicable law requires a different method, any notice that must be given to me under this Note will
be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different
address if I give the Note Holder a notice of my different address.
Any notice that must be given to the Note Holder under this Note will be given by delivering it or by mailing
it by first class mail to the Note Holder at the address stated in Section 3(A) above or at a different ad dress if I am
given a notice of that different address.
9. OBLIGATIONS OF PERSONS UNDER THIS NOTE
If more than one person signs this Note, each person is fully and personally obligated to keep all of the
promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor,
surety or endorser of this Note is also obligated to do these things. Any person who takes over these obligations,
including the obligations of a guarantor, surety or endorser of this Note, is also obligated to keep all of the promises
made in this Note. The Note Holder may enforce its rights under this Note against each person individually or
against all of us together. This means that any one of us may be required to pay all of the amounts owed under this
Note.
10. WAIVERS
I and any other person who has obligations under this Note waive the rights of Presentment and Notice of
Dishonor. “Presentment” means the right to require the Note Holder to demand payment of amounts due. “Notice
of Dishonor” means the right to require the Note Holder to give notice to other persons that amounts due have not
been paid.
11. UNIFORM SECURED NOTE
This Note is a uniform instrument with limited variations in some jurisdictions. In addition to the protections
given to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the “Security Instrument”),
dated the same date as this Note, protects the Note Holder from possible losses which might result if I do not keep
the promises which I make in this Note. That Security Instrument describes how and under what conditions I may
be required to make immediate payment in full of all amounts I owe under this Note. Some of those conditions are
described as follows:
If all or any part of the Property or any Interest in the Property is sold or transferred (or if
Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without
Lender’s prior written consent, Lender may require immediate payment in full of all sums secured
by this Security Instrument. However, this option shall not be exercised by Lender if such exercise
is prohibited by Applicable Law.
If Lender exercises this option, Lender shall give Borrower notice of acceleration. The
notice shall provide a period of not less than 30 days from the date the notice is given in accordance
with Section 15 within which Borrower must pay all sums secured by this Security Instrument. If
Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any
remedies permitted by this Security Instrument without further notice or demand on Borrower.
WITNESS THE HAND(S) AND SEAL(S) OF THE UNDERSIGNED.
________________________________________
Borrower
________________________________________
Borrower
________________________________________
Borrower
FIRST GENERATION HOMEBUYER AFFIDAVIT
EDINA FIRST-TIME HOMEOWNERSHIP PROGRAM
The undersigned, as applicant for a home mortgage loan originated pursuant to the Edina Housing Foundation
(the “Foundation”) First-Time Homeownership Program (the “Loan Program”), being duly sworn, does hereby
represent and warrant as follows:
1. I am submitting this affidavit as part of my application for a mortgage pursuant to the Loan Program,
which Loan Program is available only to First Generation Homebuyers, as that term is defined below.
2. The home to be financed with proceeds of the loan sought from the Loan Program is located at the
following street address: _________________________________________________, Edina,
Minnesota.
3. I am a First Generation Homebuyer, meaning that each of the following statements are true:
a. I do not currently own a home, nor have I previously owned a home;
b. My parents and/or legal guardian do not currently own a home, nor have they previously
owned a home;
c. My spouse, if applicable, does not currently own a home and has not previously owned a
home; and
d. My spouse’s parents and/or legal guardian do not own a home, nor have they previously
owned a home.
4. I understand that the Foundation, as the mortgage lender under the Loan Program, will be relying my
statements in this affidavit in connection with the Foundation making any loan to me under Loan
Program.
5. I understand that under Minnesota law, it is considered residential mortgage fraud to knowingly
make or cause to be made any deliberate and material misstatement, misrepresentation, or omission
during the mortgage lending process with the intention that it be relied on by a mortgage lender,
borrower, or any other party to the mortgage lending process. I also understand that committing
residential mortgage fraud can result in a felony conviction, imprisonment for up to two years, and
a monetary fine of up to $20,000.00.
______________________________
[Borrower’s Name]
______________________________
[Borrowers Signature]
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ________day of ________,
202_, by __________________________________ .
_______________________________
Notary Public
Date: O c tober 13, 2022 Agenda Item #: VI I.C .
To:C hair & C ommis s ioners of the Edina HR A Item Type:
R eport / R ecommendation
F rom:Bill Neuendorf, Economic Development Manager
Item Activity:
Subject:Approve Loan Terms for Edina Innovation Lab Ac tion
Edina Housing and Redevelopment
Authority
Established 1974
C ITY O F E D IN A
HO US I NG & R EDEVELO P MENT
AUT HO R I T Y
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
A C TI O N R EQ U ES TED:
Authorize staff to engage legal advisor to prepare Loan Agreement with the E dina C hamber of C ommerce based
on the recommended terms.
I N TR O D U C TI O N:
T his item pertains to the renovation and re-occupancy of vacant commercial space located at 7201 Metro Avenue.
T he E dina C hamber of C ommerce intends to the lease the space and use it to establish the E dina I nnovation L ab.
T his proposal is consistent with goals expressed in the 2015 Vision Edina and the 2018 Comprehensive P lan.
S taff has prepared the general terms of a loan to support the project. T he Edina Chamber of Commerce is
agreeable to these terms.
S taff seeks authorization to engage a legal advisor to prepare a Loan Agreement based on the negotiated terms.
T he full Agreement will be presented for final consideration at a future H R A meeting.
AT TAC HME N T S:
Description
Innovation Lab Term Sheet
Staff Pres entation
Prepared October 10, 2022 Page 1
Request for SPARC Funding: Edina Innovation Lab
Term Sheet for Edina Chamber of Commerce Tenant
Re-Occupancy at 7201 Metro Boulevard, Suite 520
BACKGROUND
Originally constructed in 1981 to serve as the national corporate headquarters for Regis Corporation,
the commercial property sold in 2019 after the corporation restructured and vacated the property.
Since the new owners purchased the property, the largest building has remained vacant. Significant
investment is needed to transform the single-user office building into a facility that can successfully
accommodate multiple tenants. The re-occupancy of the outdated building was also slowed by the
COVID-19 pandemic.
The owner is investing more than $7 million into the site to stabilize and renovate the common areas
in hopes of attracting new tenants. Each office floor has been cleared and the common areas re-
oriented to accommodate multiple tenants. The tenants are responsible for reconstructing their suite.
The Edina Chamber of Commerce (the “Chamber”) intends to establish a new Edina Innovation Lab
(the “Lab”) in the building but is hampered by the high costs to build out the unfinished space. The
Chamber attests that without financial participation by the Edina Housing and Redevelopment
Authority, their efforts to build a new business accelerator program will not be possible.
The HRA has the ability to provide one-time financial support (by means of a partially forgivable
construction loan) so that business operations can begin. Such support will stabilize the tax base, retain
existing jobs and create a new business accelerator program that is intended to train and support many
small businesses in Edina and throughout the Twin Cities for several years.
PROPERTY OWNER TENANT
CREFIV-CCRP Metro Boulevard Edina, LLC
c/o City Center Realty Partners
7900 Xerxes Avenue, Suite 210
Bloomington, MN 55431
Attn: Eric Anderson
Edina Innovation Lab
dba Edina Chamber of Commerce
3300 Edinborough Way, Suite 650
Edina, MN 55435
Attn: Lori Syverson, Exec. Director
Prepared October 10, 2022 Page 2
DESCRIPTION OF EDINA INNOVATION LAB
The Edina Chamber of Commerce intends to establish the Edina Innovation Lab to address real-world
business challenges in real time. The Lab is a place where a business accelerator program can be
established to support entrepreneurs and small business owners who are serious about growing their
business and contributing to the local, regional and national economy. The Lab incorporates a
structured program that stimulates innovation and growth for established and emerging businesses.
This program is geared to sole proprietors of small to medium size businesses who are ready to grow
but need guidance and expertise.
The Lab is set apart from other programs by its ability to rapidly pivot and evolve to address the
unique needs and challenges of the participating businesses. The target market is businesses that are
located in Edina or owned by Edina residents. However, other business leaders are also able to
participate, depending on space availability.
The initial program operated from the Lab is B.I.G. – Businesses Innovating & Growing. At least 4 BIG
cohorts are anticipated each year. This 6-month program brings together a cohort of 8 to 12 business
leaders who will participate in group trainings twice monthly. The curriculum includes general business
concepts such as marketing, finance, scaling, and decision-making. One of the unique aspects of the Lab
is its ability to customize the curriculum based on the precise needs and interests of the participants.
Most activities will take place in-person to build trusting relationships among cohort participants and
subject matter experts. With the knowledge and training received during these meetings, each
participant will prepare an individualized plan intended to strengthen and grow their business over the
next year.
In addition to BIG, other community-based business programs are intended to be delivered. These are
expected to focus on leadership development and purpose.
Upon completion of the tenant build-out, the Chamber will retain at least 3 jobs and will add at least 1
permanent job. Through the services conducted in the facility, many additional jobs are anticipated to
be created elsewhere in the community. Temporary construction jobs will also be created during the
renovations to the facility.
COMPATIBILITY WITH CITY GOALS
The restoration and re-occupancy of this vacant building to establish the Lab are responsive to several
goals identified in the City’s Comprehensive Plan and related documents like the 2015 Vision Edina:
“Revitalize Edina’s business and industrial parks” (Comp Plan pg 10-15)
“Retain, attract and support employment opportunities in innovative and creative industries…”
(Comp Plan pg 10-15)
“…consider inclusion of incubators and co-working spaces …” Vision #4 (pg 10)
Prepared October 10, 2022 Page 3
OWNER AND TENANT INVESTMENT
The property owner has invested approximately $7 million to update and restore the common areas
and building infrastructure. Complete renovations are required to return the leased tenant spaces to a
condition where it is desirable to new businesses. The total cost to build out and re-occupy the tenant
space for the Lab is approximately $800,000. Both Landlord and Tenant will share in the expenses
required to substantially renovate the facility. The construction work is expected to be completed
over the next six months with occupancy anticipated in Spring 2023.
GENERAL DESCRIPTION OF FINANCIAL NEED
The owner and tenant intend to enter into a 7-year lease with at least one optional renewal period.
The Chamber is a non-profit organization and unable to secure a construction loan to build out the
space. Lease execution is contingent upon pledge of financial support from the HRA. The lease is
structured to allow construction over the winter months with substantial completion in first quarter of
2023 and full occupancy in second quarter 2023.
The Chamber has requested funding support at a level that allows the project to proceed. To allow the
Lab to be created, below-market loan terms are necessary.
HRA FINANCIAL PARTICIPATION FOR CONSTRUCTION BUILD-OUT
The Edina HRA will participate in the financing of this construction project so that the Lab can be
established, create jobs and contribute to economic growth. The HRA funding is based upon these
terms and conditions:
Borrower: Edina Chamber of Commerce or related special purpose non-profit business entity
Principal Amount: up to $800,000 but not to exceed the Eligible Expenses (less the Landlord
contribution) as defined herein and shown in Exhibit A
Location: 7201 Metro Boulevard, Suite 520, Edina Minnesota
Lease Execution: The lease must be executed no later than December 31, 2022.
Loan Term: 7 years with typical principal and interest amortization
Interest Rate: 2.00% simple interest
Collateral: None
Payments: Monthly loan payments of principal and interest are required beginning the month
after the Certificate of Completion is awarded.
Late Fees: Typical late fees shall apply when payments are 30-days past the due date
Prepared October 10, 2022 Page 4
Pre-payment: Pre-payment of the loan is encouraged. There shall be no penalty for pre-payment
of the loan.
Repayment: Borrower shall repay the loan with any available revenues, other than from funds
of the loan (i.e., Borrower may not repay the loan with unobligated TIF).
Forgiveness: Up to $200,000 in principal amount will be forgiven based upon the success of the
private fundraising campaign for operating and programming costs.
o The forgivable amount shall be identified in the loan documents, based on the final
construction cost estimate and the contribution from the landlord.
o Private fundraising efforts for the Innovation Lab shall be at least double the forgiven
principal amount up to $200,000. For example, if $100,000 is raised privately, $50,000 in
principal amount will be forgiven. If $400,000 is raised privately, $200,000 in principal
amount will be forgiven. If $800,000 is raised privately, a maximum of $200,000 in
principal amount will be forgiven (based on forgiveness up to $200,000).
o the forgiven principal amount shall be measured at a time requested by the Tenant, but
no later than the 5-year anniversary of Certificate of Completion, upon which time a
request for principal forgiveness is forfeited.
Eligible Expenses: all construction required to deliver the tenant space as shown in Exhibit B,
including walls, ceilings, floor finishes, plumbing, electrical, ventilation; permanent built-in
equipment/furnishings shown in Exhibit B. The design costs, permits and construction
management expenses shall also be eligible.
Ineligible Expenses: furnishings (such as loose tables and chairs), equipment (such as coffee
machines), supplies, decorations, computers, monitors and related office materials
Disbursement of Funds. The loan amount shall be issued by the HRA in no more than three
installments.
o The initial amount shall be for the original budget amount less contingencies and the
landlord contribution.
The remaining disbursements shall be for contingency costs, if needed.
Completion of Work: Unless an extension is approved in advance, the work must be
completed and the space must be occupiable no later than June 30, 2023.
Evidence of Completion: lien waivers or equivalent waivers required from all vendors and
contractors whose goods or services are funded with the HRA loan; a certificate of occupancy
or equivalent also required.
Conditions of loan:
o All work must be performed in accordance with the applicable construction permits
required by the City of Edina or other governing agency
Prepared October 10, 2022 Page 5
o All appliances should be Energy Star rated or equivalent to reduce energy consumption
o Other agencies providing economic development services to Edina businesses (such as
SBA and Open to Business) shall be allowed to conduct meetings in the shared areas of
the tenant space during normal business hours at no charge when space is available and
not otherwise programmed.
o The City of Edina / Edina Housing and Redevelopment Authority must be identified as
the ‘founding sponsor’ or equivalent with recognition in print, on the website and in
prominent signage located in the entrance or common area of the tenant space
Default: Standard default provisions shall be included. Additionally, the Edina HRA shall have the
first right to sublease the space. This right to sublease is not an obligation to sublease.
Business Subsidy Laws: Since the Chamber is a non-profit with fewer than 100 full-time
equivalent positions, this transaction should be exempt from business subsidy reporting.
Lender Commitment: use of unobligated TIF funds is subject to formal action by the Edina HRA
END
Prepared October 10, 2022 Page 6
EXHIBIT A
ESTIMATED CONSTRUCTION BUDGET AND SOURCES
Cost
Estimate
Notes
Construction Costs to
rebuild tenant space
$579,000 August 23, 2022
Estimate
Construction Project
Management
$58,000 10% rough estimate
Design Documents $58,000 10% rough estimate
Contingency $105,000 20% rough estimate
Total = $800,000
Funding Source Amount Notes
Tenant Equity $0 In kind
Landlord Contribution $ _____ TBD
HRA Loan Amount $ _____ Not to exceed $800k
Total = $800,000
Prepared October 10, 2022 Page 7
EXHIBIT B
SCOPE OF CONSTRUCTION WORK
Prepared October 10, 2022 Page 8
EXHIBIT C
LAB 3-YEAR OPERATING BUDGET
2023 2024 2025 Notes
Revenue
BIG Program Fees $180,000 $300,000 $360,000 Assumes 3 to 5 cohorts of 10 participants @ $6,000 each
Event Sponsorship
and Fees $20,000 $20,000 $25,000
Anticipate 2 or more special events annually in partnership
with area universities and others collaborative partners; intial
topics include: Focus on Purpose and Women Business owners
breaking the glass ceiling; other topics TBD
General Program
Sponsorships $269,000 $150,000 $150,000 Assumes initial ARPA support from City in first year plus private
contributions from local stakeholders and business supporters
Total Revenue $469,000 $470,000 $535,000
Expenses
Staff
Compensation $175,000 $185,000 $200,000
Includes one full-time dedicated staff person plus one part-
time staff person ; this may change depending on fundraising
and sponsorship
Additional
Compensation $150,000 $150,000 $150,000
additional programming expenses may be incurred based on
fundraising and sponsorship; if not funded, this expense will
not be incurred
Rent / CAM $32,000 $64,985 $72,228
Total monthly rent is $11,225 with annual escalation; Lab to
pay about 50% ($5,333) with balance paid by Chamber of
Commerce and Explore Edina
Accounting $12,000 $12,600 $13,230 Assumption $1,000 per month exclusively for Lab
Legal $6,000 $0 $0 Assumption $500 per month for first year
Marketing/
Advertising $12,000 $12,000 $12,000 Assumption $1,000 per month; specific marketing effort will
change as needed over time
Utilities $0 $0 $0 included in rent/CAM
Copier $800 $800 $800 Total cost approx $2,400 split by Chamber and Explore; $67 per
month attributed to Lab
Phones $1,800 $1,800 $1,800 Total cost approx $5,400 split by Chamber and Explore; $150
per month attributed to Lab
Internet $1,040 $1,040 $1,040 Total cost approx $3,600 split by Chamber and Explore; $87 per
month attributed to Lab
Insurance $2,000 $2,500 $3,000 Assumption $167 per month for Lab; additional costs borne by
Chamber and Explore
Subscriptions $1,500 $1,500 $1,500 Assumption $1,500 beginning of the year; industry and
economic reports
Software $1,800 $1,800 $1,800 Purchase 2 additional licenses for new users
IT $1,524 $1,575 $1,600 Total cost approx $4,600 split by Chamber and Explore; $128
per month attributed to Lab
Computers $3,000 $0 $0 Purchase 2 new machines in 2023
Other $18,000 $18,000 $18,000 misc program expenses including: office supplies, consumable
items, food/bev for group meetings; staff training, etc
Total Expenses $418,464 $453,600 $476,998 Prepared October 5, 2022
The CITY of
EDINA
The CITY of
EDINA
Loan Term Sheet
Edina Innovation Lab
Presentation to:
Edina Housing &
Redevelopment Authority
October 13, 2022
The CITY of
EDINA
Background
2100,000 Sq Ft office space
The CITY of
EDINA
Background
3100,000 Sq Ft office space
Edina established the SPARC program in
2021. This program uses unallocated TIF
monies to assist businesses who are
reconstructing commercial and industrial
spaces and deliver new jobs, stabilized tax
base and other public benefits
The CITY of
EDINA
Background
4100,000 Sq Ft office space
The Chamber has been considering a
business incubator / accelerator program
for several years. With financial support
from the City, they are conducting a pilot
program in 2022.
The CITY of
EDINA
Description
5100,000 Sq Ft office space
The CITY of
EDINA
Description
6100,000 Sq Ft office space
The CITY of
EDINA
Description
7100,000 Sq Ft office space
$800,000 Construction budget
(includes hard and soft costs and contingency)
Without collateral, unable to secure private loan
The CITY of
EDINA
Summary of Loan Terms
8100,000 Sq Ft office space
Lease:
•7-year minimum
•Executed by 12/31/2022
•Completed by 6/30/2022
Loan Amount:
•not to exceed $800,000 less
landlord contribution
•2% simple interest
•7-year (principal & interest)
amortization schedule
•Monthly payments from operating
revenue
•Repayment begins June 2023
The CITY of
EDINA
Summary of Loan Terms
9100,000 Sq Ft office space
Loan Forgiveness:
•Up to $200,000 forgiven
•Forgivable amount based
on private fundraising on
2:1 basis
•Measured at 5-year
anniversary or sooner
Recognition of Financing:
•City of Edina / Edina HRA recognized
as “founding sponsor” or equivalent
•Print, website, on-site
Hub for econ/ business development:
•Shared use for related services
Revolving Loan Program:
•Repaid funds can be re-used for future
HRA programs
The CITY of
EDINA
Staff recommends approval of these terms
and authorization of legal advisor to
prepare complete loan agreement
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