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HomeMy WebLinkAbout2025-04-10 HRA Packet Meeting location: Edina City Hall Council Chambers 4801 W. 50th St. Edina, MN Housing & Redevelopment Authority Meeting Agenda Thursday, April 10, 2025 7:30 AM Participate in the meeting: Watch the meeting on cable TV or YouTube.com/EdinaTV. Provide feedback during Community Comment by calling 312-535- 8110. Enter access code 2867 227 2163. Password is 5454. Press *3 on your telephone keypad when you would like to get in the queue to speak. A staff member will unmute you when it is your turn to speak. Accessibility Support: The City of Edina wants all residents to be comfortable being part of the public process. If you need assistance in the way of hearing amplification, an interpreter, large-print documents or something else, please call 952-927- 8861 at least 72 hours in advance of the meeting. 1. Call to Order 2. Roll Call 3. Pledge of Allegiance 4. Approval of Meeting Agenda 5. Community Comment During "Community Comment," the Chair will invite residents to share issues or concerns that are not scheduled for a future public hearing. Items that are on tonight's agenda may not be addressed during Community Comment. 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. Individuals should not expect the Chair or Commissioners to respond to their comments tonight. The Chair will respond to questions raised during Community Comments at the next meeting. 5.1. Executive Director's Response to Community Comments 6. Adoption of Consent Agenda All agenda items listed on the Consent Agenda will be approved by one motion. There will be no separate discussion of items unless requested to be removed by a Commissioner. If removed the item will be considered immediately following the adoption of the Consent Agenda. (Favorable roll call vote of majority of Commissioners present to approve, unless otherwise noted in consent item.) 6.1. HRA Minutes from March 27, 2025 Regular Meeting Page 1 of 42 6.2. Amend Loan Agreement with Buhl 3906, LLC 7. Reports/Recommendations: (Favorable vote of majority of Commissioners present to approve except where noted) 7.1. Amend Loan Agreement with Edina Chamber of Commerce 8. Executive Director Comments 9. HRA Member Comments 10. Adjournment Page 2 of 42 BOARD & COMMISSION ITEM REPORT Date: April 10, 2025 Item Activity: Approve Meeting: Housing & Redevelopment Authority Agenda Number: 6.1 Prepared By: Liz Olson, Administrative Support Specialist Item Type: Minutes Department: Community Development Item Title: HRA Minutes from March 27, 2025 Regular Meeting Action Requested: Approve HRA Minutes from March 27, 2025 Regular Meeting. Information/Background: Supporting Documentation: 1. HRA Minutes from March 27, 2025 Regular Meeting Page 3 of 42 Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY March 27, 2025 7:30 A.M. I. CALL TO ORDER Chair Hovland called the meeting to order at 7:30 a.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Chair Hovland, Commissioners Agnew, Jackson, Pierce, and Risser. Absent: None. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED – AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Agnew, approving the meeting agenda as presented. Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. V. COMMUNITY COMMENT No one appeared. V.A. EXECUTIVE DIRECTOR’S RESPONSE TO COMMUNITY COMMENTS Executive Director Neal responded there were no past Community Comments. VI. ADOPTION OF CONSENT AGENDA AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Pierce, approving the consent agenda as presented: VI.A. TERMINATE CONTRACT FOR PRIVATE DEVELOPMENT WITH JESTER CONCEPTS LLC VI.B. RESCIND GRAND AGREEMENT WITH ARBOR SUNNYSIDE PROPERTIES, LLC VI.C. DRAFT MINUTES OF REGULAR MEETING OF FEBRUARY 27, 2025 AND SPECIAL WORK SESSION OF MARCH 13, 2025 Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. VII. REPORTS AND RECOMMENDATIONS VII.A. PROPOSED FINANCING STRUCTURE FOR PUBLIC PARKING AT 7001 FRANCE AVENUE – PRESENTED Economic Development Manager Neuendorf presented information regarding the approved site plan, renderings of the different sites, vision for shared rather than private parking, interest rates, inflation, hesitancy, new approach to resolve financing gap, fundamentals to consider, outline for discussion, potential risks, impact to City’s overall finances, and mitigating risk to the City/HRA. The Board asked questions regarding the TIF note vs. the TIF district, opportunities for public involvement, change in risk profile, district vs. site-specific parking, the building of ramp, the building of site C, the linkage between the two buildings, and potential redevelopment on neighboring sites. Economic Development Manager Neuendorf stated that one of the options would be that the TIF note would not go to the developer, but rather use incremental property taxes to pay. Economic Page 4 of 42 Minutes/HRA/March 27, 2025 Page 2 Development Manager Neuendorf stated that the two types of risk to be considered are the risk of impact on the City’s credit rating and debt repayment. Ted Carlson, Orion Investment, stated that they are looking to develop the sites independently, but with the structure of the TIF notes, that is not possible. The Board provided feedback regarding the ability to finance the development, decoupling the sites, pay-as-you-go, and class-A office buildings. Economic Development Manager Neuendorf discussed the neighboring sites and their development, going to the State Capitol to try and get special legislation to give the developer more time and changes in interest rates from 2022. The Board expressed concerns regarding the City’s credit rating, lack of benefits, and whether there is a need for district parking on this site. The Board asked questions regarding what grants have been pursued to support this project, TIF district extension, and bringing back a forecast of revenues. Economic Development Manager Neuendorf stated that they have received one grant from Deed, for $625,000 to partially reimburse for site work. Nick Anhut, Ehlers & Associates, stated that essentially what is being asked is that the City/HRA “co-signs” the loan, which does increase the risk profile. Ted Carlson, Orion Investment, stated that what they have programmed for the office site is desirable and is wanted by occupiers. The Board discussed a desire for potentially tabling this item until they have more information on what the legislature will do regarding the TIF district extension. VII.B. 2023 AFFORDABLE HOUSING COMPLIANCE REPORT – TABLED VIII. EXECUTIVE DIRECTOR COMMENTS – Tabled VIII.A. SPARC LOAN WITH EDINA CHAMBER OF COMMERCE – STATUS UPDATE VIII.B. PREPARATION FOR FUTURE DISCUSSION ABOUT TAX INCREMENT FINANCING IX. HRA MEMBER COMMENTS – None IX. ADJOURNMENT Motion made by Commissioner Pierce, seconded by Commissioner Jackson, to adjourn the meeting at 9:11 a.m. Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Page 5 of 42 d ITEM REPORT Date: April 10, 2025 Item Activity: Approve Meeting: Housing & Redevelopment Authority Agenda Number: 6.2 Prepared By: Bill Neuendorf, Economic Dev Mgr Item Type: Report & Recommendation Department: Community Development Item Title: Amend Loan Agreement with Buhl 3906, LLC Action Requested: Approve the First Amendment to the Loan Agreement for the 3916 W. 50th Street Commercial Renovation and Re-Occupancy Project Information/Background: In November 2023, the HRA and Buhl Investors executed a forgivable loan agreement to encourage the full renovation of vacant lower level space at 3916 West 50th Street. Per the terms of the agreement, the HRA will reimburse the property owner for up to $225,000 towards the cost in installing a permanent lift that will allow the unused space to comply with the requirements of the Minnesota Accessibility Code and Americans with Disabilities Act. The owner executed a lease in April 2024 but unfortunately it has taken much longer than anticipated to advance into the construction phase. The owner/tenant has recently submitted construction plans to the City's Building Department. They intend to begin construction soon with the intention of opening for business in late 2025. Staff recommends that the original deadlines in the Loan Agreement be extended to recognize more realistic completion dates. The new deadlines recognize that the source of HRA funds (SPARC program) must be expended by December 31, 2025. In keeping with the spirit of the original agreement, the loan will be forgiven after the business is in operation for one year. Staff recommends approval of the amended agreement. Resources/Financial Impacts: There is no change to the budget impact of the Loan Agreement. The terms of this agreement can be implemented as part of City staff's normal workload. Relationship to City Policies: Supporting Documentation: 1. Edina - First Amendment to 3916 W. 50th St Loan Agreement (Buhl)-v2 Page 6 of 42 4904-2653-8033\2 FIRST AMENDMENT TO LOAN AGREEMENT Between EDINA HOUSING AND REDEVELOPMENT AUTHORITY And BUHL 3906, LLC for the 3916 WEST 50TH STREET COMMERCIAL RENOVATION AND RE-OCCUPANCY PROJECT ________________________ Dated as of April 10, 2025 ________________________ This Document Was Drafted By: DORSEY & WHITNEY LLP (GIT) Suite 1500 50 South Sixth Street Minneapolis, Minnesota 55402 Page 7 of 42 1 FIRST AMENDMENT TO LOAN AGREEMENT THIS First Amendment to Loan Agreement (this “Amendment”), is made and entered into as of April 10, 2025, between the Edina Housing and Redevelopment Authority, a political subdivision of the State of Minnesota (the “HRA”), and Buhl 3906, LLC, a Minnesota limited liability company (the “Borrower,” and together with the HRA, the “Parties”), and amends that certain Loan Agreement between the Parties, dated November 16, 2023 (the “Original Agreement,” and together with this Amendment, the “Agreement”). WITNESSETH: WHEREAS, pursuant to the Original Agreement, the HRA agreed to provide Borrower with a loan of unobligated tax increment revenue to assist in financing the modernization and enhancement of certain vacant space in the Facility (as defined in the Original Agreement); WHEREAS, the Borrower has entered into a 10-year lease with DDP Restaurant Group or related business entity for the space (the “Tenant”), and the Tenant has submitted construction plans for permit review with the intention of proceeding with the work as soon as possible; and WHEREAS, the Tenant intends to obtain a liquor license for the space in the near future; and WHEREAS, the Parties desire to enter into this Amendment to modify certain dates and milestones in the Original Agreement, to permit the Borrower more time to complete the Project. NOW, THEREFORE, in consideration of the foregoing premises and the mutual obligations set forth in this Agreement, the Parties hereto hereby agree as follows: Article I Recitals; Definitions; Construction 1.1 Recitals. The foregoing Recitals are incorporated into this Amendment by this reference, including the definitions set forth therein. 1.2 Construction. Strikethrough text (strikethrough text) herein shall represent language deleted from the Original Agreement and underlined text (underlined text) herein shall represent added or replacement language. 1.3 Definitions. Unless amended hereinbelow or the context otherwise specifies or requires, the terms used in this Amendment have the definitions given them in the Original Agreement. All defined terms may be used in the singular or the plural, as the context requires. “Tenant” means the new restaurant tenant of the lower level of the Facility and portions of the street level of the Facility anticipated to be DDP Restaurant Group or a related business entity. Page 8 of 42 2 Article II Representations and Warranties 2.1 Original Agreement Representations and Warranties Reaffirmed. The City and the Borrower hereby reaffirm their respective representations and warranties provided in Article 2 of the Original Agreement. Article III Amendments 3.1 Amendment to Section 3.01(a). Section 3.01(a) of the Original Agreement is hereby amended as follows: (a) Subject to Unavoidable Delay and/or an HRA Improvement Delay, Borrower shall cause construction of the Project to begin by August 31, 2024 and be substantially completed in accordance with the terms of the Scope of Work and this Agreement by June 30, 2025. to begin by July 1, 2025, with Qualified Costs incurred by November 1, 2025, and business opening no later than December 31, 2025. 3.2 Amendment to Section 3.03. Section 3.03 of the Original Agreement is hereby amended as follows: 3.03. Forgiveness; Certificate of Forgiveness. The HRA will forgive the Loan after the Project is complete AND after the Tenant has occupied the space and begun operations for a twelve (12) month period. (i) If the Tenant begins operations on the lower level of the Facility and remains in operation on the lower level of the Facility through November 30, 2025 for a twelve (12) month period, the HRA shall forgive the Loan in full. (ii) If the Tenant begins operations on the lower level of the Facility but ceases operations prior to November 30, 2025 before twelve (12) months of operations have been completed, the HRA is only required to forgive 50% of the Loan. (iii) If the Borrower is reimbursed for the Qualified Costs and Tenant fails to begin operations on the lower level of the Facility by November 30, 2025 June 30, 2026, the Borrower is required to repay to the HRA the Loan in full. Upon the Borrower’s request and following November 30, 2025 twelve (12) months after commencement of operations by the Tenant, the HRA will furnish the Borrower with either: Page 9 of 42 3 (i) a Full Certificate of Forgiveness for the Loan, in substantially the form attached hereto in Exhibit D-1, if the Tenant begins operations on the lower level of the Facility and remains in operation on the lower level of the Facility on November 30, 2025 for at least a twelve (12) month period; or (ii) a Partial Certificate of Forgiveness for the Loan, in substantially the form attached hereto in Exhibit D-2, if the Tenant begins operations on the lower level of the Facility but ceases operations prior to November 30, 2025 before twelve (12) months of operations have been completed. If the HRA shall refuse or fail to provide a Certificate of Forgiveness following the Borrower’s request, the HRA shall, within ten (10) days after the Borrower’s request, provide the Borrower with a written statement specifying in what respects the Borrower has failed to comply with the Agreement, the Loan, or is otherwise in default, and what measures or acts will be necessary, in the reasonable opinion of the HRA, for the Borrower to obtain the Certificate of Forgiveness. 3.3 Amendment to Section 5.02(b). Section 5.02(b) of the Original Agreement is hereby amended as follows: (b) Any unforgiven principal of the Loan shall bear simple non- compounding interest from November 30, 2025 the first day of the full month after the Loan is issued, at four percent (4.00%) per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. 3.4 Amendment to Section 5.04. Section 5.04 of the Original Agreement is hereby amended as follows: 5.04. Satisfaction of Conditions Precedent. Notwithstanding anything to the contrary contained herein, the HRA’s obligation to reimburse the Borrower for Qualified Costs shall be subject to satisfaction, or waiver in writing by the HRA, of all of the following conditions precedent: (a) the conditions precedent in Section 5.03 hereof have been satisfied; (b) the Borrower shall not be in default under the terms of this Agreement beyond any applicable cure period; In the event that all of the above conditions required to be satisfied as provided in this Section 5.04 have not been satisfied by June November 30, 2025 (subject to Unavoidable Delay), either the HRA or the Borrower may terminate this Agreement if such conditions are not satisfied within thirty (30) days following notice to the non-terminating party by the terminating party. Upon such termination, the provisions of this Agreement relating to the Project shall terminate and, except as provided in Article 8, neither the Borrower nor the HRA shall have any further liability or obligation to the other hereunder. Page 10 of 42 4 3.5 Amendment to Section 5.06(a)(iii). Section 5.06(a)(iii) of the Original Agreement is hereby amended as follows: (iii) The Borrower and/or Tenant shall coordinate seasonal outdoor music in the adjacent public plaza in cooperation with the City and the 50th & France Business Association For the duration of the 10-year lease, the Borrower and/or Tenant shall actively cooperate with the 50th & France Business Association or other governing entity to provide and promote a seasonal outdoor music series in the adjacent public plaza, subject to applicable rules and regulations of the City. 3.6 Amendment to Section 5.08. Section 5.08 of the Original Agreement is hereby amended as follows: 5.08 Legal and Administrative Expenses. The HRA agrees to pay all Legal and Administrative Expenses that are incurred in connection with the negotiation, approval and documentation of this Agreement. The Borrower agrees to pay all legal and administrative expenses of any amendments to this Agreement not to exceed a total of $3,000.00 for each amendment. 3.7 Amendment to Section 9.01(a). Section 9.01(a) of the Original Agreement is hereby amended as follows: (a) in the case of Borrower, addressed to or delivered personally to: Buhl 3906, LLC c/o Buhl Investors 5100 Eden Avenue, Suite 317 Edina, MN 55436 5353 Wayzata Blvd., Suite 502 St. Louis Park, MN 55416 Attention: Pete Deanovic 3.8 Amendment to Certificates of Forgiveness. The Full Certificate of Forgiveness provided as Exhibit D-1 and the Partial Certificate of Forgiveness provided as Exhibit D-2 are amended as shown in Exhibit A-1 and Exhibit A-2 attached hereto. 3.9 Amendment to Form of Forgivable Note. The Form of Forgivable Note provided as Exhibit E is amended as shown in Exhibit B attached hereto. Article IV Additional Provisions 4.1 Titles of Articles and Sections. Any titles of the several parts, articles and sections of this Amendment are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Page 11 of 42 5 4.2 Severability. If any term or provision of this Amendment is determined to be invalid or unenforceable under applicable law, the remainder of this Amendment shall not be affected thereby, and each remaining term or provision of this Amendment shall be valid and enforceable to the fullest extent permitted by applicable law. 4.3 Ratification. Except as specifically modified by this Amendment, the terms and provisions of the Original Agreement shall remain in full force and effect. [The remainder of this page is intentionally left blank.] [Signature pages to follow] Page 12 of 42 S-1 4904-2653-8033\2 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. EDINA HOUSING AND REDEVELOPMENT AUTHORITY By James B. Hovland, Chair And James Pierce, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this ______ day of _____________ 2025, by James B. Hovland, the Chair, and James Pierce, the Secretary, of the Edina Housing and Redevelopment Authority, a Minnesota municipal corporation, on behalf of the corporation. IN WITNESS WHEREOF, I have set my hand and my official seal this ____ day of _____________, 2025. Notary Public Page 13 of 42 S-2 4904-2653-8033\2 BUHL 3906, LLC, A MINNESOTA LIMITED LIABILITY COMPANY By: Peter Deanovic Its: Chief Executive Officer STATE OF __________ ) ) ss. COUNTY OF __________ ) The foregoing instrument was acknowledged before me on this ___ day of ___________, 2025, by Peter Deanovic, the Chief Executive Officer of Buhl 3906, LLC, a Minnesota limited liability company, on behalf of the company. IN WITNESS WHEREOF, I have set my hand and my official seal this ___ day of __________, 2025. Notary Public Page 14 of 42 A-1 4904-2653-8033\2 EXHIBIT A-1 CERTIFICATE OF FORGIVENESS FULL CERTIFICATE OF FORGIVENESS WHEREAS, Buhl 3906, LLC, a Minnesota limited liability company, is the owner of the Facility on the property (the “Property”) in the County of Hennepin and State of Minnesota described on Exhibit A of that certain Loan Agreement (the “Agreement”), dated as of November 16, 2023, as amended April 10, 2025 between the Borrower and the Edina Housing and Redevelopment Authority (the “HRA”); and WHEREAS, pursuant the Agreement, the HRA provided a Loan to the Borrower evidenced by a certain Note (as such terms are defined in the Agreement) to finance certain improvements to the lower level of the Facility and other Qualified Costs (as such term is defined in the Agreement); and WHEREAS, the Borrower has fully and duly performed all of the covenants and conditions of Borrower under the Agreement with respect to the Project and the Loan, including delivery to the HRA of a Certificate of Completion; and WHEREAS, the Tenant began operations in the lower level of the Facility on __________, 20___ and has remained in operation on the lower level of the Facility through November 30, 2025 for at least a twelve (12) month period; and WHEREAS, based on the preceding clause, Section 3.03 of the Agreement requires the HRA to fully forgive the Loan. NOW, THEREFORE, it is hereby certified that all requirements of the Borrower under the Agreement with respect to the Project and Loan have been completed and duly and fully performed, and this instrument is to be conclusive evidence of the satisfactory termination of the covenants and conditions of the Agreement as they relate to the Note, and the Note is hereby fully forgiven and satisfied. Dated this ____ day of ____________, 20__. EDINA HOUSING AND REDEVELOPMENT AUTHORITY By Chair And Secretary Page 15 of 42 A-2 4904-2653-8033\2 EXHIBIT A-2 CERTIFICATE OF FORGIVENESS PARTIAL CERTIFICATE OF FORGIVENESS WHEREAS, Buhl 3906, LLC, a Minnesota limited liability company, is the owner of the Facility on the property (the “Property”) in the County of Hennepin and State of Minnesota described on Exhibit A of that certain Loan Agreement (the “Agreement”), dated as of November 16, 2023, as amended April 10, 2025 between the Borrower and the Edina Housing and Redevelopment Authority (the “HRA”); and WHEREAS, pursuant the Agreement, the HRA provided a Loan to the Borrower evidenced by a certain Note (as such terms are defined in the Agreement) to finance certain improvements to the lower level of the Facility and other Qualified Costs (as such term is defined in the Agreement); and WHEREAS, the Borrower has fully and duly performed all of the covenants and conditions of Borrower under the Agreement with respect to the Project and the Loan, including delivery to the HRA of a Certificate of Completion; and WHEREAS, the Tenant began operations on the lower level of the Facility on __________, 20___ but ceased operations on __________, 20___ prior to November 30, 2025 before twelve (12) months of operations have been completed; and WHEREAS, based on the preceding clause, Section 3.03 of the Agreement requires the HRA to forgive fifty percent (50%) the Loan. NOW, THEREFORE, it is hereby certified that all requirements of the Borrower under the Agreement with respect to the Project and Loan have been completed and duly and fully performed, and this instrument is to be conclusive evidence of the satisfactory termination of the covenants and conditions of the Agreement as they relate to the Note, and the Note is hereby partially forgiven by the amount stated herein and satisfied. Dated this ____ day of ____________, 20__. EDINA HOUSING AND REDEVELOPMENT AUTHORITY By Chair And Secretary Page 16 of 42 B-1 EXHIBIT B FORM OF FORGIVABLE NOTE No. R-1 $225,000 UNITED STATES OF AMERICA STATE OF MINNESOTA FORGIVABLE NOTE (3916 WEST 50TH STREET COMMERCIAL RENOVATION AND RE-OCCUPANCY PROJECT) PRINCIPAL AMOUNT: TWO HUNDRED TWENTY-FIVE THOUSAND DOLLARS INTEREST RATE: 0.0%; RESETTING TO 4.0% THE DATE AFTER NOVEMBER 30, 2025 This Note is issued pursuant to the provisions of that certain Loan Agreement, dated as of November 16, 2023, as the same may be amended from time to time (the “Loan Agreement”), between the Edina Housing and Redevelopment Authority (the “HRA”) and Buhl 3906, LLC, a Minnesota limited liability company (the “Borrower”). Terms used herein but not otherwise defined, shall have the meaning attributed to them in the Loan Agreement. This Note is subject to full, partial, or no forgiveness on November 30, 2025, by the HRA pursuant to the terms of the Loan Agreement and as detailed below: Full Forgiveness. If the Tenant begins operations on the lower level of the Facility and remains in operation on the lower level of the Facility through November 30, 2025 for at least a twelve (12) month period, and the Borrower receives a Certificate of Forgiveness from the HRA, the Loan shall be forgiven by the HRA in full, and the Borrower shall not be required to make any principal or interest payments on the Note. Partial Forgiveness. If the Tenant begins operations on the lower level of the Facility but ceases operations prior to November 30, 2025 before twelve (12) months of operations have been completed, and the Borrower receives a Certificate of Forgiveness from the HRA, 50% of the Loan shall be forgiven by the HRA, and the Borrower for value received, promises to pay, to the extent and in the manner hereinafter provided, to the Owner, the principal sum of one hundred twelve thousand five hundred dollars ($112,500), in semi-annual installments payable on each February 1 and August 1 (each being a “Scheduled Payment Date”), commencing the February 1 immediately succeeding November 30 [insert month after Loan issued], 2025, together with interest on the outstanding and unpaid principal balance of this Note (this “Note”) at the rate of four percent (4.0%) per annum, until the Note is paid in full. Page 17 of 42 B-2 No Forgiveness: If the Tenant of the lower level of the Facility (as described in the Loan Agreement) fails to begin operations by November 30, 2025 June 30, 2026, and the Borrower has not received a Certificate of Forgiveness from the HRA, the Borrower for value received, promises to pay, to the extent and in the manner hereinafter provided, to the Owner, the principal sum of two hundred twenty-five thousand dollars ($225,000), in semi-annual installments payable on each February 1 and August 1 (each being a “Scheduled Payment Date”), commencing the February 1 immediately succeeding November 30 [insert month after Loan issued], 2025, together with interest on the outstanding and unpaid principal balance of this Note (this “Note”) at the rate of four percent (4.0%) per annum, until the Note is paid in full. Installment payments shall be applied first to interest and then to a reduction of outstanding principal. Interest on the outstanding balance of this Note (if any) shall accrue from the date following November 30 [insert month after Loan issued], 2025, as simple, non- compounding interest. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Owner and mailed to the Owner at the postal address within the United States designated from time to time by the Owner. This Note is subject to prepayment on any Scheduled Payment Date at the option of the Borrower, in whole or in part, upon payment to the Owner of the principal amount of the Note to be prepaid, without premium or penalty. The Borrower shall pay to the Owner on each Scheduled Payment Date all amounts necessary to pay principal and interest then due and any past due installment. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by the manual signatures of the ________________ of the Borrower and has caused this Note to be dated as of _________________, 20___. BUHL 3906, LLC, A MINNESOTA LIMITED LIABILITY COMPANY By: Its: Page 18 of 42 d ITEM REPORT Date: April 10, 2025 Item Activity: Approve Meeting: Housing & Redevelopment Authority Agenda Number: 7.1 Prepared By: Bill Neuendorf, Economic Dev Mgr Item Type: Report & Recommendation Department: Community Development Item Title: Amend Loan Agreement with Edina Chamber of Commerce Action Requested: Approve the second amendment to the draw down loan agreement with Edina Chamber of Commerce Information/Background: This item pertains to the 2022 Loan Agreement between the Edina Housing and Redevelopment Authority (HRA) and the Edina Chamber of Commerce. The Chamber requested that the terms of the loan be amended so that the outstanding balance can be repaid without undue hardship to ongoing operations. The HRA's legal counsel drafted a proposed amendment for consideration by the HRA Board. Staff recommends that the amendment be approved. Additional information is included in the Staff Report. Representatives from the Chamber of Commerce will attend the meeting to describe the recent challenges and answer questions. Resources/Financial Impacts: The proposed amendment will extend the term over which the loan is repaid. City staff is able to monitor the loan as part of their regular duties. Relationship to City Policies: Supporting Documentation: 1. Staff Report - Edina Chamber SPARC Loan 4-10-2025 2. Edina HRA - 2nd Amendment to Draw-Down Loan Agreement (Chamber of Commerce) final 3. SPARC Loan - update letter from Chamber 3-3-2025 4. BIG Innovation Lab Memo 4-10-2025 Page 19 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 Information / Background: Summary A loan was issued to the Edina Chamber of Commerce to remodel a vacant commercial space to better serve the needs of the business community in Edina. Unfortunately, the Edina Innovation Lab project was unable to secure sustainable funding and closed earlier this year. The Chamber of Commerce continues to occupy the space. The Chamber of Commerce intends to repay the outstanding loan and seeks to modify the repayment terms to avoid undue hardship to the organization. This request was previously discussed at the December 19, 2024 HRA Board meeting. Background In 2022, the Edina HRA entered into a Loan Agreement with the Edina Chamber of Commerce Association, Inc. to provide construction funding to launch a new business accelerator program operated by the Chamber. The funds were needed to fully renovate a vacant tenant space at 7201 Metro Blvd to serve as collaborative workspace for the Edina Innovation Lab. The “Lab” was a new business accelerator program intended to provide expertise and assistance to established businesses so that they can craft a strategy to grow and prosper in a changing economy. The staff of the Chamber and Explore Edina were also intended to operate in this new facility. During 2023, the HRA issued a total of $650,767.01 in loan proceeds to the Chamber. The City also awarded ARPA funds to the Chamber to support operational and start-up costs of the Lab as the business world pivoted after the COVID-19 pandemic. Date:April 10, 2025 To:Chair and Commissioners of the Edina HRA From:Bill Neuendorf, Economic Development Manager Subject:Proposed Amendment to Loan Agreement with Edina Chamber of Commerce Staff Recommendation: Staff recommends that the Proposed Amendment be approved. Page 20 of 42 Proposed Loan Modification– Edina Chamber of Commerce Staff Report Page 2 The Lab was intended to support established businesses who need to pivot or restructure in order to prosper and grow. This type of specialized service was not readily available in the marketplace at the time of the loan origination. The Lab was also intended to create a new revenue stream for the Chamber to supplement its budget and create more financial stability for the non-profit organization. The original loan is amortized over a seven-year period to match the term of the lease on the office space. The loan collects 2% annual interest. Up to $250,000 of the loan was forgivable after the Chamber/Lab achieves specific milestones. Repayment of the loan began in January 2024. The current loan balance is $469,222.87. The current bi- annual loan payment is $41,722.46. In December 2024, Chamber representatives requested that the January 2025 payment be temporarily deferred. Evolution and Setbacks The remodeled office space was completed in late 2023 and has been occupied by the Chamber, Explore Edina and the Lab since that time. The Chamber has made the first two loan payments in full. The third payment (due January 2025) has been temporarily deferred. The Chamber attracted $201,961.00 in private funding to support the Lab as of July 2024. This fundraising allowed $100,980.50 of the loan to be forgiven. Additional terms of forgiveness have not been achieved. The Lab successfully completed four cohort groups during 2023 and 2024 serving more than 35 businesses. In an effort to attract outside revenue to sustain operations, the Lab was spun off as a separate B- Corporation in 2024 and rebranded as the BIG Innovation Lab. This change was made over the objections from the two City representatives on the Chamber Board of Directors. Unfortunately, this spin-off strategy was not successful. In February 2025, the Chamber announced that the BIG Innovation Lab would be ceasing operations. The announcement is attached. Despite this significant setback, the Chamber remains committed to repaying the loan. See attached letter dated March 3, 2025. Page 21 of 42 Proposed Loan Modification– Edina Chamber of Commerce Staff Report Page 3 Proposed Loan Amendment City staff met with representatives from the Chamber of Commerce to discuss changes to the loan structure that would ensure that the loan is repaid while avoiding conditions that would cause undue hardship to the ongoing operations of the Chamber of Commerce. The key aspects of the proposed amendment include: 1) Loan intended to be repaid 2) Increase balance due to include HRA’s legal fees to amend loan 3) No change in interest rate 4) Extend amortization term from 7 years to 15 years 5) Two payments each year (July 1st and December 1st) 6) Chamber continues to work in partnership with other groups to promote entrepreneurship and business development 7) Annual reports issued to HRA from Chamber 8) In case of default, HRA continues to have rights to potentially sublease or take control interest in the facility. The HRA’s legal counsel at Dorsey & Whitney has prepared the proposed loan amendment. The Board of the Chamber of Commerce is agreeable to the terms in the amendment. Representatives from the Chamber of Commerce will attend the HRA Board meeting to provide additional background and to answer questions from the HRA Board. Staff recommends that the Loan Amendment be approved. Page 22 of 42 SECOND AMENDMENT TO DRAW-DOWN LOAN AGREEMENT By and Between EDINA HOUSING AND REDEVELOPMENT AUTHORITY and EDINA CHAMBER OF COMMERCE ASSOCIATION, INC. for the EDINA INNOVATION LAB PROJECT AT 7201 METRO BOULEVARD ________________________ Dated as of April 10, 2025 ________________________ This Document Was Drafted By: DORSEY & WHITNEY LLP (GIT) Suite 1500 50 South Sixth Street Minneapolis, Minnesota 55402 Page 23 of 42 SECOND AMENDMENT TO DRAW-DOWN LOAN AGREEMENT THIS Second Amendment to Draw-Down Loan Agreement (this “Second Amendment”), is made and entered into as of this 10th day of April, 2025, by and between the Edina Housing and Redevelopment Authority, a political subdivision of the State of Minnesota (the “HRA”), the Edina Chamber of Commerce Association, Inc., a Minnesota nonprofit corporation (the “Borrower,” and together with the HRA, the “Parties”) and amends that certain Draw-Down Loan Agreement (the “Original Agreement”) dated November 17, 2022, between the HRA and the Edina Chamber of Commerce Association, Inc., d/b/a Edina Innovation Lab, as amended by a First Amendment to Drawn-Down Loan Agreement, dated August 10, 2023 (the “First Amendment,” and together with the Original Agreement, the “Agreement”) between the same. WITNESSETH: WHEREAS, pursuant to the temporary authority for use of increment granted by Minnesota Statutes, Section 469.176, subdivision 4n (the “Act”), on October 28, 2021, the HRA adopted, and on November 16, 2021, the City approved a written spending plan for unobligated tax increment monies for the Southdale 2 TIF District, Pentagon Park TIF District, and 70th and Cahill TIF District (the “Spending Plan”); and WHEREAS, pursuant to the Act and the Agreement, the HRA provided a draw down loan of unobligated tax increment revenue to the Borrower to assist in financing the Project (as defined in the Original Agreement) in a total amount of $650,767.01; and WHEREAS, the construction of the Project was completed as documented in the Certificate of Completion delivered by the HRA to the Borrower dated December, 22, 2023; and WHEREAS, the Borrower made two loan payments and received partial principal forgiveness in 2024, resulting in a balance due of $469,222.87 as the date of this Second Amendment; and WHEREAS, pursuant to the Agreement, Borrower was doing business as the Edina Innovation Lab until June 6, 2024, when the Lab was restructured as “BIG Innovation Lab, GBC,” an entity separate and distinct from Borrower, to provide the Lab the opportunity for future funding opportunities; and WHEREAS, the BIG Innovation Lab, GBC determined that ongoing operations were no longer financial viable and terminated operations as of January 30, 2025; and WHEREAS, the Parties desire to enter into this Second Amendment to modify certain terms and conditions relating to the Loan. NOW, THEREFORE, in consideration of the foregoing premises and the mutual obligations set forth in this Second Amendment, the parties hereto hereby agree as follows: Page 24 of 42 1 ARTICLE 1 Construction and Definitions 1.01.Construction. Strikethrough text (strikethrough text) herein shall represent language deleted from the Agreement and underlined text (underlined text) herein shall represent added or replacement language. 1.02.Definitions. In this Second Amendment, unless otherwise defined herein, all capitalized terms shall have the meanings given them in the Agreement. “Borrower” means Edina Chamber of Commerce Association, Inc., a Minnesota nonprofit corporation, d/b/a Edina Innovation Lab. “Facility” means the portion of the Building the Borrower shall build out and reconstruct and establish the Edina Innovation Lab has built out and reconstructed. “Loan” means a draw-down loan from the HRA to the Borrower, to be evidenced by the Note, in the principal amount up to $800,000 but not to exceed the Qualified Costs as defined herein and shown in Exhibit D hereto in the original principal amount of $650,767.01. “Project” means the build out and reconstruction of a portion of the unfinished space in the Building for establishment of a new business accelerator-type program – the Edina Innovation Lab – in the Building as generally shown in Exhibit C. ARTICLE 2 Representations and Warranties 2.01.Representations of HRA and Borrower. The HRA and Borrower hereby reaffirm their respective representations and warranties as stated in the Agreement. ARTICLE 3 Amendments 3.01.Amendment of Sections 5.02 (a), (b), and (c) of the Agreement. Subsections (a), (b), and (c) of Section 5.02 of the Agreement are hereby amended as follows: (a) The total principal amount of the Loan shall not exceed $800,000 is $650,767.01. The actual principal amount of the Loan shall be identified in the Master Note shown in Exhibit H. As of the date of this Second Amendment, Borrower has made two loan payments and received partial forgiveness in 2024, which when combined with $5,000 in additional legal fees to be paid by the Borrower to the HRA for this Second Amendment, results in a remaining balance due on the Loan of $474,222.87. (b) Repayment of the Loan shall be amortized over the seven (7) year term of the Lease a fifteen (15) year term ending December 1, 2039. Page 25 of 42 2 (c) Loan payments shall occur at least twice annually on July 1 and January 2 December 1 of each year until the Loan is paid in full. 3.02.Amendment of Section 5.05 (d) and Addition of Section 5.05 (g) of the Agreement. Subsection (d) of Section 5.05 of the Agreement is hereby amended and Subsection (g) is hereby added to Section 5.05 the Agreement as follows: (d) The forgiven principal amount of the Disbursements will be measured at a time requested by the Borrower, which time shall be (i) no earlier than the date the Borrower has made its final Requisition of Funds; and (ii) no later than the 5-year anniversary of Certificate of Completion, upon which time a request for principal forgiveness is forfeited by the Borrower. As of the date of this Second Amendment Borrower has raised $201,961.00 privately, resulting in $100,980.50 in principal amount of the Original Loan being forgiven by the HRA. … (g) Participant fees shall not count toward amounts of private fundraising. 3.03.Amendment of Section 5.07 of the Agreement. Section 5.07 of the Agreement is hereby amended as follows: 5.07 Loan Satisfaction. Upon repayment by the Borrower to the HRA of the full principal amount of the Loan disbursed (and not forgiven) and all interest accrued thereon, the HRA shall deliver to the Borrower a Certificate of Satisfaction of the Loan in substantially the form included herein as Exhibit J. Such Certificate of Satisfaction shall indicate that that all requirements of the Borrower under this Agreement with respect to the Loan have been completed and duly and fully performed, and such Certificate of Satisfaction is to be conclusive evidence of the satisfactory termination of the covenants and conditions of this Agreement as they relate to the Loan. Such Satisfaction is required to be delivered no later than November 17, 2022 December 1, 2039. 3.04.Amendment of Section 5.08 of the Agreement. Subsections (a), (c), (e), (f), and (g) of Section 5.08 of the Agreement are hereby amended as follows: (a) The Borrower shall maintain the programming of the Edina Innovation Lab for the full term of the Lease The Borrower shall continue the pursuit of partnerships, training and other promotions with other organizations intending to promote entrepreneurship and business development in the City (e.g., SBA Score, Elevate Hennepin, etc.) until the Loan is satisfied; … (c) The City and other agencies providing economic development services to City of Edina businesses (such as SBA and Open to Business) shall be allowed to Page 26 of 42 3 conduct meetings in the shared areas of the tenant space during normal business hours at no charge when space is available and not otherwise programmed. … (e) In addition to the City’s representative on the Borrower’s Board of Directors, the executive director of the HRA shall be permitted to appoint at least one member of the advisory team of the Innovation Lab to guide programming and outreach that is relevant to the City’s business community. Such appointment shall occur within thirty (30) days of nomination by the executive director of the HRA. (f) Upon the completion of each calendar year (but no later than March April 1st), the Borrower shall submit a summary report of the previous year’s operations to the HRA. This report shall include: number of active members, summary of programming delivered. the number of participants, including details such as: type of business, city where business is located, and gender and race of participants. The report shall also identify other programs conducted with industry partners as part of the Edina Innovation Lab programming intended to support the local business community. The report shall also summarize the annual revenue and expenses of the Edina Innovation Lab Borrower. (g) Upon an Event of Default herein that remains uncured or continuing, the HRA shall have the first right to sublease all or a portion of the Facility. The Borrower shall ensure that the Lease includes a provision permitting the HRA to sublease the Facility in such an instance. 3.05.Amendment of Section 7.02 (h) of the Agreement. Subsection (h) of Section 7.02 of the Agreement is hereby amended as follows: (h) Take a controlling interest in the Edina Innovation Lab Facility, including rights to the name, logo, data, archives, etc. 3.06.Amendment and Restatement of Note; Re-Issuance Permitted. The outstanding Note from the Borrower and currently held by the HRA is hereby canceled. An Amended and Restated Master Note, substantially in the form of Exhibit A attached hereto, shall be issued by Borrower and shall reflect the outstanding principal amount of $474,222.87. Such Note may be canceled and re-issued if the HRA and Borrower enter into a future amendment to the Agreement permitting additional Loan forgiveness, and the requirements for such additional forgiveness (as detailed in any future amendment to the Agreement) are fully satisfied. ARTICLE 4 Administrative Provisions 4.01.Notices and Demands. Except as otherwise expressly provided in the Agreement, a notice, demand, or other communication under the Agreement by any party to another party shall Page 27 of 42 4 be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally as follows: (a) in the case of Borrower, addressed to or delivered personally to: Edina Chamber of Commerce 7201 Metro Boulevard Suite 520 Edina, MN 55439 Attention: Executive Director (b) in the case of the HRA, addressed or delivered personally to: Edina Housing and Redevelopment Authority 4801 W 50th Street Edina, MN 55424 Attention: Scott Neal, Executive Director The HRA, and the Borrower, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications should be sent. 4.02. Counterparts. This Second Amendment may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 4.03. Legal Fees in Connection with Second Amendment. The Borrower is responsible for paying their own legal fees associated with this Second Amendment and agrees to reimburse the HRA for legal fees incurred with drafting, negotiating, and finalizing this Amendment up to a maximum of $5,000. This amount shall be included in the revised principal loan amount subject to repayment. 4.04. Binding Effect. This Second Amendment shall inure to the benefit of and shall be binding upon the HRA, and the Borrower and their respective successors and assigns. 4.05. Severability. In the event any provision of this Second Amendment shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 4.06. Amendments, Changes and Modifications. This Second Amendment may be amended or any of its terms modified only by written amendment authorized and executed by the HRA, and Borrower. The Chair and HRA Secretary are authorized to execute and deliver amendments and any documents related to this Second Amendment on behalf of the HRA. 4.07. Captions. The captions or headings in this Second Amendment are for convenience only and in no way define, limit or describe the scope of intent of any provisions or Sections of this Second Amendment. Page 28 of 42 5 4.08. Applicable Law. This Second Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota without giving effect to the conflicts-of-laws principles thereof. Page 29 of 42 S-1 IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed as of the date first above written. EDINA HOUSING AND REDEVELOPMENT AUTHORITY By James Hovland, Chair And James Pierce, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this ____ day of ______________, 2025, by James Hovland, the Chair, and James Pierce, the Secretary, of the Edina Housing and Redevelopment Authority, a Minnesota municipal corporation, on behalf of the corporation. IN WITNESS WHEREOF, I have set my hand and my official seal this ____ day of _____________, 2025. Notary Public Page 30 of 42 S-2 EDINA CHAMBER OF COMMERCE ASSOCIATION, INC. By: Signature Its: Title STATE OF __________ ) ) ss. COUNTY OF __________ ) The foregoing instrument was acknowledged before me on this ___ day of ___________, 2025, by __________________, the ____________________ of Edina Chamber of Commerce Association, Inc., a Minnesota Non-profit corporation. IN WITNESS WHEREOF, I have set my hand and my official seal this ___ day of __________, 2025. Notary Public Page 31 of 42 A-1 EXHIBIT A FORM OF AMENDED AND RESTATED MASTER NOTE No. R-1 $474,222.87 UNITED STATES OF AMERICA STATE OF MINNESOTA (EDINA INNOVATION LAB PROJECT) PRINCIPAL AMOUNT: FOUR HUNDRED SEVENTY-FOUR THOUSAND TWO HUNDRED TWENTY-TWO DOLLARS AND EIGHTY-SEVEN CENTS This Note is issued pursuant to the provisions of that certain Draw-Down Loan Agreement, dated as of November 17, 2022, as amended by that First Amendment to Draw-Down Loan Agreement dated August 10, 2023, and a Second Amendment to Draw-Down Loan Agreement dated April 10, 2025, as the same may be amended from time to time (the “Loan Agreement”), between the Edina Housing and Development Authority (the “Owner”), the Edina Chamber of Commerce Association, Inc., a Minnesota non-profit corporation (the “Borrower”). Terms used herein but not otherwise defined, shall have the meaning attributed to them in the Loan Agreement. The Borrower for value received, promises to pay, to the extent and in the manner hereinafter provided, to the Owner, the principal sum of four hundred seventy-four thousand two hundred twenty-two dollars and eighty-seven cents ($474,222.87), in semi-annual installments payable on each July 1st and December 1st (each being a “Scheduled Payment Date”), commencing the July 1, 2025, and to pay interest on each Scheduled Payment Date on so much of the principal amount of the debt as (i) may be disbursed from time to time as provided in the Loan Agreement and (ii) remains unpaid, until the principal amount hereof is paid or has been provided for. Interest shall accrue at the rate of two percent (2.0%) per annum (calculated on the basis of a 360-day year of twelve thirty-day months). The repayment schedule amortizes the principal over a 15-year term ending December 1, 2039. Principal and Interest Payments. Interest shall accrue only on the aggregate amount of this Master Note which has been disbursed under the Loan Agreement and shall begin accruing on the date when the Certificate of Completion is delivered to the Borrower by the Owner. Disbursements of the proceeds of this Master Note shall be made in accordance with the Loan Agreement by the execution by the Borrower of one or more Disbursement Notes in the form attached hereto as Appendix A. Principal, interest and any premium due under this Master Note will be paid on a Scheduled Payment Date by wire payment, or by check or draft mailed the last business day prior to the payment date to the person in whose name this Master Note is registered, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. Installment payments shall be applied first to interest and then to a reduction of outstanding principal. Prepayment. This Master Note is subject to prepayment in whole at any time at the option Page 32 of 42 A-2 of the Borrower without penalty. Late Fees. The Borrower shall pay to the Owner on each Scheduled Payment Date all amounts necessary to pay principal and interest then due and any past due installment. If a necessary principal and interest payment is not made by the Borrower to the Owner within fifteen (15) calendar days of a specified Scheduled Payment Date, a late fee of 5% of the outstanding balance (but not to exceed the maximum late charge allowed by law) shall be charged to the Borrower. Forgiveness. This Note is subject to partial principal forgiveness by the Owner pursuant to the terms of the Loan Agreement. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by the manual signatures of the ________________ of the Borrower and has caused this Note to be dated as of _________________, 2025. EDINA CHAMBER OF COMMERCE ASSOCIATION, INC. By: _______________________________ Signature Its: _______________________________ Title Page 33 of 42 A-3 FORM OF AMENDED AND RESTATED MASTER NOTE Amortization Schedule A Principal $474,222.87 Period interest 1.0000% Total pay periods 30 Payment Period Beginning Amount Due Bi-Annual Payment Balance Due 1 July 1st 202 5 $474,222.8 7 - $18,375.24 $460,589.86 2 Dec 1st 202 5 $460,589.8 6 - $18,375.24 $446,820.52 3 July 1st 202 6 $446,820.5 2 - $18,375.24 $432,913.48 4 Dec 1st 202 6 $432,913.4 8 - $18,375.24 $418,867.38 5 July 1st 202 7 $418,867.3 8 - $18,375.24 $404,680.81 6 Dec 1st 202 7 $404,680.8 1 - $18,375.24 $390,352.38 7 July 1st 202 8 $390,352.3 8 - $18,375.24 $375,880.66 8 Dec 1st 202 8 $375,880.6 6 - $18,375.24 $361,264.23 9 July 1st 202 9 $361,264.2 3 - $18,375.24 $346,501.63 10 Dec 1st 202 9 $346,501.6 3 - $18,375.24 $331,591.41 11 July 1st 203 0 $331,591.4 1 - $18,375.24 $316,532.08 12 Dec 1st 203 0 $316,532.0 8 - $18,375.24 $301,322.16 13 July 1st 203 1 $301,322.1 6 - $18,375.24 $285,960.14 14 Dec 1st 203 1 $285,960.1 4 - $18,375.24 $270,444.51 15 July 1st 203 2 $270,444.5 1 - $18,375.24 $254,773.71 16 Dec 1st 203 2 $254,773.7 1 - $18,375.24 $238,946.21 17 July 1st 203 3 $238,946.2 1 - $18,375.24 $222,960.43 18 Dec 1st 203 3 $222,960.4 3 - $18,375.24 $206,814.79 Page 34 of 42 A-2 19 July 1st 203 4 $206,814.7 9 - $18,375.24 $190,507.70 20 Dec 1st 203 4 $190,507.7 0 - $18,375.24 $174,037.54 21 July 1st 203 5 $174,037.5 4 - $18,375.24 $157,402.68 22 Dec 1st 203 5 $157,402.6 8 - $18,375.24 $140,601.46 23 July 1st 203 6 $140,601.4 6 - $18,375.24 $123,632.24 24 Dec 1st 203 6 $123,632.2 4 - $18,375.24 $106,493.32 25 July 1st 203 7 $106,493.3 2 - $18,375.24 $89,183.01 26 Dec 1st 203 7 $89,183.01 - $18,375.24 $71,699.60 27 July 1st 203 8 $71,699.60 - $18,375.24 $54,041.36 28 Dec 1st 203 8 $54,041.36 - $18,375.24 $36,206.53 29 July 1st 203 9 $36,206.53 - $18,375.24 $18,193.36 30 Dec 1st 203 9 $18,193.36 - $18,375.24 $0.00 Page 35 of 42 Page 36 of 42 Page 37 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 City staff have prepared the following history of City Council and HRA actions related to the BIG Innovation Lab. Detailed Timeline • October 28, 2021 HRA: Spending plan for unallocated TIF funds adopted. o Ayes: Jackson, Pierce, Staunton, & Hovland o Absent: Anderson Changes in Minnesota statute allowed cities greater flexibility in spending unallocated monies to support redevelopment and housing efforts. A Spending Plan and related Policy had been prepared for future consideration by the City Council, after input has been obtained via a Public Hearing. The City’s three TIF accounts (Pentagon Park, 70th & Cahill, and Southdale 2) and their amounts totaling $9,625,200 and staff recommended the City adopt a new spending plan for these funds to be invested in new project such as office, housing, renovations, or restaurants for example. Funding can only be for private investment, nothing public, and funds would sunset by 2025. Later on, this adopted funding plan for unallocated monies was given the name ‘SPARC’. • October 13, 2022 HRA: Loan terms for Edina Innovation Lab approved. o Ayes: Jackson, Anderson, & Hovland o Absent: Pierce & Staunton o Commissioner Anderson motioned to continue consideration rather than move forward with staff authorization, but this motion died. Staff stated this item pertained to the renovation and move in of vacant commercial space located at 7201 Metro Avenue. The Edina Chamber of Commerce intended to the lease the space and use it to establish the Edina Innovation Lab. Staff prepared a proposal to which the Edina Chamber was agreeable to the terms. Staff outlined the need for incubator space for small businesses to thrive and outlined proposed funds through SPARC and said the Edina Chamber of Commerce was conducting a pilot program then outlined the capital fund for space and operation funds. Staff said the Chamber had a Administration EdinaMN.gov Date: March 25, 2025 To: Mayor & City Council cc: Edina Chamber of Commerce From: Scott Neal, City Manager Subject: Timeline of Edina’s Chamber of Commerce BIG Innovation Lab Page 38 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 letter of intent in preparation for a lease then reviewed a summary of loan terms for a seven-year lease minimum and loan amount not to exceed $800,000 at 2% simple interest. Staff recommended up to $200,000 loan forgiveness. Lori Syverson shared the Chamber’s review of several models which was modified to include an accelerator program but was difficult to sustain revenue generation model long-term and explained how the new program was intended to help businesses that survived the pandemic take the next step. She spoke about how they intend to expand the program to leadership and purpose in order to raise funds and continue to move forward. Paul Mooty, Edina Chamber of Commerce Board of Directors, said this program was already occurring and that others wanted to participate and said they had reviewed the program and was confident it would work and help businesses grow. He spoke about connections for businesses, sponsorships and how the program would be financially sound and result in the cohort model so the program would be self-sustaining in year two. • November 17, 2022 HRA: Loan agreement with Edina Chamber of Commerce approved. o Ayes: Jackson, Pierce, Anderson & Hovland o Absent: Staunton Economic Development Manager Neuendorf said this item pertained to funding to support renovation and re-occupancy of a portion of vacant commercial property. This type of funding was possible using the SPARC program. He shared the objectives and SPARC outcomes that included support of entrepreneurial economy and small businesses, occupancy of a vacant office building, job creation, and established revolving loan fund for future HRA projects. He shared a brief description of the Lab with an $800,000 construction budget and anticipated loan amount of $650,000 to $725,000 then noted they were unable to secure traditional debt financing. Mr. Neuendorf summarized the loan terms of seven - year minimum with construction to be completed by June 2023 and repayment to begin June 2023 then reviewed a summary of loan forgiveness in detail. He said when completed, the space would host a small business development facility that included the Edina Innovation Lab and would be operated by the Edina Chamber of Commerce. Lori Syverson thanked the Council for the opportunity to share more on the proposed loan agreement. She shared their work with Edina Public Schools to formulate an entrepreneurial program for students and their intent to work with the HRA planning The Lab based on their goals and those of the City. She said they intended to offer The Lab to Edina businesses but would be open to HRA's input and said they had $105,000 pledged to date. Ms. Syverson spoke about the impacts to businesses from COVID-19 and how things have changed which resulted in ways to innovate and required strategic action from business leaders because survival of businesses was at stake. She reviewed their revenue and expenses and said the pilot program has been successful and was needed then shared what other cities were doing in the area to build for the future. Page 39 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 Paul Mooty presented more details on the proposal and the importance of giving back to the community. He said Edina had a strong and healthy business community and that The Lab would be a critical economic development tool. Annette Wildenaur said she loved to watch businesses innovate and grow and would work to create a roadmap to grow businesses to the next level. She said they had people on a waiting list and would be governed under the Chamber and would include ownership and leadership in any sector. She outlined the proposed curriculum that would be experiential learning and include finance, marketing, human resources, strategic thinking, and more . She maintained The Lab would fill a need, was sustainable, and provided an ability to pivot • May 18, 2023 HRA: SPARC potential programs to support business investment received. o Present: Agnew, Jackson, Pierce, Risser & Hovland Economic Development Manager Neuendorf stated in 2021, Edina created the SPARC program in order to guide the investment of $9.6 million dollars based on provisions in Minnesota Law. He said this item pertained to potential programs to be implemented to support private investment, job creation and construction improvements and that direction was requested from the HRA to inform future programs. He said staff intended to incorporate this direction and return later in the year with a series of programs to apply these funds before the 2025 spending deadline then outlined potential programs that supported small businesses as well as larger and unique projects through providing $25,000 grants, $149,000 forgivable loans, or establishment of a permanent revolving loan fund that would be flexible to allow for creativity. He outlined benefits of such programs that included new job creation, energy efficient improvements, ADA accesses, and public health benefits and asked if these programs met the Boards expectations or if they had other suggestions for larger or unusual investments. • August 10, 2023 HRA: Modified forgivable loan agreement with Edina Chamber of Commerce. o Ayes: Agnew, Jackson, Risser, Pierce & Hovland o Consent item Amendments to this agreement included a three-month extension for expected facility occupancy, a three-month extension for when construction on the facility needs to be initiated, and a three-month extension on progress reporting related to a summary of the work completed, a percenta ge of project completion, and any challenges jeopardizing occupancy of the facility . • May 16, 2024: Innovation Lab status update within Executive Director comments. o Present: Agnew, Jackson, Pierce, Risser & Hovland The Edina Chamber of Commerce initiated the Edina Innovation Lab in 2022 to support small business growth in Edina. The HRA issued a construction loan of $610,000 to assist this effort. In the weeks ahead, the Edina Chamber intends to modify the organizational structure of the Lab to better att ract investment and support from the private sector. The Lab is anticipated to be spun off as a Benefit Page 40 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 Corporation with a parallel non-profit charitable foundation. The loan repayment schedule has been requested to be modified to allow the re-organized program to secure a firm foundation. The loan is still proposed to be repaid, but with smaller semiannual payments and a balloon payment in later years. Staff has been working collaboratively with Chamber leaders for several weeks to identify a workable re - arrangement that achieves the goals of both Chamber and HRA. When the Chamber identifies the specific re-organizational details, an amendment to the Loan Agreement will be brought to the HRA for consideration. • December 19, 2024 HRA: Request to modify loan agreement with Edina Chamber of Commerce. o Present: Agnew, Jackson, Risser & Hovland o Absent: Pierce In 2023, the HRA issued a $650,767.01 loan to the Edina Chamber of Commerce. The loan was intended to construct a new office facility that would allow the Chamber to expand its services to include the Edina Innovation Lab - a business accelerator program intended to assist business owners and entrepreneurs. A portion of the loan is forgivable when specific milestones are achieved. Repayment of the loan began in January 2024 and is expected to continue for the next six years. In mid-2024, the Innovation Lab was spun off as a separate entity with an independent Board in an effort to raise new investor capital. To date, that effort met with limited success and the Chamber seeks to modify the repayment terms of the Loan Agreement. This restructuring resulted in violations of some of the operational requirements of the Loan Agreement. No action is necessary at this time. The Chamber seeks a deferral of the January loan payment while it prepares a new strategy. The January payment would be included in the modified repayment terms. Based on input from the HRA Board, the Chamber will propose a modification to the loan that allows for continued success and full repayment. The Chamber has thus far committed two violations to the loan agreement (potentially a third). The Chamber is expected to do some restructuring to the Lab and their own organization to find more success in both of these endeavors. The Chamber (Shelly L., Annette W., Paul M., Mark J, and Heidi S.) was present to ask for this consideration for a deferment of the January loan payment to give the Chamber some time to more meaningfully contribute to the second annual payment intended for July. While a portion of the loan is intended to be forgiven, approximately $400,000 of the loan is expected to be repaid over time. Edina's SPARC program, using unallocated TIF monies, was the original source of HRA funds. This fund is not related to the HRA tax levy. Per Minnesota Statute, these SPARC monies can only be used as grants or loans to create jobs and build or remodel buildings. The period to use these funds expires 12/31/2025. Any unused or returned funds would eventually be returned to the City, County and State (1/3 per government entity). The financial impact of a modified loan can be evaluated only after the type of modification is defined. A brief delay in payment has no significant impact. • February 17, 2025: Edina Chamber of Commerce publicly announced decision to close the BIG Innovation Lab. Page 41 of 42 City of Edina • 4801 W. 50th St. • Edina, MN 55424 The Edina City Council was informed on February 11 in an email that the principals behind the Lab decided it was no longer viable and officially closed January 31. The Chamber of Commerce announced the Lab’s closure in their February 17 newsletter. After the Lab was spun off as a separate entity with an independent board in an effort to raise new investor capital, this restructuring resulted in violations of some operational requirements of the loan agreement. City staff maintained that the City does not pl an to forgive the loan and that “there is full intention to repay the loan that was discussed at length back in December.” • March 27, 2025 HRA: Loan with Edina Chamber status update. o Present: Agnew, Jackson, Pierce, Risser & Hovland The Chamber submitted a letter to the HRA to confirm their intention to repay the loan issued by the HRA for the construction of the office space at 7201 Metro Blvd. This letter is intended as a follow up from the discussions at the December 19, 2024 and February 27, 2025 HRA Board meetings. City staff has met with representatives from the Chamber of Commerce on several occasions in the last few months to prepare an Amendment to the original payment terms. The Amendment will be presented to the HRA Board for consideration at the April 10, 2025 meeting. Page 42 of 42