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Home My WebLink About2020-06-11 HRA Regular Meeting PacketAgenda Edina Housing and Redevelopment Authority City of Edina, Minnesota VIRTUAL MEETING Thursday, June 11, 2020 7:30 AMMake live testimony:800-374-0221, enter code 3683739. Watch meeting: https://www.edinamn.gov/746/Watch-a-City-Meeting or Facebook Live at https://www.facebook.com/edinamn/. I.Call to Order II.Roll Call III.Pledge of Allegiance IV.Approval of Meeting Agenda V.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. VI.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 28, 2020 VII.Public Hearings During "Public Hearings," the Chair will ask for public testimony after City sta. members make their presentations. If you wish to testify on the topic, you are welcome to do so as long as your testimony is relevant to the discussion. To ensure fairness to all speakers and to allow the e5cient conduct of a public hearing, speakers must observe the following guidelines: Individuals must limit their testimony to three minutes. The Chair may modify times, as deemed necessary. Try not to repeat remarks or points of view made by prior speakers and limit testimony to the matter under consideration. In order to maintain a respectful environment for all those in attendance, the use of signs, clapping, cheering, booing, or any other form of verbal or nonverbal communication is not allowed. A.PUBLIC HEARING: Resolution No. 2020-03 Authorizing Sale of Land to Amundson Flats, LP and Approve Redevelopment Agreement VIII.Reports/Recommendations: (Favorable vote of majority of Commissioners present to approve except where noted) A.Approve a Revolving Loan and Grant to Expand Land Trust Program B.Grandview 2 TIF District - Programming Funds for Public Infrastructure IX.Correspondence A.Correspondence X.HRA Commissioners' Comments XI.Executive Director's Comments XII.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 ampli?cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: June 11, 2020 Agenda Item #: VI.A. To:Chair & Commissioners of the Edina HRA Item Type: Minutes From:Liz Olson, Administrative Support Specialist Item Activity: Subject:Minutes: Draft Minutes of Regular Meeting May 28, 2020 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 minutes of May 28, 2020. INTRODUCTION: See attached meeting minutes of May 28, 2020 ATTACHMENTS: Description HRA Minutes 5-28-20 Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY MAY 28, 2020 7:30 A.M. I. CALL TO ORDER Chair Hovland called the meeting to order at 7:30 a.m. and noted the meeting was being held virtually to comply with the Governor’s Stay at Home Order due to the COVID-19 pandemic then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Members Anderson, Brindle, Fischer, Staunton, and Chair Hovland. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED – AS PRESENTED Motion by Commissioner Anderson, seconded by Commissioner Fischer, approving the meeting agenda as presented. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. V. COMMUNITY COMMENT No one appeared. VI. APPROVAL OF CONSENT AGENDA – AS PRESENTED VI.A. Approve minutes of April 16, 2020, Regular meeting VI.B. Approve Village Homes of Centennial Lakes – Amendment to the Declaration and Bylaws VI.C. Approve Payment of Claims for HRA Check Register April 10-May 20, 2020, totaling $133,560.50 Motion by Commissioner Anderson, seconded by Commissioner Brindle, approving the consent agenda as presented: Rollcall: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. VII. REPORTS/RECOMMENDATIONS VII.A. SMALL BUSINESS EMERGENCY ASSISTANCE PROGRAM – REPORT RECEIVED Economic Development Manager Neuendorf stated the item pertained to the Emergency Assistance Program established in April to support local small businesses who were struggling due to pandemic-related business closures. He outlined program goals that focused on gaps in US and MN economic recovery programs and helped viable businesses that targeted small viable businesses. Staff presented a summary of the program recipients and reviewed criteria in detail and shared that of the 41 applications received 33 were eligible and loans were awarded to 11 small businesses totaling $9,000 forgivable loans. Mr. Neuendorf said the majority of loans were issued to retail shops, beauty/fitness and two local restaurants and all agreements were signed and executed and funds disbursed for loans to close July 31, 2022. The Commission asked how applications were compared and different criteria and about those who did not qualify and minority-owned businesses. Mr. Neuendorf responded of the 41 applications received eight were rejected due to being submitted twice, not located in Edina or in a commercial or industrial zone, and brand new to Edina then spoke about the subjectivity involved and how staff relied on expertise of Open to Business to help determine eligibility. He spoke about viability of all businesses and cautioned on use of Minutes/HRA/May 28, 2020 Page 2 funds for those not possibly viable then spoke about their review of decisions and why a panel was important for full perspective. He shared minority was not a criterion used but how there was strong turnout of both minority- and women-owned businesses and while not a goal was part of the outcome. The Commission complimented staff on the speed of program creation for businesses to use and how use of the funds for loan purposes versus grants could result in recovery through the CARES act that could total $2.4 million for Edina and would be used to further support small business. Executive Director Neal shared distribution formulas that varied in the House and Senate bills that ranged from $2.5-$4.5 million and said the definition of expenses had begun to expand to include programs such as small business emergency assistance programs and that staff would continue to monitor legislation. VII.B. EMERGENCY RENTAL ASSISTANCE – REPORT RECEIVED Housing Manager Hawkinson shared on April 7, 2020 the City Council approved a $100,000 grant to VEAP to provide Emergency Rental Assistance to Edina residents. She shared as of May 21 $79,660 in emergency rental assistance with 60 unduplicated Edina households had received aid for an average request of $1,395 and median request of $1,135 and that approximately 40% recipients in May were non-English speaking then noted the need was expected to increase in the summer. She shared prioritizing assistance for households with no known resolvability and said people who utilized the program tended to work in the restaurant or salon industries and were employees that did not qualify for federal relief or unemployment then shared a note of thanks from one Edina resident. The Commission commented about being close to all funds expended and how rental assistance would not be eligible for CARES funding. Ms. Hawkinson said Hennepin County had given some aid but was limited to $1,500 per family over the course of three months. Mr. Neal agreed the funding was not being considered as an allowable CARES expense because was in grant form instead of a loan and was being advocated for and monitored. The Commission spoke about the anticipated pandemic peak and if there were any plans to repeat one or both of those programs. Mr. Neal said staff had not brought anything forward yet to the Commission but agreed there could be the need for these programs again and would be able to act quickly then added the City had received the affordability housing fee from the Tom Lund project which was good. The Commission asked for timing for receipt of CARES funding. Mr. Neal spoke about two proposed bills that included dates of June 12 and hoped to get allocations by then with a possible special session mid-June. He said staff would likely come back to Council or the Commission by June 16 due to the gap in the Council meeting calendar. The Commission asked for an update about the use of COVID-related funds as a replacement of lost revenue. Mr. Neal shared a recent interview spoke about inclusion of lost revenue in the federal House bill but not yet on the Senate side and that a compromise was likely being discussed and that staff would continue to monitor the bill. VIII. CORRESPONDENCE AND PETITIONS VIII.A. CORRESPONDENCE Mayor Hovland acknowledged the Council’s receipt of various correspondence. IX. HRA COMMISSIONERS’ COMMENTS – Received X. EXECUTIVE DIRECTOR’S COMMENTS – Received XI. ADJOURNMENT Minutes/HRA/May 28, 2020 Page 3 Motion made by Commissioner Anderson, seconded by Commissioner Brindle, to adjourn the meeting at 8:15 a.m. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: June 11, 2020 Agenda Item #: VII.A. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:PUBLIC HEARING: Resolution No. 2020-03 Authorizing Sale of Land to Amundson Flats, LP and Approve Redevelopment Agreement 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: Adopt Resolution No. 2020-03 and approve Redevelopment Agreement. INTRODUCTION: On July 25, 2019 the HRA authorized Staff to engage our legal consultant to draft legal documents so the HRA could acquire 7075-7079 Amundson Avenue from the Edina Housing Foundation for $1,300,000 and sell to MWF Properties for $600,000. Since that time, MWF has secured financing and site plan approval to complete this development. Rather than conveying the property to MWF Properties, the site will be conveyed to Amundson Flats, LP, of which MWF is a member of the General Partnership. The Redevelopment Agreement spells out the requirements that the land will be developed into 62 units of affordable housing that will remain affordable for 40 years. The Staff Report, Resolution, and Redevelopment Agreement are attached. ATTACHMENTS: Description Staff Report Resolution No. 2020-03 Redevelopment Agreement June 11, 2020 Chair and Commissioners of the Edina HRA Stephanie Hawkinson, Affordable Housing Development Manager PUBLIC HEARING: Resolution 2020-03 Authorizing Sale of Land to Amundson Flats, LP and Approve Redevelopment Agreement Information / Background: In July 2018, the East Edina Housing Foundation (Foundation) acquired the Waldorf-Nevens at 7075-7079 Amundson Avenue (Parcel). Their intent was to secure a developer through a Request for Proposal (RFP) process for the development of multifamily affordable housing. 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 one-, two- and three-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 an initial 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. Later, the Foundation agreed to write down the purchase price to $600,000 to help fill the development financing gap and strengthen MWF’s Low Income Housing Tax Credit (LIHTC) application to Minnesota Housing. MWF was awarded full LIHTCs in November. They have secured all necessary financing to complete the proposed development and are moving towards acquisition and financial closing. HRA Participation Although the Foundation was prepared to fulfill their agreement to sell the property at a reduced price, the loss of revenue would 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. Therefore, on July 25, 2019 the Foundation requested that the Housing and Redevelopment Authority (HRA) acquire the Parcel for $1,300,000 and honor the land sale write-down resolution with MWF. The HRA agreed and authorized staff to engage legal consul to prepare documents so the HRA can acquire 7075-7079 Amundson Avenue from STAFF REPORT Page 2 the Foundation and sell to MWF Properties. The HRA expressed interest in having the Foundation maintain ownership until MWF had their financing secured and were prepared to assume ownership. On December 12, 2019 via Resolution 2019-10, the HRA adopted a modification to the Tax Increment Financing Plan for the Southdale 2 Tax Increment Financing District; established the Amundson Avenue Tax Increment Financing District and approved a Tax Increment Financing Plan. Staff recommended using $1,300,000 in Southdale 2 Special Legislation Pooled funds to acquire the parcel. On February 19, 2020, the City Council approved the final rezoning, final plat, and final development plan for the Project. Sale of 7075-7079 Amundson Avenue With financing and land use approvals secured, MWF Properties is seeking to acquire the property. Resolution 2020-03 authorizes the sale of 7075-7079 Amundson Avenue to Amundson Flats, Limited Partnership. Low Income Housing Tax Credit developments are structured whereby a Limited Partnership is formed that will own the development. The Tax Credit investor, in this case US Bank, becomes the Limited Partner and MWF Properties is a member of the General Partner, Edina Group, LLC. The sale of the land will be to the Limited Partnership. Redevelopment Agreement Highlights To secure the intent of the land-sale write-down for the development of affordable housing, Staff is also seeking approval of a Redevelopment Agreement between the HRA and Amundson Flats, LP. The complete Redevelopment Agreement is attached with a summary of key terms below. • The development will provide 62 units of affordable housing. • The HRA will acquire the Parcel from the Edina Housing Foundation for $1,300,000 and sell to Amundson Flats, LP for $600,000 using Southdale 2 Special Legislation TIF pooled funds. • The Redevelopment Agreement is secured by a Declaration of Covenants and Restrictions that will be in place for 40-years. • If construction does not commence by January 2, 2021, the HRA may require that the property be transferred back to the HRA. • Development must be completed by December 1, 2022. • 100% of the units must be affordable: Eight units affordable to households with incomes at or below 30% of Area Median Income (AMI); 31units affordable to households with incomes at or below 50% of AMI; and 23 units affordable to households with incomes at or below 70% of AMI as allowed through income averaging. • Amundson Flats, LP may assign their rights and obligations under the Redevelopment Agreement to US Bank, the construction lender. • The Limited Partner has the right to cure any defaults. STAFF REPORT Page 3 Budget Action: Special Legislation TIF Estimated Balance Requests Repayments Starting Pooling Capacity $7,485,831 4100 Edina ($2,900,000) $500,000 Amundson Flats ($1,300,000) $600,000 Future Funding Capacity $4,385,831 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 SAP 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.” 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. HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA HENNEPIN COUNTY STATE OF MINNESOTA RESOLUTION NO. 2020-03 RESOLUTION AUTHORIZING SALE OF LAND TO AMUNDSON FLATS, LIMITED PARTNERSHIP WHEREAS, the Board of Commissioners (the “Board”) of the Housing and Redevelopment Authority of Edina, Minnesota (the “HRA”), after proper public notice, held a hearing at approximately 7:30 A.M. on June 11, 2020 with regard to the sale of the following parcels of land (the “Land”): Part 1: Lot 2, Block 1, Amundson’s Terrace; and Part 2: That part of the most Northerly 70 feet of Tract B, Registered Land Survey No. 1193, Hennepin County, Minnesota, lying West of the Southerly extension of the East line of Lot 2, Block 1, Amundson’s Terrace; and WHEREAS, the HRA has approved entering into a Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement (the “Master Purchase Agreement”), pursuant to which the HRA will purchase the Land and assume an existing purchase agreement to sell the Land (“Underlying Purchase Agreement”) to Amundson Flats, Limited Partnership, a Minnesota limited partnership (“Amundson Flats”); and WHEREAS, the HRA has approved entering into a Redevelopment Agreement with Amundson Flats, pursuant to which the HRA will provide certain financial assistance in connection with Amundson Flats’ redevelopment of the Land with a four-story, 62-unit, 100% affordable, “workforce” housing community, known as “Amundson Flats” (the “Redevelopment Agreement”); and WHEREAS, the Master Purchase Agreement, the Underlying Purchase Agreement, and the Redevelopment Agreement (collectively, the “Agreements”) include all the relevant terms regarding the sale of the Land; and WHEREAS, the HRA hereby concludes that all the requirements of Minnesota Statutes, Section 469.029 regarding the sale of the Land have been satisfied. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: The HRA authorizes the sale of the Land to Amundson Flats under the terms and conditions of the Agreements and the Chair and Executive Director are authorized to execute the documents required to complete the sale. Approved by the Board on June 11, 2020. _________________________________ James B. Hovland, Chair ATTEST: _________________________________ Michael Fischer, Secretary STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) SS CITY OF EDINA ) CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Housing and Redevelopment Authority of Edina, Minnesota, do hereby certify that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Housing and Redevelopment Authority of Edina, Minnesota at its Meeting of June 11, 2020, and as recorded in the Minutes of said Meeting. WITNESS my hand and seal of said City this _______day of June 2020. _________________________________ Scott Neal, Executive Director Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Redevelopment Agreement by and between Housing and Redevelopment Authority of Edina, Minnesota, and Amundson Flats, Limited Partnership Dated as of June 11, 2020 THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 -i- Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Table of Contents Page Article I Recitals; Exhibits, Definitions ....................................................................................................... 2 1.1 Recitals ......................................................................................................................... 2 1.2 Exhibits......................................................................................................................... 2 1.3 Definitions .................................................................................................................... 2 Article II Representations and Warranties ................................................................................................... 5 2.1 Representations and Warranties of the Authority ........................................................ 5 2.2 Representations and Warranties of Developer ............................................................. 5 Article III Property Transfer; Land Write Down ......................................................................................... 6 3.1 Property Transfer; Land Write Down........................................................................... 6 3.2 Assignment Agreement ................................................................................................ 6 3.3 Conditions Precedent to Closing .................................................................................... 6 3.4 Right of Reverter. ......................................................................................................... 7 Article IV Project Requirements .................................................................................................................. 8 4.1 Commencement and Completion of Project................................................................. 8 4.2 Zoning and Land Use Approvals .................................................................................. 8 4.3 Building and Construction Permits .............................................................................. 8 4.4 Restrictions on Development ....................................................................................... 8 4.5 Demolition Timing ....................................................................................................... 8 4.6 Project Financing .......................................................................................................... 8 4.7 Trail Easement .............................................................................................................. 9 4.8 Additional Responsibilities of Developer. ................................................................... 9 4.9 Certificate of Completion ............................................................................................. 9 Article V Affordable Housing .................................................................................................................... 10 5.1 Use Restriction ........................................................................................................... 10 5.2 Affordable Housing Requirements ............................................................................. 10 5.3 Restrictive Covenant .................................................................................................. 12 5.4 Consents and Subordination ....................................................................................... 12 Article VI Encumbrance of the Property ................................................................................................... 13 6.1 Copy of Notice of Default to Mortgagee and Limited Partner ................................... 13 6.2 Mortgagee’s and Limited Partner’s Option to Cure Events of Default ...................... 13 6.3 Rights of a Foreclosing Mortgagee ............................................................................ 13 6.4 Events of Default Under Mortgage ............................................................................ 14 Article VII Insurance and Indemnification ................................................................................................ 14 7.1 Insurance .................................................................................................................... 14 -ii- Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 7.2 Indemnification .......................................................................................................... 15 Article VIII Other Developer Covenants ................................................................................................... 15 8.1 Future Use of Tax Increments...................................................................................... 15 8.2 Developer Reimbursement Obligations ..................................................................... 15 8.3 Maintenance and Operation of the Project ................................................................. 15 8.4 Condemnation, Damage, or Destruction .................................................................... 16 8.5 Business Subsidy Agreement ..................................................................................... 16 8.6 Developer/Authority Grant Applications ................................................................... 16 Article IX Transfer Limitations ................................................................................................................. 16 9.1 Representation as to the Project ................................................................................. 16 9.2 Limitation on Transfers .............................................................................................. 16 9.3 Collateral Assignment to Mortgage Holder ............................................................... 18 Article X Events of Default and Remedies ................................................................................................ 18 10.1 Events of Default Defined .......................................................................................... 18 10.2 Developer Events of Default ...................................................................................... 18 10.3 Authority Events of Default ....................................................................................... 19 10.4 Cure Rights ................................................................................................................. 19 10.5 Authority Remedies on Developer Events of Default ................................................ 19 10.6 Developer Remedies on Authority Events of Default ................................................ 19 10.7 No Remedy Exclusive ................................................................................................ 20 10.8 No Additional Waiver Implied by One Waiver ......................................................... 20 10.9 Reimbursement of Attorneys’ Fees ............................................................................ 20 Article XI Additional Provisions ............................................................................................................... 20 11.1 Conflicts of Interest .................................................................................................... 20 11.2 Titles of Articles and Sections .................................................................................... 20 11.3 Notices and Demands ................................................................................................. 20 11.4 Governing Law, Jurisdiction, Venue and Waiver of Trial by Jury ............................ 22 11.5 Severability ................................................................................................................. 22 11.6 Consents and Approvals ............................................................................................. 22 11.7 Additional Documents ................................................................................................ 22 11.8 Limitation ................................................................................................................... 22 11.9 Authority Approval; Representatives ......................................................................... 22 11.10 Superseding Effect ..................................................................................................... 22 11.11 Relationship of Parties................................................................................................ 22 11.12 Survival of Terms ....................................................................................................... 23 11.13 Data Practices Act ...................................................................................................... 23 11.14 No Waiver of Governmental Immunity and Limitations on Liability ........................ 23 11.15 City and Authority Regulatory Authority .................................................................. 23 11.16 Memorandum of Agreement ...................................................................................... 23 11.17 Limited Liability ........................................................................................................ 23 11.18 Time is of the Essence ................................................................................................ 23 11.19 Counterparts ............................................................................................................... 24 -iii- Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 List of Exhibits Exhibit A Legal Description of the Property Exhibit B Form of Assignment Agreement Exhibit C Form of Certificate of Completion Exhibit D Preliminary Project Budget Exhibit E Memorandum of Redevelopment Agreement Exhibit F Inclusionary Housing Policy Program Guide Exhibit G Form of Project Funding Certificate Exhibit H Form of Affordable Housing Restrictive Covenant Exhibit I Form of Release of Reverter 1 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Redevelopment Agreement (Amundson Flats) This Redevelopment Agreement (this “Agreement”) is made and entered into June 11, 2020 (“Effective Date”), by and between the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”) and AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership, (“Developer”). RECITALS A. Pursuant to Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1794, inclusive, as amended (the “TIF Act”), the City of Edina, Minnesota, a Minnesota statutory city (the “City”) and the Authority previously established the “Southeast Edina Redevelopment Plan” for the “Southeast Edina Redevelopment Project Area” in order to encourage the development and redevelopment of such designated area within the City, including increasing the availability of affordable housing. B. To further support the creation of new affordable housing in the City, the Authority and the City secured special modifications to the TIF Act from the Minnesota Legislature, set forth in Minnesota Session Laws 2014, Chapter 308, Article 6, Section 8, as amended by Minnesota Session Laws 2017, First Special Session Chapter 1, Article 6, Sections 11 and 16 and Minnesota Session Laws 2019, First Special Session Chapter 6, Article 7, Section 3 (the “Special TIF Housing Legislation”). C. In accordance with the Special TIF Housing Legislation, the City and the Authority may create new housing tax increment financing (TIF) districts within the Southeast Edina Redevelopment Project Area and use the new tax increment and/or the tax increment generated from the existing Southdale 2 TIF District to support the creation of new affordable housing in the City. D. Pursuant to Authority Resolution No. 2019-10, adopted December 12, 2019, and City Council Resolution 2019-116 adopted December 17, 2019 (collectively, the “Authorizing Resolutions”), the Authority and the City adopted a Tax Increment Financing Plan (the “TIF Plan”) for the establishment of the Amundson Avenue Tax Increment Financing District (the “TIF District”), a housing TIF district pursuant to and in conformity with the TIF Act and the Special TIF Housing Legislation. E. The TIF District encompasses that certain property located at 7075-7079 Amundson Avenue and legally described on the attached Exhibit A (the “Property”). F. The Edina Housing Foundation (the “Housing Foundation”) is the current fee owner of the Property, having acquired the Property in July of 2018 in order to assist with the creation of a multi-family affordable housing development on the Property. G. The Housing Foundation, as seller, and MWF Properties, LLC, a Minnesota limited liability company and an affiliate of Developer, as purchaser (“MWF”), are the current parties to that certain Real Estate Purchase Agreement dated January 31, 2019 (the “Purchase Agreement”), pursuant to which MWF has the right to acquire the Property from the Housing Foundation for affordable housing purposes for a purchase price of $1,300,000.00. H. MWF has proposed a project to redevelop and improve the Property with a four-story, 62- unit, 100% affordable, “workforce” housing community, known as “Amundson Flats” (as more particularly described in this Agreement, the “Project”). 2 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 I. Pursuant to City Council Resolution 2020-27, adopted February 19, 2020, the City approved the final rezoning, final plat, and final development plan for the Project. J. In order to facilitate the construction of the Project and development of new affordable housing in accordance with the Authorizing Resolutions and the TIF Plan, the Authority is willing to (i) acquire the Property from the Housing Foundation using $1,300,000.00 of pooled tax increment funds generated from the existing Southdale 2 TIF District, (ii) assume the Purchase Agreement from the Foundation and amend the same to reduce the purchase price to $600,000.00, (iii) sell and convey the Property to Developer (as successor to MWF) at such reduced purchase price, and (iv) write-down the cost of the Property, all upon the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties to this Agreement, each of them does hereby covenant and agree with the others as follows: Article I Recitals; Exhibits, Definitions 1.1 Recitals. The foregoing Recitals are incorporated into this Agreement by this reference, including the definitions set forth therein. 1.2 Exhibits. All Exhibits referred to in and attached to this Agreement upon execution are incorporated in and form a part of this Agreement as if fully set forth herein. 1.3 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: “Affordable Housing Restrictive Covenant” has the meaning set forth in Section 5.3. “Affordable Units” has the meaning set forth in Section 5.2(a). “AMI” means the Area Median Income for the Minneapolis-Saint Paul-Bloomington Metropolitan Statistical Area (including adjustments for household size), as determined by the U.S. Department of Housing and Urban Development. “Authority” means the Housing and Redevelopment Authority of Edina, Minnesota. “Authorized Representative” means, with respect to the Authority, the Executive Director of the Authority or their designee. “Board” means the Board of Commissioners of the Authority. “Certificate of Completion” means a certificate in substantially the form attached as Exhibit C, to be issued by the Authority pursuant to the terms of Section 4.9. “City” means the City of Edina, Minnesota. “City Approvals” means, collectively, the PUD Ordinance, the Project Approval Resolution, the Final Development Plan, and the Site Improvement Contract. “City Consultants” means the financial, engineering, legal, TIF eligibility and other similar advisors to the City and the Authority. 3 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 “City Council” means the City Council of the City. “City Parties or City Party” means the City and the Authority, and their respective governing body members and elected officials, officers, employees, agents, independent contractors and attorneys. “Commencement” means actual physical construction of the first visible improvement to the Property made in furtherance of the construction of the Project, specifically including pouring footings and foundations, but specifically excluding demolition of and environmental remediation related to the improvements on the Property existing of the Effective Date. “Completion” means Developer’s receipt of the Certificate of Completion from the Authority. “County” means the County of Hennepin, Minnesota. “Cure Rights” means the rights to cure a Default as specified in Section 10.4 before such Default is deemed to be an Event of Default. “Default” means an act or omission by the Authority or Developer that becomes an Event of Default under this Agreement if it is not cured following notice thereof from the other party pursuant to any applicable Cure Rights. “Developer” means Amundson Flats, Limited Partnership, its permitted successors and/or assigns. “Effective Date” means the date first set forth above. “Environmental Law” means any federal, state or local law, rule, regulation, ordinance, or other legal requirement relating to (i) a release or threatened release of any Hazardous Material, (ii) pollution or protection of public health or the environment, or (iii) the manufacture, handling, transport, use, treatment, storage, or disposal of any Hazardous Material. “Event of Default” means any of the events by the Authority or Developer described in Article X. “Final Development Plan” means the final development plan for the Project as approved by the City pursuant to the Project Approval Resolution. “Hazardous Material” means petroleum, asbestos-containing materials, and any substance, waste, pollutant, contaminant or material that is defined as hazardous or toxic in any Environmental Law. “Law” means federal, state, or local governmental or quasi-governmental laws, ordinances, rules, codes, regulations, directives, orders, and/or requirements, including, without limitation, the TIF Act and the Special TIF Housing Legislation. “Memorandum of Agreement” means the document described in Section 11.16 and substantially in the form shown in Exhibit E. “MHFA” means the Minnesota Housing Finance Agency. “Mortgage” means any mortgage or other security interest in or lien upon any portion of the Property securing any loan made to Developer for the purpose of obtaining funds necessary for Developer’s acquisition of the Property and constructing the Project, as the same may be amended, supplemented, restated or renewed from time to time. 4 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 “Policy Guide” has the meaning set forth in Section 5.2(f)(iv). “Project” means the construction and development of a four-story, 62-unit, 100% affordable, “workforce” housing community, known as “Amundson Flats” on the Property, in accordance with and as the same is more particularly described in the City Approvals. “Project Approval Resolution” means City Council Resolution No. 2020-27. “Project Funding Certificate” means the certificate (in the form attached hereto as Exhibit G) required to be delivered by Developer to the Authority in accordance with Section 4.6. “Property” means the land legally described on the attached Exhibit A. “PUD Ordinance” means City Ordinance No. 2019-11. “Related Party” means with respect to any person or entity (i) any other person or entity controlling, controlled by or under common control with such person or entity; or (ii) any other person or entity in which the majority equity interest is owned by the parties that have a majority equity interest in such person or entity. “Reverter Closing Date” has the meaning set forth in Section 3.4(b). “Reverter Deed” has the meaning set forth in Section 3.4(b). “Site Improvement Contract” means that certain Site Improvement Performance Agreement dated February 19, 2020 entered into by and between the City and Developer, and recorded against the Property. “Special TIF Housing Legislation” has the meaning set forth in Recital B. “State” means the state of Minnesota. “Tax Increments” means the tax increments generated from the TIF District and remitted to the Authority pursuant to the TIF Act. “TIF” means tax increment financing pursuant to the TIF Act and the Special TIF Housing Legislation. “TIF Act” has the meaning set forth in Recital A. “TIF District” has the meaning set forth in Recital D. “TIF Plan” has the meaning set forth in Recital D. “Unavoidable Delays” means actual delays, outside the control of the party claiming its occurrence, to extent such actual delays are a result of (a) unusually severe or prolonged bad weather, (b) acts of God, acts of war, civil unrest, terrorism, criminal conduct of third parties, fire or other casualty to the Project, global pandemics (including the global pandemic of COVID-19, commonly known as the coronavirus) (c) litigation commenced by third parties, (d) actions or inactions of any federal, State, or local government unit which directly result in delays, including a declared emergency under Minnesota Statutes, Chapter 12 or due to pandemic or quarantine restrictions imposed by applicable Law, and/or (e) strikes, or other labor trouble, and in each instance to the extent the delayed party gives written notice to the other party(ies) within 10 days after either the occurrence of such event giving rise to each Unavoidable Delay or such 5 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 party’s reasonable realization that the occurrence will cause an Unavoidable Delay. Article II Representations and Warranties 2.1 Representations and Warranties of the Authority. The Authority makes the following representations and warranties: (a) The Authority is a public body corporate and politic and a governmental subdivision of the State, duly organized and existing under State law and the Authority has the authority to enter into this Agreement and carry out its obligations hereunder. (b) The execution, delivery and performance of this Agreement and any other documents or instruments required pursuant to this Agreement by the Authority does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not, (i) conflict with or constitute on the part of the Authority a breach of or default under any existing agreement or instrument to which the Authority is a party or by which the Authority or any of its property is or may be bound, or (ii) violate any applicable Law, constitution, or other proceeding establishing or relating to the establishment of the Authority or its officers or its resolutions. 2.2 Representations and Warranties of Developer. Developer represents and warrants that: (a) Developer is a limited partnership organized and in good standing under the Laws of the state of Minnesota, is not in violation of any provisions of its operating agreement or other organizational documents or the Laws of the State, has power to enter into this Agreement and has duly authorized the execution, delivery, and performance of this Agreement by proper action of its members. (b) The execution and delivery of this Agreement and the consummation of the transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do not and will not conflict with or result in a breach of any material terms or conditions of Developer’s organizational documents, any restriction or any agreement or instrument to which Developer is now a party or by which it is bound or to which any property of Developer is subject, and do not and will not constitute a default under any of the foregoing or to the best of Developer’s knowledge be a violation of any order, decree, statute, rule or regulation of any court or of any state or Federal regulatory body having jurisdiction over Developer or its properties, including its interest in the Project, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of Developer contrary to the terms of any instrument or agreement to which Developer is a party or by which it is bound. (c) To the best of Developer’s knowledge and belief, the execution and delivery of this Agreement will not create a conflict of interest prohibited by Minnesota Statutes, Section 469.009, as amended. (d) The construction of the Project would not have been undertaken by Developer, and in the opinion of Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to Developer provided for in this Agreement. (e) Developer shall reasonably cooperate with the City and the Authority with respect to any litigation commenced by third parties with respect to the Project; however, this provision does not obligate Developer to incur costs, except as otherwise provided in this Agreement or elsewhere. 6 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 (f) Other than the items disclosed by Developer to the City and the Authority, there are no pending or to the best of Developer’s knowledge, threatened legal proceedings, of which Developer has notice, contemplating the liquidation or dissolution of Developer or threatening its existence, or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning the authority of Developer to execute and deliver this Agreement or the validity of this Agreement. (g) Neither Developer nor any Related Party of Developer is currently delinquent in the payment of any business, occupation, sales, use, gross receipts, rental, real and personal property and other similar taxes imposed with respect to any real property owned or leased by any of such parties in the State. (h) Developer has not received any notice from any local, state or federal official that the activities of Developer or the Authority with respect to the Property may or will be in violation of any Environmental Law, except as has been identified in any report, audit, inspection or survey, undertaken by or provided to the City and the Authority. Developer represents that to the best of Developer’s knowledge: (i) it is not aware of any state or federal claim filed or planned to be filed by any party relating to any violation of any local, state or federal Environmental Law, regulation or review procedure, and (ii) it is not aware of any violation of any local, state or federal law, regulation or review procedure which would give any person a valid claim under any Environmental Law, including the Minnesota Environmental Rights Act or the Minnesota Environmental Policy Act. (i) Developer reasonably expects that it will be able to obtain financing in the amount shown on Exhibit D, which amounts will be sufficient, together with funds provided by the Authority and any other public agencies, to enable Developer to construct the Project, as provided herein. Article III Property Transfer; Land Write Down 3.1 Property Transfer; Land Write Down. In consideration of Developer’s fulfillment of its obligations under this Agreement, and subject to and pursuant to the Assignment Agreement (defined below) and the conditions precedent to closing set forth in Section 3.3, the Authority agrees to sell the Property to Developer for $600,000.00 (the “Purchase Price”). Developer acknowledges that the Authority has agreed to acquire the Property for $1,300,000.00 and, therefore, the Purchase Price represents the Authority’s write down of the cost of the Property to Developer (the “Land Write Down”), such Land Write Down being provided for the purposes of facilitating the financial feasibility of the Project and the creation of affordable housing in the City. 3.2 Assignment Agreement. The purchase, sale, and conveyance of the Property between the Authority and Developer shall occur pursuant to the terms and conditions of the Purchase Agreement, as the same is to be modified by an assignment, assumption, and amendment agreement to be entered by and among the Authority, the Housing Foundation, Developer, and MWF, in substantially the form attached to this Agreement as Exhibit B (the “Assignment Agreement”). The Assignment Agreement and the documents required thereunder must be executed and delivered all by the parties thereto simultaneously with the closing of the purchase and sale of the Property pursuant to the Purchase Agreement (the “Land Closing”). 3.3 Conditions Precedent to Closing. The Authority shall not be obligated to close on the purchase and sale of the Property pursuant to the Purchase Agreement and Assignment Agreement until the following conditions precedent have been satisfied: 7 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 (a) Developer has executed the Assignment Agreement and any closing deliveries required by the Purchase Agreement and/or the Assignment Agreement. (b) Developer has executed the Memorandum of Agreement in accordance with Section 11.16. (c) Developer has executed the Trail Easement agreement in accordance with Section 4.7. (d) Developer has executed the Affordable Housing Restrictive Covenant required by the Authority in accordance with Section 5.3. (e) There has been no Event of Default on the part of Developer that has not been cured pursuant to the Cure Rights. 3.4 Right of Reverter. (a) Subject to an Unavoidable Delay and Cure Rights, if Developer fails to cause the Commencement of construction of the Project by June 2nd, 2021, then the Authority may, in addition to such other rights and remedies that are available to the Authority hereunder, require that the Property be transferred back to the Authority. The Authority may, but shall not be obligated to, cause Developer to reconvey the Property and all improvements thereon to the Authority by giving Developer notice of the Authority’s exercise of its right of reverter pursuant to this section. The right of reverter under this section for the Property shall terminate and no longer be of any force and effect upon the Commencement of the Project. The Authority agrees to execute and deliver to Developer a recordable release of its right of reverter, in form attached hereto as Exhibit I, upon Commencement of the Project . The Authority will agree to subordinate such right of reverter to any Mortgages securing loans the proceeds of which are used to finance Developer’s acquisition of the Property, construction of the Project, or both. (b) Within 15 days following Developer’s receipt of Authority’s notice exercising its right of reverter (the “Reverter Closing Date”), Developer will convey fee title to the Property and all improvements thereon to the Authority by deed (the “Reverter Deed”), as follows: (i) The Authority will pay Developer $1.00 as consideration for receiving the Reverter Deed; (ii) Developer will convey the Property and any improvements thereon to the Authority free and clear of all encumbrances other than encumbrances that existed when the Authority conveyed the Property to Developer and easements or other encumbrances which the Authority has previously approved in writing; (iii) Upon Developer’s delivery of the Reverter Deed to the Authority, this Agreement shall terminate, Developer shall have no further rights to the Property or any improvements thereon, and neither the Authority nor Developer will have any rights or obligations under this Agreement other than obligations which, by the express terms of this Agreement, expressly survive a termination of this Agreement; (iv) On or before the Reverter Closing Date, Developer will execute and deliver to the Authority a Minnesota Uniform Conveyancing Blank Form 50.3.1 Affidavit Regarding Business Entity confirming that there has been no labor or materials provided to the Property since the Authority’s conveyance of the Property to Developer for which payment has not been made; and 8 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 (v) Developer shall deliver an updated title insurance commitment to the Authority evidencing the status of title to the Property. Article IV Project Requirements 4.1 Commencement and Completion of Project. Developer shall cause the Commencement of the Project no later than June 2nd, 2021 and Completion of the Project by no later than December 1st, 2022. 4.2 Zoning and Land Use Approvals. Nothing in this Agreement shall limit the authority of the City with respect to zoning and land use approvals. Subject to the foregoing, the staff of the Authority shall cooperate with Developer and assist Developer in the processing and obtaining of zoning and land use approvals. Developer shall be responsible for applying for and obtaining all land use and zoning approvals necessary for the Project, including, without limitation, any conditions contained in the City Approvals. All zoning and land use approvals shall be by the City Council or the City Planning Commission in accordance with the ordinances of the City. 4.3 Building and Construction Permits. Nothing in this Agreement shall limit the governmental authority of the City with respect to its building and construction permitting process for the Project. Developer shall comply with all applicable City building codes and construction requirements and shall be responsible for obtaining all building permits prior to construction. 4.4 Restrictions on Development. Subject to Section 4.3, Developer may not construct or permit construction of any of the Project until Developer satisfies the following conditions: (a) Developer satisfies of the conditions set forth in Section 3.3; (b) Developer satisfies all of the conditions precedent to construction of the Project established by the City in the City Approvals; (c) Developer delivers the Project Funding Certificate to the Authority, and the Authority approves the same in accordance with Section 4.6; 4.5 Demolition Timing. Notwithstanding anything to the contrary, following the Land Closing and Developer’s satisfaction of the conditions set forth in Section 3.3, and subject to Developer obtaining any necessary permits and approvals under applicable Law, Developer may commence demolition of and/or environmental remediation related to the improvements on the Property existing of the Effective Date. Developer shall complete such work or cause such work to be completed in accordance with applicable Law. 4.6 Project Financing. Developer shall certify to the Authority no later than August 15, 2020, that all Project funding sources identified in Exhibit D (and in amounts in substantial compliance with Exhibit G and, in any event, sufficient to complete the Project) have been committed to (or otherwise remain available to) Developer by delivering the Project Funding Certificate to the Authority. Promptly following the Authority’s request, Developer agrees to submit to the Authority evidence of commitment(s) for financing which is adequate, in the Authority’s reasonable discretion, for the construction of the Project. If the Authority reasonably finds that the financing complies with the terms of this Section 4.6 and is sufficiently committed and adequate in amount, to provide for the construction of the Project, the Authority shall notify Developer in writing of its approval, such approval shall not be unreasonably defined, conditioned, or delayed. If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection and Developer shall have 30 days thereafter to submit evidence 9 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 of commitment(s) for additional or alternate financing acceptable to the Authority. If Developer fails to submit such commitment(s) for financing acceptable to the Authority within said period of time or any additional period to which the Authority may agree, the Authority may notify Developer of its failure to comply with the requirement of this Section 4.6, such failure being a Default hereunder. 4.7 Trail Easement. (a) Grant. At the Land Closing, Developer shall grant to the City an easement for trail purposes over the southerly 17 feet of the Property (the “Trail Easement”). The trail easement agreement shall be in the form reasonably required by the City attorney. Neither the City nor the Authority will not pay an acquisition cost to Developer for the Trail Easement. Developer shall, at Developer’s sole cost and expense, either cause a licensed surveyor to determine the final, actual legal description of, or cause Developer’s architect or engineer to create a reasonably detailed and accurate depiction of the Trail Easement are for the purpose of the granting such Trail Easement. Such legal description and/or depictions will be consistent with the areas and boundaries of the area as described and depicted in the City Approvals and this Agreement. The Trail Easement will also include such temporary construction easements over the Property as are reasonably necessary to construct the Trail Easement improvements. (b) Trail Improvements. The Authority and Developer acknowledge and agree that the City and/or the Authority shall be responsible for the cost and construction of any Trail Easement improvements; provided, however, if the City and/or the Authority are prepared to commence construction of such improvements during the construction of the Project, Developer shall affirmatively assist and cooperate with such construction at no cost to Developer and no additional cost to the City or the Authority, including, without limitation, obtaining bids and proposals for such work from Developer’s contractors, subcontractors, and consultants; managing and coordinating the construction of such work with the construction of the Project; and such other reasonable responsibilities as the City and/or the Authority may request. 4.8 Additional Responsibilities of Developer. (a) Developer shall cause the Project to be constructed, operated, and maintained in substantial accordance with the terms of this Agreement, the City Approvals, and all applicable Law (including, but not limited to zoning, building code and public health laws and regulations). (b) Developer shall obtain, in a timely manner, all required permits, licenses, and approvals, and will meet, in a timely manner, all requirements of all applicable Law that must be obtained or met before the Project may be lawfully constructed. (c) Developer shall not construct any building or other structures on, over, or within the boundary lines of any public utility easement unless such construction is provided for in such easement, approved by the utility involved, or approved by the City if no utility is then utilizing the easement area. (d) Prior to delivery of a Certificate of Completion to Developer, upon the request of the Authority, Developer shall, after reasonable advance notice from the Authority, provide the Authority and the City with reasonable access to the Property to inspect the Project. Prior to delivery of the Certificate of Completion, Developer shall delivery monthly progress reports to the Authority. 4.9 Certificate of Completion. Developer may notify the Authority and request a Certificate of 10 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Completion in accordance with this section. Developer may request a Certificate of Completion for the Project after the City has issued a final certificate of occupancy covering all elements of the Project. Within 30 days after receipt of each such request, the Authority shall either furnish Developer with (a) an appropriate Certificate of Completion or (b) a written statement, indicating in adequate detail in what respects Developer has failed to complete the relevant portion of the Project and what measures or acts will be necessary, in the reasonable opinion of the Authority, for Developer to take or perform in order to obtain such certification. If the Authority issues a written statement in accordance with clause (b) above, Developer shall thereafter take such actions necessary to cure such deficiencies in the applicable Project. After such deficiencies have been cured, Developer shall notify the Authority and the Authority will re-inspect the applicable Project and take one of the actions described in clauses (a) and (b) hereof, and such process will continue until the Authority issues the applicable Certificate of Completion. Issuance of a Certificate of Completion by the Authority shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligations of Developer to construct, or cause to be constructed, the Project covered by such Certificate of Completion. Article V Affordable Housing 5.1 Use Restriction. The Property shall not be used for any purpose other than a multi-family rental housing facility and related activities meeting the requirements set forth in this Article V, without the prior written approval of the City and the Authority during the period commencing on the date hereof and until no earlier than the 40th anniversary of the date the Certificate of Completion is issued (the “Qualified Project Period”). 5.2 Affordable Housing Requirements. Subject to the terms and conditions of Section 5.4(b) relating to any land use restriction agreement (the “LURA”) encumbering the Property, the covenants and restrictions set forth in this Section 5.2 and contained in the Affordable Housing Restrictive Covenant shall apply during the Qualified Project Period. (a) Affordable Units. Developer covenants that 100% of the residential units within the Project (the “Affordable Units”) will be leased at certain rates specified below (inclusive of utilities and mandatory fees) which are considered affordable to certain low- and moderate-income households. The Affordable Units will consist of the following mix of affordability levels: (i) at least eight of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 30% of AMI (each a “30% Unit”), four of which will be set aside for High Priority Homeless (the “HPH Units”) and four of which will be set aside for People with Disabilities (the “PWD Units”). If any subsidy or housing support in connection with the HPH Units or PWD Units is withdrawn or otherwise no longer available, the 30% Units shall be reserved for households who have a combined gross annual income which does not exceed 60% of AMI for the HPH Units and 50% of AMI for the PWD Units; (ii) at least 31 of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 60% of AMI (each a “60% Unit”); and (iii) at least 23 of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 70% of AMI (each a “70% Unit”). 11 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Any changes in the affordability levels of the Affordable Units set forth herein shall require the prior written approval of the Authority, which such consent will not be unreasonably conditioned, delayed, or withheld. For avoidance of doubt, it will be deemed reasonable if the Authority withholds its consent to any proposed change in affordability levels that does not comply with applicable Law. Recent federal legislation has introduced an income averaging option for the low-income housing tax credit program. This legislation allows projects to accept residents with higher average median incomes as along as the overall average of the income of tenants in the project does not exceed sixty percent (60%) of the area median income, which provides low income housing projects the ability to serve tenants with a greater range of incomes (“Income Averaging”). MHFA allows Income Averaging for the low income housing tax credit program to be used for the Project. This Agreement requires Developer to cause one hundred percent (100%) of the Affordable Units in the Project to be affordable to families at various levels using Income Averaging, if applicable; provided, however, the overall average of the income of tenants of the Project shall not exceed sixty percent (60%) of the area median income. (b) Affordable Unit Mix. The Affordable Units shall be distributed among one-bedroom units (which will be no less than 636 square feet in size), two-bedroom units (which will be no less than 892 square feet in size) and three-bedroom units (which will be no less than 1,049 square feet in size). There will be eight one-bedroom units, 23 two-bedroom units, and 31 three-bedroom units. Changes in the distribution of Affordable Units set forth herein shall require the prior written approval of the Authority, which such consent will not be unreasonably conditioned, delayed, or withheld. (c) Qualifying Tenants. Each Affordable Unit shall be leased to and occupied (or held vacant and available for occupancy) for the duration of the Qualified Project Period only by a household who, at initial occupancy, has a combined gross annual income which does not exceed the respective AMI threshold for each type of Affordable Unit (each a “Qualifying Tenant”) (e.g., each 30% Unit may only be leased to and occupied by a Qualifying Tenant whose gross annual income does not exceed 30% of AMI, etc.). Each subsequent tenant of the Affordable Unit must be a Qualifying Tenant. (d) Rental Rates. Each Affordable Unit shall bear annual rents not greater than the rental rate limits for the applicable Qualifying Tenant (adjusted for bedroom count, and including utilities) as determined and announced from time to time by HUD and as published annually by the MHFA (or any successor agency(ies) administrating government affordable housing programs). During the Qualified Project Period, the form of lease to be utilized by Developer in renting Affordable Units will provide that rental rates charged to any tenant of an Affordable Unit cannot be increased more than once in any 12-month period. (e) Certification of Tenant Eligibility. No tenant household shall be approved by Developer for initial occupancy of an Affordable Unit unless and until Developer has determined (through verification of income, assets, expenses, and deductions) whether such tenant household is a Qualifying Tenant for the applicable Affordable Unit. Each person who is intended to be a Qualifying Tenant will be required at the commencement of the initial lease of an Affordable Unit to sign and deliver to Developer a “Certification of Tenant Eligibility” in a form reasonably approved by the Authority (the “Eligibility Certification”), in which the prospective tenant certifies as to qualifying as an applicable Qualifying Tenant. Eligibility Certifications may be obtained no more than 120 days before a Qualifying Tenant occupies an Affordable Unit. In addition, the person will be required to provide whatever other information, documents, or certifications are deemed reasonably necessary by the Authority to substantiate the Eligibility Certification. Eligibility Certifications will be maintained on file by Developer with respect to each Qualifying Tenant who 12 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 resides or resided in an Affordable Unit for a period of 10 years following the end of the Qualified Project Period. Developer must re-examine and verify the income of each tenant household living in an Affordable Unit annually unless, during such year, no Affordable Unit is occupied by a new tenant household whose income exceeds the applicable income limit for Qualifying Tenants. In addition, no re-certification shall be required if a Qualifying Tenant moves to a different Affordable Unit. (f) Additional Affordable Housing Requirements. (i) No security deposit shall be required in excess of the amount of one month of rent in connection with any Affordable Unit. (ii) During the final year of the affordability period, new leases for the Affordable Units must be for a term of no less than six months, and such newly leased Affordable Units will be subject to all the requirements of this Article V until the expiration of such new leases. (iii) Developer shall affirmatively market the Affordable Units to one or more traditionally underserved populations as affordable at the rates required hereunder. (iv) The Affordable Units shall be subject to the terms and condition of the City’s Inclusionary Housing Policy Program Guide (“Policy Guide”), as the same may be amended from time to time, a current version of which is attached as Exhibit F. (v) Developer shall, upon annual invoicing, reimburse the City (or such subdivision of the City administrating affordable housing requirements) for third-party expenses related to monitoring of Developer’s compliance with this Article V and the Affordable Housing Restrictive Covenant (plus any additional costs necessitated by re-inspections for noncompliance) and thereafter be subject to reasonable adjustment from time to time. 5.3 Restrictive Covenant. The requirements of this Article V will be set forth in a separate restrictive covenant in substantially the form attached to this Agreement as Exhibit H (the “Affordable Housing Restrictive Covenant”) and recorded against the Redevelopment Property. 5.4 Consents and Subordination. (a) Mortgage Financing. Notwithstanding anything herein to the contrary, the requirements of this Article V and the Affordable Housing Restrictive Covenant, shall not be subordinated or junior to any Mortgage on the Project, and if any Mortgage exists at the time the Affordable Housing Restrictive Covenant is to be recorded, Developer shall cause the mortgagee under such Mortgage to subordinates the Mortgage and the lien thereof to the Affordable Housing Restrictive Covenant. (b) LIHTC LURA. The Authority acknowledges that the Property will be encumbered by the LURA in connection with low income housing tax credits obtained by Developer for the Project in accordance with Section 42 of the Internal Revenue Code (“LIHTC”), restricting the use of the Property to affordable housing in accordance with LIHTC requirements. The Authority will subordinate and/or modify the requirements of this Article V and the Affordable Housing Restrictive Covenant as reasonably necessary in order to enable Developer to obtain such LIHTC financing. For so long as the LURA encumbers the Property, to the extent of any conflict or inconsistency between the terms of the LURA and the terms of the Affordable Housing Restrictive 13 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Covenant, the terms of the LURA shall prevail and such prevailing terms shall be deemed to modify and replace the applicable terms of the Affordable Housing Restrictive Covenant. If the LURA is terminated prior to the expiration of the Qualified Project Period, then the requirements of this Article V and the Affordable Housing Restrictive Covenant will continue in full force and effect in accordance with their original terms until the expiration of the Qualified Project Period. Other than the LURA, Developer has not and will not without the prior written consent of the Authority, execute any other agreement with provisions contradictory to, or in opposition to, the provisions hereof and that, in any event, the requirements of this Declaration are paramount and controlling as to the rights and obligations set forth herein and supersede any other document’s provisions in conflict herewith. Article VI Encumbrance of the Property 6.1 Copy of Notice of Default to Mortgagee and Limited Partner. If the Authority delivers any notice or demand to Developer with respect to any Default under this Agreement, the Authority will also deliver a copy of such notice or demand to the mortgagee of any Mortgage at the address of such mortgagee provided to the Authority in writing. In conformity with this Section 6.1, the Authority shall deliver any notice or demand delivered to Developer’s limited partner, U.S. Bancorp Community Development Corporation, a Minnesota corporation, its successors and/or assigns (the “Limited Partner”), Developer’s construction lender, U.S. Bank National Association (the “Construction Lender”), and Developer’s permanent lender, Bridgewater Bank (the “Permanent Lender”) at the addresses set forth in Section 11.3 of this Agreement. 6.2 Mortgagee’s and Limited Partner’s Option to Cure Events of Default. Upon the occurrence of an Event of Default, the Limited Partner, the Construction Lender, the Permanent Lender or any mortgagee under any Mortgage will have the right at its option, to cure or remedy such Event of Default within the cure periods set forth herein and the Authority shall accept such cure or remedy as though it was made by Developer. 6.3 Rights of a Foreclosing Mortgagee. Any individual or entity who acquires title to all or a portion of the Project through the foreclosure of any Mortgage or deed in lieu of foreclosure remains subject to each of the restrictions set forth in this Agreement and remains subject to all of the obligations of Developer, or any successor in interest to Developer, under the terms of this Agreement, but neither the purchaser at a foreclosure sale, the grantee under a deed in lieu of foreclosure, nor any subsequent transferee from a mortgagee shall have any personal liability for a breach of such obligations under this Agreement so long as: (a) the party acquiring title through foreclosure or deed in lieu of foreclosure observes all of the restrictions set forth in the Agreement; and (b) the party who acquired title through foreclosure or deed in lieu of foreclosure does not undertake or permit any other party to undertake any Project on the portion of the Property it owns. The purpose of this section is to permit a foreclosing lender (or mortgagee or purchaser obtaining a deed in lieu of foreclosure or a subsequent transferee) to hold title to the portion of the Property it acquires through foreclosure or deed in lieu of foreclosure, subject to, but without personal liability for the obligations under this Agreement, until it can sell the portion it holds to a third party who will assume the obligations of Developer under the terms of this Agreement and proceed with the construction of the Project pursuant to the terms of this Agreement. If, rather than passively holding title to the portion of the Property it acquires through foreclosure or deed in lieu of foreclosure, the foreclosing lender (or mortgagee obtaining 14 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 a deed in lieu of foreclosure or subsequent transferee) or other purchaser at a foreclosure sale desires to construct the Project, the purchaser at the foreclosure sale must assume and perform each of the obligations of Developer, or the applicable successor to the interest of Developer, under this Agreement as to the portion of the Project subject to foreclosure. This section does not restrict the authority of the Authority to pursue its rights under any outstanding security, exercise remedies otherwise available under this Agreement or suspend the performance of the obligations of the Authority or Developer under this Agreement as otherwise allowed. The Authority agrees to reasonably cooperate with any foreclosing lender (or mortgagee obtaining a deed in lieu of foreclosure) or other purchaser at a foreclosure sale in pursuing the Project in accordance with this Agreement. Unless acting other than passively holding title as described above in this section, a lender or an independent third party that purchases at a foreclosure sale will have no liability for breach under this Agreement. 6.4 Events of Default Under Mortgage. Developer shall use commercially reasonable efforts to obtain an agreement from any mortgagee under a Mortgage that in the event Developer is in default under any Mortgage, the mortgagee will use commercially reasonable efforts, within 30 days after it becomes aware of any such default and prior to exercising any remedy available to it due to such default, to notify the Authority in writing of (a) the fact of default; (b) the elements of default; and (c) the actions required to cure the default. Developer shall use its commercially reasonable efforts to obtain an agreement in any such Mortgage, that if, within the time period required by the Mortgage, the Authority cures any default under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based on such default, provided that failure of Developer to obtain such an agreement from any such mortgagee shall not constitute a breach of this Agreement. Article VII Insurance and Indemnification 7.1 Insurance. (a) Developer shall obtain and continuously maintain insurance on the Project and, from time to time at the request of the Authority, furnish proof to the Authority that the premiums for such insurance have been paid and the insurance is in effect. The insurance coverage described below is the minimum insurance coverage that Developer must obtain and continuously maintain, provided that Developer shall obtain the insurance described in clause (i) below with respect to the Project prior to the Commencement of construction thereof and is only obligated to maintain the insurance described in clause (i) until Developer receives a Certificate of Completion: (i) Builder’s risk insurance, written on the so-called “Builder’s Risk-Completed Value Basis,” in an amount equal to 100% of the insurable value of the Project at the date of Completion, and with coverage available in non-reporting form on the so-called “all risk” form of policy. (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner’s/Contractor’s Policy naming the Authority, as an additional insured, with limits against bodily injury and property damage of not less than $5,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used), written on an occurrence basis. (iii) Workers compensation insurance, for employees of Developer if and to the extent required by Law. 15 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 (b) All insurance required in this Article shall be obtained and continuously maintained by responsible insurance companies selected by Developer which are authorized under the laws of the State to assume the risks covered by such policies. If available on commercially reasonable terms, each policy must contain a provision that the insurer will not cancel nor modify the policy without giving written notice to the insured at least 30 days before the cancellation or modification becomes effective. Not less than 15 days prior to the expiration of any policy, Developer must renew the existing policy or replace the policy with another policy conforming to the provisions of this Article. In lieu of separate policies, Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein. 7.2 Indemnification. (a) Developer releases and covenants and agrees that the City Parties shall not be liable for and agrees to indemnify and hold harmless the City Parties against any loss or damage to property or any injury to or death of any person occurring at or about, or resulting from any defect in the Project constructed by Developer, except to the extent attributable to the negligence or intentional misconduct of any City Party. (b) Except to the extent of the negligence or intentional misconduct of any City Party, Developer shall indemnify the City Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including reasonable attorney’s fees), actions or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of Developer (or other persons under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project. Article VIII Other Developer Covenants 8.1 Future Use of Tax Increments. Developer acknowledges that the Property is part of the TIF District. Developer shall affirmatively assist and cooperate with the City’s and the Authority’s reasonable requests and requirements for the administration, management, and modifications to the TIF District and TIF Plan. Developer acknowledges and agrees that Developer shall have no right, title, interest, in or to any Tax Increments generated from the Property and/or the Project, and that the Authority may use and apply any such Tax Increment for any purpose for which such Tax Increments may lawfully be used under the TIF Act, the TIF Plan, and pursuant to the provisions of any other applicable Law. 8.2 Developer Reimbursement Obligations. Developer shall pay all reasonably incurred out of pocket costs of the City and the Authority for the City Consultants in connection with the Project, including but not limited to costs of the development and negotiation of this Agreement, the TIF Plan, the creation of the TIF District, the Final Development Plan, the Site Improvement Contract, fiscal analysis, legal fees and all costs and expenses related thereto. Developer shall pay such costs monthly upon presentation of invoices and other documentation of such costs, not more than 30 days after the request for payment is delivered to Developer. 8.3 Maintenance and Operation of the Project. Developer shall, at all times during the term of this Agreement, maintain and operate the Project in a safe and secure way and in compliance with this Agreement and applicable Law. Developer shall pay all of the reasonable and necessary expenses of the operation and maintenance of the Project, including all premiums for insurance insuring against loss or damage thereto and adequate insurance against liability for injury to persons or property arising from the construction of the Project as required pursuant to this Agreement. During construction of the Project, 16 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Developer shall not knowingly cause any person working in or attending the Project for any purpose, or any tenant of the Project, to be exposed to any hazardous or unsafe condition; provided that such party shall not be in Default hereunder if it has required the contractors employed to perform work on the Project to take such precautions as may be available to protect the persons in and around the Project from hazards arising from the work, and has further required each such contractor to obtain and maintain liability insurance protecting against liability to persons for injury arising from the work. The expenses of operation and maintenance of the Project shall be borne solely by Developer. 8.4 Condemnation, Damage, or Destruction. In the event that title to and possession of the Project or any material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or other person (except the Authority or the City) or the Project is damaged or destroyed, Developer shall, with reasonable promptness after such taking, notify the Authority as to the nature and extent of such taking. Upon receipt of any condemnation award or insurance proceeds Developer shall elect to either: (a) use the entire condemnation award or insurance proceeds to reconstruct the Project (or, in the event only a part of the Project has been taken, then to reconstruct such part) upon the remaining Property to the extent necessary to maintain and continue operations of Project for its intended purpose; or (b) in the event that the condemnation affects or taking or damage or destruction affects the Property but not the Project improvements thereon, retain, for the account of Developer, all of the condemnation award or insurance proceeds. 8.5 Business Subsidy Agreement. The Authority and Developer agree that the Project is exempt from the requirement for entering into a business subsidy agreement within the meaning of the Minnesota Business Subsidy Act, Minnesota Statutes, Sections 116J.993 through 116J. 995, because the Land Write Down provides assistance for housing within the meaning of Minnesota Statutes, Section 116J.993, subd. 3(7). 8.6 Developer/Authority Grant Applications. Developer and the Authority will cooperate in efforts to obtain available public grant funding to undertake the Project, including but not limited to grants from the Metropolitan Council, Department of Employment and Economic Development, and any other funding from metropolitan, state, county, and federal sources identified by the Authority or Developer as reasonably available. Costs of preparing the grant applications shall be borne by Developer. City staff shall have the final authority to review and submit the grant applications to the applicable agency. Article IX Transfer Limitations 9.1 Representation as to the Project. Developer represents to the Authority that its undertakings under this Agreement are for the purpose of developing the Project and not for the purpose of speculation in land holding. Developer acknowledges that, in view of the importance of the Project to the general welfare of the City and the Authority, and the substantial financing and other public aids that have been made available by the City and the Authority for the purpose of making such Project possible, the qualifications and identity of Developer are of particular concern to the Authority. Developer further acknowledges that the Authority is willing to enter into this Agreement with Developer because of the qualifications and identity of Developer. 9.2 Limitation on Transfers. (a) Until the Authority’s issuance of the Certificate of Completion, Developer shall not sell, assign, convey, lease or transfer in any other mode or manner any of its right, title, and interest in and to this Agreement, all or any part of the Property or the Project, without the express written approval of the Authority, provided that the consent of the Authority shall not be required for any 17 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 of the following: (i) granting of a Mortgage in the Property, subject to the terms of Article VI hereof; (ii) leasing the Project in the normal course of business in a manner consistent with this Agreement and the City Approvals; (iii) A transfer to a Mortgage holder pursuant to Section 9.3; or (iv) transfer to a Related Party, provided such Related Party, upon request of the Authority, executes an agreement in a form reasonably approved by the Authority pursuant to which such Related Party assumes and agrees to perform the obligations of Developer under this Agreement. (b) If the Authority’s consent to a transfer is required pursuant to this Section 9.2, the Authority shall be entitled to require, as conditions to its approval of any sale, assignment, conveyance, use or transfer of any rights, title, and interest in and to this Agreement, the Property or the Project that: (i) Any proposed transferee shall not be exempt from the payment of real estate taxes and shall have the qualifications and financial responsibility, as determined by the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by Developer; (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable among the land records shall, for itself and its successors and assigns, and expressly for the benefit of the Authority have expressly assumed all of the obligations of Developer (or such obligations of Developer as are applicable to the portion of the Project acquired) under this Agreement and agree to be subject to all the conditions and restrictions to which Developer is subject; (iii) Developer must submit all instruments and other legal documents involved in effecting transfer to the Authority; (iv) Developer and the transferee must comply with such other conditions as the Authority may find desirable in order to achieve and safeguard the purposes of the HRA Act and TIF Act, this Agreement, and the Project; and (v) Developer and the transferee must demonstrate, in a manner satisfactory to the Authority, its ability to perform all assumed obligations in this Agreement. (c) In the absence of specific written agreement by the Authority to the contrary, neither the transfer of the Project, or any portion thereof, prior to the issuance of the Certificate of Completion for the Project or the Authority’s consent to such a transfer will relieve Developer of its obligations under this Agreement. Notwithstanding anything in this Agreement to the contrary, the withdrawal, removal, transfer or replacement of the general partner of Developer, Edina Group LLC, a Minnesota limited liability company (the “General Partner”), pursuant to the terms of that certain Amended and Restated Agreement of Limited Partnership of Developer, by and between the Limited Partner and the General Partner, shall be permitted under this Agreement at no cost to Developer and shall not require the prior written consent of the Authority and shall not constitute 18 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 an Event of Default under this Agreement; provided, however, that Developer agrees to notify the Authority of any proposed replacement general partner prior to replacement and, upon replacement, shall notify the Authority of the name and contact information of the replacement general partner with reasonable promptness. Further notwithstanding anything in this Agreement to the contrary, the interests of Limited Partner shall be freely transferable to any affiliate(s) of the Limited Partner without the consent or approval of the Authority. 9.3 Collateral Assignment to Mortgage Holder. Developer may collaterally assign Developer’s rights and obligations under this Agreement to the holder of a Mortgage only pursuant to collateral assignment agreement in a form reasonably acceptable to the Authority provided that the Authority acknowledges that Developer has collaterally assigned its rights under this Agreement to U.S. Bank National Association (“Construction Lender”) pursuant to the mortgage executed by Developer in favor of Construction Lender. Article X Events of Default and Remedies 10.1 Events of Default Defined. “Events of Default” under this Agreement include any one or more of the events listed in Sections 10.2 and 10.3. 10.2 Developer Events of Default. The following shall be Events of Default for Developer: (a) Subject to Unavoidable Delays and Cure Rights, Developer’s failure to achieve Commencement and Completion of the Project by the applicable dates set forth in Section 4.1. (b) Subject to Unavoidable Delays and Cure Rights, Developer shall Default in its obligations with respect to the construction of the Project (including the nature and the date for the completion of the various elements thereof), or shall abandon or substantially suspend construction work on the Project, and any such Default, violation, abandonment or suspension is not cured, ended or remedied within 30 days after written notice to do so or such longer amount of time if previously agreed to by the Board in writing; (c) there is, in violation of this Agreement, any conveyance, encumbrance or other transfer of the Property or any part thereof, and such violation is not cured within 30 days after written notice to do so; (d) subject to Unavoidable Delay and Cure Rights, failure by Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, the Trail Easement agreement, or any Affordable Housing Restrictive Covenant, and the continuation of such failure for a period of 30 days after written notice of such failure from any party hereto; (e) if, prior to the delivery of the Certificate of Completion, Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or State law; or (ii) make an assignment for the benefit of its creditors; or (iii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudication of Developer, as a bankrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law shall be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof; or a receiver, trustee or liquidator of Developer, or of the Project, or part thereof, shall be appointed in any proceeding brought against 19 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Developer, and shall not be discharged within 90 days after such appointed, or if Developer shall consent to or acquiesce in such appointment. 10.3 Authority Events of Default. Subject to Cure Rights and Unavoidable Delays, the failure of the Authority to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, and the continuation of such failure for a period of 30 days after written notice of such failure from any party hereto shall be an Event of Default for the Authority. 10.4 Cure Rights. (a) If a Default occurs under Section 10.2(a), (b) or (d) or under Section 10.3 which reasonably requires more than 30 days to cure, such Default shall not constitute an Event of Default, provided that the curing of the Default is promptly commenced upon receipt by the defaulting party of the written notice of the Default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that the defaulting party keeps the non-defaulting party well informed at all times of its progress in curing the Default; provided, however in no event shall such additional cure period for any Default extend beyond 90 days. (b) Prior to exercise any remedies in connection with an Event of Default, the Authority must first comply with the provisions of this Section 10.4(b). Notwithstanding anything in this Agreement to the contrary, upon receipt of written notice in accordance with Section 6.1 hereof, Limited Partner shall have the right, but not the obligation, to cure any default of Developer hereunder and such cure shall be deemed to have been made by Developer hereunder. Independent of any cure period afforded to Developer, Limited Partner shall 30 days upon receipt of such written notice to effectuate a cure of the Default, or, if said Default cannot reasonably be cured within such time, then Limited Partner shall have an additional period of time thereafter, not to exceed 90 days, to cure the Default so long as Limited Partner is diligently pursuing the same. 10.5 Authority Remedies on Developer Events of Default. Except as otherwise set forth in Section 10.6 below, whenever any Event of Default occurs by Developer, the Authority may take any one or more of the following actions: (a) terminate this Agreement; (b) suspend performance under this Agreement until it receives assurances from Developer or the holder of any Mortgage, deemed adequate by the Authority, that Developer or the holder of any Mortgage will cure the Event of Default and continue its performance under this Agreement; (c) withhold the Certificate of Completion where such Event of Default relates to Completion of the Project or issuance of a Certificate of Completion; (d) take whatever action at law or in equity may appear necessary or desirable to the Authority to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of Developer under this Agreement; and (e) exercise any remedies normally available at law and in equity to enforce performance of this Agreement, including a right to specific performance. 10.6 Developer Remedies on Authority Events of Default. Whenever any unremedied Event of Default of the Authority occurs, Developer’s sole other legal and equitable remedy is an action to compel 20 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 performance by the Authority. Developer shall have no right to assert any claim for monetary or other compensatory damages against the City or Authority and will not be entitled to recover damages of any kind, including lost profits and direct, indirect, incidental, consequential, or punitive damages. 10.7 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or Developer is intended to be exclusive of any other available remedy or remedies unless otherwise expressly stated, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or Developer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article X. 10.8 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by any party and thereafter waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 10.9 Reimbursement of Attorneys’ Fees. If Developer shall default under any of the provisions of this Agreement, and the Authority shall employ attorneys or incur other reasonable expenses for the enforcement of performance or observance of any obligation or agreement of Developer contained in this Agreement, the Authority in such action or enforcement shall be entitled to payment of its reasonable attorneys’ fees and costs incurred therein. Article XI Additional Provisions 11.1 Conflicts of Interest. No member of the Board or other official of the Authority shall have any financial interest, direct or indirect, in this Agreement, the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official, or employee of the City or the Authority shall be personally liable to the City or the Authority in the event of any Default or breach by Developer of any obligations under the terms of this Agreement. 11.2 Titles of Articles and Sections. Any titles of the several parts, Articles and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 11.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be in writing and shall be sufficiently given or delivered if it is dispatched by reputable overnight courier, sent registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and addressed to: 21 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 Developer at: Amundson Flats, Limited Partnership Attention: Chris Stokka 7645 Lyndale Avenue South Minneapolis, MN 55423 with copies to: Winthrop & Weinstine, P.A. Attention: Jeffrey Koerselman 225 South Sixth Street, Suite 3500 Minneapolis, MN 55406 U.S. Bancorp Community Development Corporation Attention: Director of LIHTC Asset Management 1307 Washington Avenue, Suite 300 Mail Code: SL MO RMCD St. Louis, MO 63103 Kutak Rock LLP Attention: Jill Goldstein 1650 Farnam Street Omaha, NE 68102 U.S. Bank National Association 1307 Washington Avenue, Suite 300 St. Louis, MO 63103 Attention: U.S. Bancorp Community Development Corporation, Community Lending Division, Asset Management Kutak Rock LLP Attention: Heather Aeschleman 8601 North Scottsdale Road, Suite 300 Scottsdale, AZ 85253 Bridgewater Bank Attention: Tyler Manning 370 Wabasha Street North, Suite 1500 Saint Paul, Minnesota 55102 Messerli & Kramer P.A. Attention: Michelle Jester 1400 Fifth Street Towers 100 South Fifth Street Minneapolis, Minnesota 55402 The Authority at: Housing and Redevelopment Authority of Edina, Minnesota Attention: Executive Director 4801 West 50th Street Edina, MN 55424 22 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 with a copy to: Dorsey & Whitney LLP Attention: Jay R. Lindgren 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this section. 11.4 Governing Law, Jurisdiction, Venue and Waiver of Trial by Jury. All matters, whether sounding in tort or in contract, relating to the validity, construction, performance, or enforcement of this Agreement shall be controlled by, interpreted and determined in accordance with the laws of the state of Minnesota without regard to its conflict and choice of law provisions. Any litigation arising out of this Agreement shall be venued exclusively in Hennepin County District Court, Fourth Judicial District, state of Minnesota and shall not be removed therefrom to any other federal or state court. The Authority and Developer hereby consent to personal jurisdiction and venue in the foregoing court. The Authority and Developer hereby waive trial by jury for any litigation arising out of this Agreement. 11.5 Severability. If any term or provision of this Agreement is determined to be invalid or unenforceable under applicable Law, the remainder of this Agreement shall not be affected thereby, and each remaining term or provision of this Agreement shall be valid and enforceable to the fullest extent permitted by applicable Law. 11.6 Consents and Approvals. Whenever the terms “consent,” “approve,” or “approval” are used herein, they shall mean consent or approval in a party’s sole discretion, unless specifically provided otherwise. All consents or approvals must be delivered in writing in order to be effective. 11.7 Additional Documents. When reasonably requested to do so by another party, each party shall execute or cause to be executed any further documents as may be reasonably necessary or expedient and within their lawful obligation in order to consummate the transactions provided for in, and to carry out the purpose and intent of, this Agreement. 11.8 Limitation. All covenants, stipulations, promises, agreements and obligations of the Authority or Developer contained in this Agreement shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and Developer, and not of any governing body member, officer, agent, servant, manager or employee of the Authority or Developer in the individual capacity thereof. 11.9 Authority Approval; Representatives. Unless Board determines otherwise in its discretion, whenever this Agreement provides for approval by the Authority, such approval shall be given by and effective upon action, respectively, by the Authorized Representative of the Authority, as applicable (or in either case their designee), unless (a) this Agreement explicitly provides for approval by the Board, (b) approval by the Board is required by applicable Law, or (c) the approval, in the opinion of the Executive Director, would result in a material change in the terms of this Agreement. All actions required of or taken by Developer shall be effective upon action by a duly authorized officer, partner, member, or manager, as applicable. 11.10 Superseding Effect. This Agreement reflects the entire agreement of the parties with respect to the items covered by this Agreement, and supersedes in all respects all prior agreements of the parties, whether written or otherwise, with respect to the items covered by this Agreement. 11.11 Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to 23 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 create a partnership or joint venture among or between the parties hereto, and the rights and remedies of the parties hereto shall be strictly as set forth in this Agreement. 11.12 Survival of Terms. The following section will survive the expiration or earlier termination of this Agreement: Section 7.1 [Insurance]; Section 7.2 [Indemnification]; Sections 10.5 through 10.7 [Remedies on Default] to the extent of any Event of Default arising prior to such termination or expiration; Section 11.3 [Notices and Demands]; Section 11.4 [Governing Law, Jurisdiction, Venue and Waiver of Trial by Jury]; and Section 11.17 [Limited Liability]. 11.13 Data Practices Act. Developer acknowledges that all of the data created, collected, received, stored, used, maintained, or disseminated by Developer with regard to the performance of its duties under this Agreement are subject to the requirements of Chapter 13, Minnesota Statutes. 11.14 No Waiver of Governmental Immunity and Limitations on Liability. Nothing in this Agreement shall in any way affect or impair the City’s or Authority’s immunity or the immunity of the City’s and Authority’s employees, consultants and contractors, whether on account of official immunity, legislative immunity, statutory immunity, discretionary immunity or otherwise. Nothing in this Agreement shall in any way affect or impair the limitations on the City’s or Authority’s liability or the liability of the City’s and Authority’s employees, consultants and independent contractors. By entering into this Agreement, the Authority does not waive any rights, protections, or limitations as provided under law and equity for the Authority, or of their respective employees, consultants and contractors. 11.15 City and Authority Regulatory Authority. Nothing in this Agreement shall be construed to limit or modify the City’s or Authority’s regulatory authority. 11.16 Memorandum of Agreement. Neither party shall cause this Agreement to be recorded or filed in the real estate records of the County. However, Developer shall cause a memorandum of this Agreement to be so recorded or filed in the form attached as Exhibit E, and hereby incorporated herein by reference upon execution of this Agreement upon that portion of the Property owned by Developer. At the time of execution of this Agreement the parties hereto will also execute and acknowledge the Memorandum of Agreement. 11.17 Limited Liability. Notwithstanding anything to contrary provided in this Agreement, it is specifically understood and agreed, such agreement being the primary consideration for the execution of this Agreement by Developer, that (a) there should be absolutely no personal liability on the part of any director, officer, manager, member, employee or agent of Developer or the City or Authority with respect to any terms, covenants and conditions in this Agreement; (b) Developer and the Authority waive all claims, demands and causes of action against the other parties’ directors, officers, managers, members, employees and agents in any Event of Default, by either party, as the case may be, of any of the terms, covenants and conditions of this Agreement to be performed by either party; and (c) Developer and the Authority, as the case may be, shall look solely to the assets of the other party for the satisfaction of each and every applicable remedy in the Event of Default by any party, as the case may be, of any of the terms, covenants and conditions of this Agreement such exculpation of liability to be absolute and without any exception whatsoever. 11.18 Time is of the Essence. Time is of the essence of this Agreement and each and every term and condition hereof; provided, however, that if any date herein set forth for the performance of any obligations by Developer or the Authority or for the delivery of any instrument or notice as herein provided should not be on a business day, the compliance with such obligations or delivery shall be deemed acceptable on the next following business day. 24 Redevelopment Agreement (Amundson Flats) 4819-0529-4004\6 11.19 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. [Remainder of page intentionally left blank; signatures on following page(s)] [Signature Page to Redevelopment Agreement (Amundson Flats)] 4819-0529-4004\6 IN WITNESS WHEREOF, the Authority and Developer have caused this Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: _________________________________________ James B. Hovland, Chair By: _________________________________________ Michael Fischer, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of June, 2020, by James B. Hovland and Michael Fischer, the Chair and Secretary, respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public [Signature Page to Redevelopment Agreement (Amundson Flats)] 4819-0529-4004\6 AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Christopher J. Stokka Its: Chief Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of June, 2020, by Christopher J. Stokka, the Chief Manager of Edina Group LLC, a Minnesota limited liability company, the general partner of Amundson Flats, Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. Notary Public A-1 4853-0827-8202\1 Exhibit A Legal Description Part 1: Lot 2, Block 1, Amundson’s Terrace. Part 2: That part of the most Northerly 70 feet of Tract B, Registered Land Survey No. 1193, Hennepin County, Minnesota, lying West of the Southerly Extension of the East line of Lot 2, Block 1, Amundson’s Terrace. Hennepin County, Minnesota B-1 4820-4903-8778\2 Exhibit B Form of Assignment Agreement Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement This Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement (this “Agreement”) is dated as of _______________ ___, 2020, by and among EAST EDINA HOUSING FOUNDATION, a Minnesota nonprofit corporation d/b/a EDINA HOUSING FOUNDATION (the “Foundation”); HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”); MWF PROPERTIES, LLC, a Minnesota limited liability company (“MWF”); and AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Flats”). Recitals: A. The Foundation, as Seller, and MWF, as Buyer, are parties to that certain Real Estate Purchase Agreement dated as of January 31, 2019 (the “Underlying Purchase Agreement”), pursuant to which the Foundation agreed to sell, and MWF agreed to purchase, that certain land legally described on the attached Exhibit A, together with all buildings, parking facilities, fixtures and other improvements constructed or located thereon and all easements, hereditaments, air rights, rights of way, licenses, and other rights benefiting or appurtenant thereto (collectively, the “Property”), all located at 7075-7079 Amundson Avenue Edina, Minnesota, for the purpose of MWF developing the Property with a 62-unit, 100 percent affordable “workforce” housing community (the “Project”). B. The Authority and Flats, are parties to that certain Redevelopment Agreement dated June 11, 2020 (the “Redevelopment Agreement”) pursuant to which the Authority has agreed to acquire the Property from the Foundation, assume the Underlying Purchase Agreement, reduce the Purchase Price thereunder, and sell the Property to Flats (as successor to MWF), all for the purpose of supporting the financing of the Project in order to create new affordable housing in the City of Edina, Minnesota. C. In furtherance of the Project, and as contemplated in the Redevelopment Agreement: (i) the Foundation desires to sell the Property, and assign all of the Foundation’s right, title, and interest in and to the Underlying Purchase Agreement, to the Authority, and the Authority desires to purchase the Property, and assume all of the Foundation’s right, title, and interest in and to the Underlying Purchase Agreement, from the Foundation (collectively, the “Seller Transaction”); (ii) MWF desires to assign to Flats, all of MWF’s right, title, and interest in and to the Underlying Purchase Agreement, and the Flats desires to obtain and assume all of said right, title, and interest of MWF (collectively, the “Buyer Transaction”); and (iii) the Authority and Flats desire to amend the Underlying Purchase Agreement upon the terms and conditions set forth in this Agreement. B-2 4820-4903-8778\2 D. The parties intend that the Seller Transaction, the Buyer Transaction, and the Closing, will occur simultaneously and be deemed to have occurred in the sequence required to consummate the transactions contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties to this Agreement, each of them does hereby covenant and agree with the others as follows: 1. Recitals; Definition. The Recitals are incorporated into this Agreement by this reference, including the definitions set forth therein. Terms capitalized in this Agreement, but not otherwise defined, have the meanings given to them in the Underlying Purchase Agreement. 2. Seller Transaction. (a) Purchase and Sale. At Closing (and the following shall be effective and deemed to have occurred immediately before Closing), (i) the Foundation shall sell the Property to the Authority; (ii) the Authority shall purchase the Property from the Foundation; (iii) the Authority shall pay the Foundation the amount of $1,300,000.00 in consideration for the Property; and (iv) the Foundation shall convey the Property directly to Flats pursuant to the Deed. (b) Assignment. The Foundation hereby assigns to the Authority all of the Foundation’s right, title, and interest in and to the Underlying Purchase Agreement, including the Foundation’s interest in the Earnest Money and any Extension Deposits. Subject to clause (d) below, the Foundation hereby indemnifies and holds the Authority, its agents and its officers harmless from and against any and all liability arising from any failure by the Foundation to observe and perform any obligation of Seller under the Underlying Purchase Agreement which may have arisen prior to the date of this Agreement. The indemnity obligations of the Foundation under this section shall survive Closing. (c) Assumption. The Authority hereby assumes all of the Foundation’s rights and obligations with respect to the Underlying Purchase Agreement, including the Foundation’s interest in the Earnest Money and any Extension Deposits. The Authority hereby indemnifies and holds the Foundation, its agents and its officers harmless from and against any and all liability arising from any failure by the Authority to observe and perform any obligation of Seller under the Underlying Purchase Agreement which may arise on or after the date of this Agreement. The indemnity obligations of the Authority under this section shall survive Closing. (d) Closing Deliveries; Direct Deed. Notwithstanding anything to the contrary set forth in this Agreement, at Closing, the Foundation shall execute and deliver the Deed directly to Flats in accordance with the Underlying Purchase Agreement, and execute and deliver any other of Seller’s Closing Documents reasonably required by the Authority, Flats, or the Title Company to consummate the sale and purchase of the Property under the Underlying Purchase Agreement. The Authority hereby indemnifies and holds the Foundation, its agents and its officers harmless from and against any and all loss, damages, costs, claims, liabilities and expenses, including without limitation attorneys’ fees, relating to the Foundation’s delivery of the Deed and any other Seller’s Closing Documents at Closing, except to the extent arising from the negligence or willful misconduct of the Foundation, its agents or officers. The indemnity obligations of the Authority under this section shall survive Closing. 3. Buyer Transaction. B-3 4820-4903-8778\2 (a) Assignment. MWF hereby assigns to Flats all of the MWF’s right, title, and interest in and to the Underlying Purchase Agreement, including the MWF’s interest in the Earnest Money and any Extension Deposits. MWF hereby indemnifies and holds Flats, its agents and its officers harmless from and against any and all liability arising from any failure by MWF to observe and perform any obligation of Buyer under the Underlying Purchase Agreement which may have arisen prior to the date of this Agreement. The indemnity obligations of MWF under this section shall survive Closing. (b) Assumption. Flats hereby assumes all of MWF’s rights and obligations with respect to the Underlying Purchase Agreement, including MWF’s interest in the Earnest Money and any Extension Deposits. Flats hereby indemnifies and holds MWF, its agents and its officers harmless from and against any and all liability arising from any failure by Flats to observe and perform any obligation of Buyer under the Underlying Purchase Agreement which may arise on or after the date of this Agreement. The indemnity obligations of Flats under this section shall survive Closing. 4. Amendments to the Underlying Purchase Agreement. (a) Purchase Price. The Authority and Flats hereby agree that, at Closing (provided that the following shall be effective and deemed to have occurred immediately after the occurrence of the Seller Transaction and the Buyer Transaction, and immediately before Closing) the Purchase Price shall be reduced to $600,000.00 and all references to the Purchase Price in the Underlying Purchase Agreement shall be deemed to refer to the Purchase Price as reduced by this Agreement. The foregoing Purchase Price reduction is the “Land Write Down” described in the Redevelopment Agreement. (b) Deed and Seller’s Closing Deliveries. Flats acknowledges that the Deed and certain Seller’s Closing Documents will be executed and delivered directly by the Foundation, and Flats agrees to accept the Deed and such Seller’s Closing Documents from the Foundation, subject to the indemnity from the Authority in favor of the Foundation set forth in Section 2(d) of this Agreement. 5. Miscellaneous. Except as specifically set forth in this Agreement, all terms and conditions in the Underlying Purchase Agreement shall remain unmodified and in full force and effect. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Underlying Purchase Agreement, the terms of this Agreement shall prevail. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and which together shall constitute one and the same Amendment. The parties hereby acknowledge and agree that electronic signatures, including execution using DocuSign, or signatures transmitted by electronic mail in so-called “pdf” format shall be legal and binding and shall have the same full force and effect as if an original of this Agreement had been delivered. [Remainder of Page Intentionally Left Blank. Signature Pages Follows] B-4 4820-4903-8778\2 IN WITNESS WHEREOF, the parties hereto have executed this Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement as of the day and year first above written. EAST EDINA HOUSING FOUNDATION, a Minnesota nonprofit corporation By: Name: Its: B-5 4820-4903-8778\2 IN WITNESS WHEREOF, the parties hereto have executed this Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement as of the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: _________________________________________ James B. Hovland, Chair By: _________________________________________ Michael Fischer, Secretary B-6 4820-4903-8778\2 IN WITNESS WHEREOF, the parties hereto have executed this Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement as of the day and year first above written. MWF PROPERTIES, LLC, a Minnesota limited liability company By: Name: Its: B-7 4820-4903-8778\2 IN WITNESS WHEREOF, the parties hereto have executed this Master Purchase Agreement and Assignment, Assumption, and Amendment of Real Estate Purchase Agreement as of the day and year first above written. AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Christopher J. Stokka Its: Chief Manager B-8 4820-4903-8778\2 Exhibit A Legal Description of the Property Part 1: Lot 2, Block 1, Amundson’s Terrace. Part 2: That part of the most Northerly 70 feet of Tract B, Registered Land Survey No. 1193, Hennepin County, Minnesota, lying West of the Southerly extension of the East line of Lot 2, Block 1, Amundson’s Terrace. C-1 4812-4937-1578\2 Exhibit C Form of Certificate of Completion CERTIFICATE OF COMPLETION A. AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Developer”), pursuant to the Redevelopment Agreement by and between the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA (the “Authority”), and Developer, dated effective as of June 11, 2020 (the “Agreement”), which Agreement is evidenced of record by that certain Memorandum of Redevelopment Agreement dated June 11, 2020 and recorded on ________________, 2020 in the office of the Recorder for Hennepin County, Minnesota as Document No. ____________, has agreed to complete the Project, as defined in and in accordance with the Agreement, on that certain real property (the “Property”) located in Hennepin County, Minnesota, described on the attached Exhibit A. B. As of the date hereof, Developer has substantially completed construction of the Project. C. The issuance of this Certificate of Completion by the Authority is not intended nor shall it be construed to be a warranty or representation by the City or the Authority as to the structural soundness of the applicable Project improvements, including, but not limited to, the quality of materials, workmanship or the fitness of the applicable Project improvements for their proposed use. NOW THEREFORE, this is to certify that all construction and other physical improvements specified to be done and made by Developer with regard to the Project have been completed, and the provisions of the Agreement imposing obligations on Developer to construct such Project improvements, are hereby satisfied and terminated, and the County Recorder in and for the County of Hennepin, Minnesota is hereby authorized to record this instrument to be a conclusive determination of the satisfactory termination of said provisions of the Agreement. Dated: ______________, 20___ [Remainder of page intentionally left blank; signature pages follow] C-2 [Signature Page to Certificate of Completion] 4812-4937-1578\2 HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By _______________________________________ Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 20___, by ___________, the Executive Director of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Exhibit D Preliminary Project Budget Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Housing Tax Credit Request Type of Tax Credits requested from Minnesota Housing: Housing Tax Credits - 4% Housing Tax Credits - 9% Dual Application HTC Request Amount: Request Status Basis Boost Reservation Carryover Tax Credit Pool 8609 Metro Qualified Contact Greater MN 42 M1 Letter Tax Credit Request Type Tax Credit Set-Aside First Request Non Profit Supplemental Rural Development Repeat Request - not selected Application to suballocator Previously Awarded Tax Credits: Allocator Amount Allocator Amount Allocator Amount Hennepin 8 Service Provider ReEntry House, Inc. Edina Group Development LLC Management Co Velair Property Management Tax Exempt Bond Request TYPE ISSUER SRO with Kitchen 3BR 31 4BR HIB Sr Program UNIT SUMMARIES Architect Miller Hanson Architects DEVELOPMENT TEAM 5BR Tax Exempt Bonds - Short Term DEMOGRAPHICS Senior Owner Amundson Flats, Limited Partnership 4 People with Disabilities Developer County Permanent Supportive Housing Processing Agent First Mortgage/Deferred Loan Request TYPE AMOUNT Deferred Loan(s) Minnesota Housing First Mortgage General Contractor Eagle Building Company, LLC 1,062,143Tax Exempt Bonds - Long Term AMOUNT Name of Source # Units Amount 1BR 2BR 6BR Rent Assistance 8TOTAL UNITS 62 SUMMARY ACTIVITY TYPE Amundson Flats Edina 55439 New Construction7075 Amundson Avenue Rental SubsidyDevelopment Name Primary Address City Zip Code 8 23 Unit Type # Units SRO no Kitchen HTC 62 0BR/Eff Program Type HOME NHTF # Units PWD Market Rate 4 8 Operating Subsidy Common Space Sponsor/Parent Company MWF Properties, LLC (Jay Weis and Erik Weis) HPH 4 Subsidy Funding Request Version Date Property Number (D#) Project Number (M#) HTC # D8218 M18181 # Units Description Workbook Summary - Page 1 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm SUMMARY RENT GRID Income Amount Housing Income Covered Parking Surface Parking Commercial TIF Gross Potential Rent Total Other Income Total Rental Loss Net Rental Income Expense Amount Administrative Maintenance Utilities Unique Operating Expenses Insurance Agency M & O Adjustment Total M & O Reserves & Escrows Effective Gross Expense Net Operating Income Amount NOI EXPENSE SUMMARY Total expense per Unit($) TOTALS Total Expense as % of Revenue M & O Per Room M & O/Unit/Year UNDERWRITING ASSUMPTIONS SOURCES AND USES Uses DescriptionAcquisition or RefinanceNew ConstructionRehabilitationContractor FeesContingencyEnvironmental AbatementProfessional FeesDeveloper FeesSyndicator FeesFinancing CostsTOTAL MORTGAGEABLEReserves and Non-MortgageableTOTAL DEVELOPMENT COST Subsidy Funding Sources Name of Source Housing Support Housing Support TOTAL OF SUBSIDY FUNDING 1BR 4 705 Program Type Energy RebatesSales Tax Rebate ERF EnvironmentalTree Grant 15,780400,500247,340 451,765 7,287 First Mortgage 14,350 91,355 Deferred Loan RequestFederal Historic ProceedsState Historic ProceedsSyndication ProceedsGeneral Partner Cash Met Council Environmental FUNDING GAP REMAINING (15)(0) 16,990,383 274,038 Source Construction Sources Deferred Developer Fee 46,353 Secured or Applied for 219,140 TOTAL PERMANENT FINANCING Per Unit Committed Amount # UnitAmount 13,586,700USB Construction Loan Secured 115,665 8 69,312 8 Secured 16,990,368 274,038 100%263,857 4,256 2% Amount Per UnitAmount 231 16,726,511 269,782 98%3,989 758,160 12,228 6%6,460255 1,000,000 16,129 4%589,997 9,516 1,144,366 18,458 7% 730,000 11,774 4%61%10,406,851 167,852 704,050 11,356 7.00% MIP 62 889,176 DCR Year 15 Loan Rate 4.500% 3.00%Parking Vacancy 55% 1,081 1.15 1.32Expense Inflator Cap Rate Per Unit DCR Year 1Residential Vacancy 7.0%Income Inflator 826,934 30% MTSP 889,176 60% MTSP 70% MTSP 62,242 30% MTSP Monthly Contract Rent Monthly Gross Rent Rent Limit Income Limit HTCHOMEHPHPWDHIB SeniorRent Asst889,176 Op SubsUnit Type Permanent Capital Funding Sources 2.00% 18 Commercial Vacancy CommittedSource # of Units Approx Sq Ft 3BR 23 1,225 1,490 2BR 23 1BR 3BR 1,230 4 705 678 965 1,068 8 1,225 678 722 50% MTSP 1,125 1,300 50% MTSP 722 50% MTSP 131,616 INCOME & EXPENSE 50% MTSP NHTF1,560 60% MTSP 10,195,553 164,444 5,664,0001,095 60% MTSP 8%3%1,393,087 22,469 343,616 109,000 4% 5,542 7,371 369,918 81,000 22,000 113,400 457,016 % of Total Workbook Summary - Page 2 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm SUMMARY TOTAL OF CONSTRUCTION FINANCING 13,586,700 219,140 Workbook Summary - Page 3 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Version Date Version Property Number (D#): Project Number (M#):Only enter one Project Number. HTC # Development Name Year Built 2021 Primary Address City Zip Code County Latitude Enter the property's latitude. Longitude Enter the property's longitude. Other: Other: # Units 4 8 D8218 M18181 DEVELOPMENT LOCATION Conversion/Adaptive Re-use New Construction Refinance -93.361937 ACTIVITY TYPE (Check all that apply) Acquisition Enter Primary Address above. Enter aditional buildings on Buildings tab. Check if multiple buildings44.875252 Edina 7075 Amundson Avenue Amundson Flats 55439 Hennepin Permanent Supportive Housing Rehabilitation Stabilization Historic Pres/Renovation Scattered Site Development Demolition Rental Subsidy DEMOGRAPHICS (Enter number of units for each applicable demographic) People with Disabilities Senior PROJECT DESCRIPTION Application Date 6/3/2019 MINNESOTA HOUSING USE ONLY: Multifamily Workbook Project Description - Page 1 of 1 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm SITE DESCRIPTION Acres 1.25 Project located in qualified census tract: Total Site Area Sq. Footage 54,450 Tract Number:023903 Density (units/acre)49.60 BUILDING DESCRIPTION Type of Building Number of Residential Buildings Number of Stories Number of Units Gross Sq Feet Elevator 1 4 62 50,000 1 4 62 50,000 Type Number of Parking Spaces Number Parking Spaces / Unit Gross Square Feet Underground 62 1.00 17,500 32 0.52 94 1.52 17,500 Gross Sq Ft 1,000 500 1,500 DEVELOPMENTS INVOLVING ACQUISITION Will the property be acquired from a related party? Has the property been acquired from a related party?If yes, date:Sale price: Has the property been acquired from an unrelated party in the last three years?If yes, date:Sale price: Existing Indebtedness on the Property/Building Original Loan Amount Interest Rate Term (Yrs)Unpaid Balance Date of Unpaid Balance Date of Maturity Number of Restricted Units Restricted to Special Popula-tions? Loan Will be Paid Off in this Transaction?Income Limits (%)Rent Limits (%) Existing Federal Subsidies # of Units Exp. Date Existing State and Local Subsidies Subsidy Type # of Units Exp. Date Name of Lender(s) of Existing Loans, Subsidies and Grants (secured and unsecured) Total Non-Housing gross square feet Other Commercial Kitchen or Food Service Space (for supportive or senior housing) Community Space Swimming Pool Community Service Facility Office State or Local Subsidy Describe if Other Total Federal Subsidy Are the existing federally assisted units at risk of loss? Non-Housing Space Administration/Programmatic Commercial Storage Lockers Describe PROPERTY INFORMATION Totals Housing Space New Construction Totals Parking Covered Parking Surface Parking Enter the 6 digit tract number for the site. (If applicable, include leading and/or trailing zeros and exclude the decimal). If scattered site, enter the tract number for the primary building site. Yes Yes Yes No No No Workbook Property Information - Page 1 of 1 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Utility Type SRO no Kitchen SRO with Kitchen 0BR/Eff 1BR 2BR 3BR 4BR Natural Gas Electric 7 10 13 Natural Gas 37 47 57 44 57 70 Source UNIT / RENT GRID Program Type Unit Type # of Bath- rooms # of Units Unit Sq Ft Monthly Contract Rent Total Annual Contract Rent Tenant Paid Utilities Monthly Gross Rent HTCHOMENHTFHPHPWDHIB SeniorRent AsstOp SubsRooms Per Unit Total Rooms Source of Rental Assistance or Operating Subsidy 1BR 1.00 4 705 678 32,544 44 722 50% MTSP 30% MTSP 3.5 14.0 Housing Support 1BR 1.00 4 705 678 32,544 44 722 50% MTSP 30% MTSP 3.5 14.0 Housing Support 2BR 1.00 23 965 1,068 294,768 57 1,125 50% MTSP 60% MTSP 4.5 103.5 3BR 2.00 8 1,225 1,230 118,080 70 1,300 50% MTSP 60% MTSP 6.0 48.0 3BR 2.00 23 1,225 1,490 411,240 70 1,560 60% MTSP 70% MTSP 6.0 138.0 Possible 70% units if IRS guidance allows 62 889,176 Total Rooms 318 Total # Bathrooms in Units 93 Income Average 59.84%NOTE: Income Average is based on number of HTC units with MTSP Income Limit Rent Limit/Income Limit Key: Option 30/30 MMALW 80>S/AMI 6BR 80% of the greater of SMI or AMI Effective Date Rental Hsg PotentialTotal Units Equals 30% of 30% Metro Median Affordable to the Local Workforce Income LimitRent Limit Total Tenant Paid A/C Water/Sewer Service Fee Other HOUSING INCOME Electric Utility Heating Cooking Water Heating TENANT PAID UTILITY ALLOWANCE 5BR Workbook Housing Income - Page 1 of 1 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Total Per Unit Per Room Rental Housing Potential 889,176 14,342 2,796 Parking / Garage Rent Potential Covered Parking # of spaces 62 Mo Fee Surface Parking # of spaces 32 Mo Fee Commercial Rent Potential Gross Potential Rent 889,176 14,342 2,796 Tenant Fees Laundry Equipment Other Other Forfeited Security Deposits Interest Income Total Other Income 7.0%62,242 1,004 196 Other Other 62,242 1,004 196 Net Rental Income / Total Revenue 826,934 13,338 2,600 Total Per Unit Per Room Comments Advertising and Marketing 3,000 48 9 % Revenue $/Unit/Mo 49,616 800 156 Percent of Total Revenue (OR)6.0%$66.69 Per Unit Per Month Professional Fees (Specify in Comments)8,000 129 25 Applicant Screening/Collection Expense Site Office Expense (Specify in Comments)6,000 97 19 On-Site Management Payroll (Specify in Comments)55,000 887 173 10,000 161 31 Administrative Subtotal 131,616 2,123 414 Elevator Maintenance/Contract 3,000 48 9 Security Rubbish Removal 13,000 210 41 Other Contract Services (Includes Exterminating)8,000 129 25 Maintenance/Janitor Supplies 3,000 48 9 Grounds Maintenance 3,000 48 9 Snow Removal 4,000 65 13 Heat & A/C Repair Services 10,000 161 31 General Repair Services 10,000 161 31 Painting/Decorating Materials 4,000 65 13 45,000 726 142 Other Maintenance and Operating (Specify in Comments)6,000 97 19 Maintenance Subtotal 109,000 1,758 343 Electricity 20,000 323 63 Water & Sewer 36,000 581 113 Gas and Oil 25,000 403 79 Materials UTILITIES Based on per room comp Based on per room comp Based on per room comp Maintenance/Janitor Payroll (Specify in Comments) MAINTENANCE Total Rental Loss NET RENTAL INCOME MANAGEMENT & OPERATING EXPENSES (M&O) ADMINISTRATIVE Property Management Fee Legal, Accounting Other Administration (Specify in Comments)Inspection Fees, City Fees, Phone RENTAL LOSS Rental Housing Vacancy Parking / Garage Vacancy Commercial Vacancy Vacancy Rate Vacancy Rate Vacancy Rate INCOME Comments GROSS POTENTIAL RENT OTHER INCOME FROM OPERATIONS (excluding TIF) Workbook Income & Expense - Page 1 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm INCOME Utilities Subtotal 81,000 1,306 255 Workbook Income & Expense - Page 2 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm INCOME Property and Liability Insurance Expense 22,000 355 69 AGENCY MANAGEMENT AND OPERATING ADJUSTMENT Agency Management and Operating Adjustment Total Management and Operating 343,616 5,542 1,081 Real Estate Taxes 85,500 1,379 269 27,900 450 88 Miscellaneous Reserves Reserves & Escrows Subtotal 113,400 1,829 357 Effective Gross Expense 457,016 7,371 1,437 Net Operating Income 369,918 5,966 1,163 TEMPORARY INCOME (i.e., TIF, IRP, etc)# Years Total Temporary Income TIF Specify Specify TOTAL MANAGEMENT AND OPERATING REAL ESTATE TAXES AND RESERVES See property tax estimate Replacement Reserve EFFECTIVE GROSS EXPENSE NET OPERATING INCOME SUPPORTIVE HOUSING Unique Operating Expenses (Specify in comments) INSURANCE Workbook Income & Expense - Page 3 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Year 1 Year 15 Net Operating Income Income Inflator 2.00%369,918 423,726 Expense Inflator 3.00% Income Available for Debt Service 369,918 423,726 Lender/Loan Total Subordinated Debt Payments Income Available after Subordinated Debt 369,918 423,726 Minimum Debt Coverage Ratio 1.1500 1.1500 Net Income Available for Debt Service 321,668 368,458 Lowest Income Available for Debt Service 321,668 Term (Years)17 Amortization (Years)35 Interest Rate 4.500% Mortgage Insurance Premium (MIP) Debt Service Constant (including MIP)0.056790808 Maximum Calculated Mortgage 5,664,083 Maximum NOI Supported Mortgage (rounded)5,664,000 Actual Mortgage if not Maximum Supported Annual TIF Payment Minimum Debt Coverage Ratio Available TIF for Debt Service Amortization (Years) Total Permanent Note Rate Mortgage Insurance Premium (MIP) Debt Service Constant (including MIP) Maximum Calculated TIF Mortgage Maximum TIF Supported Mortgage (rounded) Actual TIF Mortgage if not Maximum Supported FIRST MORTGAGE CALCULATION TIF MORTGAGE CALCULATION Debt Service Year 1 Debt Service Year 15 Check if MN Hsg Principal Rate Term (Years) Amort (Years) MORTGAGE CALCULATION INCOME AVAILABLE FOR DEBT SERVICE Change on the Cash Flow tab: Temporary Income (excluding TIF) SUBORDINATED DEBT PAYMENTS Workbook Mortgage Calc - Page 1 of 1 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Development Name Amundson Flats # Units Rent # Units Rent # Units Rent # Units Rent # Units Rent Total Units 62 4 678 23 1,490 Cap Rate 7.00%4 678 Vacancy Rate / Credit Allowance 7.0%23 1,068Income Inflator 2.00%8 1,230 Expense Inflator 3.00% Initial Inflator Future Inflator Begin in Year Actuals Two Years Ago Actuals One Year Ago Actuals Current Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Rental Income 2.00%889,176 906,960 925,099 943,601 962,473 981,722 1,001,357 1,021,384 1,041,811 1,062,648 1,083,901 1,105,579 1,127,690 1,150,244 1,173,249 Parking Income 2.00% Commercial Income 2.00% Gross Potential Rent 889,176 906,960 925,099 943,601 962,473 981,722 1,001,357 1,021,384 1,041,811 1,062,648 1,083,901 1,105,579 1,127,690 1,150,244 1,173,249 Other Income from Operations (incl Laundry)2.00% Other Other OtherTotal Other Income Rental Vacancy 7.0%2.00%62,242 63,487 64,757 66,052 67,373 68,721 70,095 71,497 72,927 74,385 75,873 77,391 78,938 80,517 82,127 Parking Vacancy 2.00% Commercial Vacancy 2.00% Other 2.00% Other 2.00% Total Rental Loss 62,242 63,487 64,757 66,052 67,373 68,721 70,095 71,497 72,927 74,385 75,873 77,391 78,938 80,517 82,127 Net Rental Income 826,934 843,472 860,342 877,549 895,100 913,002 931,262 949,887 968,885 988,262 1,008,028 1,028,188 1,048,752 1,069,727 1,091,121 Property Management Fee 6.00%2.00%49,616 50,608 51,621 52,653 53,706 54,780 55,876 56,993 58,133 59,296 60,482 61,691 62,925 64,184 65,467 Administrative Expenses (less Prop Mgmt Fee)3.00%82,000 84,460 86,994 89,604 92,292 95,060 97,912 100,850 103,875 106,991 110,201 113,507 116,912 120,420 124,032 Maintenance Expenses 3.00%109,000 112,270 115,638 119,107 122,680 126,361 130,152 134,056 138,078 142,220 146,487 150,881 155,408 160,070 164,872 Utilities 3.00%81,000 83,430 85,933 88,511 91,166 93,901 96,718 99,620 102,608 105,687 108,857 112,123 115,487 118,951 122,520 Unique Operating Expenses 3.00% Insurance M&O/DU/Mo:$462 3.00%22,000 22,660 23,340 24,040 24,761 25,504 26,269 27,057 27,869 28,705 29,566 30,453 31,367 32,308 33,277 Agency M&O Adjustment 3.00% Real Estate Taxes 3.00%85,500 88,065 90,707 93,428 96,231 99,118 102,091 105,154 108,309 111,558 114,905 118,352 121,903 125,560 129,326 Reserves Reserves/Unit:$450 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900Effective Gross Expense 55.27%457,016 469,393 482,132 495,243 508,737 522,625 536,919 551,630 566,772 582,357 598,398 614,908 631,901 649,392 667,395 Net Operating Income 369,918 374,079 378,210 382,306 386,363 390,377 394,343 398,257 402,112 405,905 409,630 413,280 416,850 420,335 423,726 Temporary Income Temporary Income - TIF 369,918 374,079 378,210 382,306 386,363 390,377 394,343 398,257 402,112 405,905 409,630 413,280 416,850 420,335 423,726 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 Other Other 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 321,663 1.15 1.16 1.18 1.19 1.20 1.21 1.23 1.24 1.25 1.26 1.27 1.28 1.30 1.31 1.32 48,255 52,416 56,547 60,643 64,700 68,714 72,680 76,593 80,449 84,242 87,966 91,617 95,187 98,672 102,063 48,255 52,416 56,547 60,643 64,700 68,714 72,680 76,593 80,449 84,242 87,966 91,617 95,187 98,672 102,0631.15 1.16 1.18 1.19 1.20 1.21 1.23 1.24 1.25 1.26 1.27 1.28 1.30 1.31 1.32 Amount Rate 7,500 7,500 7,725 7,957 8,195 8,441 8,695 8,955 9,224 9,501 9,786 10,079 10,382 10,693 11,014 451,765 48,255 44,916 48,822 52,686 56,504 60,273 63,985 67,638 8,687 Deferred Loans Rate 62,538 74,741 78,181 81,538 84,806 87,978 91,049 Floor Plan Net Cash Flow Asset management fee Deferred Developer Fee Minnesota Housing Cash Flow Note Expenses to be paid from Available Cash Total Debt Service Total Debt Service Coverage Cash Flow Funds from Debt Services Reserve Enter this amt in Dev Costs, Reserves Adjusted Cash FlowAdjusted Debt Service Coverage EXPENSES Total Income for Debt Service DEBT SERVICE First MortgageTIF Supported Mortgage MIP Floor Plan CASH FLOW INCOME Floor Plan 1BR 1BR 2BR 3BR Floor Plan 3BR Floor Plan Workbook Cash Flow - Page 1 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Deferred Developer Fee Payments Beginning Balance 451,765 403,510 358,595 309,773 257,087 200,583 140,310 76,325 8,687 Interest Payment (48,255)(44,916)(48,822)(52,686)(56,504)(60,273)(63,985)(67,638)(8,687) Ending Balance 403,510 358,595 309,773 257,087 200,583 140,310 76,325 8,687 Cash Flow Loans Beginning Balance Interest PaymentEnding Balance Workbook Cash Flow - Page 2 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Total Costs Per Unit 4% Credit Basis 9% Credit Basis Historic Credits Basis Inter- med. Costs Comments ACQUISITION or REFINANCE EXISTING DEBT Land 600,000 9,677 Existing Structures Demolition 130,000 2,097 Not included in estimate 730,000 11,774 Special Assessments Other Other Holding Costs Holding Costs Acquisition/Refinance Total 730,000 11,774 CONSTRUCTION New Construction Residential 8,248,493 133,040 8,248,493 Based on spring 2020 start Garages $ per stall:800,000 12,903 Accessory Structures On Site Work 1,358,358 21,909 1,358,358 Off Site Work Other Other New Construction Subtotal 10,406,851 167,852 9,606,851 Rehabilitation Residential Garages $ per stall Accessory Structures On Site Work Off Site Work Other Other Rehabilitation Subtotal New and Rehabilitation Subtotal 10,406,851 167,852 9,606,851 General Requirements 5.74%597,037 9,630 597,037 Contractor's Overhead 1.91%199,013 3,210 199,013 Contractor's Profit 5.74%597,037 9,630 597,037 Construction Contract Amount 11,799,938 190,322 10,999,938 Construction Contingency 5.00%589,997 9,516 589,997 Total Construction Costs 12,389,935 199,838 11,589,935 ENVIRONMENTAL ABATEMENT Soil Abatement 350,460 5,653 Lead Abatement Asbestos Abatement 53,500 863 Other 80,000 1,290 80,000 Vapor Mitigation System (est Abatement Contingency (Agency determined)220,090 3,550 Abatement Total 704,050 11,356 80,000 DEVELOPMENT COSTS Acquisition/Refinance Subtotal Workbook Development Costs - Page 1 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Total Costs Per Unit 4% Credit Basis 9% Credit Basis Historic Credits Basis Inter- med. Costs Comments DEVELOPMENT COSTS PROFESSIONAL FEES Architect's Fee Total 225,000 1.9% Architect's Fee - Design 75%168,750 2,722 172,500 Architect's Fee - Supervision 25%56,250 907 57,500 Architect's Reimburseables Marketing 30,000 484 Velair + Lease-Up Surveys 8,000 129 8,000 As-Built Soil Borings In Architect Fee Payment & Performance Bond Premium Building Permit(s) Sewer-Water Access Charge 471,016 7,597 471,016 $2,485*SAC units; $2,289 Cit Other Local Fees 15,000 242 15,000 Comp Plan Amend; Rezone; s Appraisal Fee 15,500 250 15,500 US Bank + Application Appra Energy Audit Energy Consultant In Architect Fee Environmental Assessment 43,500 702 43,500 Phase I update, Phase II upda Cost Certification/Audit 6,000 97 6,000 1st yr TR; Cost Cert Market Study 4,500 73 Tax Credit Fees (% of credits)84,800 1,368 Compliance Fees (1st year)1,050 17 7% + $800 app fee Furnishings and Equipment 40,000 645 40,000 Legal Fees 200,000 3,226 100,000 Winthrop and US Bank lende Relocation Costs Other Fees Other Fees Zero per planning Other Fees Other Fees Professional Fees Total 1,144,366 18,458 929,016DEVELOPER FEE Developer Fee 1,000,000 16,129 1,000,000 Reduced to hit intermediary Processing Agent Owner's Construction Representative Other Consultant Fees Other Developer Fee Total 6.3%1,000,000 16,129 1,000,000SYNDICATOR/INVESTOR FEES Organization Fees Bridge Loan Tax Opinion Due Diligence Fees Other Fees Syndicator/Investor Fees Total Park Dedication City Fees Workbook Development Costs - Page 2 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Total Costs Per Unit 4% Credit Basis 9% Credit Basis Historic Credits Basis Inter- med. Costs Comments DEVELOPMENT COSTS FINANCING COSTS Construction Period Costs Hazard and Liability Insurance Construction Interest at:3.150%18 550,000 8,871 375,000 LIBOR + 2.15% Builder's Risk Insurance Taxes During Construction N/A Minnesota Housing Bridge Loan Origination Fee Construction Loan Origination Fee 81,520 1,315 81,520 0.60% Minnesota Housing Construction Oversight Fee Other Inspection Fee 10,000 161 Radon, Tenant Cert, ect Permanent Financing Costs Minnesota Housing 1st Mortgage Application Fee Minnesota Housing 1st Mortgage Origination Fee HUD/FHA MIP HUD/FHA Exam Fee HUD/FHA Inspection Fee Other Permanent Origination Fee 56,640 914 Mortgage Insurance Premium Bond Counsel Underwriter Counsel Trustee Fee Rating Agency Other Bond Fees Title and Recording 60,000 968 45,000 Financing Costs Total 758,160 12,228 501,520 TOTAL MORTGAGEABLE COSTS 16,726,511 269,782 14,100,471RESERVES AND NON-MORTGAGEABLE COSTS 263,857 4,256 Non-Mortgageable Costs Total 263,857 4,256 TOTAL DEVELOPMENT COST Total Development Costs 16,990,368 274,038 App = $16,380,110 Total Basis for Tax Credits 14,100,471 MHFA = $16,380,110 Total Intermediary Costs % of total 14.03%2,383,510 Operating Reserve Other Other Investor Fees Bond Issuance Fee Other Other Workbook Development Costs - Page 3 of 3 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Total Development Cost from Development Costs tab:$16,990,368 Term (Months)Rate Amount Per Unit Committed 18 5.500%13,586,700 219,140 0 0 0 0 Total Construction Financing 13,586,700 219,140 Term (Years)Rate Amount Per Unit Committed Include in HTC Gap End Loan 17 4.500%5,664,000 91,355 1,095 18 10,195,553 164,444 0 0 0 0 15,780 255 400,500 6,460 247,340 3,989 14,350 231 0 0 0 0 0 0 0 0 0 451,765 7,287 Total Permanent Financing 16,990,383 274,038 (15)(0) OS Funding Use Term (Years)# of Units Annual Amount Secured or Applied for Revenue Shortfall 10 8 69,312 Secured Tenant Service Co 10 46,353 Secured Total Proposed Rental Assistance or Operating Subsidy Funding 8 115,665 Minnesota Housing 1st Mortgage Escrow Requirements Amount 0 Insurance Escrow Tax Escrow Other Other Yes 1,529,497 0 0 Explain: MAXIMUM ALLOWABLE RETURN ON EQUITY Developments with syndication proceeds Developments with no syndication proceeds Developments with de minimus amount of syndication proceeds Manual Entry 0 8,664 ADDITIONAL COSTS NOT INCLUDED IN TOTAL DEVELOPMENT COST Operating Deficit Escrow Operating Subsidy Housing Support 0 0 FUNDING GAP REMAINING NEW OR ADDITIONAL RENTAL ASSISTANCE OR OPERATING SUBSIDY FUNDING Type of Source Name of Source Per Unit Rental Assistance Housing Support 8,664 Deferred Developer Fee $311,221 originally Tree Grant Energy Rebates Bridged by GP Loan Met Council Environmental ERF Environmental Federal Historic Proceeds Deferred Loan Request Sales Tax Rebate General Partner Cash Syndication Proceeds State Historic Proceeds Name of Source Notes (Enter info about status and estimated timing of funding) First Mortgage SOURCES CONSTRUCTION SOURCES Name of Source Notes USB Construction Loan PERMANENT CAPITAL SOURCES OF FUNDING Workbook Sources - Page 1 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Amount During Const End of Const Stabilization Cash Flow Comment 13,586,700 13,586,700 (7,354,922)(6,231,778) 0 0 0 0 Amount During Const End of Const Stabilization Cash Flow Comment 5,664,000 5,664,000 1,095 10,195,553 280,065 7,354,922 801,521 0 0 0 0 15,780 15,780 400,500 400,500 247,340 247,340 14,350 14,350 0 0 0 0 0 0 0 0 0 0 451,765 451,765 13,586,700 13,586,700 (7,354,922)(6,231,778)0 16,990,383 927,905 7,354,922 6,947,416 0 30,577,083 14,514,605 0 715,638 0 Amount During Const End of Const Stabilization Cash Flow Comment 730,000 10,406,851 10,406,851 0 1,393,087 1,393,087 589,997 589,997 704,050 704,050 1,144,366 584,681 1,000,000 298,235 0 451,765 0 758,160 537,704 263,857 263,857 16,990,368 14,514,605 0 715,622 0 (0)0 16 0 Professional Fees (Soft Costs)559,685 Developer Fee 250,000 Contingency Environmental Abatement Reserves Total Uses 1,760,141 Difference 0 Syndication Fees Financing Fees 220,456 Rehab Contractor Fees Acquisition 730,000 New Construction Total Perm Sources 1,760,141 Total All Sources 1,760,141 USES Closing Total Construction Sources 0 Deferred Developer Fee Tree Grant Met Council Environmental ERF Environmental Energy Rebates Syndication Proceeds 1,759,046 First Mortgage General Partner Cash 1,095 PERMANENT SOURCES Closing USB Construction Loan Name of Source Closing CONSTRUCTION SOURCES In each column of the Flow of Funds, Total All Sources and Total Uses must be equal. FLOW OF FUNDS Workbook Sources - Page 2 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Credit Type (Check all that apply)Project Located in: Newly constructed and not federally subsidized Difficult Development Area Newly constructed and federally subsidized State Designated Basis Boost Rehabilitation expenditures not federally subsidized Rehabilitation expenditures federally subsidized Existing Building Allocation subject to non profit set aside under sec. 42(h)(5) 20% of the units serving households at 50% MTSP 40% of the units serving households at 60% MTSP 40% of units serving households at an average of 60% MTSP (Income Average is based on number of HTC units with MTSP Income Limits located on the Housing Income tab.) TENANT FACILITIES / AMENITIES Common Space - Non Unit Sq Ft Fee Basis? Parking / Garages 17,500 Storage Lockers Community Space 1,000 Swimming Pool Community Service Facility Office 500 Other OTHER BASIS CONSIDERATIONS Will any of the project financing be treated as or considered to be a Federal Grant or Tax-Exempt obligation (Code Sec. 103)?Yes No If yes, provide the following information Source of Funds Amount Select one of the following:Select one of the following: 4% credit 4% credit Subtract from basis Subtract from basis TAX EXEMPT BOND FINANCING Are tax exempt bonds to be issued?Yes No If yes, complete the following: Total Aggregate Basis Total Tax Exempt Bonds Name of Bond Issuer Date of allocation of bond volume cap ACQUISITION/REHABILITATION Total Rehabilitation Expense Lowest average rehabilitation attributable qualified basis per low income unit/building Average rehabilitation expense per low income unit per project Adjusted basis x 20% = HOUSING TAX CREDIT INFORMATION Commercial Kitchen or Food Service Space (for supportive or senior housing) Minimum Set-Aside (Please select one of the minimum set aside requirements stated by Section 42 IRS Code. The choice of minimum set-aside also establishes the income limit and rent limit applicable to all HTC units in the project. Note: An election of 20% at 50% MTSP means that the 50% limit is applicable to all HTC units in the building.) Workbook HTC Info - Page 1 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm HOUSING TAX CREDIT INFORMATION BUILDING GRID Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Date of Substantial Rehab by Seller Date of Acquisition by Seller Date of Original Certificate of Occupancy Actual / Proposed Date of Rehab by Applicant Number of Years Between Placed in Service (later of column 2, 3 or 4) and Rehab Is 10 year rule violated for this project? Average rehabilitation attributable qualified basis per low income unit for this buidling Total Buildings 1 If less than 10 years since last placed in service, is the project eligible for: Exemption under 42(d)(2)(D)Exemptions for certain transfers, including but not limited to buildings placed in service by government or nonprofit, or buildings acquired through foreclosure. Exemption under 42(d)(6)(A)Exemption for state- or federally-assisted building. Waiver under 42(d)(6)(B)Waiver for buildings acquired from insured depository instuitions in default. If eligible for waiver, what is actual or proposed waiver date? Please refer to IRS section 42 for complete details about eligibility under these rules. 7075 Amundson Avenue Address of Building (list all buildings separately) Workbook HTC Info - Page 2 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Type of Residential Rental Units # of Units Sq Ft 62 65,810 62 65,810 100.00%100.00% 62 65,810 State Federal Total Historic Basis Rebates Qualified Rehabilitation Expenditures Applicable Percentage 20%20% Historic Tax Credits Investor Ownership Percentage Investor Tax Credits Equity Factor Historic Credit Syndication Proceeds 4%9%Total Total Basis 14,100,471 14,100,471 Less federal grant(s) used to finance qualifying development costs Less amount of nonqualifying nonrecourse financing Less nonqualifying excess portion of higher quality units Less Historic Tax Credit (Residential Portion Only) Less Rebates 15,780 15,780 Portion not elig for High Cost Adj: Total Eligible Basis 4%9%14,084,691 14,084,691 4,225,407 4,225,407 Total Eligible Basis Adjusted for the High Cost 18,310,098 18,310,098 Applicable Fraction 1.0000 1.0000 Total Qualified Basis 18,310,098 18,310,098 Applicable Percentage 9.00% Tax Credit Potential For Project 1,647,909 Annual Tax Credits From Basis Calculation Applicable Sources will populate from the Capital Sources of Funding Grid Amount 5,664,000 15,780 400,500 247,340 14,350 Employee / Common Space Units Total Number and Square Feet of Units HTC Low Income Units Market Rate Units / Non-HTC Units Total # HTC Low Income + Market Rate Unit and Area Fractions Applicable Fraction (Lesser of Unit or Area Fraction) Sales Tax Rebate ERF Environmental Tree Grant High Cost Adjustment DETERMINATION OF CREDIT PROJECT APPLICABLE FRACTION 100.00% HISTORIC CREDITS TAX CREDIT BASIS CALCULATION Met Council Environmental 1,647,909 TAX CREDIT EQUITY GAP CALCULATION Source First Mortgage State Historic Proceeds Federal Historic Proceeds Deferred Loan Request Energy Rebates Workbook Determination of Credit - Page 1 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm DETERMINATION OF CREDIT Total Sources of Funds from above 6,341,970 Total Development Costs 16,990,368 Funding Gap 10,648,398 Equity Factor/Syndication Rate 0.9600 10 Year Credit Gap 11,092,081 Annual Credit Gap 1,109,208 Annual Basis Credit 1,647,909 Maximum Tax Credit Allowed 1,109,208 MN Housing Approved Maximum Tax Credit 1,109,208 Credit Amount Previously Allocated and/or Reserved Maximum Credit Requested at this time 1,062,143 Total Calculated Credit Allocation 1,062,143 Manual Credits Requested at this time 1,062,143 Ten Year Gross Tax Credits 10,621,430 Equity Factor 0.9600 Investor Ownership Percentage 99.99% Gross Syndication Proceeds 10,195,553 Manual Syndication Proceeds If individual, attach a description explaining how the tax benefits will be used. Type of Offering:Syndicated Individual/Private Placement Pay-In Amount % of Pro- ceeds Anticipated Date of Pay-In Required Reserve Amounts Developer Fee Amount 2,039,111 20.00%7/1/2020 7,354,922 72.14%1/1/2022 801,521 7.86%4/1/2022 263,857 451,765 10,195,554 100.00%263,857 451,765 Pay-In Amount % of Pro- ceeds Anticipated Date of Pay-In Required Reserve Amounts Developer Fee Amount Construction Completion TAX CREDIT SYNDICATION Housing Tax Credits Describe Milestones Initial Closing Requesting waiver of limit per development Stabilization Historic Tax Credits Describe Milestones Workbook Determination of Credit - Page 2 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm Sponsor / Parent Company MWF Properties, LLC (Jay Weis and Erik Weis)Guarantors: Please list each below Address 7645 Lyndale Avenue South Guarantor 1 Jay Weis City Minneapolis Guarantor 2 Erik Weis State MN Guarantor 3 Zip Code 55423 Guarantor 4 Federal Tax ID #41-4962870 Guarantor 5 Guarantor 6 Director/CEO/President Jay Weis Guarantor 7 Phone 612-243-5000 Guarantor 8 Fax 612-243-5010 Guarantor 9 Email JayWeis@weisbuilders.com Guarantor 10 Contact Person and Title Chris Stokka, Development Manager Guarantor 11 Phone 612-243-4636 Guarantor 12 Fax 612-243-5010 Guarantor 13 Email ChrisStokka@mwfproperties.com Guarantor 14 Developer Edina Group Development LLC Architect Miller Hanson Architects Contact Person Chris Stokka Contact Person Karen Gjerstad Address 7645 Lyndale Avenue South Address 218 Washington Avenue N #230 City Minneapolis City Minneapolis State MN State MN Zip Code 55423 Zip Code 55401 Phone 612-243-4636 Phone 612-332-5420 Cell Phone Cell Phone Email ChrisStokka@mwfproperties.com Email kgerstad@millerhanson.com Owner/Mortgagor Amundson Flats, Limited Partnership Management Company Velair Property Management Contact Person Chris Stokka Contact Person Sarah Kohler Address 7645 Lyndale Avenue South Address 7645 Lyndale Avenue South City Minneapolis City Minneapolis State MN State MN Zip Code 55423 Zip Code 55423 Phone 612-243-4636 Phone 612-886-2491 Cell Phone Cell Phone Email ChrisStokka@mwfproperties.com Email sarahkohler@velairmanagement.com General Partner 1 Edina Group LLC Service Provider ReEntry House, Inc. Contact Person Chris Stokka Contact Person Lynda Merkens Address 7645 Lyndale Avenue South Address 5812 Lyndale Avenue South City Minneapolis City Minneapolis State MN State MN Zip Code 55423 Zip Code 55419 Phone 612-243-4636 Phone 612-243-4124 Cell Phone Cell Phone 612-243-4120 Email ChrisStokka@mwfproperties.com Email Lynda.Merkens@reentryhouse.org % of ownership 0.010% General Partner 2 Tax Credit Syndicator US Bank Contact Person Contact Person Kyle Kochtanek Address Address 1307 Washington Avenue City City St. Louis State State MO Zip Code Zip Code 63103 Phone Phone 314-335-3355 Cell Phone Cell Phone 573-268-2557 Email Email kyle.kochtanek@usbank.com % of ownership General Partner 3 General Contractor Eagle Building Company, LLC Contact Person Contact Person Chad Weis Address Address 6636 Cedar Avenue South, Suite 140 City City Minneapolis State State MN Zip Code Zip Code 55423 Phone Phone 612-378-1115 Cell Phone Cell Phone Email Email chadweis@eaglebuildingllc.com % of ownership Is there an identity of interest with either Owner or Developer?Yes Processing Agent Attorney Winthrop & Weinstine, P.A. Contact Person Contact Person Jeff Koerselman Address Address 225 South Sixth Street, suite 3500 City City Minneapolis State State MN Zip Code Zip Code 55402 Phone Phone 612-604-6702 Cell Phone Cell Phone Email Email jkoerselman@winthrop.com DEVELOPMENT TEAM Workbook Development Team - Page 1 of 2 6/4/2020 3:26 PM Multifamily Workbook- Amundson Flats - 5.27.20 - USB .xlsm DEVELOPMENT TEAM Construction/Bridge Lender US Bank, NA Title Company First American Title Company Contact Person Contact Person Jim Erickson Address Address 801 Nicollet Mall, Suite 1900 City City Minneapolis State State MN Zip Code Zip Code 55402 Phone Phone 612-305-2005 Cell Phone Cell Phone Email Email jerickson@firstam.com First Mortgage Lender Bridgewater Bank Contact Person Tyler Manning Address 370 Wabasha Street North, Suite 1500 City Saint Paul State MN Zip Code Phone 952-283-3739 Cell Phone Email tyler.manning@bwb.com Workbook Development Team - Page 2 of 2 6/4/2020 3:26 PM E-1 4826-0511-4810\2 Exhibit E Form of Memorandum of Redevelopment Agreement Memorandum of Redevelopment Agreement This Memorandum of Redevelopment Agreement (this “Memorandum”) is entered into as of June 11, 2020, by and between the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“Authority”), and AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Developer”). RECITALS: A. The Authority and Developer (collectively, the “Parties”) have entered into a certain Redevelopment Agreement dated as of June 11, 2020 (the “Agreement”), whereby the parties have agreed to various aspects of the redevelopment of certain real property more particularly described on the attached Exhibit A, together with all improvements, tenements, easements, rights and appurtenances pertaining to such real property, lying and being in Hennepin County, Minnesota (the “Property”). B. The parties wish to give notice of the existence of the Agreement. AGREEMENT: NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The above recitals are incorporated by reference as if fully set forth herein. 2. Capitalized terms, when not defined herein, shall have the meanings ascribed to them in the Agreement. 3. The Parties have entered into the Agreement to set forth the terms and provisions governing the redevelopment of the Property. 4. This Memorandum has been executed and delivered by the Parties for the purpose of recording and giving notice that a contractual relationship for the redevelopment of the Property has been created between the Parties in accordance with the terms, covenants and conditions of the Agreement. 5. The terms and conditions of the Agreement are incorporated by reference into this Memorandum as if fully set forth herein. 6. This Memorandum may be executed separately in counterparts which, when taken together, shall constitute one and the same instrument. [Remainder of page left blank intentionally; signature pages follow] E-2 [Signature Page to Memorandum of Redevelopment Agreement (Amundson Flats)] 4826-0511-4810\2 IN WITNESS WHEREOF, the Parties have executed this Memorandum as of the date first written above. HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By James B. Hovland, Chair By Michael Fischer, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of June, 2020, by James B. Hovland and Michael Fischer, the Chair and Secretary, respectively, of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public E-3 [Signature Page to Memorandum of Redevelopment Agreement (Amundson Flats)] 4826-0511-4810\2 AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Christopher J. Stokka Its: Chief Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of June, 2020, by Christopher J. Stokka, the Chief Manager of Edina Group LLC, a Minnesota limited liability company, the general partner of Amundson Flats, Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. ______________________________________ Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street Suite 1500 Minneapolis, MN 55402-1498 E-4 [Exhibit A to Memorandum of Redevelopment Agreement (Amundson Flats)] 4826-0511-4810\2 Exhibit A Legal Description Part 1: Lot 2, Block 1, Amundson’s Terrace. Part 2: That part of the most Northerly 70 feet of Tract B, Registered Land Survey No. 1193, Hennepin County, Minnesota, lying West of the Southerly Extension of the East line of Lot 2, Block 1, Amundson’s Terrace. Hennepin County, Minnesota Exhibit F Inclusionary Housing Policy Program Guide March 2020 Page 1 of 31 Affordable Housing Program Policy Guide March 2020 March 2020 Page 2 of 31 Table of Contents Introduction to the Affordable Multi-Family Housing Program (AHP) ..............................................................................................4 Chapter 1 – Overview of Affordable Housing Program Policy ...........5 1.01 Period of Affordability (POA) ................................................................................................................. 5 1.02 Affordable Dwelling Units (ADUs) ........................................................................................................ 5 Affordability Standards – Rental Projects ........................................................................................................... 5 Affordability Standards – For Sale Projects ......................................................................................................... 6 1.03 Student Households ............................................................................................................................... 6 1.04 New Multi-Family Affordable Housing Program (AHP) Rent Limits ..................................................... 6 1.05 Rental Assistance .................................................................................................................................. 7 1.06 Allowable Fees and Charges .................................................................................................................. 7 1.07 Fixed or Floating Affordable Dwelling Units .......................................................................................... 8 1.08 Rent Increases ....................................................................................................................................... 8 1.09 Utility Allowances ................................................................................................................................. 8 1.10 Record Retention ................................................................................................................................ 10 1.11 Leases .................................................................................................................................................. 10 1.12 Income Certification ............................................................................................................................ 11 1.13 Increases in Income ............................................................................................................................ 11 1.14 Property Standards ............................................................................................................................. 11 1.15 Affirmative Fair Housing Marketing Plan ........................................................................................... 12 1.16 Fair Lease and Grievance Procedures .................................................................................................. 12 Chapter 2 – Maintaining the Unit Mix ............................................ 12 2.01 Fixed Affordable Dwelling Units .......................................................................................................... 13 2.02 Floating Affordable Dwelling Units .................................................................................................... 13 Chapter 3 – General Occupancy Guidelines .................................... 15 3.01 Qualification of Applicants ................................................................................................................. 15 3.02 Eligibility Determination ..................................................................................................................... 16 3.03 Change in Household Composition ...................................................................................................... 16 3.04 Minimum Lease Requirements ............................................................................................................ 17 3.05 House Rules ......................................................................................................................................... 17 3.06 Number of Persons Per Unit ............................................................................................................... 17 3.07 Tenant Selection Plan ......................................................................................................................... 18 March 2020 Page 3 of 31 3.08 Government Data Practices Act Disclosure Statement Form ............................................................. 18 3.09 Income Verification ............................................................................................................................. 19 3.10 Gross Annual Household Income ........................................................................................................ 19 3.11 Factors that Affect Household Size ..................................................................................................... 20 3.12 General Income Verification Requirements ......................................................................................... 21 3.13 Corrections to Documents ................................................................................................................... 24 3.14 Effective Term of Verifications ............................................................................................................ 24 3.15 Over Income Households ..................................................................................................................... 24 3.16 Annual Recertification ........................................................................................................................ 24 3.17 Tenant Files ......................................................................................................................................... 25 Chapter 4 – Reporting Requirements ............................................. 27 4.01 Annual Owner/Agent Certifications .................................................................................................... 27 4.02 Compliance Reports ............................................................................................................................. 27 4.03 Utility Allowance Source Document ................................................................................................... 27 Chapter 5 – Compliance Inspections .............................................. 28 5.01 Physical Inspections ............................................................................................................................ 28 5.02 Review of Tenant Files and Property Records ..................................................................................... 28 Chapter 6 – Correction and Consequences of Non-Compliance ...... 29 6.01 Notice to Owner/Agent ....................................................................................................................... 29 6.02 Correction Period ................................................................................................................................ 29 6.03 Owner’s/Agent’s Response .................................................................................................................. 29 Chapter 7 – Requests for Action .................................................... 31 7.01 Sale or Transfer ................................................................................................................................... 31 March 2020 Page 4 of 31 Introduction to the Affordable Multi-Family Housing Program (AHP) Properties developed using financing from the City of Edina, or because of our policy for New Multi-Family Affordable Housing, are subject to specific rules designed to ensure that affordability pledges made by owners and developers remain available to very low and low income tenants (30% to 60% of Area Median Income) throughout the required Period of Affordability (the POA). This Guide is designed to assist owners and their agents with planning and maintaining compliance with the local requirements associated with these rental properties that include affordable units. This guide does not pertain to the Market Rate units. It is the responsibility of City of Edina Housing and Redevelopment Authority (hereafter the “HRA”) to monitor the continuing compliance of affordable units in accordance with local policy and governing agreements throughout the POA. The following procedures apply to all rental properties that received funds or a Planned Unit Development (PUD) under the local policy on New Multi-Family Affordable Housing (AHP). Any violation of the AHP requirements could constitute a covenant default of the governing agreement(s) and imposition of all local government rights and remedies. While successful operation of an affordable property is management intensive, the owner/agent is responsible for ensuring that the governing agreement requirements are properly administered. Thorough understanding of requirements and compliance monitoring procedures requires training of owners/agents. The owner/agent should ensure that it knows and understands the requirements of the affordable housing policy and the compliance requirements since failure to comply may have very serious consequences. The HRA recommends that owners, management agents and site managers (collectively referred to as “owner/agent” throughout this document) receive compliance training before certifying or leasing any affordable units. At a minimum, training should cover key compliance terms, determination of rents, household eligibility, file documentation, procedures for maintaining the required unit mix and reporting. Record retention and property condition standards are also key to maintaining compliance. Attending educational opportunities as offered is strongly recommended to keep up with any procedural changes to the AHP. Should the AHP assisted property also receive an allocation of Section 42 tax credits (Low Income Housing Tax Credits or LIHTC), and the property is found to be compliant with the tax credit program, then the HRA will consider the property compliant with the AHP. Owners/Agents of AHP assisted properties must annually certify to the HRA that the property is compliant with the Low Income Housing Tax Credit program. The HRA’s determination to monitor the project for compliance with requirements of the AHP does not make it liable for an owner’s/agent's noncompliance. This Guide will be made available to the owner/agent at project financial closing and will be posted on the City’s website. The HRA, in its sole discretion, may delegate its compliance reporting and monitoring responsibilities to a third-party. AHP assisted properties will have a compliance review at initial lease up and every third (3rd) year thereafter. However, the HRA reserves the right to conduct a March 2020 Page 5 of 31 compliance review annually. During the compliance review, the HRA or third-party monitoring agent, will ensure compliance against City Agreements by inspecting records of residential student status, income and asset documentation, and rent record for each resident household for all project’s AHP assisted units. The first review for new projects will occur no later than the end of the second year of the period of affordability. Chapter 1 – Overview of Affordable Housing Program Policy The following is an overview the Affordable Housing Policy. It is not intended to be detailed or comprehensive. The requirements of the AHP apply to market rate residential developments that receive a PUD approval from the City of Edina and/or financial assistance from the HRA. This includes new developments and mixed-used developments that create twenty (20) or more multi-family dwelling units and/or any change in use of all or part of an existing building from a non-residential use to a residential use that includes at least twenty (20) dwelling units. 1.01 Period of Affordability (POA) Affordable units created under the Affordable Housing Policy (AHP) are rent and income controlled for a minimum of 20 years with a maximum established by the funding source and reflected in the binding agreement. This term is referred to as the Period of Affordability or POA. Owners/agents should refer to the property’s governing agreements, at project commitment, to determine the specific terms and conditions that govern the property, as the affordability period was increased from 15 years to 20 years in March 2019. Project Commitment is a schedule of commitments within the project’s Financing Agreement(s) between the parties hereto, such as the authorizing Resolution, Development Agreement and/or Loan Documents, dated as of the Execution Date and their related agreements. 1.02 Affordable Dwelling Units (ADUs) At least ten percent (10%) to twenty percent (20%) of the total number of dwelling units in a development receiving a PUD and/or assisted with local funds under the AHP will be designated as Affordable Dwelling Units (ADUs). The percentage applied is based on the affordability standard of the development. Affordability Standards – Rental Projects If an AHP property also is assisted with Low Income Housing Tax Credits (LIHTC), the AHP Affordability Standard is based on the LIHTC election (Income Averaging, 20/50 or 40/60 set aside). If an AHP property is NOT assisted with LIHTC, then the HRA together with the owner will determine which affordability standard applies. The legal document executed with the HRA determines the standard. March 2020 Page 6 of 31 10% at 50% At least ten percent (10%) of total units developed shall be occupied by households at or below fifty percent (50%) of the MTSP (Multifamily Tax Subsidy Income Limits, i.e. tax credit income limits). 20% at 60% At least twenty percent (20%) of total units developed shall be occupied by households at or below sixty percent (60%) of the MTSP. Affordability Standards – For Sale Projects At least ten percent (10%) of total units developed shall be affordable for households as follows: 1-2 person household $100,000 3+ person household $115,000 Adjusted annually by Minnesota Housing as posted on their website. 1.03 Student Households AHP adopted the Section 8 Housing Choice Voucher program restrictions on student participation found at 24 CFR 5.612 and excludes any individual that: 1. Is enrolled in a higher education institution; AND 2. Is under the age of 24; and 3. Is not a veteran of the US Military; and 4. Is not married*; and 5. Does not have a dependent child(ren); and 6. Is not a person with disabilities; and 7. Is not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income * Effective August 1, 2013 same-sex marriages are recognized as marriages for student eligibility purposes. 1.04 New Multi-Family Affordable Housing Program (AHP) Rent Limits Every ADU is subject to maximum allowable rents based on bedroom size for the area in which the property is located. These maximum rents are referred to as the AHP rents. These limits represent the maximum that owners/agents can charge for rent, including an allowance for March 2020 Page 7 of 31 tenant paid utilities, and other non-optional charges (i.e. parking, required renter’s insurance, etc.). AHP will utilize the U.S. Department of Housing and Urban Development annually published median income amounts for all Minnesota counties. Minnesota Housing uses these amounts to calculate the maximum allowable rents and tenant income. Minnesota Housing publishes the LIHTC income and rent limits on its website and notifies owners/agents of the updated limits as they become available. According to AHP, the date a Certificate of Occupancy is issued to a building will determine which rent and income limits to use. Minnesota Housing provides different tables (Table A, B, C, etc.) of income and rent limits based on your Certificate of Occupancy dates and updates these tables annually. To avoid noncompliance, be sure you are using the correct limits table. In the event AHP rent limits decrease for an area, or utility allowances increase, an owner/agent may be required to reduce the rent charged but will not be required to lower rents below those in effect at the time when the Development Agreement was signed by the City. 1.05 Rental Assistance Tenant Based Section 8 Housing Choice Vouchers. Tenants with Section 8 vouchers, or similar state or federal tenant based rental assistance (TBRA) subsidies tied to a tenant and not a unit, may be charged rent that exceeds the applicable AHP rent for the unit to an extent allowed by HUD, Metro HRA, and/or the most restrictive funding source. ADUs layered with tenant or project based rental assistance qualify households using the Very Low-Income limits (<50%) and the household pays no more than 30% of its monthly adjusted income for rent; ADU rent therefore remains affordable. Tenants receiving rental assistance, including Section 8 subsidy, must not be refused tenancy in an ADU based solely on the fact that they receive rental assistance. For eligibility purposes, the tenant selection plan must indicate that household income does not need to equal at least two times the unit rent (or any variation thereof) as long as the published Payment Standard subsidy can cover the project’s intended rent. The HRA annually publishes Payment Standards (a rent limit for using a Section 8 Housing Choice Voucher. Payment standards are set by each housing authority. They differ for bedroom size and property location). 1.06 Allowable Fees and Charges Fees considered reasonable and customary may be charged, such as application fee, if such fees are customary for rental housing in the neighborhood. Fees for parking or services such as bus transportation or meals can only be charged if the services are voluntary and are not a condition of occupancy. An eligible tenant cannot be charged a fee for the owner or manager’s work involved in completing the additional forms or documentation required for the AHP, such as the Resident Income Certification. Down payment fees/rent deposit for the ADU should not exceed one month’s rent. March 2020 Page 8 of 31 1.07 Fixed or Floating Affordable Dwelling Units ADUs may be “fixed” or “floating” and are designated on a property-by-property basis. The enforcement agreement must contain fixed or floating unit designations. Fixed Units – The ADUs are identified by unit number and never change. Development Agreements may outline a specific quantity of bedroom sizes and square footage, including minimum floor space, when considering the placement of ADUs within the project. Units in properties where all units are ADUs automatically are considered fixed. If units throughout a project are not comparable (as defined by the HRA) or are in several scattered sites, the ADU unit designation must be fixed. Floating Units – The ADUs may change over time as long as the total number of ADUs and specific quantity of bedroom sizes or ADU total square footage in the property remains compliant with the original Development Agreement. If a property’s enforcement agreement does not specify floating units, then the units that were initially designated as ADUs at project completion will be used to determine comparable floating units. See Chapter 2, Maintaining the Unit Mix, for more information. 1.08 Rent Increases If ADU rents remain below the maximum allowed, an owner/agent may impose a rent increase as allowed by the enforcement agreement no earlier than one year from the date the project was completed (date the building Certificate of Occupancy was issued) and no more frequently than once a year thereafter. If an owner/agent wishes to increase rents, the request must be within reasonable limits to cover increases in expenses such as real estate taxes or operating expenses. At no time can proposed rent increases exceed the current MTSP (LIHTC rents) rent limits for that development. If the owner/agent increases rents as provided above, tenants must be given a written notice 90 days in advance or in accordance with lease provisions before implementation. 1.09 Utility Allowances The AHP requires that an allowance for tenant paid utilities be considered as a housing cost to the tenant and be factored in when determining rent for an ADU. The HRA approved the use of Metro HRA’s Utility Allowance Schedule (effective 2/1/18 and amended annually) as the document to use to determine an ADU’s utility allowance. Utility allowance schedules are usually updated annually. It is the owner’s/agent’s responsibility to obtain an updated utility allowance and retain it in the property records. Changes in utility allowances must be implemented within 90 days of the publication effective date. If an increase in the utility allowance causes the ADU rent to exceed the applicable AHP rent limit, the unit rent must be adjusted (lowered) to bring the gross rent of the unit into compliance with the AHP rent limits. However, at no time will the ADU rent be adjusted to an amount lower than the ADU rent in place at project commitment. March 2020 Page 9 of 31 An alternative estimate for utility payments may be used, as allowed by Section 42 and approved by the City. Utility allowance methodology change requests and all supporting documentation must be emailed to the Affordable Housing Development Manager at the City for approval. Requests for a change in the property's established utility allowance methodology, to one of the approved utility allowance methodologies should reflect savings from energy efficiency improvements in a manner that is fair to tenants, financially feasible for owners and reduces long-term public subsidy expenditures. General Submission Requirements Each request for a change in utility allowance methodology must include: 1. Cover letter with the current utility allowance and proposed utility methodology 2. A current utility allowance schedule (i.e. local Metro HRA Utility chart) completed with tenant paid utilities 3. Copy of 90-day Notice to the resident including new Utility Allowance and Tenant Rent 4. Utility Allowance Certification, signed and dated 5. Supporting documentation as required (estimate from a properly licensed engineer for example) Allowable Utility Allowance Methodologies The property owner may request to use one or more of the following utility allowance methodologies that meets the AHP requirements. If the project has multiple funding sources, the rents must comply with the program gross rent limits for each program. If the project also has Section 8 Project Based Assistance, the PBA administrator determines the UA schedule for the unit. PHA Utility Method: The local PHA utility allowance for the voucher program. This is the typical current method of establishing Utility Allowances used by most Section 42 LIHTC projects. Owners may request consideration of a different utility allowance methodology from the following alternatives: 1. HUD Utility Schedule Model (HUSM): An estimate calculated via HUD’s online Utility Schedule Model, using recent utility rates. The HUSM enables users to calculate utility schedules using a project specific methodology by entering the property housing type, and utility rate information (tariffs) for the property location. This model is based on climate and survey information from the U. S. Energy Information Administration of the Department of Energy and it incorporates energy efficiency and Energy Star data. The HUSM (web based and Excel format) and use instructions can be accessed on the HUD Exchange website User at: https://www.hudexchange.info/trainings/courses/hud- utility-schedule-model-calculating-utilityallowances-for-home-webinar1/ 2. Utility Company Estimate (UCE): An estimate from a local utility company providing the estimated cost of utilities for a unit of similar size and construction for the project or from the geographic area where the project is located. 3. Energy Consumption or Engineered Model (ECM): An estimate from a properly licensed engineer, or qualified professional, using an energy consumption model that takes into March 2020 Page 10 of 31 account the unit size, building orientation, design and materials, mechanical systems, appliances and characteristics of the building location. If the ECM report is completed by a qualified professional that is not a properly licensed engineer, the request must include additional information to support the qualifications and experience of the qualified professional in providing energy consumption utility allowance reports. The engineer or qualified professional must be licensed in Minnesota. If the property is regulated by HUD, or another form of project-based subsidy, the program- approved utility allowance may be used. 1.10 Record Retention Owners/agents must retain each household’s initial application forms including household income and asset documentation and lease and leasing agreements/addenda for three (3) years after the tenant’s move out effective date. Owners/agents must maintain applicant and tenant information in a way to ensure confidentiality. Any applicant or tenant affected by negligent disclosure or improper use of information may bring a civil action for damages against the owner/agent and seek other relief, as appropriate. Owners/agents must dispose of records in a manner that will prevent any unauthorized access to personal information, e.g., burn, pulverize, shred, etc. 1.11 Leases Each lease must include the legal name(s) of the parties to the agreement and all other occupants, a description of the unit to be rented (address), the term of the lease, the rental amount, the use of the premises, and the rights and obligations of each party. The lease shall also inform the tenant that fraudulent statements and information are grounds for eviction and that the tenant could become subject to penalties available under federal law. Initial leases for ADUs must be for 12 months unless another term is agreed to mutually by owner/agent and tenant. If tenant agrees to a shorter term, that agreement must be in writing and kept in the tenant’s file. At no time can a lease term be for less than 30 days. ADU leases must contain language that the owner/agent reserves the right to adjust tenant rents in accordance with the AHP rent limits and/or in the event a tenant’s income increases above the income limits of the AHP. The lease also must contain a provision that the owner/agent retains the right to recertify the tenant’s income and household composition on an annual basis. The tenant’s failure to cooperate with the annual recertification constitutes a violation of the lease. If the lease used for the ADU unit does not contain any of the required provisions and/or contains any prohibited provisions, an AHP Lease Addendum must be signed by the tenant and March 2020 Page 11 of 31 kept in the tenant’s file. If a new lease is executed, a new AHP Lease Addendum also must be executed. Prohibited lease terms are defined in the AHP Lease Addendum (see Appendix B). Owner/Agent may not evict or terminate resident (including refusal to renew a lease) without good cause. Good cause is (a) serious or repeated violation(s) of the material terms and conditions of the Resident Lease. Use of the AHP Lease Addendum including the AHP Lease Rider outlining provisions on evictions and terminations is mandatory. During the final year of the POA, new leases for the Affordable Units must be for a term of no less than six months, and such newly leased Affordable Units will be subject to all the Affordable Housing Requirements until the expiration of such new leases. An AHP Lease Addendum is not required when the HUD model lease for subsidized housing is used. 1.12 Income Certification The owner/agent must verify and certify tenant income eligibility and student status at move in and recertify at least annually thereafter. At initial move in, or when first being determined eligible for an ADU and in every 3rd year of the affordability period (not tenancy), household composition, income and income from assets must be verified via third-party verification or other forms of supporting documentation and kept in the tenant’s file. In other years, tenants must, at a minimum, self-certify to their anticipated income (including income from assets), family size, and composition. As part of the monitoring process, tenant files will be reviewed at initial occupancy of the project and every 3rd year thereafter. 1.13 Increases in Income The owner/agent must ensure that any household whose anticipated gross income exceeds 140% of the maximum income limit at recertification pays not less than the market or similar rent as the other non-ADUs in the development. A minimum notice of 60 days is required for increases to tenant rent. The unit must be marketed to eligible tenants when vacated. If the units are floating, the rent is increased, and the next available unit must be rented at affordable rates to an income eligible tenant. Conversely, the tenant whose income increase to above 140% of AMI could be relocated to a Market Rate unit if the affordable units are fixed. For units assisted with both AHP funds and Low Income Housing Tax Credits (LIHTC), a tenant is not considered over income until income exceeds the applicable 140% LIHTC limit. When a tenant’s income exceeds the 140% LIHTC limit, the tenant’s rent is adjusted to the LIHTC rent limit if the project is 100% LIHTC or, if the project is mixed income, to the market rent for similar non-ADUs in the property. 1.14 Property Standards March 2020 Page 12 of 31 The owner/agent must keep all units in compliance with local codes and other applicable state and local building codes to ensure the units are decent, safe, and sanitary at all times. 1.15 Affirmative Fair Housing Marketing Plan Owners/agents must adhere to Equal Opportunity, Affirmative Marketing, and Fair Housing practices in all marketing efforts, eligibility determinations and other transactions. The Equal Housing Opportunity logo or statement must be used in all advertising of vacant units (We do business in accordance with the Federal Fair Housing Law. It is illegal to discriminate against any person because of race, color, religion, sex, handicap, familial status, or national origin). In addition to the federal protections mentioned above, the Minnesota Human Rights Act makes it illegal to discriminate against any person with respect to housing and real property, because of race, color, creed, religion, national origin, sex, marital status, disability, status with regard to public assistance, sexual orientation or familial status. A file must be maintained with all marketing efforts related to the property including newspaper ads, social service contacts, photos of signs posted, etc. Records will be reviewed during on site monitoring to ensure that all efforts follow federal requirements and are being adequately documented. 1.16 Fair Lease and Grievance Procedures Fair lease and grievance procedures should be objective. They should clearly state: • To whom a tenant should direct a complaint; • Who will investigate and/or respond to the complaint; and • By when the tenant should expect to receive a response. Chapter 2 – Maintaining the Unit Mix March 2020 Page 13 of 31 Chapter 2 – Maintaining the Unit Mix 2.01 Fixed Affordable Dwelling Units Properties with units that are not comparable in terms of size, amenities and features must have fixed ADUs. Fixed ADUs means specific units are designated as the ADUs for the duration of the affordability period. Owner/Agent must maintain these specific units as the ADUs. Maintaining the required number of ADUs, is called complying with the unit mix requirements. At no time will non-ADUs be subject to AHP rent and income requirements when the ADUs are fixed. When an owner/agent recertifies a tenant’s income, the tenant’s income may have increased. A tenant is considered “over income” in the AHP when: • The tenant occupies an ADU and the tenant income increases to 140% of the current income limit for that family size; or • For ADUs that are also LIHTC units, a tenant is considered “over income” when its income goes over 140% of the qualifying tax credit election (Average Income, 50% or 60%) for that unit. When a tenant is over income, the unit that the tenant occupies is considered temporarily out of compliance with the AHP’s occupancy and unit mix requirements. Temporary noncompliance due to an increase in an existing tenant’s income is permissible if the owner/agent takes specific steps to restore the correct unit mix in the property as soon as possible. When the tenant’s income exceeds the AHP’s income limit (140%), the unit rent also must be adjusted. The owner/agent cannot terminate the lease immediately if the tenant’s income has increased above the AHP income limit. Instead, the owner/agent may extend /renew the lease for up to six months. If the tenant remains over income at the time of the next recertification, a 60-day notice to vacate may be issued to the tenant. If the tenant is determined to be under the AHP income limit at the time of recertification, the unit is considered back in compliance. 2.02 Floating Affordable Dwelling Units Properties with units that are comparable in terms of size, amenities and features can have floating ADUs. Properties with floating ADUs must maintain the required number of ADUs throughout the POA; however, the initial ADUs do not have to remain as ADUs throughout the POA. When ADUs float, the specific units that carry the ADU designation may change, or float, among assisted and non-assisted units during the POA. If/when an initial ADU goes out of compliance due to a tenant’s income going over the AHP (or LIHTC) income limit, a non-ADU can replace the out of compliance ADU if the tenant income and unit rent of the non-ADU meet the ADU requirements. In other words, the ADU designation “floats” to another unit. March 2020 Page 14 of 31 For example, if a property has an over-income tenant in an ADU, when the next non-ADU comparable unit becomes available, it will be designated as an ADU and rented to an income eligible tenant. The unit occupied by the over income tenant is redesignated as a market rate unit. Maintaining the required number of comparable ADUs is called complying with the unit mix requirements. When recertifying a tenant’s income, an owner/agent may find that the tenant’s income has increased. A tenant is considered “over income” when: • The tenant occupies an ADU and the tenant income increases over the current AHP income limit (140% AMI) for that family size; or • In ADUs that are also LIHTC units, a tenant is considered “over income” when its income increases to 140% or more of the qualifying tax credit election (50% or 60%) for that unit. When a tenant is over income, the unit that the tenant occupies is considered temporarily out of compliance with the AHP’s unit mix requirements. Temporary noncompliance due to an increase in an existing tenant’s income is permissible if the owner/agent takes specific steps to restore the required unit mix in the property. The rents of the over income tenants can be adjusted. When redesignating units in a property with floating ADUs, owner/agent can choose to substitute a unit that is equal or “greater” than the original ADU, but generally they cannot substitute one that is “lesser”. A lesser unit can be substituted only when doing so preserves the original unit mix. A greater unit is one that might be considered preferable because of larger size or additional bedrooms. The goal is to maintain the same number and type of ADUs as were designated originally. Therefore, if an owner/agent makes a substitution that is “greater,” it later can substitute an available unit that is “lesser” to restore the original unit mix. Once a comparable non-ADU unit is designated as the new ADU, the unit with the over income tenant is redesignated as a non-ADU or market rate unit. At this point, the owner/agent may adjust the tenant’s rent without regard to the AHP rent requirements (although requirements from other funding sources still may apply). Rent increases are subject to the terms of the lease. Note, a tenant in a floating ADU whose income exceeds AHP income limit is not required to pay more than the market rent for a comparable, unassisted unit in the property. The owner/agent cannot terminate the lease based on the tenant’s increase in income. March 2020 Page 15 of 31 Chapter 3 – General Occupancy Guidelines 3.01 Qualification of Applicants Applicants for ADUs shall be advised early in their initial visit to the property that there are maximum income limits that apply to these units. They also will be made aware that the anticipated income of all persons expecting to occupy the unit must be verified and included on a Resident Income Certification form prior to occupancy, and that tenant income and student status will be reviewed annually. If an individual is enrolled as a student at an institution of higher education, is under the age of 24, is not a veteran, is not married, is not a person with disabilities, and does not have a dependent child, in order to be eligible for a ADU, the student must be individually income eligible and the student’s parents (the parents individually or jointly) must be income eligible unless the student can demonstrate his or her independence from parents. AHP has adopted the section 8 Housing Choice Voucher program restrictions on student participation found at 24 CFR 5.612, which exclude any student that: 1. Is enrolled in a higher education institution. 2. Is under the age of 24. 3. Is not a veteran of the US Military. 4. Is not married**. 5. Does not have a dependent child(ren). 6. Is not a person with disabilities. 7. Is not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income. **Effective August 23, 2013, same-sex marriages are recognized as marriages for student eligibility purposes. To determine a student’s independence from his or her parents, the owner should consider all of the following: 1. The individual must be of legal contract age under state law; and 2. The individual must have established a household separate from parents or legal guardians for at least one year prior to application for occupancy, or the individual must meet the U.S. Department of Education’s definition of an independent student; and 3. The individual must not be claimed as a dependent by parents or legal guardians pursuant to IRS regulations; and 4. The individual must obtain a certification of the amount of financial assistance that will be provided by parents, signed by the individual/s providing the support. This certification is required even if no assistance will be provided. March 2020 Page 16 of 31 To document a student’s independence from parents: 1. Review and verify previous address information to determine evidence of a separate household, or verify the student meets the U.S. Department of Education’s definition of “independent student”; and 2. Review prior year income tax returns to verify if a parent or guardian has claimed the student as a dependent (except if the student meets the Department of Education’s definition of “independent student”); and 3. Verify income provided by a parent by requiring a written certification from the individual providing the support. Certification is also required if the parent/s is providing no support to the student. Financial assistance that is provided by persons not living in the unit is part of annual income. Verification of student eligibility must be maintained in the tenant file along with the income certification. 3.02 Eligibility Determination A fully completed Household Questionnaire is critical to an accurate determination of eligibility. The information furnished on the application should be used as a tool to determine all sources of anticipated income and assets. After the tenant completes the Household Questionnaire, the owner/agent must have all income verified by obtaining source documentation (award letters, offers of employment, W- 2’s, check stubs (not paycheck), bank statements, investment records, etc.) or by a third-party (public agency, employer, financial institution). If total cash value of assets is less than $50,000, assets can be self-certified using the Under $50,000 Certification. Assets exceeding $50,000 must be third-party verified. The application, income and asset verifications, and lease are to be executed prior to move in. All occupants in an ADU must be certified and have a valid lease on file. All household members age 18 and over must sign all required documents. 3.03 Change in Household Composition If a tenant in an ADU (no LIHTC) wishes to have an additional person move into the unit within the first 6 months of occupancy, the following steps must be taken: 1. The prospective tenant must complete a Household Questionnaire and allow time for verification of income and assets as required of the initial tenant; and 2. The prospective tenant's income must be added to the current tenant's certification and a determination made as to whether the new household is still within the AHP income guidelines. If the new household income exceeds the guidelines, then once proper notice is given, the tenant must pay the market rate. If the ADU is floating, the ADU designation must be floated to another eligible unit. The new rent of the now over income household cannot exceed market rent for a comparable unassisted unit. The tenant file shall also be documented when any household member vacates the unit. March 2020 Page 17 of 31 3.04 Minimum Lease Requirements Initial tenant leases, including a signed and dated AHP lease addendum (if applicable), must be on file and must specify a term of at least 12 months. Subsequent leases may have a shorter term, with written mutual agreement. Leases must not contain any of the prohibited lease terms. Any non-renewal or termination of leases must be in accordance with the lease and/or AHP lease addendum. Owners/agents must comply with the lease requirements found in Section 601 of the Violence Against Women Reauthorization Act (VAWA) of 2013. HRA highly encourages owners/agents to use the VAWA Lease Addendum, form HUD-91067 or its successor VAWA Lease Addendum form. In general, owner/agent may not construe an incident of actual or threatened domestic violence, dating violence, sexual assault, or stalking as a serious or repeated violation of a lease term by the victim, or threatened victim, as good cause for terminating tenancy. However, in accordance with VAWA 2013, owner/agent may bifurcate a lease to terminate the tenancy of an individual who is a tenant or lawful occupant and engages in criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking against another lawful occupant living in the unit or other affiliated individual as defined in the VAWA 2013. Owner/Agent should include a copy of HUD-5382 form with each tenancy termination or eviction notice to allow an individual to certify that he or she is a victim of domestic violence, dating violence, sexual assault or stalking. The form is to be completed and submitted to owner/agent within 14 business days or an agreed upon extension date for the individual to receive protection under the VAWA. 3.05 House Rules Developing a set of house rules is a good practice. The decision about whether to develop house rules for a property rests solely with the owner/agent. If house rules are listed in the lease as an attachment, then they must be attached to the lease. By identifying allowable and prohibited activities in housing units and common areas, the owner/agent provides a structure for treating tenants equitably and for making sure tenants treat each other with consideration. House rules also are beneficial in keeping properties safe and clean and making them more appealing and livable for the tenants. They also are extremely beneficial if it becomes necessary to evict a tenant for inappropriate behavior. For more information on House Rules, refer to Chapter 6-9 of the HUD 4350.3 REV 1, Change 4 Handbook. 3.06 Number of Persons Per Unit There is no federal regulation governing the number of persons allowed to occupy a unit based on size; however, at initial occupancy ADUs will have a minimum requirement of at least one person per bedroom. It is important, though, to be consistent when accepting or rejecting applications. It is required that the owner/agent determine the minimum and maximum number of people that will be allowed to occupy each size unit and put that formula in writing as part of the Tenant Selection Plan and submit the Plan to the HRA or designated agent for approval. The owner/agent may refer to the HUD Handbook 4350.3 REV 1, Change 4, Chapter March 2020 Page 18 of 31 3-23, regarding occupancy standards. By following the standards described, owners/agents can ensure that applicants and tenants are housed in appropriately sized units in a fair and consistent manner. 3.07 Tenant Selection Plan Owner/Agent must develop a formal written policy that clearly states the procedures and criteria the owner/agent will consistently apply in drawing applicants from the waiting list, screening for suitability for tenancy, and implementing income targeting requirements. The Tenant Selection Plan must state if there is an elderly restriction (“seniors only” building). In accordance with the VAWA of 2013, the selection criteria cannot deny admission on the basis that the applicant has been a victim of domestic violence, dating violence, sexual assault or stalking. Owner/Agent should provide to each applicant/tenant HUD form 5382or its successor form to allow the applicant/tenant to provide information regarding his or her status as a victim of domestic violence, dating violence or stalking. Owners/agents may refer to the HUD Handbook 4350.3 REV 1, Change 4, Chapter 4, when developing a tenant selection plan. HRA will review the Tenant Selection Plan as part of its monitoring process. 3.08 Government Data Practices Act Disclosure Statement Form In working with applicants and tenants, the owner/agent warrants compliance with applicable data privacy laws and regulations including the Minnesota Government Data Practices Act, which sets policies on the information that can be obtained, stored and/or released in connection with public programs. To comply with this law, the AHP Government Data Practices Act Statement form must be kept in each tenant's permanent file. Note that this is not a release authorization for verification of income and assets and must not be used as such. Each adult household member’s name must be printed clearly at the top in the box provided. An unsigned and/or undated form is not valid and will be noted as insufficient at time of file inspection. 1. The form is to be signed one time and is valid as long as the resident lives at the property and participates in the program(s) identified in item #2 on page 1 of the form. If a resident moves from one unit to another, the original signed and dated form should be moved to the file for the new unit. A copy should be kept in the move out file for the old unit. 2. A valid form must include all relevant attachments. Some properties or units within a property may require 2 or more attachments for multiple programs. 3. Only one form is needed per unit as long as the head of household, spouse, co-head, and all household members over the age of 18 have signed and dated the form. 4. If an adult is added to the household or a minor reaches age 18, they must be added to, sign, and date the original form. It is not necessary to complete a new form. 5. A copy of the form should be made available to the applicant/tenant. It is acceptable to give them an unsigned copy. 6. For new residents, the form should be completed at the time of initial application. March 2020 Page 19 of 31 A Government Data Practices Act Disclosure form that can be used for all ADUs is available on the HRA website. 3.09 Income Verification At initial occupancy, owner/agent must determine whether prospective tenant(s) of ADUs qualify as low income households. Income eligibility is based on anticipated income as defined at 24 CFR 5.609 (Section 8). When collecting income verification documentation, owner/agent must consider any likely changes in income. Owner/Agent must follow appropriate steps in determining whether households are eligible prior to admittance. Minnesota Housing provides sample verifications and other forms to assist owners/agents in qualifying eligible tenants. The release of information (at top of form) must be completed and signed by the person who is the subject of the verification prior to sending the form to an employer or other income source. Completed and returned verifications are used to calculate and document income. An Income and Asset Calculation Worksheet form also is available and can be used to assist in showing the individual calculations of income and asset income. This is highly recommended and will assist an inspector during a file review. This form should be dated and signed by the owner/agent. 3.10 Gross Annual Household Income Gross annual income for households living in ADUs shall be determined in a manner consistent with Section 8 of the U.S. Housing Act of 1937. Note that the information below only provides a summary. Owners and managers must use current circumstances to project income, unless verification forms or other verifiable documentation indicate that an imminent change will occur. For guidance in this section and in determination of tenant income, the HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, is used and is recommended as a reference guide. The HUD Handbook 4350.3 and HUD notices can be obtained by visiting HUD’s website: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handboo ks/h sgh/4350.3. The determination of annual income must include all types of income in the amount anticipated to be received by the tenant in the 12 months following certification/ recertification. Owner/Agent should use current circumstances to project income, unless verification forms or other verifiable documentation indicate that a change will occur (increase/decrease in rate of pay and/or hours). However, if the owner/agent is unable to determine annual income using current information because the family reports little to no income, or because income fluctuates, the owner/agent may average past actual income received or earned within the last 12 months before the certification date to calculate annual income. March 2020 Page 20 of 31 3.11 Factors that Affect Household Size When determining family size for occupancy, the owner/agent must include the following individuals who currently are not living in the unit: • Children temporarily absent due to placement in a foster home; • Children in joint custody arrangements who are present in the household 50% or more of the time; • Children who are away at school but who live with the family during school recesses; • Unborn children of pregnant women. When a pregnant woman is an applicant, the unborn child is included in the size of the household and is included for purposes of determining the maximum allowable income. The rental application should ask the following question: “Will there be any changes in household composition within the next 12-month period?” If an applicant answers that a child is expected (birth, foster or adoption), the owner/agent should explain to the applicant this is an additional household member and use the corresponding income limit, and self-certification of additional member should be used as documentation within the initial certification. • Children who are in the process of being adopted; • Temporarily absent family members who still are considered family members. For example, the owner/agent may consider a family member who is working in another state on assignment to be temporarily absent. Persons on active military duty are considered temporarily absent (except if the person is not the head, co-head or spouse or has no dependents living in the unit). If the person on active military duty is the head, co-head, or spouse, or if the spouse or dependents of the person on active military duty resides in the unit, that person’s income must be counted in full; • Family members in the hospital or rehabilitation facility for periods of limited or fixed duration. These persons are temporarily absent as defined above. Persons permanently confined to a hospital or nursing home are not considered household members. When determining family size for establishing income eligibility, the owner/agent must include all persons living in the unit except the following: • Live-in aides • Children of live-in aides o A live-in aide/attendant is a person who resides with one or more elderly persons, near-elderly persons, or persons with disabilities, and who:  Is determined to be essential to the care and well-being of the person(s);  Is not obligated for the support of the person(s); and  Would not be living in the unit except to provide the necessary supportive services. While a relative may be a live-in aide/attendant, s/he must meet the above requirements, especially the last. The live-in aide qualifies for occupancy only if the individual needing supportive services requires the aide’s services and remains a tenant. The live-in aide may not March 2020 Page 21 of 31 qualify for continued occupancy as a remaining family member. The owner/agent must obtain verification from the person’s physician, psychiatrist or other medical practitioner or health care provider that the live-in aide is needed to provide the necessary supportive services essential to the care and well-being of the person and should not add the attendant to the lease. The owner/agent may not require applicants or tenants to provide access to confidential medical records or to submit to a physical examination. Some households may include other persons who are considered family members for the purposes of determining household size and income eligibility, including: • Foster adults • Foster children Please see Appendix A for more detail on whose income is counted, what is counted as income and what is not, and how to account for income generated by assets. 3.12 General Income Verification Requirements All income and asset sources must be disclosed on the eligibility application and verified. A properly completed application must be used as the basis for determining what verifications will be necessary. The application, along with all supporting documentation and the Resident Income Certification, will be reviewed by HRA staff or its agent during a tenant file review. The following describes the types of third-party verification in order of acceptability: 1. Third-party verification from source (written): a. An original or authentic document generated by a third-party source that is dated within six months from the date of receipt by the owner/agent. Documents may be in possession of the tenant (or applicant), and commonly are referred to as tenant provided documents. These documents are considered third-party verification because they originated from a third-party source. Examples of tenant provided documentation that may be used include, but are not limited to: pay stubs, payroll summary report, employer notice/letter of hire/termination, SSA benefit letter, bank statements, child support payment stubs, welfare benefit letters and/or printouts, and unemployment monetary benefit notices. Owner/Agent must consider the following when using tenant provided documentation: i. Is the document current? Documentation of public assistance may be inaccurate if it is not recent and does not show any changes in the family’s benefits or work and training activities. ii. Is the documentation complete? Owner/Agent may accept pay stubs to document employment income only if the applicant or tenant provides the most recent two months of consecutive pay stubs to illustrate variations in hours worked. Actual paychecks or copies of paychecks March 2020 Page 22 of 31 should never be used to document income because deductions are not shown on the paycheck. iii. Is the document an unaltered original? The greatest shortcoming of tenant provided documents as a verification source is their susceptibility to undetectable change through the use of high quality copying equipment. Documents with original signatures are the most reliable. Photocopied documents generally cannot be assumed to be reliable. 2. Written documentation sent directly to the third-party source by mail or electronically by fax, email or internet. Verification forms must contain a release authorization signed by the applicant/tenant. Do not use a blanket release authorization as this entitles the owner/agent to obtain information to which it is not entitled or needed for eligibility determination. The Data Practices Act Disclosure Statement is not a verification release. Applicants should be asked to sign two copies of each verification form. The second copy may be used if the first request has not been returned in a timely manner. Income verification requests must be sent directly to and from the source. They are never given to the tenant to obtain signatures. If the returned verifications do not contain complete information, owner/agent must follow up with the source to obtain complete information. Typical examples include failure to indicate interest rates, dates of anticipated raises, amounts of anticipated raises, etc. All pertinent information must be documented in the file and must also include the name, phone number and title of the contact, the name of the person accepting the information, and the date. The single form AHP Eligibility Verification may be used to document income and asset eligibility in lieu of separate verification(s) for each separate income or asset source, if the sole source of income is Housing Support. The AHP Eligibility Verification confirms receipt of Housing Support (formally known as GRH) since it identifies that the applicant is in fact qualified for income-based Medical Assistance (MA) through Minnesota’s Department of Human Services. (Housing Support recipients must have MA prior to obtaining housing grant funding). MA eligibility documents AHP eligibility because the Federal Poverty Guidelines (FPG) are significantly less than the LIHTC income limits. NCCP.org (NCCP.org/tools/converter/) defines poverty as a family income less than 100 percent of the federal poverty threshold, as determined by the U.S. Census Bureau; Low Income is defined as family income less than 200 percent of the poverty threshold. 3. Third-party verification from source (verbal). When clarifying information over the telephone, it is important to be certain that the person on the telephone is the party he or she claims to be. Generally, it is best to telephone the verification source rather than to accept verification from a source calling the property management office. Verbal verification must be documented in the file. When verifying information by phone, the owner/agent must record and include in the tenant’s file the following information: March 2020 Page 23 of 31 a. Third-party’s name, position, and contact information; b. Information reported by the third-party; c. Name of the person who conducted the telephone interview; and d. Date and time of the telephone call. 4. Self Certification An owner/agent may accept a tenant’s notarized statement or signed affidavit regarding the veracity of information submitted only if the information cannot be verified by another acceptable verification method. In these instances, the owner/agent must document the file why third-party verification was not available. The owner/agent may witness the tenant signature(s) in lieu of a notarized statement or affidavit. The following describes use of electronic information when used as third-party verification. Electronic Verification. The owner/agent may obtain accurate third-party written verification by facsimile, email, or Internet, if adequate effort is made to ensure that the sender is a valid third-party source. a. Facsimile. Information sent by fax is most reliable if the owner/agent and the verification source agree to use this method in advance during a telephone conversation. The fax should include the company name and fax number of the verification source. b. Email. Similar to faxed information, information verified by email is more reliable when preceded by a telephone conversation and/or when the email address includes the name of an appropriate individual and firm. c. Internet. Information verified on the Internet is considered third-party verification if the owner/agent is able to view web-based information from a reputable source on the computer screen. Use of a printout from the Internet may also be adequate verification in many instances. Steps used to obtain written verification as described in 1, 2 and 3 above must be documented to show just cause for using other types of verification. The owner/agent must include the following documents in the tenant file: 1. A written note explaining why third-party verification is not possible, signed and dated by the applicant/resident. 2. A copy of the date-stamped original request that was sent to the third-party. 3. Written notes or documentation indicating follow up efforts to reach the third-party to obtain verification. 4. A written note indicating the request has been outstanding without a response from the third-party. Note: If a tenant is employed by a business owned by the tenant's family or is employed by the property owner/agent or the management company, a copy of a recent pay stub verifying year- to- date earnings also is required. March 2020 Page 24 of 31 Upon receipt of all verifications, owner/agent must determine if the resident is qualified for participation in the AHP. All verifications should be reviewed, and calculations made as necessary. 3.13 Corrections to Documents Sometimes it is necessary to make corrections or changes to documents. A document that has been altered with correction fluid or "white out" will not be accepted by HRA. When a change is needed on a document, the person making the correction must draw a line through the incorrect information, write or type the correct wording or number, and have all parties initial and date the change. 3.14 Effective Term of Verifications Verifications of any kind are valid for 6 months prior to an ADU tenant’s move in date or recertification date. 3.15 Over Income Households When determining eligibility to occupy an ADU, the household's gross income must always be considered. However, if a tenant goes over the income guidelines of 140% of household income at recertification, the owner/agent must raise the over income tenant’s rent to reflect Fair Market Rent, or relocate tenant to a Market Rate Unit, as soon as the lease permits in accordance with the terms of the lease (see Chapter 2). The AHP does not require interim rent adjustments. 3.16 Annual Recertification All households occupying an ADU must be recertified at least annually from the date of occupancy. Annual recertifications must be effective on or before the occupancy anniversary date of the previous certification. Owner/Agent may align recertification dates with other program certifications or so that all units in the property are recertified at one time during the year. However, if a period of twelve (12) months passes without a recertification being completed for any ADU, the unit is considered out of compliance. Owner/Management may request an annual schedule whereby all tenants are recertified during the same month however before making changes to schedule, an email request must be made, and approved by the City first. The requirement to recertify is included in an ADU lease or addendum, tenant refusal to comply can be considered a violation of the lease and is grounds for termination. Income must be third-party verified in every 3rd year of the affordability period, not tenancy. Example: Every Third Year Full Certification Property ABC received Certificate of Occupancy on 11/1/2019  Period of Affordability (POA) for Property ABC will be a total of 15 years starting on 11/1/2019 and ending on 11/1/2034 March 2020 Page 25 of 31 Amanda Johnson Moved onto Property ABC on 12/1/2019 In 2019 (POA Year One): Management verifies income using SSA Benefits Award Letter, a copy of Amanda’s current PERA Benefit Letter (Pension Public Employees Retirement Association of Minnesota) and Under $50,000 Asset Verification to determine eligibility at Move In. All items must be third-party verified using source documents. In 2020 (POA Year Two): Amanda Johnson needs to complete her Annual Recertification but in POA Year Two for Property ABC, only a self-certification of income and asset, signed by all adult household members is needed. Use of the AHP Self-Certification of Income & Asset form can be used instead of third-party verifications during this non-3rd year. Note: Move In certifications for eligibility must always third-party verify using source documents. In 2021 (POA Year Three): Amanda Johnson needs to complete her Annual Recertification but in POA Year Three for Property ABC, only a self-certification of income and asset, signed by all adult household members is needed. Use of the AHP Self-Certification of Income & Asset form can be used instead of third-party verifications during this non-3rd year. Note: Move In certifications for eligibility must always third-party verify using source documents. In 2022 (Year Four): The Annual Recertification requirement for this POA year at Property ABC states all income and assets reported by a household must be third-party verified using source documents. The AHP Self-Certification of Income & Asset is not eligible for use for any ADU at Property ABC. 3.17 Tenant Files Owner/Agent must maintain a tenant file for each ADU. All permanent documents must be kept together so they are accessible at each compliance review (income certification and supporting documentation, lease/AHP addendum, etc.). Annual recertification information, including the tenant questionnaires, release forms, verifications, and annual inspection reports must be grouped together by year, with the most recent year on top for review. The tenant files must contain the following: • HRA Government Data Practices Act Statement • Household Questionnaire • Acceptable verifications of income and assets • Verification of student eligibility if applicable • Resident Income Certification (Initial Certification and Annual Recertifications) • Signed lease agreement and AHP addendum (if needed) • Lead based paint acknowledgements (rental rehabilitation only; built pre-1978) All move out files should also contain the following: • Written 30-day (or greater) notice to vacate (if not available – document in file) March 2020 Page 26 of 31 • Security deposit refund (check number and date) or letter of intent to withhold security deposit within 14 days of move out Tenant records, including income verifications and development rents must be retained for the most recent three year period after the tenant moves out. March 2020 Page 27 of 31 Chapter 4 – Reporting Requirements The owner/agent must maintain a report of all tenants residing in each ADU at the time of application through the end of the affordability period and must submit annual reports to HRA in a form and manner requested by HRA. Annual compliance reports are due to HRA by March 1 or as otherwise specified by HRA, of each year during the affordability period. If the due date falls on a weekend or a holiday, reports are due the following business day. Reports and other required documents must be submitted as directed by HRA on an annual basis. 4.01 Annual Owner/Agent Certifications Complete the Owner/Agent Certification to certify compliance with AHP requirements for the preceding calendar year. Owner/Agent Certifications must be printed, signed and dated by the authorized Owner/Agent Representative, then scanned and submitted as directed by HRA. 4.02 Compliance Reports HRA or designated agents will monitor AHP compliance by reviewing annual Owner/Agent Certifications and analyzing compliance information submitted by the owner/agent. Failure to submit the Owner/Agent Certification and/or update the report on all units and their related activity by the due date will constitute noncompliance with the AHP and the related loan documents. 4.03 Utility Allowance Source Document Owners/Agents must submit the utility allowance source documents applicable to the reporting period. Multiple utility allowance source documents may apply to one reporting period. March 2020 Page 28 of 31 Chapter 5 – Compliance Inspections Compliance inspections (file reviews) will be conducted every 3 years. Inspections may be conducted more frequently if HRA determines it to be necessary based on concerns raised during a previous review or other information. The compliance inspection includes, but is not limited to, an inspection of at least 20%, but up to 50%, of the ADU tenant files (with a minimum of four (4) units). HRA will contact the owner/agent in advance to schedule the tenant file review. The property inspection and tenant file review may be conducted at the same time or may be conducted separately by different HRA staff. 5.01 Physical Inspections This program does not mandate inspections. Rental Licensing requires inspections every three years. 5.02 Review of Tenant Files and Property Records During the tenant file review, HRA staff will review Resident Income Certifications, third-party verifications or other forms of income documentation, leases, lead based paint disclosure forms, and other management information for selected units. HRA staff will also review the following property information: • Utility Allowances and supporting documentation • Current written tenant selection plan, occupancy policy and/or house rules if changes were made since the last review • Current lease and lease addenda/agreement(s) • Affirmative Fair Housing Marketing Plan/Marketing Plans • Advertising • Equal Housing Opportunity posters, logos • Correspondence • Tenant ledgers for all units inspected March 2020 Page 29 of 31 Chapter 6 – Correction and Consequences of Non-Compliance If HRA does not receive the required certifications and/or compliance reports when due, or discovers by audit, inspection, or review, or in some other manner, that the property is not in compliance with the requirements of the AHP, or with the property’s loan documents, including the enforcement agreement, the HRA will notify the owner/agent as soon as possible. 6.01 Notice to Owner/Agent HRA or its designated agent will provide prompt written notice to the owner/agent of an AHP property if HRA does not receive the annual Owner/Agent Certification and income and occupancy report by the required due date. HRA or its designated agent also will notify the owner/agent if it does not receive or is not permitted to inspect the Resident Income Certifications, supporting documentation, and rent records, or discovers by inspection, review, or in some other manner, that the property is not in compliance with the requirements of the AHP or with the property’s loan documents, including the enforcement agreement. 6.02 Correction Period The correction period of 30-days will be set forth in a Notice of Noncompliance to the owner and its agent. HRA may extend the correction period if HRA determines there is good cause for granting the extension. Requests for an extension must be in writing from the owner/agent, must be received by HRA no later than the last day of the correction period identified on the Notice of Noncompliance, and must include an explanation of the efforts to correct the noncompliance and the reason the extension is needed. 6.03 Owner’s/Agent’s Response HRA will review the owner’s/agent’s response and supporting documentation, if any, to determine whether the noncompliance has been clarified, corrected or remains out of compliance. Clarified noncompliance is, for example, where income eligibility was not properly documented and the inspector cannot make a reasonable determination that the unit is in compliance but the owner/agent conducts a retroactive (re)certification which completely and clearly documents the sources of income and assets that were in place at the time the certification should have been effective, and applies income and rent limits that were in effect on that date. If documentation is complete and supports that the tenant was eligible as of the effective date, the file is considered clarified. Corrected noncompliance is when a violation is observed and there is a period of time during which the unit is out of compliance but the unit is brought back into compliance. For example, a late certification or re-certification is out of compliance on the certification due date, and back in compliance as of the date the last household member signs a retroactive Income Certification. March 2020 Page 30 of 31 Uncorrected noncompliance is a violation that is not corrected or clarified by the end of the correction period. Failure to correct all noncompliance could result in extension of the end of the POA, loss of Tax Increment Financing, or LURC tax treatment or other legal remedies. Persistent noncompliance also may impact the owner’s/agent’s eligibility for financing from the HRA under any or all its programs. March 2020 Page 31 of 31 Chapter 7 – Requests for Action 7.01 Sale or Transfer Any property owner must provide prior written notice to the HRA before sale or transfer of the property. The notice will provide that the new owner/agent acknowledges that the terms and conditions of the Affordable Housing Program as set forth in the governing documents recorded against the property remain in place. Attachments: •Current Rent Income Table •AFHMP Template – Pages 1-5 without HUD Signature •AHC Checklist •AHC Forms 05/03/2019Minnesota Housing Finance Agency Income Limits And Maximum Rents TAX_CREDIT_INCOME_LIMIT.RDF Date Run: Table L: Projects Placed in Service on or after 4/24/2019 Page 14 of 44 04/24/2019 04/24/2019 Hennepin Houston 20% 30% 40% 50% 60% 70% 80% 20% 30% 40% 50% 60% 70% 80% 14,000 21,000 28,000 35,000 42,000 49,000 56,000 11,020 16,530 22,040 27,550 33,060 38,570 44,080 16,000 24,000 32,000 40,000 48,000 56,000 64,000 12,580 18,870 25,160 31,450 37,740 44,030 50,320 18,000 27,000 36,000 45,000 54,000 63,000 72,000 14,160 21,240 28,320 35,400 42,480 49,560 56,640 20,000 30,000 40,000 50,000 60,000 70,000 80,000 15,720 23,580 31,440 39,300 47,160 55,020 62,880 21,600 32,400 43,200 54,000 64,800 75,600 86,400 16,980 25,470 33,960 42,450 50,940 59,430 67,920 23,200 34,800 46,400 58,000 69,600 81,200 92,800 18,240 27,360 36,480 45,600 54,720 63,840 72,960 24,800 37,200 49,600 62,000 74,400 86,800 99,200 19,500 29,250 39,000 48,750 58,500 68,250 78,000 26,400 39,600 52,800 66,000 79,200 92,400 105,600 20,760 31,140 41,520 51,900 62,280 72,660 83,040 20% 30% 40% 50% 60% 70% 80% 20% 30% 40% 50% 60% 70% 80% 350 525 700 875 1,050 1,225 1,400 275 413 551 688 826 964 1,102 375 562 750 937 1,125 1,312 1,500 295 442 590 737 885 1,032 1,180 450 675 900 1,125 1,350 1,575 1,800 354 531 708 885 1,062 1,239 1,416 520 780 1,040 1,300 1,560 1,820 2,080 408 613 817 1,021 1,226 1,430 1,635 580 870 1,160 1,450 1,740 2,030 2,320 456 684 912 1,140 1,368 1,596 1,824 640 960 1,280 1,600 1,920 2,240 2,560 503 754 1,006 1,258 1,509 1,761 2,013 700 1,050 1,400 1,750 2,100 2,450 2,800 550 825 1,100 1,375 1,650 1,925 2,200 County: County: Effective Date: Effective Date: 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 0 0 1 1 2 2 3 3 4 4 5 5 6 6 ---------- Income Limits By Household Size ---------- ---------- Income Limits By Household Size ---------- ---- Maximum Gross Rents By Bedroom Size(Post 1989) ---- ---- Maximum Gross Rents By Bedroom Size(Post 1989) ---- Note to all applicants/respondents: This form was developed with Nuance, the official HUD software for the creation of HUD forms. HUD has made available instructions for downloading a free installation of a Nuance reader that allows the user to fill-in and save this form in Nuance. Please see http://portal.hud.gov/hudportal/documents/huddoc?id=nuancereaderinstall.pdf for the instructions. Using Nuance software is the only means of completing this form. Affirmative Fair Housing Marketing Plan (AFHMP) - Multifamily Housing U.S. DepartmentofHousing andUrban Development OfficeofFairHousingandEqualOpportunity OMB Approval No. 25290013 (exp.12/31/2016) Previous editions are obsolete Page 1 of 8 Form HUD-935.2A (12/2011) 1a.Project Name &Address (including City,County,State &Zip Code)1b.Project Contract Number 1c.No.of Units 1d. Census Tract 1e.Housing/Expanded Housing Market Area 1f. Managing Agent Name, Address (including City, County, State & Zip Code), Telephone Number & Email Address 1g. Application/Owner/Developer Name, Address (including City, County, State & Zip Code), Telephone Number & Email Address 1h. Entity Responsible for Marketing (check all that apply) Owner Agent Other (specify) Position, Name (if known), Address ( including City, County, State & Zip Code), Telephone Number & Email Address 1i. To whom should approval and other correspondence concerning this AFHMP be sent? Indicate Name, Address (including City, State & Zip Code), Telephone Number & E-Mail Address. 2a. Affirmative Fair Housing Marketing Plan Plan Type Date of the First Approved AFHMP: Reason(s) for current update: 2b. HUD-Approved Occupancy of the Project (check all that apply) Elderly Family Mixed (Elderly/Disabled) Disabled 2c. Date of Initial Occupancy 2d. Advertising Start Date Advertising must begin at least 90 days prior to initial or renewed occupancy for new construction and substantial rehabilitation projects. Date advertising began or will begin For existing projects, select below the reason advertising will be used: To fill existing unit vacancies To place applicants on a waiting list (which currently has individuals) To reopen a closed waiting list (which currently has individuals) Previous editions are obsolete Page 2 of 8 Form HUD-935.2A (12/2011) 3a.Demographics of ProjectandHousing Market AreaCompleteandsubmitWorksheet1. 3b.Targeted Marketing Activity Based on your completed Worksheet 1,indicate which demographic group(s)in the housing market area is/are least likely to apply for the housing without special outreach efforts.(check all that apply) White AmericanIndianorAlaska Native Asian Black or African American Native Hawaiian or Other Pacific Islander Hispanicor Latino Persons with Disabilities Families withChildren Other ethnic group,religion,etc.(specify) 4a.Residency Preference Is the owner requesting a residency preference?If yes,complete questions 1 through 5. If no,proceed to Block 4b. (1)Type (2)Is the residency preference area: The same as the AFHMP housing/expanded housing market area as identified in Block 1e? The same as the residency preference area of the local PHA in whose jurisdiction the project is located? (3)What is the geographic area for the residency preference? (4)What is the reason for having a residency preference? (5)How do you plan to periodically evaluate your residency preference to ensure that it is in accordance with the non-discrimination and equal opportunity requirements in 24 CFR 5.105(a)? Complete and submit Worksheet 2 when requesting a residency preference (see also 24 CFR 5.655(c)(1))for residency preference requirements.The requirements in 24 CFR 5.655(c)(1)will be used by HUD as guidelines for evaluating residency preferences consistent with the applicable HUD program requirements.See also HUD Occupancy Handbook (4350.3)Chapter 4,Section 4.6 for additional guidance on preferences. 4b.Proposed Marketing Activities: Community Contacts CompleteandsubmitWorksheet3 to describeyour use of community contacts to market the project to those least likely to apply. 4c.Proposed Marketing Activities: Methods of Advertising Complete and submit Worksheet 4 to describe your proposed methods of advertising that will be used to market to those least likely to apply. Attach copies of advertisements, radio and television scripts, Internet advertisements, websites, and brochures, etc. Previous editions are obsolete Page 3 of 8 Form HUD-935.2A(12/2011) 5a.Fair Housing Poster The Fair Housing Poster must be prominently displayed in all offices in which sale or rental activity takes place (24 CFR 200.620(e)). Check below all locations where the Poster will be displayed. Rental Office Real Estate Office Model Unit Other (specify) 5b.Affirmative Fair Housing Marketing Plan The AFHMP must be available for public inspection at the sales or rental office (24 CFR 200.625).Check below all locations where the AFHMP will be made available. Rental Office RealEstate Office Model Unit Other (specify) 5c.Project Site Sign Project Site Signs,if any,must display in a conspicuous position the HUD approved Equal Housing Opportunity logo,slogan,or statement (24 CFR 200.620(f)).Check below all locations where the Project Site Sign will be displayed. Please submit photos of Project signs. RentalOffice Real Estate Office Model Unit Entrance toProject Other (specify) The size of the Project Site Sign will be x The Equal Housing Opportunity logo or slogan or statement will be x 6.Evaluation of Marketing Activities Explain the evaluation process you will use to determine whether your marketing activities have been successful in attracting individuals least likely to apply,how often you will make this determination,and how you will make decisions about future marketing based on the evaluation process. Previous editions are obsolete Page 4 of 8 Form HUD-935.2A (12/2011) 7a.Marketing Staff What staff positions are/will be responsible for affirmative marketing? 7b.Staff Training and Assessment:AFHMP (1)Has staff been trained on the AFHMP? (2)Has staff been instructed in writing and orally on nondiscrimination and fair housing policies as required by 24 CFR 200.620(c)? (3)If yes,who provides instruction on the AFHMP and Fair Housing Act, and how frequently? (4)Do you periodically assess staff skills on the use of the AFHMP and the application of the Fair Housing Act? (5)If yes,how and how often? 7c.Tenant Selection Training/Staff (1)Has staff been trained on tenant selection in accordance with the project’s occupancy policy,including any residency preferences? (2)What staff positions are/will be responsible for tenant selection? 7d.Staff Instruction/Training: Describe AFHM/Fair Housing Act staff training,already provided or to be provided,to whom it was/will be provided,content of training, and the dates of past and anticipated training.Please include copies of any AFHM/Fair Housing staff training materials. Previous editions are obsolete Page 5 of 8 Form HUD-935.2A (12/2011) 8. Additional Considerations: Is there anything else you would like to tell us about your AFHMP to help ensure that your program is marketed to those least likely to apply for housing in your project?Please attach additional sheets,as needed. 9. Review and Update By signing this form,the applicant/respondent agrees to implement its AFHMP, and to review and update its AFHMP in accordance with the instructions to item 9 of this form in order to ensure continued compliance with HUD’s Affirmative Fair Housing Marketing Regulations (see 24 CFR Part 200,Subpart M).I hereby certify that all the information stated herein, as well as any information provided in the accompaniment herewith,is true and accurate.Warning:HUD will prosecute false claims and statements.Conviction may result in criminal and/or civil penalties.(See 18 U.S.C.1001,1010,1012; 31 U.S.C.3729,3802). Signature of person submitting this Plan &Date of Submission (mm/dd/yyyy) Name (type or print) Title &Name of Company For HUD-Office of Housing Use Only Reviewing Official: For HUD-Office of Fair Housing and Equal Opportunity Use Only Approval Disapproval Signature & Date (mm/dd/yyyy) Signature & Date (mm/dd/yyyy) Name(typeor print) Title Name(typeorprint) Title Head of Household Demographic Information Head of Household Demographics 1 of 1 AHP 02/2020 Instructions: This form is to be completed by the head of household only after occupancy has been approved. Your approval for occupancy will not be affected if you choose not to respond. The owner will submit this information to The City of Edina for assessment of households being served by its financing programs. Your cooperation is much appreciated. Housing Information (this section to be completed by owner/agent) Property Name Minnesota Housing D# Building Address Unit # Head of Household Information Name Date of birth (month/day/year) / / Ethnicity Hispanic or Latino Not Hispanic or Latino I choose not to respond Gender Female Male I choose not to respond Race (check all that apply) American Indian/Alaska Native Asian Black/African American Native Hawaiian/ Other Pacific Islander White I choose not to respond Number of household members Adults (including head of household) Children under age 18 residing in unit Is any household member mobility impaired requiring features of an accessible unit? Yes No I choose not to respond Is any household member a person with a disability other than mobility impairment? Yes No I choose not to respond Main source of household income (check only one) Salary/wages Self-employment Social Security Retirement /pension/annuity Alimony/child support Interest/dividends/rental income Unemployment/disability Public assistance No income Previous editions are obsolete form HUD-928.1 (6/2011) U. S. Department of Housing and Urban Development EQUAL HOUSING OPPORTUNITY We Do Business in Accordance With the Federal Fair Housing Law (The Fair Housing Amendments Act of 1988) It is illegal to Discriminate Against Any Person Because of Race, Color, Religion, Sex,Handicap, Familial Status, or National Origin In the sale or rental of housing or residential lots In advertising the sale or rental of housing In the financing of housing In the provision of real estate brokerage services In the appraisal of housing Blockbusting is also illegal Anyone who feels he or she has beendiscriminated against may file a complaint ofhousing discrimination: 1-800-669-9777 (Toll Free) 1-800-927-9275 (TTY) www.hud.gov/fairhousing U.S. Department of Housing and Urban Development Assistant Secretary for Fair Housing and Equal Opportunity Washington, D.C. 20410 AHP 02/2020 Attachment Affordable Housing Program (AHP) Part A (Required to determine eligibility) 1. Information regarding the household composition including the name(s) and age(s) of all members in the household. 2. Student status. 3. The amount and source of all earned and unearned income of all household members. 4. The type, value and income derived from all household assets. 5. The type, value and income derived from all household assets disposed of for less than fair market value within the past 2 years. 6. Current and/or previous housing history (for program eligibility, if applicable). Part B 1. Race 2. Ethnicity 3. Gender of head of household 4. Receipt of Public Assistance and Type of Assistance (MFIP, Section 8, GRH, etc.) 5. Homeless Household 6. Disabled Status 7. Household Type (single, elderly, disabled, etc.) AHP 02/2020 Verification of Eligibility – Affordable Housing Program TO: (Name and Address of Housing Support Division) FROM: (Name & Address of Owner/Management Agent) RE:________________________________ Email: ________________________________ Applicant/Tenant Full Name Contact: _______________at ( )___________ ___________________ Unit Number (Optional) Thank you for your prompt response. All information is confidential. PERMISSION FOR RELEASE OF INFORMATION Release: I hereby authorize the release of requested information. Information obtained under this consent is limited to information that is no older than 12 months. There are circumstances which would require the owner to verify information that is up to 5 years old, which would be authorized by me on a separate consent with explanation, attached to a copy of this consent. Signature of Applicant/Tenant Date MN-DHS Housing Supports and Services Division, please fill in all blanks. Does the above Applicant/Tenant receive benefits under one of these two income-based Housing Programs outlined below? If Yes, what type of benefit program does s/he participate in? and/or Effective date of benefits: Additional remarks: Housing Support and Services Provider: Print Your Name: Title: Signature: Date: Telephone #: Fax #: Email: THIS SECTION TO BE COMPLETED BY HOUSING SUPPORT & SERVICES DIVISION  Yes  No  Housing Support  Minnesota Supplemental Aid (MSA Housing Assistance) AHP 02/2020 Government Data Practices Act Disclosure Statement Print name(s) of Household Members signing this form: The City of (“City”) that provided the funding for the development of the property listed below is asking for this private information that relates to your application to occupy, or continue to occupy, a unit in the following property (“Property”). Property Name: Some of the information you are being asked to provide may be considered private or confidential under the Minnesota Government Data Practices Act (MGDPA), Minnesota Statutes Chapter 13. Section 13.04(2) of this law requires that you be notified of the matters included in this Disclosure Statement before you are asked to provide that information. The owner/agent of the Property may also ask you to supply information that relates to your application. The owner’s/agent’s request for information is not governed by the Minnesota Government Data Practices Act. 1. The City of Edina, Minnesota for the Affordable Housing Program (AHP) is asking for information necessary for the administration and management of a local program to provide housing for low income families. Some of the information may be used to establish your eligibility to initially occupy, or to continue to occupy, a unit in the Property. Other information may be used to assist the City in the evaluation and management of some of the programs it operates. 2. As part of your application, you are asked to supply the information contained in the following attachment. Attachment 1 – Inclusionary Housing Program The Attachment has two parts: Part A and Part B 3. The information asked for under Part A of the attachment may be used by the City and/or owner/agent to establish your eligibility to participate in the Inclusionary Housing Program or occupy an affordable dwelling unit in the Property. If you refuse to supply any portion of the information asked for under Part A, you may not qualify for initial or continued occupancy of a unit in the Property. 4. The information asked for under Part B will help the City in the evaluation and management of some of the programs it operates and your supplying of this information will be helpful to the City. AHP 02/2020 Failure to provide any of the information asked for under Part B will NOT affect whether or not you qualify for initial or continued occupancy of a unit in the Property. 5. The owner/agent may also ask for information to determine whether or not it will rent a unit in the Property to you. If you supply, or refuse to supply, any information requested by the owner/agent, it will NOT affect a decision by the City, but could affect the owner’s/agent’s decision to rent a unit to you. The determination by the owner/agent is separate from the City’s determination and the City does not participate, in any way, in the owner’s/agent’s decision. 6. All of the information that you supply will be accessible to staff of the City (and its agents) and may be made available to staff of the Office of the Minnesota Attorney General, the United States Department of Housing and Urban Development (HUD), the United States Internal Revenue Service (IRS) and other persons and/or governmental entities who may have statutory authority to review the information, investigate specific conduct, and/or take appropriate legal action including but not limited to law enforcement agencies, courts and other regulatory agencies. The information may also be provided by the City to the owner’s management agents of the Property. 7. This Disclosure Statement remains in effect for as long as you occupy a unit in the Property and are a participant in the program(s) identified above. I was (We were) supplied with a copy of and have read this Government Data Practices Act Disclosure Statement and the Attachment identified above. Head of Household, Spouse, Co-Head and all household members age 18 or older must sign and date: Applicant/Tenant signature Date Applicant/Tenant signature Date Applicant/Tenant signature Date Applicant/Tenant signature Date Applicant/Tenant signature Date AHP 02/2020 AFFORDABLE HOUSING PROGRAM (AHP) LEASE ADDENDUM Resident Name: Address: Lease Date: The Property in which you are leasing received funding from the Affordable Housing Program. This program is designed to provide housing to low income individuals and families. This addendum will be in effect for the duration of your occupancy. By signing this Agreement, you and all adult household members acknowledge that you have read, understand and agree to the following provisions: 1. Affordable Housing Program. The Unit must comply with the Affordable Housing Program. Resident's rights under the Lease are subject to Program requirements. 2. Unit Occupancy. Only the residents named on the Lease are permitted to occupy the unit. 3. Income Certification. Resident has executed an Income Certification Form prior to moving into the Unit, and Resident shall complete and execute further Income Certification Forms at Management's request not less than annually hereafter. Upon Management’s request, Resident shall certify Resident’s household income and/or assets to Management or any governmental or quasi-governmental agency in a manner satisfactory to Management. 4. Recertified Income. Resident acknowledges that the annual recertification of Resident's household income must meet the limitations imposed by the Program. (Resident’s initials) ________ 5. Information Supplied. Resident certifies that the information supplied by Resident to determine Resident's qualifications to rent the Unit, including Resident's Application and Income Certification, is accurate, complete, and true in all respects. Submission of inaccurate, incomplete, or false information at any time is a breach of lease for which Resident can be evicted. 6. Increased Income. If, upon annual recertification, Resident's household income exceeds 140% of the applicable Program limit, Management may meet with Resident to review the status of the household’s qualification under the Program. If the household no longer qualifies, Management may terminate Resident’s lease. 7. Certain Changes. Resident shall notify Management immediately in writing if Resident's household size changes, anyone in Resident’s household becomes a full-time student, or Resident begins to receive HUD assistance. Management may immediately terminate this Lease if Resident’s student status disqualifies the Unit under the Program. Management may adjust Resident's rent and/or utility allowance if Resident begins to receive HUD assistance. (Resident’s initials) _________ 8. Student Eligibility. AHP adopted the Section 8 Housing Choice Voucher program restrictions on student participation found at 24 CFR 5.612 and excludes any individual that: AHP 02/2020 1. Is enrolled in a higher education institution; AND 2. Is under the age of 24; and 3. Is not a veteran of the US Military; and 4. Is not married*; and 5. Does not have a dependent child(ren); and 6. Is not a person with disabilities; and 7. Is not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income * Effective August 1, 2013 same-sex marriages are recognized as marriages for student eligibility purposes. ALL RESIDENTS MUST IMMEDIATELY REPORT TO MANAGEMENT ANY CHANGE IN STUDENT STATUS. (Resident’s initials) __________ 9. Cooperation with Management. Resident shall cooperate with Management so that Management complies with the Program. Resident will timely respond to Management requests related to Program documents, verifications, and certifications. This includes but is not limited to timely attending meetings, signing verifications, and providing requested information. Resident agrees to sign a new lease upon the completion of annual certifications, if requested or required by Management. 10. Termination/Non-Renewal. Management may terminate or refuse to renew the Lease or file an eviction action for the following reasons:  Serious or repeated violation of the Lease. This includes but is not limited to Resident’s violation of this Agreement. (Resident’s initials) _______  Violation of applicable federal, state, or local law. (Resident’s initials) _______  Refusal/Failure to complete paperwork required by the Program. (Resident’s initials) _______  Other good cause, including if Resident’s continued occupancy of the Unit violates Program requirements. (Resident’s initials) _______ I have read and agree to the provisions above and understand that failure to comply with these provisions constitutes material non-compliance with this lease and establishes good cause for termination, nonrenewal of the lease, or eviction action. ________________________________________________ __________________________ Resident’s Signature Date ________________________________________________ __________________________ Resident’s Signature Date ________________________________________________ __________________________ Management’s Signature Date AHP 02/2020 AHP Rental Application Applicant Information Name: Date of birth: SSN: Phone: Current address: City: State: ZIP Code: Own Rent (Please circle) Monthly payment or rent: How long? Previous address: City: State: ZIP Code: Owned Rented (Please circle) Monthly payment or rent: How long? Co-applicant Information Name: Date of birth: SSN: Phone: Current address: City: State: ZIP Code: Own Rent (Please circle) Monthly payment or rent: How long? Previous address: City: State: ZIP Code: Owned Rented (Please circle) Monthly payment or rent: How long? Income and Asset Total Monthly Income (Include all family gross income): $ Income Sources (check all that apply)  Wages/Self-Employment  SSI/SSA  Pension/Annuity  Child Support  Investment/Interest Income  Workers Compensation  TANF/Public Assistance  Other________________ Value of Family Assets (Assets include all bank accounts, investment accounts, and real estate): $ Emergency Contact Name of a person not residing with you: Address: City: State: ZIP Code: Phone: References Name: Address: Phone: I authorize the verification of the information provided on this form as to my credit and source/s of income. Signature of applicant: Date: Signature of co-applicant: Date: AHP 02/2020 RESIDENT INCOME CERTIFICATION For use by eligible Affordable Housing Program (AHP) properties only Property Name: ____________________________ Effective Date: _________________ Household Composition: Anticipated Gross Household Income (Annual Amounts): Household Member Name Wages/Salaries/Self- Employment Benefits/Pensions TANF/Public Assistance Other Income Annual Gross Income: $ $ $ $ Total Annual Gross Income: $ Household Asset and Asset Income: Household Member Name Asset Description Current Cash Value of Asset Actual Income from Assets Total Cash Value: Total Income from Assets: $ (A)$ Enter Total Cash Value if over $50,000 $______________ Passbook Rate: X .06% = (B)$_____________ Imputed Income Enter the greater of the Total Income from Assets (A) OR Imputed Income (B): This will be the Total Income from Assets: $________________ Total Annual Income Annual Income (total of all actual income and income from assets): $________________ Head of Household Name Leased Address Total Number of Occupants AHP 02/2020 Rent Amounts: Leased Rent Amount: $________________ Monthly Utility Allowance: $________________ Gross Monthly Rent: (Leased Rent + Utility Allowance) $________________ Student Status: Are any household members, a student at an institution of higher education?  Yes  No If Yes, enter # as shown on the student form AHP Student Self-Certification 1. FT Student 2. Disabled 3. At least 24 years of age 4. Veteran of United States Military 5. Married 6. Dependent 7. Living Independently from Parents 8. Graduate or Professional Student 9. Orphan or Ward of the Court 10. Vulnerable Youth 11. Independent via unusual circumstances #_________________ After all verifications of income and/or assets have been received and calculated, each household member age 18 or older must sign and date the Resident Income Certification. For move-in, it is recommended that the Resident Income Certification be signed no earlier than 5 days prior to the effective date of the certification. I/we hereby affirm that the foregoing information is true and complete to the best of my/our knowledge and authorize the Landlord to make inquires to verify the statements herein. I/we further understand that any intentional misrepresentation in this self-certification might result in a default in the rental agreement and/or eviction of the household. If any of the aforementioned changes, I/we agree to notify the Landlord immediately. All household members age 18 or older must sign and date below: Signature: ______________________________________________ Date: _________________________________ Signature: ______________________________________________ Date: _________________________________ Signature: ______________________________________________ Date: _________________________________ Signature and Date of Owner/Representative: Signature: ______________________________________________ Date: _________________________________ Affordable Housing Program (AHP) RESIDENT NOTIFICATION LETTER As a resident of (name of property), a property funded by the CITY OF EDINA, MINNESOTA, a Minnesota statutory city, and the HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF EDINA, MINNESOTA, you have certain rights stated in your lease and the attached Lease Rider. Your landlord must follow city and state rules for the Affordable Housing Program. One of the important protections provided by federal law is that you cannot be evicted from your home or have your tenancy terminated without good reason or “good cause.” Your landlord may not evict you or terminate your tenancy (including refusing to renew your lease) without good cause. Good cause is (a) serious or repeated violation(s) of the material terms and conditions of your lease. The landlord must state, in writing, the good cause in any eviction, lease non-renewal or termination of tenancy notice. If you did not do what your landlord claims in the notice, or if you think it was not serious enough for your lease to be terminated or not renewed, you can ask the landlord if there is an appeal process. If there is no appeal process, you may request that the termination be retracted and discuss your reasons why. If you receive a notice of eviction, you have a right to contest the eviction in court by explaining to the judge why you disagree with the reasons for terminating your lease. Visit www.lawhelpmn.org to see if you qualify for free or low-cost legal assistance. In addition, your landlord may not increase the amount of rent stated on your lease more than once annually. The attached Lease Rider should already be signed by your landlord. You and all members of your household age 18 or older must also sign the Lease Rider in order to make it part of your lease. The Lease Rider needs to be signed each time you sign a new lease. If at any time additional adult household members enter the unit or a child who lives in that unit turns 18, they should add their signature to the existing Lease Rider with the current date. Your landlord also has a legal obligation to comply with the statutory requirements found in Section 601 of the Violence Against Women Reauthorization Act of 2013 (VAWA). Under VAWA, you may not be denied admission, denied assistance, terminated from participation, or evicted on the basis that you are or have been a victim of domestic violence, dating violence, sexual assault or stalking, if you otherwise qualify for admission, assistance, participation or occupancy. You should have received the following when you were approved for occupancy or at some time during your occupancy: •HUD Form 5380 – Notice of Occupancy Rights under the Violence Against Women Act; and •HUD Form 5382 – Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking, and Alternate Documentation. The landlord must also include these documents with any notice of eviction, lease non-renewal or termination of tenancy. You may also have signed a VAWA Lease Addendum. If you have any questions concerning this matter, please contact your resident manager, , or your landlord at (phone and email). Sincerely , Property Representative Name (print and sign) Date AHP 02/2020 Affordable Housing Program LEASE RIDER (attach to resident lease) Property Name: Building/Unit #: Head of Household Name: The Lease dated is hereby amended by adding the following provisions: 1. Owner/Landlord may not evict or terminate the tenancy (including refusing to renew this Lease) except for good cause. Good cause means (a) serious or repeated violation(s) of the material terms and conditions of the Lease. Any eviction, lease non-renewal or termination of tenancy notice must be in writing and must state the specific violation(s). The notice must comply with all requirements of Minnesota law and other applicable programs. 2. Owner/Landlord may not increase the lease rent more than once annually, regardless of the term of the Lease. To the extent that any terms contained in the Lease or any other agreement between the owner and the tenant contradict the terms of this Lease Rider, the provisions of this Lease Rider shall control. By signing below, I indicate my consent to this Lease Rider: Property Representative Name (print) (signature) Date ************************************************************************************* By signing below, I indicate my consent to this Lease Rider. I/we have been given a copy of this Lease Rider. Resident Name (print) (signature) Date Resident Name (print) (signature) Date Resident Name (print) (signature) Date Resident Name (print) (signature) Date AHP 02/2020 AHP 02/2020 Self-Certification of Household Annual Income For use by eligible Affordable Housing Program (only to be used in-between the 3rd year requirement of a full certification) Property Name: __________________ Unit Number: ______________ Recertification Date: _____________ 1. Enter all household member’s names, relationship to the head of household and student status below: Last Name First Name Relationship to Head of Household Has This Person Been a Student During the Past Year and/or Will This Person Be a Student in the Upcoming Year? 2. Enter all household members’ gross annual income (income before taxes). Types of income include but are not limited employment wages, military pay, public assistance, Social Security/SSI benefits, Pension, VA benefits, child support, regular gifts, unemployment, and some types of financial aid. Household Member’s Name Source of Income Gross Annual Income Total Gross Annual Income from Column: $ AHP 02/2020 3. Types of income from assets include but are not limited to interest and dividends earned from checking accounts, savings accounts, retirement accounts, certificates of deposit, money market, 401Ks and real estate. Total Cash Value: (total of Current Cash Value of Asset Colum) Total Actual Income from Assets: (total of Actual Income from Assets Column) $ $ Total Annual Income ANNUAL (GROSS) INCOME (TOTAL OF ALL HOUSEHOLD MEMBERS): $_______________________ I/we hereby affirm that the foregoing information is true and complete to the best of my/our knowledge and authorize the Owner/Manager to make inquires to verify the statements herein. I/we further understand that any intentional misrepresentation in this self-certification might result in a default in the rental agreement and/or eviction of the household. If any of the aforementioned changes, I/we agree to notify the Owner/Manager immediately. All household members age 18 or older must sign and date below: Signature: ______________________________________________ Date: _________________________________ Signature: ______________________________________________ Date: _________________________________ Signature: ______________________________________________ Date: _________________________________ Signature: ______________________________________________ Date: _________________________________ Household Member’s Name Type of Asset & Source Current Cash Value of Asset Actual Income From Assets 11/2019 Property Address: ____________________ Affordable Housing Program (AHP) STUDENT STATUS SELF-CERTIFICATION FIRST NAME: TO BE COMPLETED BY APPLICANT / RESIDENT: A.Are you student at an institution of higher education?_____ Yes _____ No “Institution of higher education” includes post-secondary vocational institutions, “proprietary institutions of higher education” which prepare students for “gainful employment in a recognized occupation,” and accredited post-secondary colleges and universities. If you are not sure, please mark “yes” and we will verify the status of your institution. If you have answered no, please skip the following questions in (B) and sign below in (C). B.If you answered yes, please complete the following questions and sign below in (C): Yes No 1. Are you a full-time student?_____ ____ 2. Are you disabled?_____ ____ If yes, were you receiving Section 8 assistance as of November 30, 2005? _____ ____ 3. Are you at least 24 years of age? _____ ____ If no, please list birth date:________________ 4. Are you a veteran of the United States military?_____ ____ 5. Are you married?_____ ____ 6. Do you have a dependent other than a spouse (e.g. dependent child) _____ ____ 7. Will you be living with your parents?_____ ____ If no:a. Are your parents receiving or eligible to receive Section 8?_____ ____ b. Are you claimed as a dependent on your parent’s tax return? _____ ____ c. Have you maintained a household separate from your parents orguardians for at least 1 year?_____ ____ 8. Are you a graduate or professional student?_____ ____ 9. Were you an orphan or a ward of the court through the age of 18?_____ ____ 10. Are you classified as a Vulnerable Youth?_____ ____ 11. Are you a student for whom a financial aid administrator makes adocumented determination of independence by reason of otherunusual circumstances?_____ ____ C. ________________________________ __________________________________ Signature Print Name ________________________________ Date LAST NAME: AHP 02/2020 UNDER $50,000 ASSET CERTIFICATION for use with HRA's Affordable Housing Program Only For households whose combined net assets do not exceed $50,000. Complete only one form per household; include assets of children. Household Name: Unit No. Development Name: City: Complete all that apply for 1 through 4: 1.My/our assets include (enter n/a in (A) if you do not own the respective asset): (A) Cash Value* (B) Int. Rate (A*B) Annual Income Source (A) Cash Value* (B) Int. Rate (A*B) Annual Income Source $ $ Savings Account(s) $ $ Checking Account(s) $ $ Include online accounts such as GoFundMe, Fundly, etc. Cash on Hand $ $ Cash cards used to receive government benefits or other income $ $ Certificates of Deposit $ $ Money market funds $ $ Stocks $ $ Bonds $ $ IRA Account(s) $ $ 401K Account(s) $ $ Keogh Account(s) $ $ Trust Funds $ $ Equity in real estate $ $ Land Contracts $ $ Lump Sum Receipts $ $ Capital investments $ $ Life Insurance Policies (excluding Term) $ $ Other Retirement/Pension Funds not named above: $ $ Personal property held as an investment** : $ $ Other (list): PLEASE NOTE: Certain funds (e.g., Retirement, Pension, Trust) may or may not be (fully) accessible to you. Include only those amounts which are. *Cash value is defined as market value minus the cost of converting the asset to cash, such as broker's fees, settlement costs, outstanding loans, early withdrawal penalties, etc. **Personal property held as an investment may include, but is not limited to, gem or coin collections, art, antique cars, etc. Do not include necessary personal property such as, but not necessarily limited to, household furniture, daily-use autos, clothing, assets of an active business, or special equipment for use by the disabled. 2.Within the past two (2) years, I/we have sold or given away assets (including cash, real estate, etc.) for more than $1,000 below fair market value (FMV). Those amounts equal a total of: $ (enter the difference between FMV and the amount you received). 3.I/we have not sold or given away assets (including cash, real estate, etc.) for less than fair market value during the past two (2) years. 4.I/we do not have any assets at this time (do not check this box if you have entered any numbers in section 1, above). The net family assets (as defined in 24 CFR 813.102) above do not exceed $50,000 and the annual income from the net family assets is $ (enter the total of all (A*B) Annual Income in section 1 above). This amount is included in total gross annual income. Under penalty of perjury, I/we certify that the information presented in this certification is true and accurate to the best of my/our knowledge. The undersigned further understand(s) that providing false representations herein constitutes an act of fraud. False, misleading or incomplete information may result in the termination of a lease agreement. Applicant/Tenant Under $50,000 Asset Certification Date Applicant/Tenant Date G-1 4839-1203-3722\2 Exhibit G Form of Project Funding Certificate AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Developer”) has entered into that certain Redevelopment Agreement with the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA (the “Authority”), dated effective as of June 11, 2020 (the “Agreement”). Developer hereby certifies to the Authority, pursuant to Section 4.6 of the Agreement, that the funding sources identified in Exhibit 1, attached hereto, have been fully committed and available to Developer for the construction of the Project. Dated: __________________ DEVELOPER: AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Christopher J. Stokka Its: Chief Manager G-2 4839-1203-3722\2 Exhibit 1 to Project Funding Certificate (Amundson Flats) H-1 4825-1172-7802\3 Exhibit H Form of Affordable Housing Restrictive Covenant DECLARATION OF COVENANTS AND RESTRICTIONS (Affordable Housing) THIS DECLARATION OF COVENANTS AND RESTRICTIONS (this “Declaration”) is made as of the _____ day of ______________, 2020, by AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Declarant”). Recitals A. Declarant is the owner of certain real property situated in the city of Edina (the “City”), county of Hennepin, state of Minnesota, located at 7075-7079 Amundson Avenue and legally described in the attached Exhibit A (the “Property”). B. Declarant and the Housing and Redevelopment Authority of Edina, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”) are parties to that certain Redevelopment Agreement dated June 11, 2020 (as may be amended from time to time, the “Redevelopment Agreement”). C. The Redevelopment Agreement provides for the redevelopment of the Property by Declarant with the cooperation and assistance of the Authority and provides for the expenditure of certain public funds to assist in such redevelopment of the Property and construction thereon of a four-story, 62-unit, 100% affordable, “workforce” housing community, known as “Amundson Flats” (the “Project”). D. The City, by Resolution No 2020-27, dated February 19, 2020, approved Declarant’s development plan and rezoning for the Project (“Approvals”). E. Pursuant to the Redevelopment Agreement and as a condition to the Approvals, Declarant has agreed to impose certain restrictive covenants upon the Property to ensure that at least 100% of the housing units within the Project will remain affordable to certain low-income persons and households (“Affordable Units”). F. Declarant, under this Declaration, intends, declares, and covenants that the restrictive covenants set forth herein governing the use, occupancy, and transfer of the Project shall be and are covenants running with the Property for the Term stated herein and binding upon all subsequent owners of the Property for such Term, and are not merely personal covenants of Declarant. G. Capitalized terms in this Declaration have the meaning provided in the Redevelopment Agreement unless otherwise defined herein. NOW, THEREFORE, Declarant makes the following Declaration, hereby specifying that said Declaration shall constitute covenants to run with the land and shall be binding on all parties in interest and their respective successors and assigns: 1. Use Restriction. The Property shall not be used for any purpose other than a multifamily rental housing facility and related activities meeting the requirements set forth in Section 2 hereof, without H-2 4825-1172-7802\3 the prior written approval of the City and the Authority during the period commencing on the date hereof (“Commencement Date”) and ending on the later to occur of the (a) 40-year anniversary of the Commencement Date and (b) expiration of the last of the leases with a Qualifying Tenant for an Affordable Unit (the “Term”). Declarant’s obligation to operate the Project subject to this Declaration for the Term is independent of the existence and continuance of any public assistance contemplated or given by the Authority or the City to Declarant under the Redevelopment Agreement, or otherwise (“Public Assistance”). The provisions of this Declaration are intended to survive the termination or extinguishment of any Public Assistance, any mortgage securing the same, and any other security instruments placed of record in connection with the Public Assistance and to survive the termination of any subsequent financing or security instruments placed of record by other lenders. 2. Occupancy Requirements and Restrictions. (a) Affordable Units. The Affordable Units will consist of the following mix of affordability levels: (i) at least eight of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 30% of AMI (each a “30% Unit”), four of which will be set aside for High Priority Homeless individuals (the “HPH Units”) and four of which will be set aside for People with Disabilities (the “PWD Units”). If any subsidy in connection with the HPH Units or PWD Units is withdrawn or otherwise no longer available, the 30% Units may be reserved for households who have a combined gross annual income which does not exceed 60% of AMI for the HPH Units and 50% of AMI for the PWD Units; (ii) at least 31 of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 60% of AMI (each a “60% Unit”); and (iii) at least 23 of the Affordable Units will be reserved for households who have a combined gross annual income which does not exceed 70% of AMI (each a “70% Unit”). For purposes of this Declaration, “AMI” means the Area Median Income for the Minneapolis-Saint Paul-Bloomington Metropolitan Statistical Area (including adjustments for household size), as determined by the U.S. Department of Housing and Urban Development (“HUD”). Recent federal legislation has introduced an income averaging option for the low-income housing tax credit program. This legislation allows projects to accept residents with higher average median incomes as along as the overall average of the income of tenants in the project does not exceed sixty percent (60%) of the area median income, which provides low income housing projects the ability to serve tenants with a greater range of incomes (“Income Averaging”). The Minnesota Housing Finance Agency allows Income Averaging for the low income housing tax credit program to be used for the Project. This Agreement requires the Declarant to cause one hundred percent (100%) of the Affordable Units in the Project to be affordable to families at various levels using Income Averaging, if applicable; provided, however, the overall average of the income of tenants of the Project shall not exceed sixty percent (60%) of the area median income. (b) Qualifying Tenants. Each Affordable Unit shall be leased to and occupied (or held vacant and available for occupancy) for the duration of the Term only by a household who, at initial occupancy, has a combined gross annual income which does not exceed the respective AMI threshold for each type of Affordable Unit (each a “Qualifying Tenant”) (e.g., each 30% Unit may H-3 4825-1172-7802\3 only be leased to and occupied by a Qualifying Tenant whose gross annual income does not exceed 30% of AMI, etc.). Each subsequent tenant of an Affordable Unit must be a Qualifying Tenant. (c) Rental Rates. Each Affordable Unit shall bear annual rents not greater than the rental rate limits for the applicable Qualifying Tenants (adjusted for bedroom count, and including utilities and mandatory fees) as determined and announced from time to time by HUD and as published annually by the Minnesota Housing Finance Agency (or any successor agency(ies) administrating government affordable housing programs), and if such agency ceases to publish and update such rates during the Term, such annual rents for the Affordable Units shall not be greater than 30% of the respective AMI thresholds listed in Section 2(a) (e.g., annual rents for the 50% Units shall not be greater than 30% of 50% of AMI). Notwithstanding the foregoing, if any subsidy or housing support in connection with the HPH Units or PWD Units is withdrawn or otherwise not available, the rents for the 30% Units may be increased to 50% of AMI. (d) Certification of Tenant Eligibility. No tenant household shall be approved by Declarant for initial occupancy of an Affordable Unit unless and until Declarant has determined (through verification of income, assets, expenses, and deductions) whether such tenant household is a Qualifying Tenant. Each person who is intended to be a Qualifying Tenant will be required at the commencement of the initial lease of an Affordable Unit to sign and deliver to Declarant a “Certification of Tenant Eligibility” substantially in the form attached as Exhibit B, or in any other form as may be approved in writing by the Executive Director of the Authority or the City Manager of the City (the “Eligibility Certification”), in which the prospective tenant certifies as to qualifying as a Qualifying Tenant. Eligibility Certifications may be obtained no more than 120 days before a Qualifying Tenant occupies an Affordable Unit. In addition, the person will be required to provide whatever other information, documents, or certifications are deemed necessary by the Authority or the City to substantiate the Eligibility Certification. Eligibility Certifications will be maintained on file by Declarant with respect to each Qualifying Tenant who resides or resided in an Affordable Unit for a period of 10 years following the end of the Term. Declarant must re-examine and verify the income of each tenant household living in an Affordable Unit annually unless, during such year, no Affordable Unit is occupied by a new tenant household whose income exceeds the applicable income limit for Qualifying Tenants. In addition, no re-certification shall be required if a Qualifying Tenant moves to a different Affordable Unit. (e) Leases. The Affordable Units shall be rented pursuant to a written lease, and the term of each such lease shall be least 12 months, except that during the final year of the Term, new leases for the Affordable Units may be for a term of no less than six months, and such newly leased Affordable Units shall be subject to the terms and conditions of this Declaration until the expiration of such new leases. In addition, the form of lease to be utilized by Declarant in renting any Affordable Unit to any person who is intended to be a Qualifying Tenant shall: (i) not require a security deposit in excess of the amount of one month of rent in connection with any Affordable Unit; (ii) provide that rental rates charged to any Qualifying Tenant of an Affordable Unit cannot be increased more than once in any 12-month period. (iii) provide for termination of the lease and consent by the person to eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to the Eligibility Certification; H-4 4825-1172-7802\3 (iv) include a clause wherein each individual tenant or tenant certifies the accuracy of the statements made in its application and Eligibility Certification; and (v) include a clause wherein each individual tenant or tenant certifies that the family income at the time the lease is executed will be deemed substantial and material obligation of the tenant’s tenancy; that the tenant will comply promptly with all requests for income and other information relevant to determining low or moderate income status from Declarant, the Authority, or the City, and that the tenant’s failure or refusal to comply with a request for information with respect thereto will be deemed a violation of a substantial obligation of the tenant’s tenancy of its Affordable Unit. (f) Affordable Unit Mix. The Affordable Units shall be distributed as follows: (i) Eight, one-bedroom units (which will be no less than 700 square feet in size); (ii) 23, two-bedroom units (which will be no less than 965 square feet in size); and (iii) 31, three-bedroom units (which will be no less than 1,200 square feet in size). Changes in the distribution of units set forth below shall require the prior written approval of the Executive Director of the Authority and City Manager of the City. 3. Enforcement of Covenants and Restrictions. (a) Annual Certification. Declarant shall prepare and submit to the Authority and the City, annually for approval on the basis of compliance with this Declaration, a certificate substantially in the form of the attached Exhibit C, executed by Declarant, (i) identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants, including the percentage of the dwelling units of the Project which were occupied by Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding the date of the certificate; (ii) describing all transfers or other changes in ownership of the Project or any interest therein; and (iii) stating that all Affordable Units were rented or available for rental on a continuous basis during the year to Qualifying Tenants and that Declarant was not otherwise in default under this Declaration during the year. The initial deadline for submission of such certification is three months following the Commencement Date and thereafter an annual deadline for submission of January 31. (b) Books and Records. Declarant shall permit, during normal business hours and upon reasonable notice, any duly authorized representative of the Authority or City, to inspect any books and records of Declarant regarding the Project with respect to the incomes of tenant households of Affordable Units and the rents charged for Affordable Units to ensure compliance with the requirements of this Declaration. At the City’s or Authority’s request, Declarant will submit any other information, documents or certifications that Declarant, in its reasonable discretion, deems necessary to substantiate Declarant’s compliance with the requirements of this Declaration. (c) Delegation; Third-Party Monitoring. Each of the Authority and the City may, in their reasonable discretion, delegate their obligations hereunder and responsibilities for monitoring H-5 4825-1172-7802\3 and enforcement of this Declaration to a separate subdivision of the City and/or one or more designated contractors, subcontractors, or agents. Declarant shall, upon annual invoicing, reimburse the Authority and the City for third-party expenses related to monitoring of Declarant’s compliance with this Declaration, including any additional costs necessitated by re-inspections for noncompliance with this Declaration. (d) City Affordable Housing Policy. The Project and the Affordable Units shall be subject to the terms and condition of the City’s Inclusionary Housing Policy Program, as may be amended from time to time. (e) Notice of Non-Compliance. Declarant shall immediately notify the Authority and the City if at any time during the term of this Declaration the dwelling units in the Project are not occupied or available for occupancy as required by the terms of this Declaration. 4. Additional Covenants, Representations, and Warranties of Declarant. (a) Legal Compliance. Declarant shall maintain the Affordable Units and the Project in compliance with all requirements of the Redevelopment Agreement and Approvals, any requirements of any lender whose loan is secured by a mortgage to which Declarant is a party or by which it or the Project is bound, and applicable ordinances, building and use restrictions, code-required building permits, and any requirements with respect to licenses, permits, and agreements necessary for the lawful use and operation of the Project. (b) No Violation. The execution and performance of this Declaration by Declarant (i) will not violate or, as applicable, have not violated any provision of law, rule or regulation, or any order of any court or other agency or governmental body, and (ii) will not violate or, as applicable, have not violated any provision of any indenture, agreement, mortgage, mortgage note, or other instrument to which Declarant is a party or by which it or the Project is bound, and (iii) will not result in the creation or imposition of any prohibited encumbrance of any nature. (c) Section 8 Housing. Declarant shall accept tenants who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, as amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor. Declarant shall not adopt any policies specifically excluding rental to tenants holding Section 8 certificate/voucher holders solely because of the status of the prospective tenant as such a holder. (d) Underserved Populations. Declarant shall affirmatively market the Affordable Units to one or more traditionally underserved populations as affordable at the rates required hereunder. (e) LIHTC LURA. The City and the Authority acknowledge that, upon completion of the Project, the Property will be encumbered by a land use restriction agreement (“LURA”) in connection with low income housing tax credits obtained by Declarant for the Project in accordance with Section 42 of the Internal Revenue Code (“LIHTC”), restricting the use of the Property to affordable housing in accordance with LIHTC requirements. For so long as the LURA remains in effect against the Property, this Declaration shall be subordinate to the terms and conditions of the LURA and to the extent of any conflict or inconsistency between the terms of the LURA and the terms of this Declaration, the terms of this LURA shall prevail and such prevailing terms shall be deemed to be modify and replace the applicable terms of this Declaration. If the LURA is terminated prior to the expiration of the Term, then this Declaration will continue in full force and effect in accordance with its original terms until the expiration of the Term. H-6 4825-1172-7802\3 (f) Consents and Subordination. Declarant shall obtain the consent to this Declaration of any prior recorded lien-holder for the Property and shall cause such liens to be subordinated to this Declaration. Other than the LURA, Declarant has not and will not execute any other agreement with provisions contradictory to, or in opposition to, the provisions hereof and that, in any event, the requirements of this Declaration are paramount and controlling as to the rights and obligations set forth herein and supersede any other document's provisions in conflict herewith. (g) Transfer Restrictions. Subject to the terms and conditions of the Redevelopment Agreement and the Approvals, Declarant may sell, transfer or exchange the Project, the Property or any portion thereof, but Declarant shall notify the Authority and the City in writing at least 60 days prior to such sale, transfer or exchange, and use commercially reasonable efforts to obtain the acknowledgment of any buyer or successor or other person acquiring the Project or any interest therein that such acquisition is subject to the covenants and restrictions of this Declaration (and to the requirements of Redevelopment Agreement incorporated herein). Such notification shall not be required by any lender foreclosing on the Property, or any subsequent sale by such lender. Failure by Declarant to obtain such acknowledgment shall not be deemed to impair the covenants and restrictions of this Declaration. (h) Alterations; Use. Declarant shall not demolish any part of the Project or substantially subtract from any real or personal property of the Project or permit the use of any residential unit for any purpose other than rental housing during the Term of this Declaration unless required by law. (i) Casualty. Promptly upon any casualty loss or damage to all or any part of the Project (including subsurface structural support elements), Declarant shall proceed with diligence to restore the Project to the condition prior to the casualty with the insurance proceeds obtained with respect to the loss or damage to the extent the insurance proceeds recovered allow for such rebuilding; provided, however, Declarant shall not be obligated to rebuild the Project if any of Declarant’s lenders or loan agreements (whether executed before or after the date hereof) do not permit such rebuilding or require that insurance amounts recovered with respect to any loss or damage to the Project be paid directly to the lender. 5. Remedies; Enforceability. In the event of a violation or attempted violation of any of the covenants, conditions or restrictions herein contained, the City or the Authority may institute and prosecute any proceeding at law or in equity to abate, prevent or enjoin any such violation, or enforce specific performance by Declarant of the covenants, obligations, conditions and/or restrictions set forth herein, or to recover monetary damages caused by such violation or attempted violation. Declarant specifically acknowledges that the City and the Authority cannot be adequately compensated by monetary damages in the event of any default hereunder. Unless terminated as provided herein, the provisions hereof are imposed upon and made applicable to the Project, and shall be enforceable against Declarant, each purchaser, grantee, owner or tenant of the Project and the respective heirs, legal representatives, successors and assigns of each. No delay in enforcing the provisions of said covenants, conditions and restrictions as to any breach or violation shall impair, damage or waive the right to enforce the same or to obtain relief against or recover for the continuation or repetition of such breach or violation or any similar breach or violation thereof at any later time or times. In addition to any remedy set forth herein for failure to comply with the restrictions set forth in this Declaration, the City or the Authority may exercise any remedy available to it under the Redevelopment Agreement. 6. Indemnification. Declarant hereby indemnifies, and agrees to defend and hold harmless, the Authority, the City, and their respective officers, officials, employees, and agents, from and against all liabilities, losses, damages, costs, expenses (including attorneys’ fees and expenses), causes of action, suits, H-7 4825-1172-7802\3 allegations, claims, demands, and judgments of any nature arising from the consequences of a legal or administrative proceeding or action brought against them, or any of them, on account of any failure by Declarant to comply with the terms of this Declaration, or on account of any representation or warranty of Declarant contained herein being untrue. 7. Covenants Running With the Land. Declarant intends, declares and covenants, on behalf of itself and all future owners and operators of the Property and the Project during the Term, that this Declaration and the covenants and restrictions set forth in this Declaration regulating and restricting the use, occupancy and transfer of the Property and the Project (a) shall be and are covenants running with the Property and the Project, encumbering the Property and the Project for the Term, binding upon Declarant’s successors in title and all subsequent owners and operators of the Property and the Project; (b) are not merely personal covenants of Declarant; and (c) shall bind Declarant (and the benefits shall inure to the Authority and the City) and its respective successors and assigns during the Term. Declarant hereby agrees that any and all requirements of the laws of the State of Minnesota to be satisfied in order for the provisions of this Declaration to constitute deed restrictions and covenants running with the land shall be deemed to be satisfied in full and that any requirements of privileges of estate are intended to be satisfied, or in the alternate, that an equitable servitude has been created to insure that these restrictions run with the land. For the Term, each and every contract, deed or other instrument hereafter executed conveying the Property and the Project or portion thereof shall expressly provide that such conveyance is subject to this Declaration; provided, however, that the covenants contained herein shall survive and be effective regardless of whether such contract, deed or other instrument hereafter executed conveying the Property and the Project or portion thereof provides that such conveyance is subject to this Declaration. 8. Notices. Any notice, approval, consent, payment, demand, communication, authorization, delegation, recommendation, agreement, offer, report, statement, certification or disclosure required or permitted to be given or made under this Declaration, whether or not expressly so stated, shall not be effective unless and until given or made in writing and shall be deemed to have been duly given or made as of the following date: (a) if delivered personally by courier or otherwise, then as of the date delivered or if delivery is refused, then as of the date presented; or (b) if sent or mailed by certified U.S. mail, return receipt requested, or by Federal Express, Express Mail or other mail or overnight courier service, then as of the date received. All such communications shall be addressed as follows (which address(es) for a party may be changed by that party from time to time by notice to the other parties). No such communications to a party shall be effective unless and until deemed received at all address(es) for such party: Declarant at: Amundson Flats, Limited Partnership Attention: Chris Stokka 7645 Lyndale Avenue South Minneapolis, MN 55423 The Authority at: Housing and Redevelopment Authority of Edina, Minnesota Attention: Executive Director 4801 West 50th Street Edina, MN 55424 with a copy to: Dorsey & Whitney LLP Attention: Jay R. Lindgren 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 The City at: City of Edina Attention: City Manager H-8 4825-1172-7802\3 4801 W. 50th Street Edina, MN 55424 with a copy to: Dorsey & Whitney LLP Attention: Jay R. Lindgren 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. 9. Amendment. The provisions of this Declaration shall not be amended, terminated or deleted during the Term hereof, except by an instrument in writing duly executed by the Authority, the City, and Declarant, their respective successors and assigns. 10. Attorneys’ Fees. In case any action at law or in equity, including an action for declaratory relief, is brought against Declarant to enforce the provisions of this Declaration, Declarant agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred by the City and/or the Authority in connection with the action. 11. Governing Law. This Declaration is governed by the laws of the state of Minnesota and, where applicable, the laws of the United States of America. 12. Severability. If any provisions hereof shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. [Remainder of Page Intentionally Left Blank. Signature Pages Follows] H-9 [Signature Page to Declaration of Covenants and Restrictions] 4825-1172-7802\3 IN WITNESS WHEREOF, Declarant has caused this Declaration to be executed as of the date first written above AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Name: Christopher J. Stokka Its: Chief Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of ___________, 2020, by Christopher J. Stokka, the Chief Manager of Edina Group LLC, a Minnesota limited liability company, the general partner of AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership, on behalf of the limited partnership. Notary Public THIS DOCUMENT WAS DRAFTED BY: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 H-10 [Exhibit A to Declaration of Covenants and Restrictions] 4825-1172-7802\3 Exhibit A Legal Description of the Property [Part 1: Lot 2, Block 1, Amundson’s Terrace. Part 2: That part of the most Northerly 70 feet of Tract B, Registered Land Survey No. 1193, Hennepin County, Minnesota, lying West of the Southerly Extension of the East line of Lot 2, Block 1, Amundson’s Terrace. Hennepin County, Minnesota]1 1 NTD: Subject to change if recorded after final plat. H-11 [Exhibit B to Declaration of Covenants and Restrictions] 4825-1172-7802\3 Exhibit B Form of Certification of Tenant Eligibility H-12 [Exhibit B to Declaration of Covenants and Restrictions] 4825-1172-7802\3 H-13 [Exhibit C to Declaration of Covenants and Restrictions] 4825-1172-7802\3 Exhibit C Form of Certificate of Continuing Program Compliance Certificate of Continuing Program Compliance Date: ___________________ The following information with respect to the Project located at 7075-7079 Amundson Avenue, Edina, Minnesota (the “Project”), is being provided by AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership (“Declarant”) to the City of Edina Minnesota, a Minnesota statutory city (the “City”) and the Housing and Redevelopment Authority of Edina, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Authority”), pursuant to that certain Declaration of Covenants and Restrictions (Affordable Housing) dated ________________ ___, 20___ (the “Declaration”), with respect to the Project: (A) The total number of Affordable Units which are available for occupancy is 62. The total number of these units occupied is _________________. (B) The total number of units occupied by “Qualifying Tenants,” as the term is defined in the Declaration (for a total of 62 units) is ____________ (may use the Table below or attach a rent roll) ___________ _________________ _________________ Unit Number Name of Tenant Number of Persons Residing in the Unit Number of Bedrooms Total Adjusted Gross Income Date of Initial Occupancy Rent 1 2 3 4 5 6 7 H-14 [Exhibit C to Declaration of Covenants and Restrictions] 4825-1172-7802\3 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 (C) Declarant has obtained a “Certification of Tenant Eligibility,” in the form provided as Exhibit B to the Declaration, from each Tenant named in above, and each such Certificate is being maintained by Declarant in its records with respect to the Project. Attached hereto is the most H-15 [Exhibit C to Declaration of Covenants and Restrictions] 4825-1172-7802\3 recent “Certification of Tenant Eligibility” for each Tenant named in (B) above who signed such a Certification since ______________, _____, the date on which the last “Certificate of Continuing Program Compliance” was filed with the Authority and the City by Declarant. (D) In renting the residential units in the Project, Declarant has not given preference to any particular group or class of persons (except for persons who qualify as Qualifying Tenants); and none of the units listed in (B) above have been rented for occupancy entirely by students, no one of which is entitled to file a joint return for federal income tax purposes. All of the residential units in the Project have been rented pursuant to a written lease, and the term of each lease is at least twelve (12) months. (E) The information provided in this “Certificate of Continuing Program Compliance” is accurate and complete, and no matters have come to the attention of Declarant which would indicate that any of the information provided herein, or in any “Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate or incomplete in any respect. (F) The Project is in continuing compliance with the Declaration. (G) Declarant certifies that as of the date hereof at least 62 of the residential dwelling units in the Project are occupied or held open for occupancy by Qualifying Tenants, as defined and provided in the Declaration. (H) The rental levels for each Qualifying Tenant comply with the maximum permitted under the Declaration. IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of Declarant, on ____________________, 20___. AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership By: Edina Group LLC Its: General Partner By: _________________________________________ Name: Christopher J. Stokka Its: Chief Manager H-16 4825-1172-7802\3 CONSENT AND SUBORDINATION The undersigned, ___________________, a ___________________, holder of that certain [Mortgage] executed by AMUNDSON FLATS, LIMITED PARTNERSHIP, a Minnesota limited partnership, dated ________________, 20___, filed ________________, 20____, as Document No. ___________, in the office of the County Recorder in and for Hennepin County, Minnesota, in favor of ________________ (the “Mortgage”), hereby consents to the foregoing Declaration of Covenants and Restrictions (Affordable Housing) (the “Declaration”), and hereby subordinates the Mortgage and all of its right, title and interest in the Property to the Declaration. ___________________________________, a ___________________ By: _________________________________________ Printed Name: ________________________________ Title: ________________________________________ STATE OF ______________ ) ) ss. COUNTY OF ______________ ) The foregoing instrument was acknowledged before me this ____ day of ____________, 20___, by ____________________, the _________________ of ___________________, a ___________________, on behalf of the ___________________. (Signature of Person Taking Acknowledgment) I-1 4825-4123-0268\1 Exhibit I Form of Release of Reverter RELEASE OF RIGHT OF REVERTER Date: __________ ___, 20___ FOR VALUABLE CONSIDERATION, the real property in Hennepin County, Minnesota, legally described on the attached Exhibit A is hereby released from that certain right of reverter (“Right of Reverter”) owned by the undersigned and described in Section 3.4 of that certain Redevelopment Agreement dated as of June 11, 2020, as evidenced by Memorandum of Redevelopment Agreement, dated as of June 11, 2020 and filed June ___, 2020, as Document No. ________ in the Office of the Hennepin County Recorder (collectively, the “Redevelopment Agreement”). Except as set forth in this instrument, all of the terms, covenants, and conditions of the Redevelopment Agreement remain in full force and effect. Check here if all or part of the described real property is Registered (Torrens) HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: ______________________________________ Name: Scott Neal Its: Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of ______________, 20___, by Scott Neal, the Executive Director of the Housing and Redevelopment Authority of Edina, Minnesota, on behalf of said Authority. Notary Public DRAFTED BY, AND AFTER RECORDING RETURN TO: Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 I-2 4825-4123-0268\1 Exhibit A Description of Property Lot 1, Block 1, Amundson Flats, Hennepin County, Minnesota Date: June 11, 2020 Agenda Item #: VIII.A. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Devfelopment Manager Item Activity: Subject:Approve a Revolving Loan and Grant to Expand Land Trust Program 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 a Revolving Loan and Grant to expand Land Trust P rogram and authorize staff to engage attorney to draft grant agreement and other necessary legal documents. INTRODUCTION: The City of Edina has been supporting the West Hennepin Affordable Housing Land Trust (WHAHLT ), dba Homes Withing Reach (HWR), since 2007 through the allocation of the City’s Community Development Block Grant program funds. Since that time, 14 houses have been placed into a Land Trust to remain affordable for 99-years. The proposed revolving loan program is designed to expand the Homes Within Reach program number of affordable ownership homes in Edina by removing funding limitations through the creation of an Edina Revolving Loan program (ERLP) with two major provisions. - The proposed ERLP will provide a grant to fund the creation and preservation of ownership home in the City of Edina, by using HWR Community Land Trust practice. · The proposed ERLP will provide a line of credit to WHAHLT to acquire, rehab and sell the home to a qualified buyer. ATTACHMENTS: Description Staff Report Exhibit A June 11, 2020 Chair and Commissioners of the Edina HRA Stephanie Hawkinson, Affordable Housing Development Manager Approve a Revolving Loan and Grant to Expand Land Trust Program and Authorize Staff to Engage an Attorney to Draft Legal Agreements Information / Background: The City of Edina has been supporting the West Hennepin Affordable Housing Land Trust (WHAHLT), dba Homes Within Reach (HWR), since 2007 through the allocation of the City’s CDBG program funds. Since that time, 14 houses have been placed into a Land Trust to remain affordable for 99-years. This program is designed to expand the Homes Within Reach number of affordable ownership homes in Edina by removing funding limitations through the creation of an Edina Revolving Loan program (ERLP) with two major provisions. • The proposed ERLP will provide a grant to fund the creation and preservation of affordable home ownership in the City of Edina, by using HWR Community Land Trust practice. • The proposed ERLP will provide a line of credit to WHAHLT to acquire, rehab and sell the home to a qualified buyer. Description of the Community Land Trust practice: HWR establishes affordability by using the Community Land Trust practice to acquire and retain the ownership of real property, rehabilitate and then sell the improvement (home) to buyers earning less than 80% Area Median Income (AMI). The HWR Community Land Trust program removes the land value from the mortgage equation to create initial affordability. The home costs less than market rate homes because HWR buyers purchase only the house and enter into a Ground Lease with WHAHLT-HWR to secure the long-term rights and use of the land. This land trust practice offers long-term affordability, where each affordable home will offer homeownership to 7- 12 families throughout the life of the lease. The homes are made permanently affordable for work-force homeowners through two contractual provisions embedded in the Ground Lease. • The first is a pricing formula that provides the owner with a fair amount of equity (HWR is 35%), while ensuring the sale price for subsequent low-to-moderate income households is affordable. • The second requires the homeowner to sell to another low-to-moderate income household. In addition, the provisions ensure the home continues to be affordable with each sale. STAFF REPORT Page 2 The Ground Lease allows the homeowner to secure long-term rights to the land. In addition, the homeowners have full use of the land and are responsible for the property and payment of all real estate taxes on the house and the parcel of land. The homeowner may sell his/her home only to an income qualified buyer. The resale price is based on a formula, which (based on market conditions) allows the seller to recover the original cost of the house plus a modest profit. Therefore, assuming the house has retained or increased in value, the homeowner who sells his or her home will get all of their equity plus a percentage (35%) of the home’s appreciation (the amount that a home has increased in value since it was purchased). As a result, Community Land Trust homes remain affordable for consecutive generations of homeowners, because the resale restriction ensures permanent affordability. Housing is a multiplier, a basic need that impacts every part of life: education, health, economic success. HWR’s mission is to continue creating affordable homeownership for low-to-moderate income work-force households, which in turn stabilizes the family unit, adds value to the suburban community and protects the HRA’ s investment HWR program features of cost, quality and location of its homes has been and continues to appeal and draw interest from workforce households with low-to-moderate income. Who is the target clientele? What populations will benefit from the activity? The proposal supports work-force families providing essential services to the community and surrounding suburbs who typically cannot afford to purchase an entry-level home in Edina; such as custodians, teachers, municipal workers, retail staff, office personnel, food prep staff, customer service representatives and many more. In 2007, Homes Within Reach implemented its program in the City of Edina, creating and preserving affordable homeownership, using the Community Land Trust practice. To date, HWR has assisted sixteen families (includes two resales) become Edina homeowners. The target market for Edina is households with 50% - 80 % Area Median Income. Over the past 12 years, HWR has served households between 34% to 76% AMI in the City of Edina. The program average Area Median Income (AMI) in Edina is 60% and 50% for resales. The program has served 60 persons. What community needs does this activity address: In today’s market, Edina is confronted with the fact entry-level properties are overpriced for most work-force households who work or live in the City. Increased home values have taken place because of a reduction in supply and increase in demand, while wages have not increased accordingly and cannot keep pace with increases in housing costs. HWR program not only offers value and benefits to the families it has assisted in becoming homeowners; the program also expands homeownership opportunities, retains community wealth, by making maximum use of existing properties and the community’s infrastructure with younger households. It also provides a mechanism to invest in affordable homeownership, which enhances residential stability and the preservation of housing affordability by recycling funds from owner to owner. Additional Information may be found in Exhibit A. STAFF REPORT Page 3 Budget Request: $1,300,000 Revolving loan $840,000 Grant Interim Sources Uses Affordable Housing Trust Fund $1,300,000 Acquisition $1,020,000 Rehabilitation $ 204,000 Permanents Sources Project Expenses $ 81,000 Affordable Housing Trust Fund $840,000* TOTAL $1,305,000 Home Buyers $465,000 TOTAL $1,305,000 *The amortization of the proposed project of a net contribution of $280,000 per house for a 99-year period is $2,828.28 per year. Affordable Housing Trust Fund Estimated Balance Requests Beginning Balance $4,060,000 Market Street ($750,000) 4d Pilot Program – 2018 -NO TAKERS ($160,000) 4d Pilot Program -2019 ($50,000) VEAP Emergency Assistance ($100,000) Single Family Ownership Programs ($840,000) Ending Balance $2,160,000 Next Steps: Staff will return to the HRA with a Memorandum of Understanding and a Grant Agreement for review and approval. Page 1 of 5 EXHIBIT A Proposed Program: Revolving Loan Program Summary Purpose: Create and preserve affordable homeownership for work-force families (80% below AMI) Partnership: City of Edina, HRA and West Hennepin Affordable Housing Land dba Homes Within Reach 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). Housing Production in creating and preserving a Community Land Trust home. The following is an outline of the three major HWR housing production phrases. Detail as it relates to the outline of general categories follow the chart. The list of tasks does not include detail steps, such as application, credit review and income verification. Page 2 of 5 1. Applications Process: 1. Submission of HWR application with required financial attachments. a. Approval for HWR to pull credit report b. HWR orientation (Informational Meeting) and compliance with qualifications and criteria c. Applicant meet with HWR staff to review credit reports and assist in meeting qualifications and finalize income verification to ascertain eligibility and determine work plan to be credit worthy to meet with loan officer d. Attendance of a Home Stretch Class sponsored by Minnesota Homeownership Center is required. This education is to provide basic tools to move through the process and own a home. 1. Application Process Application/Credit Reports/Qualifications/Selection Informational Meeting Orientation & Homebuyer Education Interviews and Income verification Meeting with Lender process application Pre-approvals 2. Acquisition Property Search Property Selection Purchase Offer LC Approval Contingency Inspections Determine Scope of Rehab, Finalize Offer, Remove Contingencies Acquire property Inspections - Energy, Radon & PIRA, Finalize Scope of Rehab Rehab Final Inspections 3. Selling/Closing Process Mortgage Application and Approval Selection of Property HWR Resident Committee Interview, Finalize Income Eligibility Execute PA , Home Inspection, Attorney Review Closing - Coordination with Funders, Buyers, Closer CLT Housing Production Page 3 of 5 e. Participation in the interviews and working sessions with HWR staff f. Income verification of eligibility per HOME regulations g. Select lender from approved list of CLT lenders and process application 2. Attendance by prospective applicant to a HWR Informational Meeting 3. Pre-approval from one of six lending institutions, Alerus Mortgage, Bremer Bank, Mid-Country Bank, US Bank, AnnieMac Home Mortgage and Trustone Home Mortgage. 2. Acquisition & Rehab: 1. Property Search a. Criteria to Real Estate Agent based on annual goals & projections, funding resources, application pool/profile realtor previews b. Inspects multiple properties before selecting one to continue the process i. Initial Inspection - Property Search Criteria ii. Location 1. Neighborhood setting with close proximity to services and transportation 2. Structural integrity and conditions of the home and property c. 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 d. Property Selection i. Research Hennepin Property Information ii. Create Preliminary Project Budget to determine if acquisition is feasible iii. Determine affordability gap & funding sources iv. Acquisition Approval from City – location and LC for acquisition. v. Initial Offer: Decision Point e. Purchase Offer of Selected Property (foreclosed properties take additional time) i. Multiple offers in negotiating initial purchase price prior to the contingency period. ii. If Applicable: Counter Offer iii. Offer – Accepted / Not Accepted iv. Execute Purchase Agreement 1. Non-profit Purchase Letter and Page 4 of 5 2. Seller Acceptance of Voluntary Offer f. Request and Finalize Line of Credit for acquisition i. WHAHLT/HWR submits invoice to City including: 1. Request access to Line of Credit a. Preliminary Sources and Uses b. PA ii. City of Edina approves LC via email to HWR within 24 hours of submission. iii. City of Edina transfer funds to WHAHLT’s bank account three days prior to acquisition closing date. g. Due-Diligence Period – PA Contingency Period i. Includes at least three levels of inspections 1. WHAHLT Contractor 2. House Masters 3. Hennepin County ii. There are multiple inspections after acquisition of the property. 1. Energy Audit 2. Radon Test 3. PIRA 4. Others if deemed necessary h. Determine Rehab/Construction Requirements using the three inspections i. Complete HWR Inspection Form ii. Finalize Offer and Remove Contingencies if appropriate or renegotiate price or release the PA iii. Send Purchase Agreement that includes copies of nonprofit purchase letter and seller’s acceptance of voluntary offer along with the Preliminary Sources & Uses, MLS listing and tax statement to the City of Edina. Title commitment and appraisal is submitted at a later date iv. Implement Pre-Closing Action Items v. Pursuant to HWR Property Acquisition Checklist vi. Acquire Property vii. Pursuant to required real estate transaction – law and lending practices i. Post Purchase Action Items - i. Ready the property to move to the Selling Home Process & Procedures and Application Checklists ii. During the selling/selection process, a qualified family is approved and rehab/repair work has begun on the home and completed prior to selling the home iii. Identify and perform rehabilitation work that is necessary to make the acquired home hazard free and safe and ready the home for sale to a qualified homebuyer j. Rehab process includes but is not limited to: i. Inspections 1. Radon, Blower/Energy Tests and PIRA if necessary ii. Preparation of inspection report iii. Determine scope of work and cost estimates Page 5 of 5 iv. Determine rehab work plan, provide written specifications v. Negotiate and execute scope of work – proposal/contract vi. Commence and complete work vii. Contractor presents to WHAHLT/HWR invoice for work with all permits and required inspections viii. Final inspection of work completed with permits/approvals and lien waivers ix. WHAHLT/HWR makes payment to contractor 3. Selling Process: During the selling/selection process, a qualified family receives approval by HWR and a preliminary approval by the lending institution and rehab/repair work has begun on the home and completed prior to selling the home. 1. HWR supervises the process to sell the home using the Community Land Trust practice and the funding requirements. a. Mortgage application and request pre-approval for a mortgage b. HWR Resident Committee Interview c. Selection of Property – show and select a home by a qualified applicant with a mortgage pre- approval by an approved CLT lender d. Execution of PA and all attachments and riders if necessary e. Applicant Inspection of home f. Applicant typically is required by lending institution to have a third party inspection and HWR encourages the applicant to engage in a third party inspection - even if it is not required. g. Attorney review of documents (including the ground lease) and review with prospective homebuyer h. Closing transaction i. Selling of the home improvements j. Execution of the Ground Lease and Mortgage k. 5 working days after home sale, 50% of proceeds are sent to the City of Edina, to be deposited into the HRA Revolving Loan Fund. Remaining balance is sent to the City of Edina after project costs are closed out – 30-60 days after sale of home. l. Final documentation regarding the sale is sent to the City of Edina – HRA that includes ii. Appraisal, which is completed after rehab is completed prior to sale of the home. iii. Applicant income qualifications iv. Purchase HUD settlement Statement v. Copy of the Seller’s Purchase Agreement vi. Copy of Warranty showing transfer to HWR vii. Title Commitment viii. Lender’s Underwriters worksheet (Fannie Mae 1008) Date: June 11, 2020 Agenda Item #: VIII.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Bill Neuendorf, Econ. Dev. Manager & Chad Milner, Director of Engineering Item Activity: Subject:Grandview 2 TIF District - Programming Funds for Public Infrastructure 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 solicit engineering and design of public improvements in the Grandview 2 Tax Increment Financing (T IF) District. INTRODUCTION: This item pertains to construction of public infrastructure to serve the Grandview District. With incremental taxes beginning to be collected, staff recommends that a slate of public improvements be pursued. This will allow redevelopment goals of the TIF District to be achieved in the future. An overview is attached for review and consideration. ATTACHMENTS: Description Programming Funds - Staff Report Grandview 2 program - presentation Chair and Commissioners of the Edina Housing & Redevelopment Authority Bill Neuendorf, Economic Development Manager Grandview 2 TIF District Programming Funds for Public Infrastructure Information / Background: The Grandview 2 Tax Increment Financing (TIF) District was established in 2016 to provide a funding source for public redevelopment improvements in portions of the Grandview District. The potential improvements are described in the 2012 Framework and subsequent Transportation Plan. The TIF District covers approximately 10.8 acres and includes 15 parcels and adjacent streets. Since the time the TIF District was established, the Edina School District sold their property for private development. The Avidor – a new 55+ age-restricted apartment complex was constructed on that property and was completed in 2019. No decision has been made about the development of the City’s vacant property at 5146 Eden Avenue. After considering several options for combinations of public and private uses on the site from 2016 - 2018, a preferred scenario has not yet been identified. It does not appear that a development plan for the City’s vacant site will be decided in the near future. In order to comply with the 5-year rule in Minnesota TIF Statutes, staff has considered alternative strategies to achieve some of the goals identified in previous planning efforts. Staff has two recommendations: 1) Delay action on the City’s vacant parcel at 5146 Eden Ave. 2) Design and construct a variety of public improvements using the incremental property taxes generated by the completed Avidor project. STAFF REPORT Page 2 The attached presentation summarizes the goals and scope of public improvements. The presentation also includes revenue projections that informed the recommendation to issue public debt to finance these improvements. City Engineer Chad Milner has identified a slate of improvements that can be readily designed and constructed in 2021-2022. These proposed improvements are derived from the 2016 Transportation Plan and other redevelopment studies for the Grandview District. The improvements potentially include planning, design, construction, acquisition and administration. The recommended scope of work is summarized below. Scope of Project Estimated Costs Street Projects (streets, sidewalks, bikeways, bus bays, retaining walls) Eden Ave. (from Arcadia to Vernon) $1.3 M Arcadia Ave. (from Eden to 50th ) $1.3 M Eden / Arcadia intersection included Brookside Rd. (from Eden to Parking Ramp) TBD Utilities Sewer Lift Station at Eden / Arcadia $1.7 M Water main from Treatment Plant Included Capital Improvements Jerry’s / Brookside Ramp (ped. Bridges, lighting, signage, wayfinding, solar) $1.0 M Land Acquisition TBD Soil Remediation at 5146 Eden Ave. TBD Total = $5.3 M Staff seeks approval of these recommendations and authorization to seek a design engineer to clarify the scope of these projects and to prepare construction documents that can be used to solicit construction bids for the 2021 road construction season. As the project scope becomes more focused, staff will also seek the consent of the HRA Board for the anticipated actions: • Approval of Planning/Engineering Design Contract • Approval of Construction Administration Contract • Approval of Construction Contract • Approval to issue TIF bonds City staff will be available to answer questions about these recommendations. Grandview 2 TIF DistrictProposed Program of Public ImprovementsPresentation to Edina HRA BoardJune 11, 2020Presented by:Bill Neuendorf, Economic Development ManagerChad Millner, Director of Engineering •Decision needed regarding funds in Grandview 2 TIF District•Staff recommends slate of public improvements using approx. $5 million incremental property taxesSummaryEdinaMN.gov2 Background•Redevelopment discussed for many decades•Strategic steps taken to create funding opportunities that benefit the general publicEdinaMN.gov3Key Events2016 TIF District established2016 Transportation Plan approved2019 Avidor Apartments completed2019 Comprehensive Plan completed2020 First TIF collection2021 5-year deadline for funding2045 TIF District scheduled expiration Funding OpportunityDedicated funding available for public improvements•Revenue begins in 2020 •Continues for up to 25 years•Can be used for: engineering, architecture, construction, related legal and administrative costsBut …EdinaMN.gov4 Funding Constraint•Funds must be committed by June 26, 2021Revenue source no longer available after that timeEdinaMN.gov5 Revenue ProjectionsEdinaMN.gov6 Strategic Path ForwardStaff considered several strategies and recommends the following:1)Issue TIF-supported & GO backed bonds (debt) by June 26, 2021 to fund public roadway and utility improvements1)-Approx $5 million2)- Repaid over approx. 10-years3)- Retire TIF District early, when debt repaid2)If necessary, seek 2021 legislative extension of 5-year rule to allow more time to solidify scope of workEdinaMN.gov7 Objectives of Public Improvements1)Implement some recommendations prepared in 2012 Framework, 2016 Transportation and 2019 Comprehensive Plans2)Simplify future redevelopment of vacant parcel1)- no decision on type of future redevelopment3)Improve the HRA-owned Jerry’s/Brookside Parking Ramp4)Limit financial risk to City & HRA5)Minimize duration of Grandview 2 TIF DistrictEdinaMN.gov8 9Jerry’sRampArcadia AveTIF District Parcels - 2016 Potential Site Improvements•Environmental remediation •Site preparation•Structured parkingPotential Public Improvements•Eden Av•Arcadia Av•New shared-street & bridge•New road to “Jerry” parking ramp•Vernon/Eden intersection•Eden/Sherwood intersection•Eden/Arcadia intersection•Structured Parking10Likely Uses of Incremental Taxes Collected – 2016 TIF Plan Grandview Transportation Plan11EdinaMN.govShort Term Mid Term Recommended Public Improvements12Scope of Project Est. CostsStreet Projects(streets, sidewalks, bikeways, bus bays, retaining walls)Eden Av. from Arcadia to Vernon $1.3 MArcadia Av. from Eden to 50th$1.3 MEden/Arcadia intersection IncludedBrookside Rd. from Eden to Ramp TBDUtilitiesSewer Lift Station at Eden/Arcadia $1.7 MWater main from treatment plant IncludedCapital ImprovementsJerry’s/Brookside Ramp (ped bridges, lighting, signage, wayfinding, solar)$1.0 MLand Acquisition TBDSoil remediation at 5146 Eden Av TBD .Total = $5.3 MEdinaMN.gov 13Recommended Public Improvements –2021-22 Questions&DiscussionEdinaMN.gov14 Steps to Implement TIF15•Boundaries•Maximum Budget•Term•Qualifications•But-for1) Create “District”•Private developments•Public improvements2) Consider Funding for Specific Projects•4-year kick-out•5-year construction•Annual reporting•De-certification3) Monitoring & ComplianceSteps to Establish, Fund and Monitor TIF(defined in Minnesota TIF Statutes)Completed2016For Consideration2020 Potential Revenue Collected•$32.5 million in taxes (over 26 year term)•$35.7 million (with interest earnings)16Approved TIF Plan BudgetProjected Uses of Funds•Land acquisition $1.5 M (4%)•Site preparation $1.5 M (4%)•Utilities $1.2 M (3%)•Other Improvements $13.8 M (39%)•Administrative $3.2 M (9%)•Interest $14.5 M (41%)•Total $35.7 MPage 2-6 of Grandview 2 TIF Plan Date: June 11, 2020 Agenda Item #: IX.A. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Liz Olson, Administrative Support Specialist 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: Attached is correspondence received since the last HRA meeting. ATTACHMENTS: Description HRA Correspondence 6-1-20 City of Edina Correspondence Submission If you are leaving comments for a public hearing being heard by Council or the Planning Commission, go to https://www.bettertogetheredina.org/public-hearings Correspondence Selection * Data Practices Advisory: Any information submitted through this form will be emailed to the Housing and Redevelopment Authority (HRA) Chair and Commissioners and submitted for inclusion in the next public “HRA packet.” HRA packets are permanent records of materials prepared for HRA meetings. HRA packets are public documents that are available in print, published on the City’s website and maintained in permanent electronic records. You are not required to complete any fields of this form. However, if you do not provide your name and street or email address, your comments will not be included in the HRA packet. Open Meeting Law The HRA Chair and Commissioners receive and consider all feedback sent through this form. Because of the open meeting law, the HRA Chair and Commissioners cannot engage in back-and-forth emails involving a quorum of three or more members. For that reason, you might not receive a response from them. You might also receive a response from a City staff member. Email HRA: If you only want to email the City Council and not send your comments for publishing, contact members at CityCouncil@EdinaMN.gov. Contact Executive Assistant Jennifer Garske, at jgarske@EdinaMN.gov, if you have any questions or require assistance. HRA Packet Deadline Correspondence must be received by noon the Monday prior to a HRA meeting in order to ensure it is published in the packet prior to the Council meeting. Submissions after that time may be included in a future Council packet. Name * Street Address City State Zip Code Phone Number Email Housing and Redevelopment Authority Sidney no dashes or spaces brow3665@umn.edu Comments * File Upload By submitting this form, I have read and agree to the Data Practices Advisory above. Hi- I wanted to bring to your attention/inquire about the fact that virtually all condos in the city of Edina do not accept pets. Examples include: 6400 York “The Yorker” All Edinborough communities York Plaza 7500, 7510 Cahill Rd All “Windwood Condos” 6670 Vernon “Fountain Woods” (accepts cats) 4350 Brookside Court 4100 Parklawn “Heatherton Condos” These are just the ones I was able to query for in the past 5 minutes. They all say “pets not allowed”. I was wondering why this is, and if the city council can provide a list of condominiums/complexes in the city of Edina that are under $250k that do allow pets, dogs specifically. I’ve lived on the Edina border my entire life. It’s frustrating that as a young professional, the housing options are so clearly not welcoming for me. Thank you. Attachments allowed: pdf, jpg, png