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Home My WebLink About2019-07-25 HRA Regular Meeting PacketAgenda Edina Housing and Redevelopment Authority City of Edina, Minnesota Edina City Hall Council Chambers Thursday, July 25, 2019 7:30 AM I.Call to Order II.Roll Call III.Approval of Meeting Agenda IV.Community Comment During "Community Comment," the Edina Housing and Redevelopment Authority (HRA) will invite residents to share new issues or concerns that haven't been considered in the past 30 days by the HRA or which aren't slated for future consideration. Individuals must limit their comments to three minutes. The Chair may limit the number of speakers on the same issue in the interest of time and topic. Generally speaking, items that are elsewhere on today's agenda may not be addressed during Community Comment. Individuals should not expect the Chair or Commissioners to respond to their comments today. Instead the Commissioners might refer the matter to sta- for consideration at a future meeting. V.Adoption of Consent Agenda All agenda items listed on the consent agenda are considered routine and will be enacted by one motion. There will be no separate discussion of such items unless requested to be removed from the Consent Agenda by a Commissioner of the HRA. In such cases the item will be removed from the Consent Agenda and considered immediately following the adoption of the Consent Agenda. (Favorable rollcall vote of majority of Commissioners present to approve.) A.Minutes: Draft Minutes of Regular Meeting May 30, 2019, and Special Meeting June 18, 2019 B.Approve Payment of Claims VI.Reports/Recommendations: (Favorable vote of majority of Commissioners present to approve except where noted) A.Proposed Pilot Program: Preserving Edina Homeownerhsip B.Acquisition of Property at 7075-7079 Amundson Avenue VII.Correspondence A.Correspondence VIII.HRA Commissioners' Comments IX.Executive Director's Comments A.Pentagon Village Update B.Project Update C.Proposed 2020-2021 HRA Levy X.Adjournment The Edina Housing and Redevelopment Authority wants all participants to be comfortable being part of the public process. If you need assistance in the way of hearing ampliAcation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: July 25, 2019 Agenda Item #: IV.A. To:Chair & Commissioners of the Edina HRA Item Type: Minutes From:Sharon Allison, City Clerk Item Activity: Subject:Minutes: Draft Minutes of Regular Meeting May 30, 2019, and Special Meeting June 18, 2019 Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the regular meeting minutes of May 30, 2019, and special meeting minutes of June 18, 2019. INTRODUCTION: See attached meeting minutes of May 30, 2019, and special meeting minutes of June 18, 2019. ATTACHMENTS: Description Minutes: Draft Minutes of Regular Meeting, May 30, 2019 Minutes: Draft Minutes of Special Meeting, June 18, 2019 Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY MAY 30, 2019 7:30 A.M. I. CALL TO ORDER Chair Hovland called the HRA meeting to order at 7:33 a.m. II. ROLLCALL Answering rollcall were Commissioners Anderson, Brindle, Fischer, Staunton, and Chair Hovland. Absent: Commissioner Anderson. III. APPROVAL OF MEETING AGENDA – AS PRESENTED Motion made by Commissioner Brindle seconded by Commissioner Fischer approving the meeting agenda as presented. Ayes: Anderson, Brindle, Fischer, Staunton and Hovland Motion carried. IV. COMMUNITY COMMENT None. V. CONSENT AGENDA – AS PRESENTED Motion made by Commissioner Brindle seconded by Commissioner Fischer approving the consent agenda. V.A. Approve Minutes of Regular Meeting of April 25, 2019 V.B. Approve Payment Claims for April 19-May 23, 2019, totaling $142,075.56. Ayes: Anderson, Brindle, Fischer, Staunton and Hovland Motion carried. VI. REPORTS/RECOMMENDATIONS – (Favorable vote of majority of HRA Board Members present to approve except where noted). VI.A. DISCUSSION OF POTENTIAL REDEVELOPMENT STRATEGY OF 5146 EDEN AVENUE – APPROVED Executive Director Neal stated staff was approached by Frauenshuh Companies with a proposal to develop the former Public Works maintenance center at 5146 Eden Avenue. He said the group proposed for consideration a modified version of their original plan with elements that included a residential tower with reduced height, affordable housing along Arcadia, a medical office building, underground parking, and land/area dedicated for future public use for an arts center, senior center or fire station. He said Frauenshuh had not developed any specific plans but would like to begin a discussion and staff thought it would be best to get Commission direction on this site first. Community Development Director Teague said the applicant would like to pursue a high-rise building on the north end of site of 10-12 stories of senior housing, liner housing along Acadia and green space on top, an art center, and a 60,000-square foot medical office building and future fire/EMT facility. He said the Frauenshuh had agreed to meet the affordability housing concept and while no actual plans had been submitted wanted some direction on the proposed development. Dave Anderson, Frauenshuh, presented their proposal and shared comments about how this could be a catalyst site that could accommodate safety services as well. Dean Dovolis, DRJ Architecture, said this plan had been presented to the Planning Commission and included town green space, grand stairs and bridges, but the uses had evolved into a senior coop of 10-12 stories, liner Minutes/HRA/May 30, 2019 2 housing for either lease or purchase, no art center but 60,000 square feet for medical office building and a potential fire/EMT location. They were looking for added direction on their concept The Commission noted the concept included both public and private ownership, similar to 7200/7250 and spoke about how that and the senior housing could be received. Mr. Dovolis stated 7200/7250 was a great cooperation project and unique model and said this project would be similar with the addition of another major private component. The Commission commented about the time needed to reach consensus for this site but how housing would be extremely useful as well as the connection between preservation of the single-family housing to provide more affordability for young families if structured correctly. The Commission stated the senior housing would be affordable at 60-80% and its importance to allow people to age in place. The Commission spoke about the interest in a community center and how it would be a good but expensive proposition and noted the Race and Equity Commission had focused on a naming place in the Grandview area and how this area could be that location. The Commission also spoke about how much space would be needed for a fire/EMT facility and noted this would be a good location but stated the greatest challenge was the community center. The Commission acknowledged this was similar to 7200-7250 instead, considered the site ownership, then spoke about public uses such as parking and use by seniors and if public space with private use around could be supported by shared parking. The Commission stated access would be very important and there would be no need for TIF as the site would pay the City back immediately. This might be the best opportunity to offset the expense depending on the housing component. The Commission noted direction for the site had been discussed since 2009, which included a medical office building and parking. Then the Small Area Plans involved stakeholders first with Grandview and the Arts and Culture Commission would like to see a combined art and community center with front door concept, which this site included as a possibility. The Commission commented about the need for more community engagement for the fire/EMT facility and how they were not inclined to move forward with a change in direction until the development framework was revisited as this was a great urban design solution and great use but more information was needed. The Commission agreed that while shared uses would be good, they were not ready to take action at this time before determination of the real demand. The Commission noted the importance to maintain access to the rail and this site would be easier with a lid or deck park and how the senior coop would be intriguing because of easy access to many locations. The Commission spoke about how this could be a great community gathering space but no one wants to pay for that and with the current strong market for fitness centers, there is no need for more now. The Commission stated the site continued to increase in value which was good but plans should include community engagement. Mr. Neal reiterated that no proposal had been presented but more of a fundamental concept regarding potential uses and that should partnerships be considered, there were others besides Frauenshuh who would be interested as well. The Commission spoke about how the community center concept could be in the way actually and noted other buildings in the area would likely redevelop too with resulting traffic so should an art center be relocated here, the building could be easily filled and used. The Commission consensus was that the proposal was premature at this point until more direction could be determined for the area and resolution of a potential community center. VII. CORRESPONDENCE VII.A. Correspondence – None VIII. HRA COMMISSIONERS’ COMMENTS - Received IX. EXECUTIVE DIRECTOR’S COMMENTS - None Minutes/HRA/May 30, 2019 3 X. ADJOURNMENT There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 8:47 a.m. Respectfully submitted, ___________________________________________ Scott Neal, Executive Director Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY JUNE 18, 2019 IMMEDIATELY FOLLOWING THE CITY COUNCIL MEETING I. CALL TO ORDER Chair Hovland called the HRA meeting to order at 9:37 p.m. II. ROLLCALL Answering rollcall were Commissioners Anderson, Brindle, Fischer, Staunton, and Chair Hovland. Absent: None. III. APPROVAL OF MEETING AGENDA – AS PRESENTED Motion made by Commissioner Fischer seconded by Commissioner Anderson approving the meeting agenda as presented. Ayes: Anderson, Brindle, Fischer, Staunton and Hovland Motion carried. IV. CONSENT AGENDA – AS PRESENTED Motion made by Commissioner Staunton seconded by Commissioner Brindle approving the consent agenda. V.A. Approve Encroachment Agreement for 3930-3944 Market Street V.B. Approve Declaration of Reciprocal Easements for 3930-3944 Market Street Ayes: Anderson, Brindle, Fischer, Staunton and Hovland Motion carried. V. ADJOURNMENT There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 9:38 p.m. Respectfully submitted, ___________________________________________ Scott Neal, Executive Director Date: July 25, 2019 Agenda Item #: IV.B. To:Chair & Commissioners of the Edina HRA Item Type: Claims From:Don Uram, Finance Director Item Activity: Subject:Approve Payment of Claims Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Motion to approve payment of claims for HRA Check Register dated 05.24.19-06.20.19 totaling $254,248.22. INTRODUCTION: Payment of claims are attached. ATTACHMENTS: Description HRA Check Register 05.24.19-06.20.19 TOTAL $254,248.22 6/19/2019CITY OF EDINA 11:02:12R55CKS2LOGIS600V 1Page -Council Check SummaryNote: Payment amount may not reflect the actual amount due to data sequencing and/or data selection. 6/20/20195/24/2019 - Check #AmountDate Supplier / Explanation PO#Doc No Inv No BU Obj Sub Subledger Account Description BU Description Co Dept Div 8243 6/13/2019 105693 CITYSPRINT 09243 12671051.15 9243NORTH RAMP EXP LEGAL 492841 43229 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 51.15 435780 5/30/2019 140948 MOHAGEN / HANSEN ARCHITECTURAL GROUP 09243 1267103,116.17 9243NORTH RAMP SIGNAGE 491663 44677 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 3,116.17 435817 5/30/2019 120784 SIGN PRO 09210 146710134.60 9210NORTH RAMP EXP - WAYFINDING 491674 14112 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 09210 146710113.60 9210NORTH RAMP EXP - WAYFINDING 491884 14076 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 248.20 435822 5/30/2019 101016 SRF CONSULTING GROUP INC 09243 1267103,216.36 9243NORTH RAMP EXP -OWNERS REP 491885 10930.00-20 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 3,216.36 435826 5/30/2019 101756 SUNDE LAND SURVEYING LLC. 09243 1267102,206.03 9243NORTH RAMP EXP - SURVEY 491677 53510 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 2,206.03 436009 6/6/2019 128914 MINUTEMAN PRESS 09210 14671048.00 9210NORTH RAMP EXP WAYFINDING 492380 27560 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 48.00 436054 6/6/2019 120784 SIGN PRO 09210 146710296.70 9210NORTH RAMP EXP WAYFINDING 492378 14042 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 09210 146710178.34 9210NORTH RAMP EXP WAYFINDING 492379 14143 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 475.04 436166 6/13/2019 100730 DORSEY & WHITNEY LLP 09210 1420662,645.50 9210PENTAGON SOUTH TIF ESCROW 493144 3497733 ESCROW DEPOSITS HRA ADMINISTRATION 09232 146131143.00 9232TIF LEGAL 493145 3497731 PROFESSIONAL SERV - LEGAL CENTENNIAL TIF DISTRICT 09238 1461313,001.00 92387008 SANDELL - LEGAL 493146 3497736 PROFESSIONAL SERV - LEGAL SOUTHDALE 2 TIF DISTRICT 09210 1420665,837.00 92104500 FRANCE TIF ESCROW 493147 3497735 ESCROW DEPOSITS HRA ADMINISTRATION 09243 1261315,981.26 9243NORTH RAMP - LEGAL 493148 3497732 PROFESSIONAL SERV - LEGAL 50TH AND FRANCE 2 TIF DIS 17,607.76 436169 6/13/2019 100049 EHLERS & ASSOCIATES INC. 09238 146136367.50 9238SOUTHDALE TIF 493150 80066 PROFESSIONAL SVC - OTHER SOUTHDALE 2 TIF DISTRICT 09210 142066460.00 92104500 FRANCE TIF ESCROW 493151 80090 ESCROW DEPOSITS HRA ADMINISTRATION 09238 146136720.00 9238SOUTHDALE 2 LEGISLATION 493152 80081 PROFESSIONAL SVC - OTHER SOUTHDALE 2 TIF DISTRICT 09210 1420661,265.00 92107200 FRANCE TIF ESCROW 493153 80089 ESCROW DEPOSITS HRA ADMINISTRATION 2,812.50 436293 6/13/2019 100883 MESSERLI & KRAMER 09238 1461316,250.00 9238SOUTHDALE 2 LEGAL 493177 366941 PROFESSIONAL SERV - LEGAL SOUTHDALE 2 TIF DISTRICT 6/19/2019CITY OF EDINA 11:02:12R55CKS2LOGIS600V 2Page -Council Check SummaryNote: Payment amount may not reflect the actual amount due to data sequencing and/or data selection. 6/20/20195/24/2019 - Check #AmountDate Supplier / Explanation PO#Doc No Inv No BU Obj Sub Subledger Account Description BU Description Co Dept Div 6,250.00 436309 6/13/2019 111803 MONSON, JAN & MITCHELL 09243 1267101,173.00 9243NORTH RAMP EXP EASEMENT 493215 060719 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 1,173.00 436328 6/13/2019 141258 PEMBER COMPANIES INC. 09232 14613356,537.56 9232PAY #1 493187 INTERLACHEN/VERNON #1 PROFESS SERVICES-ENGINEERING CENTENNIAL TIF DISTRICT 56,537.56 436379 6/13/2019 101016 SRF CONSULTING GROUP INC 09235 12671013,801.74 9235WVV TRAFFIC SIGNAL/ADA WORK 492799 12409.00-3 EQUIPMENT REPLACEMENT VALLEY VIEW/WOODDALE TIF 13,801.74 436388 6/13/2019 101756 SUNDE LAND SURVEYING LLC. 09243 126710842.36 9243NORTH RAMP EXP - SURVEY 493202 53574 EQUIPMENT REPLACEMENT 50TH AND FRANCE 2 TIF DIS 842.36 436484 6/20/2019 100730 DORSEY & WHITNEY LLP 09210 14206616,502.00 92107200 FRANCE TIF ESCROW 493935 3497734 ESCROW DEPOSITS HRA ADMINISTRATION 16,502.00 436584 6/20/2019 141258 PEMBER COMPANIES INC. 09232 146133129,145.35 9232PAY #2 494065 ENG 19-8 PROFESS SERVICES-ENGINEERING CENTENNIAL TIF DISTRICT 129,145.35 436632 6/20/2019 123129 TIMESAVER OFF SITE SECRETARIAL INC. 09210 146136215.00 9210HRA MAR 28 493760 #M24636 PROFESSIONAL SVC - OTHER HRA ADMINISTRATION 215.00 Report Totals 254,248.22 Date: July 25, 2019 Agenda Item #: V.A. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:Proposed Pilot Program: Preserving Edina Homeownerhsip Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve using $825,000 of the Affordable Housing Trust Funds to implement the Housing P reservation Pilot Program and enter into a grant agreement with the West Hennepin Affordable Housing Land Trust. INTRODUCTION: The City of Edina in partnership with West Hennepin Affordable Housing Land Trust dba Homes Within Reach (HWR), a nonprofit community based program, providing affordable land trust homeownership to low-to- moderate income work-force households in the suburbs of Hennepin County, is proposing the implementation of a pilot program to assist current Edina homeowners. T he program is designed to assist financially challenged low- to-moderate income Edina homeowners retain their home in time of financial hardship. ATTACHMENTS: Description Staff Report: Proposed Pilot Program Preserving Edina Homeownership Application Guidelines Program Checklist DRAFT Grant Agreement Staff Presentation July 25, 2019 Chair and Commissioner of the Edina HRA Stephanie Hawkinson, Affordable Housing Development Manager Proposed Pilot Program: Preserving Edina Homeownership Information / Background: The proposed pilot program is designed to preserve already affordable single family housing for low and very-low income households and create future perpetually affordable homeownership opportunities for future low-income households. The program would occur in partnership with West Hennepin Affordable Housing Land Trust dba Homes Within Reach (HWR), a nonprofit community based program providing affordable land trust homeownership to low-to-moderate income work-force households in the suburbs of Hennepin County. Program Goals and Outcomes • Preserves homeownership opportunities for low-to-moderate income households • Retains community and homeowner wealth • Enhances residential stability • Preserves long-term housing affordability for 99-years • Preserves Naturally Occurring Affordable Homes (NOAH) single family homes Budget Action Financial Request: Up to $825,000 to assist 4 to 6 households Source: Affordable Housing Trust Fund Current Balance Ending Balance Affordable Housing Trust Fund (Buy-In) $2,160,000 $375,000 Nolan Mains (pledge) ($800,000) 10 Affordable Units 4d Pilot Program ($160,000) NOAH Preservation Homeownership Preservation Pilot ($825,000) Demonstration of Need With a median home price of over $500,000, entry-level properties are overpriced for the majority of work-force households who work or live in Edina. Increased home values have taken place because of a STAFF REPORT Page 2 reduction in supply and increase in demand, while wages have not increased accordingly and cannot keep pace with increases in housing costs. Over the years, low-to-moderate income Edina homeowners have experience challenges of health issues, job retention and other crisis that have put burden on their financial ability to fund the expenses of their home, leaving them in a position of risk of losing their homes. Anecdotal evidence of need include the following: • Seniors on fixed incomes go to VEAP seeking mortgage assistance. • Senior Community Services assists 70 to 80 senior homeowners from Edina with household needs as they cannot hire out for the work. Of these, approximately 50% have incomes at or below 60% of AMI. • 800 children in the Edina School system are on free and reduced lunch. This is an increase of 200 students from five years ago. There is a segment of the school population that does not qualify for free and reduced lunch because they are over income, but they are struggling to make ends meet. • Meals on Wheels served 116 clients in 2018. • The Department of Commerce Office of Energy Assistance Programs reports in that in 2018 262 households were determined eligible for Energy Assistance benefits. Of these, the average household income was $15,725 and 27% lived in single family houses. Based on the experience of community partners there is an audience for the proposed pilot program. Public Purpose/Comprehensive Plan Conformance Edina’s Comprehensive Plan stipulates that the City is committed to fund and expand its financial and technical support of Community Land Trusts as a mechanism to create and preserve affordable homeownership options in Edina. The City of Edina has repeatedly supported HWR, since it provides long- term and sustainable homeownership opportunities to households who might otherwise not be able to own a home in Edina. Sources and Uses Sources Affordable Housing Trust Fund $825,000 Uses Acquisition of Land from Homeowners $825,000 Average $165,000 per House Uses of Land Acquisition Proceeds Rehabilitation Costs $443,750 To address health and safety issues Non-Rehab Project Expenses $29,500 Appraisal; energy audit; radon testing, closing costs Homeowner Delinquent Expenses $250,000 Includes utility bills, taxes Program Expenses $69,250 Legal fees; marketing; WHAHLT fees Facilitation Fee $25,000 Remaining Funds for Homeowners $7,500 TOTAL $825,000 STAFF REPORT Page 3 Rehabilitation Criteria Each program participant’s house will be inspected with the funds allocated in priority order to the following: 1. Program fees and expenses: Legal fees; closing costs; management fees 2. Rehabilitation of house: Address health and safety concerns; code compliance; energy improvements; deferred maintenance 3. Payment of delinquent bills: property taxes; utility bills 4. Residual funds to go to homeowner Recommendation Staff recommends approval to use $825,000 of Affordable Housing Trust Funds to implement the Housing Preservation Pilot Program and enter into a Grant Agreement with the West Hennepin Affordable Housing Land Trust. Staff will ask for City Council approval on August 7. Attachment: Application Guidelines Program Checklist Grant Agreement Preserving Edina Homeownership Program Guide The City of Edina in partnership with West Hennepin Affordable Housing Land Trust dba Homes Within Reach (HWR), a nonprofit community based program, providing affordable land trust homeownership to low-to- moderate income work-force households in the suburbs of Hennepin County, is proposing the implementation of a pilot program to assist current Edina homeowners. The program is designed to assist financially challenged low-to-moderate income Edina homeowners retain their home in time of financial hardship. Program’s Objective: The proposed program’s objective is to assist five (5) low-to-moderate income Edina homeowners who are experiencing significant financial challenges of overburdening housing expenses, resulting in the potential loss of their homes, the opportunity to retain their home by using the Community Land Trust practice. The program’s intent is to serve current Edina homeowners who are low to moderate income residents (less than 80% AMI – per HUD Income Guidelines), who no longer can afford to remain homeowners in Edina. The program will establish and provide permanent affordability for a qualified household by using the Community Land Trust practice. Program Goals: • Preserves homeownership opportunities for low-to-moderate income households • Retains community and homeowner wealth • Enhances residential stability • Preserves long-term housing affordability Applicant Qualifications: • Applicant Criteria Applicant must be 21 years of age or older. • Applicant (and co-applicant) must be a citizen of the United States or a legal resident. • Applicant (and co-applicant) may not have other liquid assets, excluding retirement accounts, totaling in excess of $25,000 net of liabilities or the amount consistent with Section 8 guidelines, whichever is greater. • Total gross income is at or below 80% of area median income. • Applicant cannot be above a 43% debt ratio (back end bank ratio once payoff of debt takes place). Application and Approval Process 1. Requirements a. Intake Interview: HWR staff meet with homeowner to determine circumstances contributing to being cost burdened, the pending foreclosure or tax-forfeiture situation as well as any other debt (e.g. personal judgments, delinquent utilities, mechanic's liens) that may impact the organization's ability to assist. b. Inspections i. There are at least three levels of inspections: 1. WHAHLT Contractor 2. House Masters 3. Hennepin County ii. Key areas of inspection 1. Foundation/Structural Integrity 2. Condition of driveway and garage 3. All wells and private sewage system approved by government authority 4. Water intrusion - condition of yard/slope to home foundation 5. Condition of exterior - siding, soffits, roof, chimney stack (interior and exterior) 6. Mechanical - HVAC system and hot water heater 7. Ventilation in kitchen and all bathrooms 8. Adequately functioning plumbing 9. No hazardous wiring or fixtures i.e. GFIs in kitchen, baths and garage and grounded circuits for all appliances 10. Insulation (attic, foundation, doors & windows) etc. 11. Condition of windows, exterior and interior doors 12. Lead base paint - exterior and interior c. Intake Meeting: HWR determines and conveys next step to homeowner based on condition of property and intake meeting. d. Application Submission: If deemed viable - applicant submits a completed HWR application. i. HWR application ii. Questionnaire iii. Tax returns – 2 years iv. Check stubs – 2 months – if applicable v. Release for HWR to pull credit report: Applicant must agree to HWR pulling applicant credit report as part of application process to ascertain readiness to participate in the programs. vi. Check stubs – 2 months – if applicable vii. Release for HWR to pull credit reports e. Informational Meeting: If applicant decides to move forward after attending the Informational Meeting, HWR staff, requests the following information. i. Certification application ii. Employment verifications iii. Assets verifications or asset statements (6 months) iv. Authorization to release information v. Data Privacy Statement vi. Home Eligibility Release Form vii. Minnesota Housing combine privacy and Tennessen warning viii. Child support ix. Social Security Card and Driver’s License x. Hennepin County Homebuyer Assistance Programs – Data Privacy Statement xi. Other f. Homebuyer Training Classes: (attendance of a Home Stretch Class sponsored by Minnesota Homeownership Center) – if applicable; require attending budgeting class. 2. Approval: HWR sends to applicant an approval or denial letter based on application process. 3. Transaction: a. Applicant sells the land to HWR, proceeds of the sale would pay off obligations and fund rehab. b. Transfer of the property would take place at a closing, where land is conveyed to HWR and Ground Lease would be executed. 4. Rehabilitation: a. Inspections – prior to closing i. Hennepin County, Radon, Blower/Energy Tests, Sewer and PIRA if necessary b. Finalize scope of work and commence bidding c. Negotiate and execute scope of work – proposal/contract d. Meet with homeowner to review rehab and set-up rehab timeline e. Commence and complete work 5. Financing Flow: a. WHAHLT/HWR submits invoice to City including: i. Voluntary acquisition form ii. Appraisal iii. Offer to purchase property form iv. Purchase agreement v. Construction estimates vi. Preliminary Sources and Uses b. City of Edina sends check to WHAHLT for the acquisition of the land. c. Contractor presents to WHAHLT/HWR invoice for work with all permits and required inspections. d. Final inspection of work completed with permits/approvals and lien waivers. e. HWR makes payment to General Contractor. f. Residual funds returned to Homeowner. Edina Homeownership Preservation Program Project Transactional Documentation to the City of Edina 1.Application Notification with address. 2.Confirmation the Applicant has met the Program requirements. 3.Preliminary Sources & Uses with Rehab estimates. 4.Request for Project Funding 5.Copy of Property Appraisal. 1.Copy of executed Ground Lease with the buyer. 3.Copy of the Closing Statement between WHAHLT and the seller. 4.Copy of Deed. 5.Final Project Budget. HWR EHPP CHECKLIST Project Completion (Conveyance of property and rehab is completed) Pre-Development 1 GRANT AGREEMENT This Grant Agreement (“Agreement”) is entered into on this ______ day of ___________, 2019, by, between and among the CITY OF EDINA, a Minnesota municipal corporation (“City”), and WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST, a Minnesota nonprofit corporation, d.b.a. HOMES WITHIN REACH (“HWR”). Recitals WHEREAS, HWR is a nonprofit, community-based program which provides affordable land trust homeownership to low-to-moderate income work-force households in the suburbs of Hennepin County. WHEREAS, The City and HWR are proposing the implementation of a pilot program which will assist financially challenged low-to-moderate income Edina homeowners to retain their home during a time of financial hardship, in exchange for that home being preserved as naturally occurring affordable housing for future owners. WHEREAS, in furtherance of said program, the City has agreed to provide grant funds to be used by HWR in the acquisition of property and the rehabilitation of the homes thereon. WHEREAS, Edina City Code Chapter 2, Article X established an Affordable Housing Trust Fund in accordance with Minnesota Statutes Section 462C.16 to provide loans and grants to non-profit housing developers for the acquisition, rehabilitation and preservation of existing naturally occurring affordable housing. NOW, THEREFORE, in consideration of the mutual promises and covenants herein, parties do hereby agree as follows: 1. GRANT. The City agrees to grant to HWR an amount not to exceed Eight Hundred Twenty Five Thousand and No/100 Dollars ($825,000.00) (“Funds”) to be dispensed as stated herein, for the purposes stated herein. 2. ELIGIBILITY CRITERIA. Grant funds received by HWR pursuant to this agreement may only be dispersed to applicants that meet all of the following criteria: A. Applicant must be the sole registered owner(s) of the home and land to be purchased (“Property”). B. The home on the Property must be a building containing not more than one dwelling unit, as defined by Edina City Code, and be located within the municipal boundaries of the City. C. Applicant must be at immediate risk of losing applicant’s legal title to the Property due to foreclosure or tax forfeiture. D. Applicant must be 21 years of age or older. E. Applicant must be a citizen of the United States or a legal resident. 2 F. Applicant may not have liquid assets, excluding retirement accounts, totaling either (a) in excess of $25,000 (net of liabilities), or (b) the amount consistent with Section 8 guidelines, whichever is greater. G. Applicant’s total gross income must be at or below 80% of area median income, based on the U.S. Department of Housing and Urban Development guidelines. H. Applicant must not be above a 43% debt ratio (back end bank ratio) following payoff of debt pursuant to this Agreement. 3. APPLICANT APPROVAL PROCESS. Upon receipt by HWR of an application, HWR will undertake all actions listed in the attached Exhibit A (“Application Review”). If following Application Review, HWR determines that the applicant does not qualify for the program, HWR will issue a denial letter to applicant. If following Application Review, HWR determines that the applicant does qualify for the program, HWR will forward a copy of all of the applicant’s application materials to the City for review and approval. If HWR receives written approval from the City, HWR will issue an approval letter to the applicant. If the City determines, in its sole discretion, that the applicant does not qualify for the program, the City will notify HWR in writing, and HWR will issue a denial letter to applicant. Following issuance of an approval letter to the applicant, HWR will submit to the City the following documentation (“Program Documents”): A. Application Notification with address B. Copy of Property Appraisal C. Confirmation that the Applicant has met program requirements D. Preliminary Sources and Uses with rehabilitation estimates E. Funding Request Following written approval of the Program Documents by the City, HWR will schedule a date (“Closing Date”) for the sale of the Property and transfer of Funds (“Closing”). 4. CLOSING. Closing shall be facilitated by a title company chosen by HWR (“Title Company”) and shall take place at the offices of the Title Company. HWR will notify the City of the Closing Date in writing at least 30 days prior thereto. On or before the Closing Date, the City shall submit to the Title Company that portion of the Funds requested by HWR and approved by the City in the Funding Request. HWR shall instruct the closing company that it must hold these Funds in escrow, and shall only release them following receipt of the following documents: A. A Deed signed by all legal owners of the Property conveying title to the Property to HWR B. A Declaration of Covenants and Restrictions executed by HWR in the format attached hereto as Exhibit B. C. A Land Lease executed by applicants in the format attached hereto as Exhibit C. D. Copy of the Closing Statement E. Final project budget Following receipt of said documents, all Funds in escrow may be released to HWR for disbursement in accordance with this Agreement and the Program Documents. The Funds shall first be used to pay off any encumbrances to the title of the Property. HWR shall ensure that the 3 Deed, Declaration of Covenants and Restrictions, and Land Lease shall immediately be recorded against the title to the property on the Closing Date. 5. HWR RESPONSIBILITIES. Following Closing, HWR shall be responsible for ensuring that all construction and maintenance is completed in accordance with the Program Documents within one year from the Closing Date. Remaining Funds shall be used to pay contractors for said work. HWR shall manage all Land Leases on the Property and shall ensure that conveyance of the Property is consistent with the terms of this Agreement. 4. MISCELLANEOUS. A. Notice. All notices to be given by either party to the other hereunder shall be in writing and deemed to have been given when delivered personally or when deposited in the United State mail, registered or certified and postage prepaid, addressed as follows: To the City at: City of Edina Attn: Affordable Housing Development Manager 4801 W. 50th St. Edina, MN 55424 To HWR at: ________________________ ________________________ ________________________ ________________________ ________________________ B. Assignment. HWR may neither assign nor transfer any rights or obligations under this Agreement without the prior consent of the City and a fully executed Assignment Agreement, executed and approved by the same parties who executed and approved this Agreement, or their successors in office. C. Amendments. Any amendment to this Agreement must be in writing and will not be effective until it has been executed and approved by the same parties who executed and approved the original Agreement, or their successors in office. D. Waiver. If the City fails to enforce any provision of this Agreement, that failure does not result in a waiver of the right to enforce the same or another provision of the Agreement in the future. e. Liability and Indemnification. HWR releases from and covenants and agrees that the City and its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (collectively the “Indemnified Parties”) shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss claims or 4 causes of action, including attorney’s fees, arising from the performance of this Agreement or any of the actions specified herein. f. Accounting, Records, and Audits. HRW agrees to establish and maintain accurate and complete accounts and records relating to the receipt and expenditure of all Funds received pursuant to this Agreement. Such accounts and records shall be kept and maintained by the HRW for a period of six (6) years from the last date of expenditure of Funds. HWR’s books, records, documents, and accounting procedures and practices relevant to this Agreement are subject to examination by the City, State and/or the State Auditor or Legislative Auditor, as appropriate, for a minimum of six (6) years from the last date of expenditure of Funds. g. Government Data Practices. HWR must comply with the Minnesota Government Data Practices Act, Minn. Stat. Ch. 13, as it applies to all data provided by the City under this Agreement, and as it applies to all data created, collected, received, stored, used, maintained, or disseminated by HWR under this Agreement. The civil remedies of Minn. Stat. § 13.08 apply to the release of the data referred to in this clause by either the City or HWR. If HWR receives a request to release the data referred to in this clause, HWR must immediately notify the City. The City will give HWR instructions concerning the release of the data to the requesting party before the data is released. h. Governing Law, Jurisdiction, and Venue. Minnesota law, without regard to its choice-of-law provisions, governs this Agreement. Venue for all legal proceedings out of this Agreement, or its breach, must be in the appropriate state or federal court with competent jurisdiction in Hennepin County, Minnesota. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the day and year first above written. CITY OF EDINA BY: James Hovland, Its Mayor AND Scott Neal, Its City Manager WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST BY: Its EXHIBIT A TO GRANT AGREEMENT 1. Intake Interview: HWR staff meet with homeowner to determine circumstances contributing to being cost burdened, the pending foreclosure or tax-forfeiture situation, applicant eligibility in accordance with this Agreement, as well as any other debt (e.g. personal judgments, delinquent utilities, mechanic's liens) that may impact the organization's ability to assist. 2. Inspections a. There are at least three levels of inspections: i. WHAHLT Contractor ii. House Masters iii. Hennepin County b. Key areas of inspection i. Foundation/Structural Integrity ii. Condition of driveway and garage iii. All wells and private sewage system approved by government authority iv. Water intrusion - condition of yard/slope to home foundation v. Condition of exterior - siding, soffits, roof, chimney stack (interior and exterior) vi. Mechanical - HVAC system and hot water heater vii. Ventilation in kitchen and all bathrooms viii. Adequately functioning plumbing ix. No hazardous wiring or fixtures i.e. GFIs in kitchen, baths and garage and grounded circuits for all appliances x. Insulation (attic, foundation, doors & windows) etc. xi. Condition of windows, exterior and interior doors xii. Lead base paint - exterior and interior 3. Intake Meeting: HWR determines and conveys next step to homeowner based on condition of property and intake meeting. 4. Application Submission: If deemed viable - applicant submits a completed HWR application. a. HWR application b. Questionnaire c. Tax returns – 2 years d. Check stubs – 2 months – if applicable e. Release for HWR to pull credit report: Applicant must agree to HWR pulling applicant credit report as part of application process to ascertain readiness to participate in the programs. f. Check stubs – 2 months – if applicable g. Release for HWR to pull credit reports 5. Informational Meeting: If applicant decides to move forward after attending the Informational Meeting, HWR staff, requests the following information. a. Certification application b. Employment verifications c. Assets verifications or asset statements (6 months) d. Authorization to release information e. Data Privacy Statement EXHIBIT A TO GRANT AGREEMENT f. Home Eligibility Release Form g. Minnesota Housing combine privacy and Tennessen warning h. Child support i. Social Security Card and Driver’s License j. Hennepin County Homebuyer Assistance Programs – Data Privacy Statement k. Other 6. Homebuyer Training Classes: (attendance of a Home Stretch Class sponsored by Minnesota Homeownership Center) – if applicable; require attending budgeting class. EXHIBIT B TO GRANT AGREEMENT DECLARATION OF COVENANTS AND RESTRICTIONS WHEREAS, West Hennepin Affordable Housing Land Trust, (hereinafter referred to as "Declarant"), is the owner of land under certain improvements to the real property located at, [address] (hereinafter referred to as the "Property"), situated in the City of Edina , County of Hennepin, State of Minnesota, and legally described as: [legal description] WHEREAS, Declarant has received a grant in the amount of [$______________.__] (hereinafter referred to as the "Grant") from the City of Edina (hereinafter referred to as the "City") to sustain the Property as naturally occurring affordable housing; and WHEREAS, in order to enable the City to make the Grant, Declarant does hereby make this Declaration of Covenants and Restrictions; and WHEREAS, Declarant hereby agrees to impose certain covenants and restrictions upon the Property, to ensure that the Property remains affordable to low-income persons. NOW, THEREFORE, said Declarant makes the following Declaration, hereby specifying that said Declaration shall constitute public covenants to run with the land and shall be binding on all parties in interest and their successors and assigns: 1. The Property must be purchased by a Low Income Purchaser (LI Purchaser) defined as who is a household whose income is eighty percent (80%) or less of area median income adjusted for household size as determined annually by United States Department of Housing and Urban Development (HUD) who certifies that the Property will be used as their principal residence. EXHIBIT B TO GRANT AGREEMENT 2. Household income must be determined using the definition of income found at 24 CFR Part 5.609, commonly referred to as Section 8 or Part 5 definition. 3. The Property must remain owner occupied. 4. In the event of a voluntary or involuntary sale of title of the Property, the subsequent sale of the Property must be to another LI Purchaser. 5. A fair return must be provided to the seller of the unit. A fair return is defined as per the terms and conditions of the Ground Lease executed between the LI Purchaser and Declarant. 6. Declarant shall execute the Ground Lease at the closing with the LI Purchaser which includes the Declarant’s right of first refusal. At a minimum a Memorandum of Ground Lease shall be filed on the Property to ensure the Declarant’s right of first refusal. 7. The covenants, conditions, restrictions, easements, liens and charges contained in this Declaration shall be perpetual. This Declaration may be amended, modified, or terminated in part or in whole by written consent of the City, or its respective successors and assigns. 8. In the event that Declarant, its successors or assigns, shall default in its performance or observance of any covenant, agreement or restriction set forth herein and such default shall remain uncured for a period of thirty (30) days after notice thereof shall have been given by the City to Declarant, its successors or assigns, then in such case, (i) the City may require Declarant, its successors and assigns, to demonstrate to the satisfaction of the City that any default has been corrected and the City may take any action reasonably necessary to investigate and substantiate the existence or correction of the default, or (ii) the City may seek specific performance of the covenants and restrictions contained herein. Declarant, its successors or assigns, hereby agrees to pay, indemnify and hold the City harmless from any and all costs and expenses, including reasonable attorney’s fees, actually incurred in any such action for specific performance hereof following a default hereunder if the City should prevail. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK EXHIBIT B TO GRANT AGREEMENT IN WITNESS WHEREOF, Declarant has caused this Declaration to be executed and acknowledged this day of ,20__. West Hennepin Affordable Housing Land Trust By: ____________________________________ Its: Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 20__, by , the Executive Director of West Hennepin Affordable Housing Land Trust, a Minnesota non-profit corporation on behalf of said corporation. ____________________________________________ Notary Public This document was drafted by: Campbell Knutson P.A. Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan MN 55121 EXHIBIT C TO GRANT AGREEMENT ________________________________________________________________________ GROUND LEASE FROM WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST TO ____________________________________________________________________________________________________ ________________________________________________________________________ EXHIBIT C TO GRANT AGREEMENT i TABLE OF CONTENTS Page Article 1 Letters of Stipulation and Acknowledgement 1 Article 2 Lease of Land ...............................................................................................1 Article 3 Duration of Ground Lease ...........................................................................1 Article 4 Use of Land ..................................................................................................2 Article 5 Ground Lease Fee ........................................................................................3 Article 6 Taxes and Assessments ................................................................................4 Article 7 Improvements ..............................................................................................4 Article 8 Financing......................................................................................................6 Article 9 Liability, Insurance, Damage and Destruction, Eminent Domain ...............9 Article 10 Transfer, Sale or Disposition of Improvements .........................................11 Article 11 Assignment and Sublease ..........................................................................15 Article 12 Default........................................................................................................16 Article 13 Arbitration ..................................................................................................17 Article 14 General Provisions .....................................................................................17 Exhibit A Homeowner’s Letter of Stipulation Exhibit B Land Exhibit C Right of First Refusal EXHIBIT C TO GRANT AGREEMENT 1 Ground Lease THIS GROUND LEASE (“Ground Lease”) is entered into on _______________ between WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST (“WHAHLT”), as Landlord, and __________________, husband and wife, as Homeowner. Background WHAHLT is organized for charitable purposes, including: the development and preservation of decent, affordable housing and the creation of homeownership opportunities for low and moderate income people. One method of meeting these charitable purposes is to own land under a house and lease the land to the house owners. The Land described in this Ground Lease is owned by WHAHLT and is being leased to the owners of the house on the Land as part of WHAHLT’s mission. WHAHLT and Homeowner understand the special nature of the conditions of this Ground Lease. Each of them has had independent advice of legal counsel and freely accepts these conditions, including those that affect the marketing and resale of any Improvements on the leased Land. In exchange for the mutual promises of WHAHLT and Homeowner and for other valuable consideration, which they both acknowledge is sufficient and has been received, WHAHLT and Homeowner agree as follows: ARTICLE 1: Letters of Stipulation and Acknowledgment Attached as Exhibit A and made part of this Ground Lease are (a) the Homeowner’s Letter of Stipulation and (b) a Letter of Acknowledgment from Homeowner’s legal counsel stating that they have reviewed and understand this Ground Lease (in particular, Article 10) and related documents for this transaction. ARTICLE 2: Lease of Land 2.1 LAND: WHAHLT leases to Homeowner, and Homeowner leases from WHAHLT, the property described in the attached Exhibit B exclusive of any Improvements (as defined in Section 7.1 below) (“the Land”). WHAHLT has given Homeowner a copy of the most current title report for the Land, and Homeowner accepts title to the Land in the condition that it exists today. 2.2 RESERVATION OF MINERAL RIGHTS: WHAHLT reserves for itself all the minerals and other materials that may be extracted from the Land. This does not restrict the Homeowner’s right to occupy and freely use the Land. WHAHLT’s removal of minerals or other extractive resources must be carried out with as little disruption to the Homeowner as is reasonably possible, unless otherwise agreed by the Homeowner. ARTICLE 3: Duration of Ground Lease 3.1 PRINCIPAL TERM: The term of this Ground Lease is 99 years, beginning on ___________________ and ending ______________________, unless terminated sooner or extended as provided in this Ground Lease. EXHIBIT C TO GRANT AGREEMENT 2 3.2 GROUND HOMEOWNER'S OPTION TO EXTEND: Homeowner may extend the term of this Ground Lease for one additional period of 99 years, subject to the same Ground Lease provisions. WHAHLT may make changes to the Ground Lease provisions for the renewal period before the renewal period begins, but only if the changes do not materially harm Homeowner’s rights under this Ground Lease. Homeowner’s right to extend is subject to the following conditions: (a) this Ground Lease must be in effect not only when notice of the extension is given but also on the last day of the term; and (b) there can be no Event of Default by Homeowner (as defined in Article 12) under this Ground Lease or under any loan documents between Homeowner and a Permitted Mortgagee (defined later in this Ground Lease). To extend the Ground Lease term, Homeowner must notify WHAHLT in writing, not more than 365 nor less than 180 days before the last day of the current term, irrevocably exercising the option to extend. Each party must then sign a memorandum or notice of lease, in recordable form, acknowledging that the option has been exercised. 3.3 CHANGE OF LANDLORD; HOMEOWNER’S RIGHT TO PURCHASE: If WHAHLT transfers ownership of the Land (whether voluntarily or involuntarily) to any other person or entity, this Ground Lease remains binding and unaffected. Nevertheless, the Homeowner has a right of first refusal to buy the Land if WHAHLT wants or attempts to pledge the Land as security for a mortgage loan or to transfer the Land to a person or entity that is not a 501(c)(3) or 501(c)(4) non-profit corporation, charitable trust, governmental agency or other similar entity sharing the goals and objectives stated above in the Background. The conditions of this right are specified in the attached Exhibit C. ARTICLE 4: Use of Land 4.1 RESTRICTIONS: Homeowner may use, and allow occupants to use, the Land and Improvements (as defined in Section 7.1 below) only for residential purposes and incidental related activities that are permitted by applicable zoning law. In addition, Homeowner’s use of the Land and Improvements is subject to the additional restrictions contained in Exhibit D. 4.2 RESPONSIBLE USE: Homeowner must not destroy or damage the Land, allow the Land to deteriorate, cause actual harm to others, or create any nuisances, public or private. Homeowner must dispose of waste in a safe and sanitary manner. Homeowner must maintain the Land and Improvements in good, safe and habitable condition, except for normal wear and tear, and in full compliance with all applicable laws. 4.3 RESPONSIBILITY FOR OTHERS: Homeowner is responsible for the use of the Land by all residents, their families, friends or visitors, or anyone else using the Land with their consent, and must make them aware of appropriate Ground Lease terms. EXHIBIT C TO GRANT AGREEMENT 3 4.4 OCCUPANCY: Homeowner must occupy the Land as Homeowner’s principal residence for at least eight months of each year, unless otherwise agreed by WHAHLT. Homeowner must qualify and maintain the Land at all times as “homestead” property under Minnesota property tax law. 4.5 INSPECTION: WHAHLT or its agent may enter onto the Land for inspection by giving Homeowner reasonable prior notice of the time and reason for the entry and inspection, unless prior notice may be impracticable because of an emergency. 4.6 PEACEFUL ENJOYMENT: Homeowner has the right to quiet enjoyment of the Land. ARTICLE 5: Ground Lease Fee 5.1 GROUND LEASE FEE: In exchange for the possession and occupancy of the Land, Homeowner must pay to WHAHLT a monthly fee (the “Ground Lease Fee”) of $30.00. 5.2 PAYMENT OF GROUND LEASE FEE: The Ground Lease Fee is payable at WHAHLT’s principal address on the first day of each month, unless WHAHLT agrees that the Ground Lease Fee will be escrowed by a mortgagee, in which case payment will be made as specified by the mortgagee. If this Ground Lease starts on a day other than a payment date, a pro-rata portion of the Ground Lease Fee must be paid for the balance of the month. If any amount of the Ground Lease Fee remains unpaid when the Improvements are sold and the leasehold estate is transferred to another party, the unpaid amount must be paid to WHAHLT out of the sale proceeds due to Homeowner. Additional language: If payments are late, a late fee can be charged: If WHAHLT has not received any monthly installment of the Ground Lease on or before the date on which the such installment first becomes payable under this Ground Lease (the “Due Date”), WHAHLT may require Homeowner to pay a late fee on the unpaid amount from the Due Date through and including the date such payment or installment is received by WHAHLT, at a rate not to exceed Ten Dollars ($10.00). Such fee shall be deemed additional Ground Lease Fee and shall be paid by Homeowner to WHAHLT upon demand; provided, however, that WHAHLT shall waive any such fee that would otherwise be payable to WHAHLT if such payment of the Ground Lease Fee is received by WHAHLT on or before the tenth (10th) day after the Due Date. 5.3 REDUCTION, DELAY OR WAIVER OF GROUND LEASE FEE: WHAHLT in its sole discretion may reduce, delay or waive the Ground Lease Fee to assure affordable monthly housing costs for the Homeowner. A reduction, delay or waiver must be in writing and signed by WHAHLT to be effective. 5.4 ADJUSTMENT OF GOUND LEASE FEE: (a) The Ground Lease Fee has been calculated to approximate the monthly fair rental value of the Land subject to the restrictions in this Ground Lease. If the provisions of Article 10 or Article 11 are suspended or invalidated, then during the time that Homeowner is not required to comply with those provisions, the Ground Lease Fee will be increased to an amount calculated by WHAHLT to equal the fair rental value of the Land without those EXHIBIT C TO GRANT AGREEMENT 4 restrictions. The fair rental value of the land is equal to the assessed value of the land, as determined by the County Assessor, multiplied by 10% and divided by 12 months. (b) To keep the Ground Lease Fee reasonably current, the amount specified in Section 5.1 (and the maximum amount specified in the preceding paragraph) will be recalculated every tenth year during the term of this Ground Lease. The amount will be recalculated through a reasonable process selected by WHAHLT. (c) WHAHLT must notify Homeowner promptly upon a recalculation of the Ground Lease Fee. If Homeowner does not object as provided below, the Ground Lease Fee will then be the amount stated in WHAHLT’s notice. Homeowner may object to the recalculated amount by giving WHAHLT written notice of the basis for its objection and its proposed recalculated amount within 30 days after receiving the notice. If Homeowner objects and the parties are unable to agree upon a recalculated Ground Lease Fee within 15 days after WHAHLT’s receipt of Homeowner’s objection, the dispute will be resolved under the arbitration process in Article 13. The arbitrators chosen by each party must have substantial experience in the valuation of real estate. After the final determination of the recalculated Ground Lease Fee, WHAHLT must maintain a notarized certification of the recalculated Ground Lease Fee and the method of determination. ARTICLE 6: Taxes and Assessments 6.1 TAXES AND ASSESSMENTS. Homeowner is responsible for payment of all taxes and assessments that relate to the Improvements and the Land. Homeowner must also pay, when due, all other service bills, utilities charges, or other governmental assessments charged against the Land. Homeowner is responsible for paying taxes on the Land even if the local taxing authority bills WHAHLT for those taxes. Homeowner must escrow taxes and assessments with a Permitted Mortgagee, to the extent permitted by law and subject to any terms and conditions of law governing payment and administration of such escrows. 6.2 HOMEOWNER’S RIGHT TO CONTEST: Homeowner has the right to contest the taxes relating to the Improvements and the Land. WHAHLT must, upon written request by Homeowner, join in those proceedings if Homeowner reasonably determines that it is necessary or convenient for WHAHLT to do so. Homeowner must pay all expenses of the proceedings. 6.3 PAYMENTS IN A DELINQUENCY: If Homeowner fails to pay the taxes or other charges specified in Section 6.1, WHAHLT may increase the Ground Lease Fee in an amount to offset those costs. After collecting the increased amount, WHAHLT must promptly pay the increase to the taxing authority. 6.4 PROOF OF COMPLIANCE: When paying taxes, assessments, and charges required or permitted under this Ground Lease, each party must give satisfactory documentation to the other party showing that payment was made. The documentation used should be a photocopy of a paid receipt showing payment prior to the due date, unless otherwise agreed by the parties. A copy of a statement from a Permitted Mortgagee showing payments from the escrow account established for such purposes will satisfy the requirements of this section. EXHIBIT C TO GRANT AGREEMENT 5 ARTICLE 7: Improvements 7.1 OWNERSHIP: Homeowner will own all buildings, structures, fixtures, and other improvements purchased by the Homeowner or constructed or placed by the Homeowner on the Land (the "Improvements"). The Homeowner’s ownership is subject to the provisions of this Ground Lease. In addition, Homeowner may not move the Improvements from the Land. 7.2 PURCHASE OF IMPROVEMENTS BY HOMEOWNER: This Ground Lease shall act as a “Bill of Sale” by WHAHLT to Homeowner of all buildings, structures, fixtures and other improvements on the land, which WHAHLT hereby conveys to Homeowner. 7.3 CONSTRUCTION AND ALTERATION: Any construction in connection with an existing or new Improvement is subject to the following conditions: (a) costs must be paid by the Homeowner; (b) construction must be performed in a workerlike manner and must comply with applicable laws; (c) construction must be consistent with the permitted uses stated in Article 4; (d) the exterior (including height) of the Improvements may not be increased or expanded and new Improvements may not be constructed, without WHAHLT’s prior written consent; (e) Homeowner must furnish to WHAHLT a copy of plans for new Improvements and building permits for the construction before beginning construction; and (f) Homeowner must not diminish the value of the Improvements. 7.4 PROHIBITION OF LIENS: No lien for services, labor or materials resulting from Homeowner’s improvements may attach to WHAHLT's interest in the Land or to any other property owned by WHAHLT. Homeowner may not allow a lien to be filed against the Land, the Improvements, or any interest of WHAHLT if the lien remains more than 60 days after filing. Homeowner must ensure that a lien is discharged within 60 days. If Homeowner fails to do so, WHAHLT may discharge the lien by paying the amount in question. Homeowner may contest the validity of a lien in good faith and at its own expense, if Homeowner deposits with the applicable court an amount sufficient to discharge the lien. Any amounts paid by WHAHLT because of liens is an additional Ground Lease Fee payable by Homeowner upon demand. 7.5 MAINTENANCE: Homeowner must, at its own expense, maintain the Land and all Improvements in accordance with all applicable laws. WHAHLT will not furnish any services or facilities, including heat, electricity, air conditioning or water, and will not make any repairs to the Land or Improvements. Homeowner has sole responsibility for furnishing all services or facilities and complying with all applicable laws. EXHIBIT C TO GRANT AGREEMENT 6 7.6 DISPOSITION OF IMPROVEMENTS UPON EXPIRATION OF GROUND LEASE TERM: Upon the expiration of the Ground Lease term, Homeowner must surrender the Improvements and the Land to WHAHLT. The Improvements will then belong to WHAHLT. WHAHLT must promptly pay to the Homeowner WHAHLT's Actual Purchase Option Price calculated in accordance with Article 10 as of the Ground Lease’s expiration date. At least two years before the expiration of the term, WHAHLT must give Homeowner a plan explaining how WHAHLT intends to satisfy its obligations under this section. ARTICLE 8: Financing 8.1 PERMITTED MORTGAGE(S): Homeowner may mortgage or encumber the Land or a portion of it only pursuant to a “Permitted Mortgage”, which is a mortgage that: (a) runs in favor of either (1) an "institutional lender" such as a government housing finance agency, a federally or state insured bank (including a savings and loan association or credit union), an insurance company, a pension and/or profit-sharing fund or trust, or any combination of these, if the lender’s policies and procedures are subject to direct governmental supervision, or (2) a "community loan fund", or similar non-profit lender to housing projects for low and moderate income persons; (b) is a first lien on all or any of the Improvements (the "Security"); and (c) provides that the holder of the Permitted Mortgage will notify WHAHLT of a mortgage default by sending to WHAHLT a copy of the cure letter required by Minn. Stat. §47.20, subd. 8 (as may be amended) when that letter is sent to the Mortgagor. WHAHLT will then have the right either to cure the default before a sheriff’s foreclosure sale or acquire an assignment of the security before the expiration of the Mortgagor’s redemption period by payment of all sums due under the Permitted Mortgage. 8.2 WHAHLT's CONSENT TO PERMITTED MORTGAGE: Homeowner may mortgage or encumber the Land or a portion of it only with WHAHLT’s written consent. Homeowner must give WHAHLT at least 30 days to review each document to be signed in connection with the mortgage. WHAHLT is required to consent to a mortgage only if: (a) it is a Permitted Mortgage as defined by this Ground Lease: (b) Homeowner is not in default; (c) the Permitted Mortgage and related documentation contain only provisions commonly used by institutional lenders for similar transactions in the Twin Cities area; (d) the Permitted Mortgage and related documentation do not contain any provisions making WHAHLT or its successors or assigns personally liable for the payment of the debt; (e) the Permitted Mortgage and related documentation must contain provisions that the holder of the Permitted Mortgage (a "Permitted Mortgagee") may not look to WHAHLT or WHAHLT's interest in the Land for payment of the debt, but will look solely to Homeowner, EXHIBIT C TO GRANT AGREEMENT 7 the leasehold estate created by this Ground Lease, the Improvements, or other buildings and improvements existing on the Land (WHAHLT may not be held responsible for any deficiency judgement); (f) the Permitted Mortgage and related documentation provide that if any part of the Security is taken by eminent domain, the proceeds must be paid in accordance with ARTICLE 9; and (g) nothing in the Permitted Mortgage or related documentation requires WHAHLT to execute an assignment of the Ground Lease Fee payable by Homeowner. 8.3 RIGHTS OF PERMITTED MORTGAGEE: A Permitted Mortgagee has the right, but not the obligation, without getting WHAHLT’s consent, to: (a) cure a default and perform an obligation under this Ground Lease, in place of the Homeowner; (b) acquire and convey, assign, transfer and exercise any right granted to Homeowner by this Ground Lease or by law, subject to any limitations in the Permitted Mortgage; and (c) rely upon and enforce any provisions of this Ground Lease to the extent that those provisions are for the benefit of a Permitted Mortgagee. Permitted Mortgagee does not assume personal liability for the performance of the obligations under the Ground Lease. If Permitted Mortgagee acquires possession of the Security, its obligation for past due payments under this Ground Lease will not exceed the sum of the delinquent payments due during the six months immediately before the acquisition. If the Permitted Mortgagee then transfers the security, WHAHLT must simultaneously enter into a new Ground Lease with the transferee. 8.4 APPROVAL OF AMENDMENTS: Amendments to this Ground Lease are subject to the Permitted Mortgagee’s written approval, which may not be unreasonably withheld or delayed. An amendment will be considered approved by Permitted Mortgagee if it fails to act within 30 days after submittal. 8.5 NEW GROUND LEASE TO PERMITTED MORTGAGEE: If the Homeowner’s interest in the Ground Lease has been terminated, a new Ground Lease will automatically be created between WHAHLT and the Permitted Mortgagee. The new Ground Lease will be for the remainder of the term of this Ground Lease and subject to the same terms and priority, without merger of interests. 8.6 NO TERMINATION WITHOUT CONSENT: WHAHLT may not terminate or foreclose the Ground Lease without the prior written consent of the Permitted Mortgagee. 8.7 PROVISIONS SUBJECT TO FORECLOSURE: When there is a foreclosure sale or the delivery of a deed in lieu of foreclosure, the following provisions apply: EXHIBIT C TO GRANT AGREEMENT 8 (a) At the election of the Permitted Mortgagee, the provisions of sections 10.1 through 10.12 will be deleted and have no further effect on the portion of the Security that was foreclosed or transferred. (b) When the Permitted Mortgagee acquires title to the leasehold estate by a deed- in-lieu of foreclosure, the Permitted Mortgagee must give WHAHLT written notice of the acquisition. WHAHLT will then have 30 days from the date of the notice to acquire the leasehold estate for the full amount that is then owed to the Permitted Mortgagee. 8.8 COSTS OF PERMITTED MORTGAGE: Homeowner must pay to WHAHLT as additional rent all reasonable costs incurred by WHAHLT in connection with a Permitted Mortgage. ARTICLE 9: Liability, Insurance, Damage and Destruction, Eminent Domain 9.1 HOMEOWNER’S LIABILITY: Homeowner assumes sole responsibility and liability for its possession, occupancy and use of the Land. 9.2 INDEMNIFICATION OF WHAHLT: Homeowner must defend and indemnify WHAHLT against all liability and costs for property damage or personal injury from any cause on or about the Land. Homeowner waives all claims against WHAHLT for property damage or personal injury arising on or about the Land from any cause. Nevertheless, WHAHLT remains liable (and Homeowner need not indemnify and defend WHAHLT against or waive these claims of liability) for acts or omissions of WHAHLT, its agents or employees. 9.3 PAYMENT BY WHAHLT: If WHAHLT is required to pay something that is the Homeowner’s responsibility, the Homeowner must reimburse WHAHLT for that amount and reasonable expenses incurred in connection with it. 9.4 INSURANCE: Homeowner must, at its own expense, continuously insure all Improvements against loss or damage by fire and all extended coverage hazards for their full replacement value. Homeowner must, at its own expense, continuously maintain general liability insurance covering the Land and its surroundings in the amounts of at least $300,000.00. The dollar amount of this coverage must be adjusted every two years after the date of this Ground Lease or upon WHAHLT's 30-day notice to Homeowner, but not more often than once a year. This adjustment will be equal to the percentage of change (positive or negative) since the last adjustment in the Consumer Price Index for urban wage earners and clerical workers for the Twin Cities Metropolitan Area or another index that reasonably measures adjustments in coverage amounts for the applicable insurance. The insurance must basically insure Homeowner against all liability assumed under this Ground Lease and imposed by law. WHAHLT must be an additional insured. Homeowner must provide WHAHLT with copies of all policies and renewals. The policies must contain endorsements saying that they cannot be canceled, reduced in amount or coverage, or otherwise modified by the insurance carrier without at least 30 days prior written EXHIBIT C TO GRANT AGREEMENT 9 notice to WHAHLT. WHAHLT is entitled to participate in the settlement or adjustment of any losses covered by this insurance. 9.5 DAMAGE OR DESTRUCTION: If there is damage to the Improvements, Homeowner must promptly repair the damage and restore the Improvements to the condition that they were in immediately before the damage. The repairs and restoration must be completed as promptly as possible. Homeowner must also promptly secure the Land so that it will be safe and the damaged Improvements will not be dangerous to others after the damage has occurred. The Ground Lease Fee will not be suspended, unless WHAHLT decides to do so because of the personal hardship to Homeowner. Homeowner may terminate this Ground Lease if Homeowner determines either (a) that the full repair or restoration is physically impossible, or (b) that the available insurance proceeds are 80% or less of the cost of the repair or restoration. Homeowner must give written notice of termination to WHAHLT no later than 60 days after the damage occurs. This termination notice will not be effective until 60 days after WHAHLT receives it. During that time WHAHLT may seek an adjustment from the insurer to increase the amount of available insurance proceeds, arrange for repair or restoration at a cost low enough to avoid condition (b) above, or design a partial restoration of the Improvements sufficient to provide Homeowner with Improvements of reasonably equivalent quality and a floor area of at least 80% of what existed immediately before the damage. If WHAHLT is able to achieve one of these three options, WHAHLT may void Homeowner’s termination notice by giving Homeowner written notice of its action within the additional 60-day period. If WHAHLT does not void the termination notice, then this Ground Lease will terminate 60 days after WHAHLT received Homeowner’s termination notice. If the Ground Lease is terminated, insurance proceeds for the damage must be paid first to cover the expenses of collecting the insurance. Remaining proceeds will be paid first to the Homeowner (or its Permitted Mortgagee if required by the Permitted Mortgage) up to the amount of WHAHLT's Actual Purchase Option Price calculated under Sections 10.7 and 10.8 below (as of the date immediately before the damage). The balance of the proceeds, if any, must be paid to WHAHLT. 9.6 WHAT HAPPENS IF HOME IS DAMAGED OR DESTROYED: Except as provided below, in the event of fire or other damage to the Home, Homeowner shall take all steps necessary to assure the repair of such damage and the restoration of the Home to its condition immediately prior to the damage. All such repairs and restoration shall be completed as promptly as possible. Homeowner shall also promptly take all steps necessary to assure that the Leased Land is safe and that the damaged Home does not constitute a danger to persons or property. If Homeowner, based on professional estimates, determines either (a) that full repair and restoration is physically impossible, or (b) that the available insurance proceeds will pay for less than the full cost of necessary repairs and that Homeowner cannot otherwise afford to cover the balance of the cost of repairs, then Homeowner shall notify WHAHLT of this problem, and WHAHLT may then help to resolve the problem. Methods used to resolve that problem may include efforts to increase the available insurance proceeds, efforts to reduce the cost of EXHIBIT C TO GRANT AGREEMENT 10 necessary repairs, efforts to arrange affordable financing covering the costs of repair not covered by insurance proceeds, and any other methods agreed upon by both Homeowner and WHAHLT. If Homeowner and WHAHLT cannot agree on a way of restoring the Home in the absence of adequate insurance proceeds, then Homeowner may give WHAHLT written notice of intent to terminate the Lease. The date of actual termination shall be no less than 60 days after the date of Homeowner’s notice of intent to terminate. Upon termination, any insurance proceeds payable to Homeowner for damage to the Home shall be paid as follows: 1st: to the expenses of their collection; 2nd: to any Permitted Mortgagee(s), to the extent required by the Permitted Mortgage(s); 3rd: to the expenses of enclosing or razing the remains of the Home and clearing debris; 4th: to WHAHLT for any amounts owed under this Lease; 5th: to the Homeowner, up to an amount equal to the Purchase Option Price, as of the day prior to the loss, less any amounts paid with respect to the second, third and fourth clauses above; 6th: the balance, if any, to WHAHLT. What happens if some or all of the land is taken for public use: If all the Leased Land is taken by eminent domain or otherwise for public purposes, or if so much of the Leased Land is taken that the Home is lost or damaged beyond repair, the Lease shall terminate as of the date when Homeowner is required to give up possession of the Leased Land. Upon such termination, the entire amount of any award(s) paid shall be allocated in the way described in Section 9.5 above for insurance proceeds. In the event of a taking of a portion of the Leased Land that does not result in damage to the Home or significant reduction in the usefulness or desirability of the Leased Land for residential purposes, then any monetary compensation for such taking shall be allocated entirely to WHAHLT. In the event of a taking of a portion of the Leased Land that results in damage to the Home only to such an extent that the Home can reasonably be restored to a residential use consistent with this Lease, then the damage shall be treated as damage is treated in Section 9.5 above, and monetary compensation shall be allocated as insurance proceeds are to be allocated under Section 9.6. If part of the land is taken, the Lease Fee may be reduced: In the event of any taking that reduces the size of the Leased Land but does not result in the termination of the Lease, WHAHLT shall reassess the fair rental value of the remaining Land shall adjust the Lease Fee if necessary to assure that the monthly fee does not exceed the monthly fair rental value of the Land for use as restricted by the Lease. EXHIBIT C TO GRANT AGREEMENT 11 If lease is terminated by damage, destruction or taking, WHAHLT will try to help Homeowner buy another WHAHLT Home. If this Lease is terminated as a result of damage, destruction or taking, WHAHLT shall take reasonable steps to allow Homeowner to purchase another home on another parcel of leased land owned by WHAHLT if such home can reasonably be made available. If Homeowner purchases such a home, Homeowner agrees to apply any proceeds or award received by Homeowner to the purchase of the home. Homeowner understands that there are numerous reasons why it may not be possible to make such a home available, and shall have no claim against WHAHLT if such a home is not made available. 9.7 RELOCATION OF HOMEOWNER: If this Ground Lease is terminated because of damage or taking, WHAHLT will take reasonable steps to lease to Homeowner other available property that it owns. If Homeowner agrees to accept such a property, Homeowner will contribute any proceeds or award that it receives in accordance with the provisions of Sections 9.5 and 9.6. WHAHLT is not required to terminate the ground lease of any other Homeowner or to withhold property from development or rental to accommodate Homeowner. WHAHLT's failure to supply land will not give Homeowner the right to sue WHAHLT for damages, specific performance or other remedy. ARTICLE 10: Transfer, Sale or Disposition of Improvements 10.1 INTENT: The parties agree that the provisions of this Ground Lease, and in particular of this Article 10, are intended to make the Improvements affordable to low and moderate income families who would not otherwise be able to afford them. 10.2 TRANSFERS TO INCOME-QUALIFIED RESIDENTS: Homeowner may sell or otherwise dispose of its interest in the Land or the Improvements only to a Low or Moderate Income Resident as defined below. These transfers are subject to WHAHLT's rights under this article. An attempted sale or other disposition that is done without following the procedures set forth below will be invalid. "Low or Moderate Income Resident" means a person or group of persons constituting a household whose combined income does not exceed 80% of the median household income for the Twin Cities Standard Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development (HUD) or any successor, as adjusted for family size. 10.3 TRANSFER TO HOMEOWNER’S HEIRS: If WHAHLT receives notice from the executor of Homeowner’s estate within 90 days after Homeowner’s death (or the death of the last surviving co-owner of the Improvements) WHAHLT must, unless there is a good reason not to, consent to a transfer of the Improvements and an assumption of this Ground Lease to and by one or more of the following possible heirs of the Homeowner: (a) the spouse of the Homeowner; (b) the child or children of the Homeowner; or (c) member(s) of the Homeowner’s household who have lived on the Land for at least one year before the Homeowner’s death. EXHIBIT C TO GRANT AGREEMENT 12 Any heir listed above is entitled to possession of the Land even if that person is not a Low or Moderate Income Resident, but subject to all other terms and conditions of this Ground Lease. Any other person who is an heir, legatee or devisee of the Homeowner must demonstrate to WHAHLT’s reasonable satisfaction that he or she meets the definition of Low or Moderate Income Resident, and if that person is unable to do so, then that person is not entitled to possession of the Land and must transfer the Land in accordance with the provisions of this Ground Lease. 10.4 NOTICE TO WHAHLT: (a) If Prospective Buyer is known. Except for a sale or other transfer to a Permitted Mortgagee in lieu of foreclosure, each time Homeowner plans an assignment or transfer of its interest in this Ground Lease or a sale or transfer of the Improvements to a particular third party, then Homeowner must give WHAHLT notice at least 60 days before the planned closing. The notice must be substantially in the form of the attached Exhibit F and must include the following or comparable items: (1) a copy of the complete tax return of the assignee or buyer for the immediately preceding year; (2) a current verification of assignee's or buyer's employment; (3) the pay stubs of the assignee or buyer for the three months immediately before the month in which notice is given to WHAHLT; (4) a Letter of Stipulation from the assignee or buyer and a Letter of Acknowledgment in the form of Exhibit A; and (5) a statement of the sale terms. No sale or other transfer will be effective unless WHAHLT confirms in writing within 45 days after receiving Homeowner’s notice and accompanying documentation that the assignee or buyer is a Low or Moderate Income Resident, that the sale terms are permitted under this Ground Lease and that the sale price is not more than the Actual Purchase Option Price as determined in Sections 10.9 and 10.10 below. A failure by WHAHLT to respond in writing within the 45 days will be the same as a confirmation. (b) If Prospective Buyer is Not Known. If Homeowner intends to sell the Improvements but does not yet have a specific buyer, then Homeowner must give WHAHLT a notice containing a detailed listing of the terms of the intended sale. Within 45 days after WHAHLT's receipt of the notice, WHAHLT must: (1) exercise its option to purchase on the terms and within the time period stated in Sections 10.5 and 10.6 below; (2) locate an interested buyer and obtain from the buyer a binding commitment to purchase from the Homeowner; or (3) notify the Homeowner that Homeowner is free to sell the Improvements in the open market to any party, at not more than the Actual Purchase Option Price as determined in Sections 10.9 and 10.10 below. 10.5 WHAHLT'S OPTION TO PURCHASE: After receiving a notice complying with Section 10.4 above (an "Intent to Sell Notice"), WHAHLT has the option to buy the Improvements at the Actual Purchase Option Price calculated under Section 10.9 below. EXHIBIT C TO GRANT AGREEMENT 13 WHAHLT may instead assign this purchase option to a third party (the “Designated Purchase Option Assignee”), if the assignee is an Income Qualified Buyer as defined below. 10.6 PERIOD FOR EXERCISING OPTION: If WHAHLT decides to exercise its purchase option, WHAHLT must: (a) notify Homeowner of its intent to buy within 45 days after its receipt of the Intent to Sell Notice, and (b) exercise the option to buy within 60 days after WHAHLT's notice of intent to purchase. Otherwise, its option will expire. WHAHLT's notice must include WHAHLT's good faith estimate of the Actual Purchase Option Price. If the Actual Purchase Option Price determined under Sections 10.9 and 10.10 below is more than 110% of WHAHLT's estimate, then WHAHLT may cancel its purchase by notifying Homeowner within five business days after it is notified of the Actual Purchase Option Price. If WHAHLT cancels its purchase, the Homeowner is free to sell the Improvements in the open market to any party at not more than the Actual Purchase Option Price. WHAHLT, or WHAHLT’s Designated Purchase Option Assignee, must exercise its option by entering into a contract to purchase the Improvements from Homeowner. This contract must include a closing date within 30 days, unless extended by agreement of the parties. 10.7 HOMEOWNER’S PURCHASE PRICE: WHAHLT and Homeowner agree that Homeowner’s total purchase price for the Improvements existing on the Land at the beginning of this Ground Lease is $____________ (_______________________ ______________________ and No/100) (the “Homeowner’s Purchase Price”). 10.8 INITIAL APPRAISED VALUES: WHAHLT and Homeowner acknowledge that immediately before Homeowner’s acquisition of the Improvements, an appraisal of the Land and Improvements determined the market value of the Land to be $____________ (____________________________________________ and No/Dollars) (the “Initial Appraised Value of the Land”) and the market value of the Improvements to be $___________ (__________________________________________ and No/Dollars) (the “Initial Appraised Value of the Improvements”). 10.9 PURCHASE OPTION PRICE: Whenever it is necessary to calculate the Purchase Option Price of the Improvements, an Appraisal of the Land and the Improvements located on the Land will be performed by a mutually acceptable property appraiser (the “Current Appraised Value of the Land and Improvements”). The appraisal will be conducted by analysis of comparable properties as though title to the Land and Improvements were held in fee simple absolute, disregarding the Ground Lease restrictions on the use of the Land and the transfer of the Improvements. Values for the Land and the Improvements will be indicated separately (the “Current Appraised Value of the Land” and the “Current Appraised Value of the Improvements”). The Purchase Option Price for the Improvements will be determined using the three steps provided below. Step 1. CALCULATION OF APPRECIATION IN MARKET VALUE OF THE IMPROVEMENTS: The Appreciation in Market Value of the Improvements will be determined by subtracting the Initial Appraised Value of the Improvements from the Current Appraised Value of the Improvements. The formula for calculating Appreciation in Market Value of the Improvements is shown below: EXHIBIT C TO GRANT AGREEMENT 14 Current Appraised Value of the Improvements $___________ Minus - Initial Appraised Value of the Improvements $___________ Equals = Appreciation in Market Value of the Improvements $___________ Step 2. CALCULATION OF HOMEOWNER’S SHARE OF APPRECIATION IN MARKET VALUE OF THE IMPROVEMENTS: Homeowner’s Share of Appreciation in Market Value of the Improvements will be determined by multiplying the Appreciation in Market Value of the Improvements by the Shared Appreciation Factor. The Shared Appreciation Factor is 35%. The formula for calculating Homeowner’s Share of Appreciation in Market Value of the Improvements is shown below: Appreciation in Market Value of $___________ the Improvements Multiplied by 35% Equals = The Homeowner’s Share of Appreciation in Market Value of the Improvements $___________ Step 3. CALCULATION OF PURCHASE OPTION PRICE: The Purchase Option Price, which is also WHAHLT’s option price to purchase the Improvements, will be determined by adding Homeowner’s Share of Appreciation in Market Value of the Improvements to Homeowner’s Purchase Price. The formula for calculating the Purchase Option Price is shown below: Homeowner’s Purchase Price $___________ plus + Homeowner’s Share of Appreciation in Market Value of the Improvements $___________ Equals = Purchase Option Price $___________ EXHIBIT C TO GRANT AGREEMENT 15 Homeowner agrees that this method of calculating the Purchase Option Price is a fair exchange for the opportunity to enter the local home ownership marketplace that, before the execution of this Ground Lease, remained closed to them because of limited financial resources. 10.10 ACTUAL PURCHASE OPTION PRICE: If the Current Appraised Value of the Improvements is less than the Homeowner’s Purchase Price, the Actual Purchase Option Price will be the Current Appraised Value of the Improvements at the time Homeowner gave notice under Section 10.4 above. Otherwise, the Actual Purchase Option Price will be the Purchase Option Price calculated under Section 10.9. 10.11 WHAHLT'S POWER OF ATTORNEY TO CONDUCT SALE: This paragraph applies if WHAHLT or WHAHLT’s Designated Option Assignee does not exercise its option to purchase, and Homeowner (a) is not then living in the Improvements and (b) continues to offer the Improvements for sale but is unable to execute a binding purchase agreement within one year after giving the Intent to Sell Notice. In that situation, Homeowner appoints WHAHLT as its attorney in fact to seek a buyer, negotiate a reasonable price, sell the property, and distribute the proceeds of the sale, minus WHAHLT's costs and any other sums that Homeowner owes WHAHLT. 10.12 RIGHT OF FIRST REFUSAL IN LIEU OF OPTION: If the provisions of the option in this Article 10 become unenforceable, WHAHLT will nevertheless have a right of first refusal to purchase the Improvements at the highest documented bona fide purchase price offer made to Homeowner. This right will be as specified in the attached Exhibit C. Any sale or transfer contrary to this Section, when applicable, will be void. ARTICLE 11: Assignment and Sublease Except as provided in Article 8 and Article 10, Homeowner may not transfer any of Homeowner’s rights under this Ground Lease without WHAHLT’s prior written consent. Homeowner agrees that WHAHLT has broad discretion to withhold this consent in order to further the goals stated in this Ground Lease. If permission is granted, an assignment or sublease must be subject to the following conditions: (a) an assignment or sublease will be subject to all provisions of this Ground Lease; (b) for a sublease, the rental fee charged the sub-Homeowner may not be more than the amount that WHAHLT charges the Homeowner, plus an amount approved by WHAHLT to cover costs to Homeowner for the Improvements; and (c) for an assignment, the total consideration for the assignment and the related sale or transfer of the Improvements may not exceed the Actual Purchase Option Price as calculated under Article 10. ARTICLE 12: Default 12.1 EVENTS OF DEFAULT: An Event of Default occurs when: EXHIBIT C TO GRANT AGREEMENT 16 (a) The Ground Lease Fee or other charges under this Ground Lease have not been paid by: (1) Homeowner within 30 days after WHAHLT sends Homeowner notice of the nonpayment, or (2) a Permitted Mortgagee within 30 days after WHAHLT sends the Permitted Mortgagee a subsequent notice that Homeowner failed to make the payment within the initial 30-day grace period. Nevertheless, if Homeowner makes a good faith partial payment of at least two-thirds of the Ground Lease Fee or other outstanding charges during the initial 30-day grace period, then the grace period will be extended one additional 30-day period; (b) Homeowner fails to comply with another material condition in this Ground Lease, and compliance is not completed by Homeowner or a Permitted Mortgagee within 60 days after WHAHLT sends notice to Homeowner and the Permitted Mortgagee. Nevertheless, when the Homeowner or Permitted Mortgagee has begun compliance within the 60-day period and is continuing to do so with due diligence but cannot complete compliance within that period, the period will be extended for an additional period reasonably necessary to complete compliance; or (c) Homeowner’s interest in this Ground has been taken by law, Homeowner has been judicially declared bankrupt, an assignment of Homeowner’s property has been made for the benefit of creditors, a court of competent jurisdiction has appointed a receiver, trustee in involuntary bankruptcy or other similar officer to take charge of all or a substantial part of Homeowner’s property, or a petition has been filed for the reorganization of Homeowner under the bankruptcy laws. If there is an Event of Default, WHAHLT may terminate this Ground Lease and initiate summary proceedings against Homeowner. WHAHLT may enter and repossess the Land, may remove Homeowner and those claiming through Homeowner, and may remove its or their property. WHAHLT may do so without being guilty of trespass and without harming any remedies that it has for overdue rent or past defaults. If WHAHLT terminates this Ground Lease or re-enters the Land after an Event of Default, the Homeowner agrees to pay any unpaid Ground Lease Fee, damages that may occur because of the termination or re-entry, and all reasonable expenses (including attorneys' fees) incurred by WHAHLT in pursuit of its remedies under this Ground Lease. If WHAHLT terminates the Ground Lease, the Permitted Mortgagee has the right to postpone the specified termination date. The postponement can only be for the period reasonably needed by the Permitted Mortgagee to foreclose the mortgage and acquire Homeowner’s interest in the lease. The Permitted Mortgagee’s rights under this paragraph are subject to WHAHLT’s rights under Article 8. 12.2 WHAHLT'S DEFAULT: WHAHLT will not be in default of any of its obligations until it has failed to perform those obligations for a period longer than 60 days after Homeowner gave notice of the default to WHAHLT. The 60-day time period will be extended by the additional amount of time reasonably required to correct the default. ARTICLE 13: Mediation and Arbitration EXHIBIT C TO GRANT AGREEMENT 17 13.1 MEDIATION AND ARBITRATION: Mediation or arbitration can be utilized: Nothing in this Lease shall be construed as preventing the parties from utilizing any process of mediation or arbitration in which the parties agree to engage for the purpose of resolving a dispute. Cost of mediation or arbitration shall be shared. Homeowner and WHAHLT shall each pay one half (50%) of any costs incurred in carrying out mediation or arbitration in which the parties have agreed to engage. ARTICLE 14: General Provisions 14.1 HOMEOWNER’S MEMBERSHIP IN WHAHLT: The Homeowner under this Ground Lease is automatically a regular voting member of WHAHLT. The Homeowner will have only one membership in WHAHLT, regardless of the number of persons in Homeowner’s household. 14.2 NOTICES: When this Ground Lease requires either party to give notice to the other, the notice must be given in writing and delivered in person or sent by certified mail, return receipt requested, to the address below, or another address designated in writing through this same process: If to WHAHLT: 5101 Thimsen Avenue, Suite 200 Minnetonka, MN 55345 If to Ground Homeowner: ____________________________ ____________________________ If to Permitted Mortgagee: __________________ __________________ __________________ With copy to: N/A All notices, demands and requests are effective when delivered to the United States Mail or in the case of personal delivery, when actually received. 14.3 NO BROKERAGE: Homeowner represents that it has not dealt with any real estate broker. If a claim is made against WHAHLT regarding Homeowner’s dealings with brokers, Homeowner must defend the claim with counsel of WHAHLT's selection and indemnify WHAHLT for any loss or cost that results from the claim. 14.4 SEVERABILITY AND DURATION: If any part of this Ground Lease is unenforceable or invalid, that part will be deleted from the Ground Lease and will not affect the validity of the remainder. It is the parties’ intent that their respective rights and options under this Ground Lease will continue in effect for the duration of this Ground Lease and any renewal term. If any option or right is construed to be subject to a rule of law limiting the duration, the time period for exercising the option or right will expire 20 years after the death of the last EXHIBIT C TO GRANT AGREEMENT 18 survivor of the following persons: Erik T. Armijo and Erin B. Armijo. 14.5 WAIVER: WHAHLT’s waiver of, or failure to take action with respect to, a breach of any Ground Lease provision cannot be considered a waiver of that provision or any other Ground Lease provision. WHAHLT may grant waivers in the Ground Lease terms, but this must be in writing and signed by WHAHLT before being effective. WHAHLT’s acceptance of Ground Lease Fee payments after a breach has occurred cannot be considered a waiver of any preceding breach, other than Homeowner’s failure to pay the particular Ground Lease fee accepted. 14.6 WHAHLT'S RIGHT TO PROSECUTE OR DEFEND: WHAHLT may prosecute or defend, in its own or the Homeowner’s name, any proceedings to protect its title to, and Homeowner’s interest in the Land. Whenever requested by WHAHLT, Homeowner will cooperate with WHAHLT in prosecuting or defending the proceeding. 14.7 CONSTRUCTION: A pronoun used in this Ground Lease represents either the singular or the plural, masculine or feminine, as appropriate. 14.8 CAPTIONS AND TABLE OF CONTENTS: The captions and table of contents appearing in this Ground Lease are for convenience only and are not a part of this Ground Lease. 14.9 PARTIES BOUND: This Ground Lease contains the entire agreement between the parties with respect to leasing the Land. It is binding upon and inures to the benefit of the parties and, to the extent provided in this Ground Lease, their respective successors in interest. This Ground Lease may be altered only in writing. 14.10 GOVERNING LAW: This Ground Lease will be interpreted under Minnesota law. The language in this Ground Lease must be construed according to its fair meaning and not strictly for or against WHAHLT or Homeowner. 14.11 RECORDING: The parties agree to execute a Memorandum of Ground Lease in recordable form reasonably satisfactory to WHAHLT's attorneys. That document may not state the rent or other charges payable by Homeowner under this Ground Lease. That document must state that it is executed pursuant to the provisions in this Ground Lease, and does not vary the Ground Lease conditions. The parties have executed this Ground Lease on the date listed at the beginning. WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST (WHAHLT) By: __________________________ Its___________________________ EXHIBIT C TO GRANT AGREEMENT 19 HOMEOWNER _____________________________ ____________________________ STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on __________________ by Janet A. Lindbo, the Executive Director of the West Hennepin Affordable Housing Land Trust, a Minnesota non-profit corporation on behalf of the corporation. _____________________________ NOTARY PUBLIC STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on __________________ by _________________________________, husband and wife. _____________________________ NOTARY PUBLIC EXHIBIT C TO GRANT AGREEMENT A-1 EXHIBIT A HOMEOWNER’S LETTER OF STIPULATION TO: The West Hennepin Affordable Housing Land Trust (“WHAHLT”) DATE: ___________________ This letter is given to you to become an exhibit to a ground lease (the “Ground Lease”) between the undersigned, as Homeowner, and WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST (“WHAHLT”) who is the owner of the land located at _______________________________________________________ (the “Property”). We intend to purchase the Improvements (as defined in the Ground Lease) located on the Property. We are buying the Improvements and agreeing to abide by the Ground Lease freely, without pressure from other parties, and with the intent of receiving certain benefits, as described in this document. Our legal counsel, __________________________, has explained to us all of the terms and conditions of the Ground Lease and other legal documents that are part of this transaction. We understand the present and future effects of these terms and conditions on our rights of ownership of the Improvements. We understand that the following documents describe the special nature of the purchase of my home: a) this letter of stipulation and the Attorney’s Letter of Acknowledgment; b) a deed for the Improvements and other title information; c) the Ground Lease to which this is an exhibit; d) the articles of incorporation and bylaws of WHAHLT. The purpose of this Letter of Stipulation is to show to anyone who examines this transaction in the future that we understand and agree to the goals, terms, and conditions set out in these documents, as follows: 1. WHAHLT was founded to develop and preserve long-term affordable home ownership for people of limited resources. 2. The goal of WHAHLT is to encourage the transfer of decent, affordable housing between people of Low and Moderate Income, as defined in the Ground Lease, through the long-term leasing of the land under the housing. 3. WHAHLT is the owner of the Property on which the Improvements we are buying is located. EXHIBIT C TO GRANT AGREEMENT A-2 4. We are the owner of all Improvements on the land. 5. The price at which we may resell the Improvements is limited by a resale formula in the Ground Lease. 6. We freely accept the ownership of the Improvements on these terms and conditions. 7. WHAHLT and we agree that the terms and conditions will make it more likely that, if the Improvements are sold at some time in the future, they will be sold, either directly or indirectly, at an affordable price to another low or moderate income person. 8. We intend to occupy the Improvements according to the terms of the Ground Lease. WHAHLT will encourage this occupancy in all reasonable ways and provide us the rights and privileges normally associated with home ownership as stated in the Ground Lease. 9. Should we decide to sell the Improvements, WHAHLT will have the right to purchase them before they are offered to anyone else. WHAHLT may also approve a sale at a limited price to an eligible Low or Moderate Income Resident. 10. The limited price at which WHAHLT or another purchaser would purchase the Improvements is referred to as the Actual Purchase Option Price. The maximum purchase option price is calculated by the formula described in Article 10 of the Ground Lease. The Actual Purchase Option Price may be less than the maximum amount determined by the resale formula if the market value is lower than this maximum amount. This limitation on the resale price ensures fair compensation to us and the affordability of the property to another Low or Moderate Income Resident. 11. Although WHAHLT has the first option for repurchase of our Improvements, we both intend that the Improvements remain in continual occupancy by either ourselves or our family, household, or heirs. It is our desire for reasons both of private motivation and sound public policy that the terms of the Ground Lease and the other documents be honored. We consider these terms fair and equitable. Sincerely, EXHIBIT C TO GRANT AGREEMENT A-3 ATTORNEY’S LETTER OF ACKNOWLEDGEMENT I, _______________________, have been independently employed by _______________________________ (HEREINAFTER “Client”) who intend to purchase a house (referred to as the “Improvements”) at __________________________ _____________________________. In connection with the Client’s purchase of the Improvements, I reviewed with Client the following documents relating to the transaction: a) this Attorney’s Letter of Acknowledgement and a letter of stipulation from the Client; b) a deed for the Improvements and other title information; c) the Ground Lease to which this is an exhibit; d) the articles of incorporation and by-laws of The West Hennepin Affordable Housing Land Trust (“WHAHLT”); Client has received full and complete information and advice regarding this acquisition and the foregoing documents. My advice and review has been given to reasonably inform Client of the present and foreseeable risks and legal consequences of the contemplated transaction. Client has entered the aforesaid transaction in reliance on his or her own judgment and investigation of the facts. The advice and information provided by me was an integral element of such investigation. ________________________ Date Title EXHIBIT C TO GRANT AGREEMENT B-1 EXHIBIT B Land Street Address: _______________________________________ Legal Description: EXHIBIT C RIGHT OF FIRST REFUSAL Whenever any party under the Ground Lease has a right of first refusal as to certain property, the following procedures apply. If the owner of the property offering it for sale (“Offering Party”) receives, within the term of the Ground Lease, a bona fide third party offer to purchase the property that the Offering Party is willing to accept, the holder of the right of first refusal (the “Holder”) will have the following rights: a. The Offering Party must give written notice (the “Notice”) of the offer to Holder describing (i) the name and address of the prospective purchaser, (ii) the purchase price offered by the prospective purchaser and (iii) all other terms and conditions of the sale. Holder has ninety (90) days after the receipt of the Notice containing the offer (the “Election Period”) to elect to purchase the property on the same terms and conditions, including the purchase price set forth in the Notice. Such election must be made by a written notice given to the Offering Party within the Election Period. b. If Holder elects to purchase the property, the purchase must be made within ninety (90) days after Holder’s election (or any later closing date specified in the Notice) by performance of the terms and conditions of the Notice. c. If Holder fails to make any election within the Election Period, then the Offering Party has the right (subject to any other applicable restrictions in the Ground Lease) to go forward with the sale that the Offering Party desires to accept. The Offering Party may sell the property within one (1) year following the expiration of the Election Period on terms and conditions that are not materially more favorable to the purchaser than those set forth in the Notice. If the sale is not consummated within that one-year period, the Offering Party’s right so to sell terminates, and all of the foregoing provisions of this section will be applied again to any future offer. If a sale is EXHIBIT C TO GRANT AGREEMENT B-2 consummated within the one-year period, the property remains subject to a renewed right of first refusal as described in this document. Other Exhibits to be Attached as Appropriate EXHIBIT PREMISES [Correct legal description of area of subject property and appurtenant title rights and obligations.] EXHIBIT DEED EXHIBIT ZONING EXHIBIT RESTRICTIONS [To be attached when necessary to stipulate use restrictions not included under Zoning.] EXHIBIT APPRAISAL [If relevant] The CITY ofEDINA Home Ownership Preservation A Pilot Program with the West Hennepin Affordable Housing Land Trust Housing and Redevelopment Authority July 25, 2019 The CITY ofEDINAProgram Summary In partnership with WHAHLT’s Homes Within Reach (HWR) program, the proposed pilot program is designed to preserve already affordable single family housing for households with low income AND create future perpetually affordable homeownership opportunities for future low-income households. www.EdinaMN.gov 2 The CITY ofEDINAWhat is a Land Trust? The HWR Community Land Trust program removes the land value from the mortgage equation, creating initial affordability. The long-term affordability is obtained through a pricing formula that provides the owner with an amount of equity (35%), while ensuring the sale price to subsequent workforce low-to-moderate income households continues to be affordable and requires the homeowner to sell to another low- to-moderate income household. www.EdinaMN.gov 3 The CITY ofEDINAAffordability Comparison www.EdinaMN.gov 4 $- $100,000 $200,000 $300,000 $400,000 Initial Acquisition Sales Price after 10-years Acquisition Comparison with Land Removed in Land Trust Land Trust Model Conventional Model Affordability Comparison CLT Model Conventional Model Acquisition costs Market Value Land 100,000$ 100,000$ Market Value Home 145,000$ 145,000$ Total 245,000$ 245,000$ Subsidy Subsidy/Affordability Gap 100,000$ -$ Sale Price 145,000$ 245,000$ Housing Costs Principal and Interest 1 778$ 1,315$ Property Taxes 260$ 260$ Homeowner Insurance 125$ 125$ Land Lease Fee 30$ n/a Total Monthly Principal, Interest, Taxes, Insurance 1,193$ 1,700$ Down Payment 1,000$ 12,250$ Closing Costs 4,628$ 6,292$ Market Value After 10 Years Market Value Home 194,868$ n/a Market Value Land and Home n/a 329,260$ Increase in Value2 49,868$ 84,260$ Sale Price Calculation after 10 Years Percentage of Appreciation to Owner 35%100% Owners Share of Appreciation 17,454$ 84,260$ New Sale Price of Home 162,454$ 329,260$ 1 Mortgage Interest Rate 5%, Term 30 years, 2 Annual average increase in market value 3% The CITY ofEDINAHow Does this Program Work? •Program participants will sell the land beneath their house to the Land Trust and enter into a Land Lease. •The money from the land sale will be used to address deferred maintenance and health and safety issues on the house. The money will also be used to pay late mortgage payments, property tax bills and utility bills, if any. •Remaining funds with be placed in escrow. •When the program participant sells the house, it will already be in a Land Trust and must be sold to an income qualified households. www.EdinaMN.gov 5 The CITY ofEDINAExample www.EdinaMN.gov 6 House with Land $350,000 House Value$185,000 Land Value$165,000 Title remains with Homeowner Title transfers to WHAHLT who leases back to homeowner Rehab$85,000 Project Expenses$20,000 Delinquent Bills$50,000 Fees$5,000 $165,000 Remaining for Seller$5,000 The CITY ofEDINASpending Criteria Source Money from acquisition of land based on the appraised value Uses 1.Program fees and expenses: Legal fees; closing costs; management 2.Rehabilitation of house: health and safety; code compliance; energy improvements; deferred maintenance 3.Payment of delinquent bills: property taxes; utility bills 4.Residual funds to go to homeowner www.EdinaMN.gov 7 The CITY ofEDINA •Makes it possible for current homeowner to remain in their home with maintenance issues addressed. •Preserves homeownership opportunities for low-to-moderate income households •Retains community and homeowner wealth •Enhances residential stability •Preserves long-term housing affordability www.EdinaMN.gov 8 Program Goals The CITY ofEDINADemonstration of Need •Seniors on fixed incomes go to VEAP seeking mortgage assistance. •Senior Community Services assists 70 to 80 senior homeowners household needs as they cannot hire out for the work. Of these, approximately 50% have incomes at or below 60% of AMI. •800 children in the Edina School system are on free and reduced lunch. This is an increase of 200 students from five years ago. •Meals on Wheels served 116 clients in 2018. •In 2018 262 households were determined eligible for Energy Assistance benefits. Of these, the average household income was $15,725 and 27% lived in single family houses. www.EdinaMN.gov 9 The CITY ofEDINARoles and Responsibilities Edina HRA and/or Staff •Authorize and execute grant agreement •Marketing and outreach •Participate in intake interview •Review application •Review and approve reimbursement request •Track funding www.EdinaMN.gov 10 WHAHLT •Conduct intake interviews •Inspect property •Review applications •Approve/deny applications •Submit payment documentation to City staff •On-going communication with Homeowner •Manage and pay contractors •Manage Land Lease and future transactions The CITY ofEDINABudget SOURCES Affordable Housing Trust Fund $825,000 USES Acquisition of Land from Homeowners $825,000 Average $165,000 per House USES OF LAND ACQUISITION PROCEEDS Rehabilitation Costs $443,750 To address health and safety issues Project Expenses $98,750 Appraisal, energy audit, legal fees, closing costs Homeowner Delinquent Expenses $250,000 Includes utility bills, taxes Facilitation Fees $25,000 Potential Remaining Funds for Homeowner $7,500 TOTAL $825,000 www.EdinaMN.gov 11 The CITY ofEDINA Questions? www.EdinaMN.gov 12 Date: July 25, 2019 Agenda Item #: V.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Director Item Activity: Subject:Acquisition of Property at 7075-7079 Amundson Avenue Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Authorize staff to draft legal documents for the Housing and Redevelopment Authority to acquire 7075-7079 Amundson Avenue from the Edina Housing Foundation and sell it to MWF Properties, LLC. INTRODUCTION: The Edina Housing Foundation is requesting that the Housing and Redevelopment Authority acquire 7075-7079 Amundson Avenue for $1,300,000 and honor their land sale write-down Resolution with MWF to sell the property for $600,000. ATTACHMENTS: Description Staff Report: Acquisition of Property at 7075-7079 Amundson Avenue Staff Presentation July 25, 2019 Chair and Commissioners of the Edina HRA Stephanie Hawkinson, Affordable Housing Development Manager Acquisition of Property at 7075-7079 Amundson Avenue Information / Background: In July 2018 the East Edina Housing Foundation (Foundation) acquired the Waldorf-Nevens dry cleaning site at 7075-7079 Amundson Avenue (Parcel) with the intent to secure a developer through a Request for Proposal (RFP) process for the development of multifamily affordable housing. In August the Foundation issued an RFP and three were submitted by the deadline. After interviewing each developer twice, the Foundation unanimously selected MWF Properties, LLC (MWF) as their proposal was in keeping with the Foundation’s vision. MWF is proposing a 100% workforce housing development containing 62 1, 2- and 3-bedroom units. There will be underground parking, first floor patios, and a connection to the bike trail. The proposed rents will serve households with incomes between 30% and 70% of the Area Median Income. The Foundation and MWF negotiated a Purchase Agreement for $1,300,000. The sale proceeds would reimburse the Foundation for the acquisition of the site; property taxes; insurance; legal fees; utilities; and the cost for securing the property. The assessed market value is $1,496,900. On April 23, 2019 the Foundation approved a Resolution to write down or reduce the purchase price of the Parcel by $700,000. The reduced sales price helps fill the development financing gap and strengthens MWF’s Low Income Housing Tax Credit (LIHTC) application to Minnesota Housing that was submitted on May 31. Minnesota Housing awards tax credits to housing applications that receive the most points: For the MWF proposal, a land sale write down provides 10 more points than a financing contribution. Although the Foundation is prepared to fulfill their agreement to sell the property at a reduced price, the loss of revenue will have an impact on their on-going operations and ability to undertake similar development activities in the future. The Foundation does not have a revenue stream but must rely on investment and interest earnings on their Come Home 2 Edina mortgages. The $700,000 land sale write down will not be recouped, therefore, the Foundation is requesting that the Housing and Redevelopment Authority (HRA) acquire the Parcel for $1,300,000 and honor the land sale write-down Resolution with MWF. STAFF REPORT Page 2 Budget Action: The Foundation is requesting that the HRA acquire the Parcel for $1,300,000. The HRA will recoup $600,000 when MWF acquires the Parcel at the time of financial closing, which is anticipated in the spring of 2020. Staff recommends using Southdale 2 TIF funds: FY 2018 Balance Funds Repaid Ending Balance Southdale 2 TIF $6,973,048 $5,923,048 7008 Sandell Ave. (pledge) ($350,000) Conversion to NOAH 7075-7079 Amundson Ave. ($1,300,000) $600,000 100% affordable new construction Future Action: Review and approve Assumption Agreement and Purchase Agreement and authorize the execution of both documents. The HRA’s acquisition of 7075-7079 Amundson could occur any time prior to MWF closing on the development financing. Public Purpose/Comprehensive Plan Conformance: The initial development plans were amended to align with the Small Area Plan (SAP) that was adopted by the City Council on January 8, 2019. The proposed plans now limit the unit count to 50 units per acre and include a trail easement on the south edge. As stated in the SAP: The 70th & Cahill neighborhood commercial node was first identified in the 2008 Edina Comprehensive Plan as a potential area of change, noting its “potential for the addition of new compatible uses” was greater than in other areas of the city. As part of the city’s overall 2018 update to the comprehensive plan, 70th & Cahill was identified as one of six critical geographic areas within the community that have the potential for significant change and development (page 1). The proposed Amundson Flats is the first development to come forth within the study area following the adoption of the SAP. Affordable Housing The 70th and Cahill S A P and the 2019 draft Comprehensive Plan both express the need to create affordable housing. Preserving and producing affordable housing is a priority in the City as evidenced by the passage of the New Multifamily Affordable Housing Policy in March 2019. Within the SAP affordable housing is mentioned in a variety of areas: • Page v: ” Connection to an under‐represented housing stock and potential location for the “missing middle,” or varied, affordable housing choices within a walkable area for middle‐income residents such as teachers, police officers and retirees.” • Guiding Principle 3 on page 9 states: “Housing options provided at Cahill Village comply with and support the City of Edina's Affordable Housing Policy.” • On page 35, land use goal 5 states: “Encourage and accommodate affordable housing as part of redevelopment.” STAFF REPORT Page 3 Additional Public Purpose: • According to the Edina Chamber of Commerce, employers have reported that increasing the number of workforce housing units helps with the recruitment of employees and put the local economy at a competitive advantage. • Affordable rents can increase the residual income that households have at their disposal after meeting necessary housing costs, thus providing increase buying power to support local businesses. • An estimated 125 short term construction jobs will be created. • Three permanent jobs will be created. Proposal Summary: Type of Program New construction; 100% workforce housing Housing Population Not age restricted; individuals and families Number of Units 62 Unit Mix 8 1 Bedroom 23 2 Bedroom 31 3 Bedroom Total Development Cost $16,372,060 Cost per Unit $264,065 Total Acquisition Cost $600,000 Acquisition per Unit $9,677 Edina Funding Request $700,000 (4.3% of TDC) Subsidy per Unit $11,290 Affordability Mix 8 units at 30% rents (13%) 31 units at 60% rents (50%) 23 units at 70% rents (37%) Funding Source Southdale 2 TIF proceeds Security Purchase Agreement Recommendation: Staff recommends that the HRA authorize staff to draft legal documents for the HRA to acquire 7075-7079 Amundson Avenue from the Edina Housing Foundation and sell to it to MWF Properties, LLC. The CITY ofEDINA Amundson Flats HRA Acquisition for Future Affordable Housing Development Stephanie Hawkinson Affordable Housing Development Manager Housing and Redevelopment Authority July 25, 2019 The CITY ofEDINAToday’s Request: •Authorize Staff to engage attorney to prepare acquisition documents EdinaMN.gov 2 The CITY ofEDINALocation www.EdinaMN.gov 3 Small Area Plan Study Area 7075-7079 Amundson The CITY ofEDINABackground –Site Control 4 July 2018 Edina Housing Foundation Acquired the property. January 2019 MWF Properties entered into a Purchase Agreement with the Foundation. The CITY ofEDINA 5 Background -2015 Vision Edina Live and Work … promote the development of a mix of commercial amenities, including restaurants and cultural amenities, which … can further act as connection points or hubs within the fabric of neighborhoods and development areas.” (page 10) “Residential Development Mix … Continue to explore options for new multi-family housing throughout the city in mixed-use areas and near public spaces… create affordable housing options close to transit, shopping and employment centers ” (page 7) The CITY ofEDINA Ratings for the availability of affordable quality housing, at 32% excellent or good, was similar to the national average, but lower when compared to other communities in Minnesota. About three-quarters of respondents felt it was essential, very important or somewhat important that local government focus on creating a diverse and inclusive city for the people of Edina. Background -2019 Quality of Life Survey EdinaMN.gov 6 Availability of affordable quality housing: Excellent 12%; Good 20% Fair 37%, Poor 31% “Affordable housing. People who work in Edina cannot afford to live in Edina.” The CITY ofEDINA •Page v: ” Connection to an under‐represented housing stock and potential location for the “missing middle,” or varied, affordable housing choices within a walkable area for middle‐income residents such as teachers, police officers and retirees.” •Guiding Principle 3 on page 9 states: “Housing options provided at Cahill Village comply with and support the City of Edina's Affordable Housing Policy.” •On page 35, land use goal 5 states: “Encourage and accommodate affordable housing as part of redevelopment.” Background: 70th Cahill SAP EdinaMN.gov 7 The CITY ofEDINA The rents for affordable housing are not sufficient to leverage the debt needed to fully finance an affordable housing development including: •Acquisition •Rehabilitation or new construction •Third party reports: environmental studies, surveys, energy analysis •Professional fees: Legal, accounting, architectural •Financing fees: property taxes, interest, origination fees, reserves Debt financing may account for 20%-70% of the total development cost. Affordable Housing Finance Tools www.EdinaMN.gov 8 The CITY ofEDINAPreliminary Sources of Funds •Total Development Budget: $17,072,060 Sources: •First Mortgage $5,441,000 •9% Tax Credit Equity $10,480,052 •General Partner Cash $1,095 •Energy Rebates $15,780 •Deferred Developer Fee $434,133 •City of Edina HRA $700,000 www.EdinaMN.gov 9 The CITY ofEDINAHRA’s Financial Participation •The HRA acquire the site from the Edina Housing Foundation for $1.3M. The HRA enters into a Purchase Agreement with MWF for $600,000, a $700,000 land sale write-down. Benefits: Funding application to funding partners are more competitive: Points for cost containment and land write-down. www.EdinaMN.gov 10 The CITY ofEDINA Category Point Range •Greatest Need Tenant Targeting 5-39 29 •Serves Lowest Income for Long Durations 2-48 22 •Areas of Opportunity 1-28 21 •Supporting Community & Eco. Development 1-18 6 Preservation 5-30 0 •Efficient Use of Resources 0-38 32 (vs. 22) •Building Characteristics 1-4 4 114 (vs. 104) Minnesota Housing Scoring 2018 Awarded to applications with 82 to 108 points www.EdinaMN.gov 11 MWF The CITY ofEDINAAcquisition Process Edina Housing Foundation -$1,030,000 -Holding Costs -Secured and Winterize site Edina HRA -1,300,000 -Insurance -$0 until June 2020 MWF Properties -$600,000 -Secure all necessary financing -Closing checklist EdinaMN.gov 12 The CITY ofEDINAWhy? •Facilitates the creation of new affordable housing. •HRA would maintain site control if MWF Properties is not successful in securing the necessary financing to move forward with their proposal with the ability to seek another residential developer. •Makes the Edina Housing Foundation whole to continue with their mission. •Demonstrates the ability of Special 2016 TIF Legislation to be effectively applied. EdinaMN.gov 13 The CITY ofEDINARisks •Restricts use of the land for affordable-housing. •Loss of interest that is currently being generated by the Southdale 2 TIF funds. •HRA will hold property regardless of success of MWF’s funding application. EdinaMN.gov 14 The CITY ofEDINANext Steps: •November and December: Receive financing awards. •2020: At financial closing, HRA to convey the property to MWF Properties. EdinaMN.gov 15 Date: July 25, 2019 Agenda Item #: VI.A. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Jennifer Garske, Executive Assistant Item Activity: Subject:Correspondence Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: None. INTRODUCTION: There has been no correspondence since the last meeting. Date: July 25, 2019 Agenda Item #: VII.A. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Scott Neal, Executive Director Item Activity: Subject:Pentagon Village Update Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: No action requested; for information only. INTRODUCTION: This informational update pertains to the progress made on the 12-acre Pentagon South site located on the south side of West 77th Street at Computer Avenue. Staff recently issued the three TIF Notes anticipated in the October 2018 TIF Redevelopment Agreement with Solomon Real Estate and Hillcrest Development. A staff memo with background information is attached. ATTACHMENTS: Description Pentagon Village Update City of Edina • 4801 W. 50th St. • Edina, MN 55424 Economic Development Phone 952-826-0407 • Fax 952-826-0390 • www.EdinaMN.gov Date: July 15, 2019 To: Scott Neal, Executive Director Edina Housing and Redevelopment Authority cc: From: Bill Neuendorf Economic Development Manager Re: Pentagon Village Update – TIF Notes issued On Friday July 12, 2019, three TIF Notes were issued to Pentagon Village, LLC related to the infrastructure costs on this 12-acre commercial redevelopment site. Over the past several months, City staff has reviewed invoices and expenses incurred by the developer and has confirmed that the developer has satisfied the obligations established in the TIF Redevelopment Agreement for the site. The issuance of TIF Notes confirms that the developer has made at least an $18.1 million investment in the site and has performed significant work ahead of the 5-year rule. The TIF Notes pledge 90% of the future incremental property taxes collected from the 12-acre site to be used to pay down the principle and interest on the Notes. Please be aware, that interest will not accrue and payments will not begin until the developer has satisfied additional terms of the TIF Agreement. These terms include the construction and completion of retail buildings, hotels, public plazas, site work in the public realm and a future office building. Additional updates will be provided as the next milestones are achieved in 2019 and 2020. Attachment: completion checklist dated July 9, 2019 Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 1 Pentagon South / Pentagon Village TIF Note Completion Checklist This is a summary of the deliverable requirements of the TIF Redevelopment Agreement dated 10/16/2018 and amended 2/5/2019. This checklist is intended to be completed prior to the issuance of the TIF Note(s) to satisfy the 5-year rule (July 15, 2019 deadline) and updated to confirm when interest begins to accrue on each TIF Note and when payments are authorized to begin or terminate. Ongoing Requirements to Satisfy Terms of Redevelopment Agreement PART ONE Developer Obligations Satisfactorily Completed Notes A Confirm LLC remains in good corporate standing (2.3(a)) Yes LLC file #1022709900026 – June 27, 2019 B Confirm no relevant legal action pending against the Redeveloper (2.3(g)) OK None – per 6-28-19 Gleekel letter C Confirm no pending legal action related to environmental law against the Redeveloper (2.3(h)) OK None – per 6-28-19 Gleekel letter D Confirm Pentagon South Development Contract recorded against the property (3.1(a)) OK Doc # T00570954 dated 10-26- 2018 E Confirm conditions of the Final Development Plan satisfied (3.1(b)) OK Per 6-28-19 Gleekel letter F Confirm Final Plat has been recorded (3.1(c)) OK Plat #10767; RT Doc #o 5570949 G Confirm building and construction permits obtained in advance and Minimum Improvements remain in good standing (3.3, 4.6 and 11.1) OK OK per Dave Fisher, Building Official 7-8-19 H Confirmation that no Default remains uncured (13.2, 13.5 and 13.6) OK No default as of 7-9-2019 I Confirm public art advisor has been engaged and funds invested (4.2) OK Forecast Art Advisors engaged and managing artist selection process – May/June 2019 J Redeveloper has reimbursed City/HRA for out-of-pocket expenses (7.1) OK Pentagon Village reimbursed HRA in full 6-28-19 L Verification that Insurance is in effect (10.1) OK USI Insurance policies 6-28-2019 Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 2 M Redeveloper notifies the HRA of any material change or progress in meeting the Minimum Improvements Timeline (6.1 as amended) OK Noted that retail ground breaking may not occur until Fall 2019; groundbreaking past 7-31-19 will be considered a default and subject to cure before payments will be made N Application made to HRA for consent of Assignment or Transfer of TIF Note (8.5) as applicable OK TIF Note assigned as collateral to Old National Bank as part of construction loan dated 5-7-2019 PART TWO City / HRA obligations Satisfactorily Completed Notes A Confirm no relevant legal action pending against the City/HRA (2.1(b) & 2.2(d)) OK Lindgren and Knudson confirmed on 6-27-19 B Establishment of the TIF District and administration of the TIF Plan to finance Qualified Redevelopment Costs (2.2(b)) OK TIF District created 2/18/2014 Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 3 TIF NOTE “A” $9,000,000 maximum Delivered upon satisfaction of Phase 1A Requirements (4.1(a)(1) – pages 13-14) PART ONE - Confirmation of Costs Description of Required Work to Issue TIF Note A Satisfactorily Completed Notes A Redeveloper continues to satisfy conditions identified within “Ongoing Requirements” section above Yes See Pages 1 and 2 B Redeveloper has incurred Project Redevelopment Costs and met Cost Submission Deadline Yes Docs submitted 6-28-19 C Total Amount of Project Redevelopment Costs (see 7.2(a)) confirmed as expended. Actual amount allowed to be allocated within five cost categories: - General site preparation ($6,222,000 est.) - Demolition, abatement & remediation ($822,000 est.) - Site prep for Plaza Element ($500,000 est.) - Design costs for Public Infrastructure Improvements ($500,000 est.) - Pre-development planning, legal, consulting ($1,104,000 est.) yes Budgeted to be $9,148,000; staff reviewed paid invoices and contractor pay applications to confirm $9,001,508 in completed and committed payments to contractors, professional service providers and misc. vendors (6-28-2019) D Confirm recording of memorandum of TIF Redevelopment Agreement by October 31, 2018 (8.1(b)(ii)) Yes Doc #T05570956; 10-26-18 E Confirm issuance of grading permit and commencement of grading of the Project Area by May 15, 2019 (8.1(b)(iii)) yes Work began Fall 2018 Final Principal Amount of TIF Note A = $9,000,000.00 Maximum achieved Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 4 PART TWO – Accrual of Interest Note “A” - Preconditions to Accrual of Interest Satisfactorily Completed Notes A Redeveloper has satisfied Conditions of Issuance (8.1(b)) Yes Note A issued 7-12-2019 B Go-Ahead Letter submitted for Phase 1A, including: - Retail Element - Plaza Element - Project Site Work C Commence construction no later than July 31, 2019 of the Retail Element (Per Sections 4.1(a)(1)(i), 6.1 and 8.2(a)(ii)(1) as amended) consisting of two buildings of approximately: - 7,500 sq. ft retail/restaurant - 4,300 sq. ft. retail/restaurant D Completion of the Project Site Work by December 31, 2019 (Per Sections 4.1(a)(1)(iii), 6.1 and 8.2(a)(ii)(2) as amended, ) consisting of - Soil correction, demolition, abatement, remediation - Site infrastructure: utilities, grading, internal roads, surface parking - Public Transit Improvements - W. 77th Street Public Art - Bicycle access improvements - District markers and other signage The above excludes Future Site Work to be completed by Sept 30, 2020 (Per 6.1 as amended): - Public Infrastructure Improvements on W. 77th St. and Computer Ave. - Sidewalk and Trees adjacent to Retail Element along W. 77th St. - Sidewalk and trees along streets at retail/office building - Curb, sidewalk and trees adjacent to the Plaza Element and surface parking lot Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 5 PART Note “A” - Preconditions to Accrual of Interest Satisfactorily Completed Notes E Completion of the Plaza Element no later than 12 months after Completion of the Project Site Work (Dec 31, 2020), including granting the City the Plaza Easement (Per Section 4.1(a)(1)(ii), 6.1 and 8.2(a)(ii)(3) as amended,) F Confirm Redeveloper has not allowed a Material Deviation which remains uncured (8.2(a)(i)(4) G Receipt of an updated TIF Pro Forma satisfying the “But For” findings related to the Retail Element, Plaza Element, and Project Site Work (8.2(a)(i)(5)) Interest Accrual Date = PART THREE – Conditions for Payment Conditions for TIF Payments – Note A Satisfactorily Completed Notes A Confirm Redeveloper is not in default (8.2(a)(i)(2)) B Confirm that no Material Deviation from approved Plan remains uncured (8.2(a)(i)(4)) C Confirm that preconditions for accrual of interest (Part 2 above) have been completed D Confirm the collective improvements have caused the Project Area to exceed a Minimum Valuation increase of $19,031,100 or the Redeveloper has entered into a Minimum Assessment Agreement sufficient to satisfy Section 8.3 Project Area valuation increase at time of payment: $__________ First occurring Payment Date = E Confirm Completion of the Future Project Site Work identified by Section 6.1(a), as amended, by September 30, 2020 consisting of: - Public Infrastructure Improvements on 77th St and Computer Ave - Sidewalk and trees adjacent to Retail Element on 77th St - Sidewalk and trees adjacent to retail/office Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 6 PA Conditions for TIF Payments – Note A Satisfactorily Completed Notes building at intersection of 77th St and Computer Ave - Curb, sidewalks and trees adjacent to Plaza Element and the surface parking lot - Rough-grading and seeding of undeveloped portions of Lot 5 (future Phase 2 office) without perimeter trees or sidewalks PART THREE – Conditions for Payment F If Commencement of the Phase 1C Minimum Improvements has not occurred by June 30, 2022, confirm Completion of the Future Project Site Work identified by Section 6.1(b), as amended, by September 30, 2022 consisting of: - Perimeter sidewalk and trees along Computer Ave and Viking Dr G If Commencement of the Phase 2 Minimum Improvements has not occurred by June 30, 2022, confirm Completion of the Future Project Site Work identified by Section 6.1(c), as amended, by September 30, 2022 consisting of: - Perimeter sidewalk and trees along Normandale Rd H Redeveloper continues to satisfy conditions identified within “Ongoing Requirements” section above I Redeveloper has not petitioned or caused a reduction in real property taxes subject to Section 11.3 J Confirm Redeveloper is not subject to TIF Lookback provisions due to a Controlling Interest Transfer of any Element Property or the Transfer of an Element within three years of Completion (7.4) Next occurring Payment Date = Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 7 TIF NOTE “B” $5,400,000 maximum Delivered upon satisfaction of Phase 1B Requirements (4.1(a)(2) – page 14) PART ONE - Confirmation of Costs Description of Required Work to Issue TIF Note B Satisfactorily Completed Notes A Redeveloper continues to satisfy conditions identified within “Ongoing Requirements” section above Yes See pages 1 and 2 B Redeveloper has incurred Parking Redevelopment Costs and additional Project Redevelopment Costs not included in TIF Note A and has met the Cost Submission Deadline (7.3) yes Docs provided 6-28-2019 C Confirmation of the total amount of Parking Redevelopment Costs incurred and/or Project Redevelopment Costs not already allocated to TIF Note A (8.1(b)(i)) Yes Total parking budgeted to be $9,386,000 Total Site Work budgeted to be $9,148,000 staff reviewed paid invoices and contractor pay applications to confirm $9,105,238 in completed and committed payments to contractors, professional service providers and misc. vendors for the Initial Parking Structure (6-28- 2019) D Confirm recording of memorandum of TIF Redevelopment Agreement by October 31, 2018 (8.1(b)(ii)) Yes Doc #T05570956; 10-26-18 E Confirm issuance of grading permit and Commencement of grading of the Project Area by May 15, 2019 (8.1(b)(iii)) Yes Work began Fall 2018 Final Principal Amount of TIF Note B: $5,400,000.00 Maximum achieved Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 8 PART TWO – Accrual of Interest Note “B” Preconditions to Accrual of Interest Satisfactorily Completed Notes A Redeveloper has satisfied Conditions of Issuance (8.1(b) yes Note B issued 7-12-2019 B Satisfaction of all conditions to the issuance and the commencement of interest and payment of TIF Note A (8.1(a)(iii)(1)) C Completion of the Retail Element by December 31, 2020 (8.2(a)(iii)(2)) D Go-Ahead Letter submitted for Phase 1B, including: - Initial Parking Element - Second Element (expected to be Hotel Element 1) E Per Section 4.1(a)(2), 6.1 and 8.2(a)(iii)(3) as amended, Commence construction no later than July 1, 2020 of the second Element consisting of at least 100,000 sq. ft. of gross building area F Per 6.1 and 8.2(a)(iii)(4) and (5) as amended, Completion of the Initial Parking Element no later than July 31, 2020 and granting of the Parking Facilities Easement no later than 30 days afterward 3-level, 423 stall structure anticipated G Confirm Redeveloper has not allowed a Material Deviation which remains uncured (8.2(a)(i)(4)) H Receipt of an updated TIF Pro Forma satisfying the “But For” findings related to the Second Element and Initial Parking Element (8.2(a)(i)(5)) Interest Accrual Date = Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 9 PART THREE – Conditions for Payment Conditions for ongoing TIF Payments - Note B Satisfactorily Completed Notes A Confirm Developer is not in default (8.2(a)(i)(2)) B Confirm that no material deviation from approved Plan remains uncured (8.2(a)(i)(4)) C Confirm that preconditions for accrual of interest have been completed D Confirm the collective improvements have caused the Project Area to exceed a Minimum Valuation increase of $19,031,100 or the Redeveloper has entered into a Minimum Assessment Agreement sufficient to satisfy Section 8.3 Project Area valuation increase at time of payment: $_________ First occurring Payment Date = E Redeveloper continues to satisfy conditions identified within “Ongoing Requirements” section above F Redeveloper has not petitioned or caused a reduction in real property taxes subject to Section 11.3 G Confirm Redeveloper is not subject to TIF Lookback provisions due to a Controlling Interest Transfer of any Element Property or the Transfer of an Element within three years of Completion (7.4) Next occurring Payment Date = Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 10 TIF NOTE “C” $3,700,000 maximum Delivered upon satisfaction of Phase 1C Requirements (4.1(a)(3) – page 14) PART ONE - Confirmation of Costs Description of Required Work to Issue TIF Note C Satisfactorily Completed Notes A Redeveloper continues to satisfy conditions identified within “Ongoing Requirements” section above Yes See pages 1 and 2 B Redeveloper has incurred Parking Redevelopment Costs and additional Project Redevelopment Costs not included in TIF Notes A or B and has met the Cost Submission Deadline (7.3) Yes Docs provided 6-28-2019 C Confirmation of the total amount of Parking Redevelopment Costs and Project Redevelopment Costs incurred and not already allocated to TIF Notes A or B (8.1(b)(i)) Yes Total parking budgeted to be $9,386,000 Total Site Work budgeted to be $9,148,000 staff reviewed paid invoices and contractor pay applications to confirm $9,105,238 in completed and committed payments to contractors, professional service providers and misc. vendors for the Initial Parking Structure and $9,001,508 for the site work (6-28-2019) D Confirm recording of memorandum of TIF Redevelopment Agreement by October 31, 2018 (8.1(b)(ii)) Yes Doc #T05570956; 10-26-18 E Confirm issuance of grading permit and Commencement of grading of Project Area by May 15, 2019 (8.1(b)(iii)) Yes Work began Fall 2018 Final Principal Amount of TIF Note C: $3,700,000.00 Maximum achieved Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 11 PART TWO – Accrual of Interest Note “C” - Preconditions to Accrual of Interest Satisfactorily Completed Notes A Redeveloper has satisfied Conditions of Issuance (8.1(b) Yes Note C issued 7-12-2019 B Satisfaction of all conditions to the issuance and the commencement of interest and payment of TIF Note A and TIF Note B (8.2(a)(iv)(1)) C Completion of the Phase 1B Minimum Improvements, namely the second Element which is also to consist of at least 100,000 sq. ft. of gross building area by June 30, 2021 (Per 6.1 and 8.2(a)(iv)(2) as amended) Anticipated to be Waterwalk Hotel or dual-brand Marriott (7-8-2019) D Go-Ahead Letter submitted for the third and fourth Elements E Completion of at least the third Element which is also to consist of at least 100,000 sq. ft. of gross building area by December 31, 2021 (Per 6.1 and 8.1(a)(iv)(3) as amended) Anticipated to be Waterwalk Hotel or dual-brand Marriott (7-8-2019) F Commence construction no later than October 1, 2021 of the fourth Element consisting of at least 100,000 sq. ft. of gross building area which shall include design considerations for the Future Vertical Element to provide shared access routes, parking resources and utilities installed as part of the Project Site Work (Per 6.1 and 8.2(a)(iv)(4) as amended) Future Vertical Element expected to be a multi-story building integrated into the Parking Element and constructed on Lot 5 G confirm installation of enhanced pilings or footings within the Initial Parking Element to support the Future Vertical Element and Expanded Parking Element (Per 8.2(a)(iv)(5) as amended) Yes Initial parking structure designed in anticipation of vertical addition 7-8-2019 H Confirm Redeveloper has not allowed a Material Deviation which remains uncured (8.2(a)(i)(4)) I Receipt of an updated TIF Pro Forma satisfying the “But For” findings related to the third and fourth Element (8.2(a)(i)(5)) Interest Accrual Date = Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 12 PART THREE – Conditions for Payment Conditions for ongoing TIF Payments for Note C Satisfactorily Completed Notes A Confirm Developer is not in default (8.2(a)(i)(2)) B Confirm that no Material Deviation from approved Plan remains uncured (8.2(a)(i)(4)) C Confirm that preconditions for accrual of interest have been completed D Confirm the collective improvements have caused the Project Area to exceed a Minimum Valuation increase of $19,031,100 or the Redeveloper has entered into a Minimum Assessment Agreement sufficient to satisfy Section 8.3 Project Area valuation increase at time of payment: $_________ First occurring Payment Date = E Redeveloper continues to satisfy conditions identified within “Ongoing Requirements section above F Redeveloper has not petitioned or caused a reduction in real property taxes subject to Section 11.3 G Confirm Redeveloper is not subject to TIF Lookback provisions due to a Controlling Interest Transfer of any Element Property or the Transfer of an Element within three years of Completion (7.4) H Confirm that the Redeveloper has met the Minimum Improvements Timeline namely completion of the fourth Element no later than October 1, 2023 (6.1 as amended) Next occurring Payment Date = Checklist prepared May 2019; completed 7-9-2019; revised _____ Approved by: 7 — 9.00/c7 7 -9- adi, ent Manager Date Prepared by: ignature, Economic Dev INITIAL REVIEW - ISSUANCE OF TIF NOTE(S) S rfa ure, Edina Ci y Manager/ HRA Ex utive rirector Date NOTE A - PAYMENT & INTEREST ACCRUAL AUTHORIZED Prepared by: Signature and Title Date Approved by: Signature, Edina City Manager / HRA Executive Director Date NOTE B - PAYMENT & INTEREST ACCRUAL AUTHORIZED Prepared by: Signature and Title Date Approved by: Signature, Edina City Manager / HRA Executive Director Date NOTE C - PAYMENT & INTEREST ACCRUAL AUTHORIZED Prepared by: Signature and Title Date Approved by: Signature, Edina City Manager / HRA Executive Director Date Pentagon Village / City of Edina / Edina HRA Printed July 9, 2019 TIF Note Completion Checklist FINAL Page 13 Date: July 25, 2019 Agenda Item #: VII.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Scott Neal, Executive Director Item Activity: Subject:Project Update Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: No action requested; for information only. INTRODUCTION: Staff has prepared an update of several sites of interest to the Housing and Redevelopment Authority. ATTACHMENTS: Description Project Update HRA Redevelopment Project Update July 25, 2019 Address Project Description Status North of Hwy 62 (Grandview, 50th & France, 44th & France) 4500 France Ave. Redevelopment of vacant Edina Cleaner site and construction of “The Lorient” – a 3-4 story apartment building with street level commercial space and public parking A ground breaking was held in May 2019. Demolition is complete and construction of the concrete foundation is in progress. The overhead lines and poles are scheduled to be removed in July 2019. 3925 Market St. Redevelopment of the former Center Parking Ramp and construction of “Nolan Mains” apartments and the new “Center Ramp” Construction began April 2018 and the building is actively under construction. Public parking, public realm areas and the first apartment building is scheduled for completion November 1, 2019. Completion of the second apartment building is scheduled for mid- December 2019 3930-3944 Market St. Expansion of North Parking Ramp to include more public parking and first floor retail space Construction was substantially complete in October 2018 and the ramp is fully open for use. Final title work and punch list items are underway as the HRA prepares to sell the new retail spaces to the Nolan Mains developer. 5146 Eden Ave. Former Edina Public Works site The future redevelopment of this site was discussed in January and May 2019. Based on direction from the HRA Board, no future action will be taken until the Housing Task Force completes their work in Q4 2019. NA Reconstruction of the Interlachen Blvd and Vernon Ave. intersection This project is actively under construction. It is paid for using TIF funds. Hwy 100 @ Vernon & Eden Ave. Grandview Green - exploratory study of the viability of creating new public park (Grandview Green) on top of Highway 100 using a “freeway lid” This is a far term concept only with no implementation date. A preliminary concept study was completed in 2018 to explore this long-range concept. Study anticipates public infrastructure to be funded by new property taxes generated from private construction on 8-acres of new land created when the tax-exempt, un-used right-of-way is reconfigured to be usable. No further work is anticipated on this concept. Based on the direction of the HRA Board in October 2018, no additional legal or consultant fees will be incurred at this time. Edina HRA Project Update July 25, 2019 Page 2 Address Project Description Status Wooddale – Valley View NA Traffic signals at Wooddale and Valley View Road intersection (CIP #19-305) A contract with Meyer Contracting was approved for this work in July 2019. It is partially paid for using TIF funds. 4416 Valley View Rd. Redevelopment of vacant parcels, commercial site and single family houses into Edina Flats – 18-condominium units The HRA sold two parcels to the developer in Spring 2018. The first two buildings are substantially complete and construction continues. Greater Southdale Area 7001 York Ave. Redevelopment of Hennepin County’s Southdale Regional Library site The Service Center and Judicial Facility were relocated in 2016 and 2019, respectively. Hennepin County intends to relocate the Southdale Regional Library to the Southdale Center Mall as an anchor in a multi-tenant expansion in 2021-2023. The fate of this site will be determined by Hennepin County in the future, after the new Library is operational. 7001-7025 France Avenue Ryan Companies and US Bank propose the complete redevelopment of the 5+ acre site. Preliminary concept proposes 3 single story retail buildings, a mid-rise luxury apartment building and a mid- rise affordable apartment building City staff, Planning Commission and City Council offered non-binding comments in June/July 2019. Several suggestions urged the developer to better follow the Greater Southdale Area Guidelines. The developer has implied that a better design is possible, if the City/HRA is willing to use TIF to compensate for the added cost. 6600-6800 France Avenue The Avenue on France - Wildmere secured site plan approvals for mixed-use redevelopment to potentially include new professional office, hotel, retail, housing and medical office along with public realm improvements. The developer is finding that the full site plan is not feasible due in part to the high cost of parking decks. They are exploring a re- working of the site plan to make the project feasible. The developer has indicated that structured parking and public realm improvements would be possible if the City/HRA is willing to use TIF to compensate for the added costs. 3250 W. 66th Street Millennium Edina - The 3.5 acre site was approved to be redeveloped into new housing. The building will include up to 227 new units. The vacant office building was demolished and a groundbreaking was held in June 2019. Construction is expected to begin in late summer 2019. The second phase is anticipated to be constructed on the adjacent parcel in the future. Edina HRA Project Update July 25, 2019 Page 3 Address Project Description Status Greater Southdale Area, 7001 York Ave. The former Best Buy store was demolished and replaced with the new Aria Edina apartments. The project is on track to be substantially complete in August 2019. This parcel is in the Southdale 2 TIF District, but no TIF monies are used on this project. 250 Southdale Center The former JC Penney anchor store will redeveloped into a new Lifetime Fitness. The new construction also includes a new Lifetime Work and Lifetime Sport facilities along with retail space and a new entrance to the shopping mall. Construction activity is actively in progress. Rustica Bakery was announced as one of the new retail tenants. Lifetime is expected to be open Fall 2019. This parcel is in the Southdale 2 TIF District, but no TIF monies are used on this project. 6801 France Ave. Construction of a new RH Gallery store in the overflow parking lot. Construction activity is actively in progress. Completion is anticipated in Q4 2019. This parcel is in the Southdale 2 TIF District, but no TIF monies are used on this project. 7008 Sandell Preservation of 11-unit affordable apartment building Aeon closed on the purchase of this building in July 2019. The HRA contributed $350,000 towards the purchasing price using pooled funds from Southdale 2 TIF. 7200 and 7250 France Ave. Demolition and redevelopment of two older office buildings; construction of three new buildings to include luxury apartments, affordable apartments, luxury townhouses, new commercial space with extensive public parking and public realm improvements The parking structure at 7250 France was condemned and determined to be unsafe for use by Building Department. Zoning approvals and TIF Agreements were completed in late 2018 and April 2019. The condemned parking structure has been secured and the developer is working with the lender so that it can be demolished before further deterioration occurs in the upcoming winter season. The developer is arranging full funding and construction is anticipated to begin in 2020. Edina HRA Project Update July 25, 2019 Page 4 Address Project Description Status Greater Southdale Area 7001 York Ave. Redevelopment of vacant office building to become 80-units of affordable housing by Aeon HRA has pledged $3.3 million in local funds; Aeon has site control and is pursuing primary funding through MN Housing Dept. Developer has requested that the City take temporary ownership of the site to minimize the interest payments on the project. Based on direction given by the HRA Board in November 2018, staff is preparing legal documents to take temporary ownership of the land and enter into a sales contract with Aeon. Pentagon Park 4815-4901 W. 77th St. and 7710 Computer Ave. Redevelopment of 12-acres of the Pentagon Park South property for retail, hotels and market-driven office/residential uses by Solomon Real Estate & Hillcrest joint venture. A full TIF Redevelopment Agreement (capped at $18.1 M in 3 TIF Notes) was approved in October 2018. Site work began in October 2018 and is nearing completion. The parking structure is nearly complete. The HRA issued 3 TIF Notes on July 12, 2019 to reflect the $18.1 million currently invested in the site. The two retail builldings are anticipated to begin construction late summer 2019. The two hotels (Waterwalk and Marriot) are anticipated to begin construction in Q3 2019. The developer is actively seeking tenants for the first office building. 70th & Cahill Area 7075 Amundson Former site of Waldorf Nevins dry cleaning facility – now vacant- anticipated to be redeveloped as affordable workforce housing Edina Housing Foundation has acquired the site and intends to sell to MWF Properties. Preliminary site plans and rezoning were approved May 2019. Developer is putting full finance package together. This is anticipated to include a request that the HRA temporarily purchase and hold the site, selling at a write down to ensure that the project is financially feasible. Prepared July 18, 2019 Date: July 25, 2019 Agenda Item #: VII.C. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Scott H. Neal, Executive Director Item Activity: Subject:Proposed 2020-2021 HRA Levy Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: No action requested; for information only. INTRODUCTION: On September 12, the HRA will be asked to adopt a preliminary 2020 HRA Budget and Levy. T he proposed levy for 2020 is $192,000, an increase of $32,000 over the 2019 levy. For 2021, a levy of $230,400 is proposed. The reason for the levy increase is to provide funding for both on-going and future economic development initiatives which have historically been paid using TIF funds.