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HomeMy WebLinkAbout12-18-2006 EDA Packet AGENDA ECONOMIC DEVELOPMENT AUTHORITY MONDAY DECEMBER 18, 2006 6:15 P.M. 1. Call to Order and Roll Call 2. Consideration of Minutes of November 13, 2006 3. Resolution No. 06-04, Approving Assignment and Release of Certain Obligations under the Contract for Private Development between the Lino Lakes Economic Development Authority, the City of Lino Lakes, and Hartford Development, Inc., Mary Alice Divine 4. Resolution No. 06-05 Approving Extension of Metropolitan Council Grant Agreement and Loan to LLAH Limited Partnership, Mary Alice Divine 5. Adjourn DRAFT 1 2 CITY OF LINO LAKES 3 ECONOMIC DEVELOPMENT AUTHORITY 4 MINUTES 5 6 DATE : November 13, 2006 7 MEMBERS PRESENT : J. Bergeson, D. Carlson, D. Stoltz, J. Reinert, 8 MEMBERS ABSENT : J. O’Donnell 9 OTHERS PRESENT : Mary Divine, Gordon Heitke, Jean Viger, Al Rolek 10 and Julie Bartell 11 12 13 Meeting called to order by President Stoltz at 6:17 p.m. 14 15 CONSIDERATION OF MINUTES OF JANUARY 23, 2006 16 17 EDA Member Reinert moved to approve the January 23, 2006 minutes, as presented. EDA 18 Member Carlson seconded the motion. Motion passed unanimously. 19 20 RESOLUTION NO. 06-02, FIRST AMENDMENT TO LEASE-PURCHASE 21 AGREEMENT BETWEEN LINO LAKES EDA AND THE CITY OF LINO LAKES 22 23 Mr. Rolek advised the City’s bond counsel has advised that the EDA would need to amend the 24 Lease-Purchase Agreement for the outstanding EDA bonds Series 1998A because the lease 25 payments will be reduced to the amount needed to pay the small amount of bonds that will 26 remain outstanding. 27 28 The City Council has approved the amended agreement in its resolution awarding the sale of the 29 G.O. CIP Refunding bonds 2006E. The EDA must also approve the amended agreement. 30 31 EDA Member Reinert moved to approve Resolution No. 06-02, as presented. EDA Member 32 Bergeson seconded the motion. Motion carried unanimously. 33 34 RESOLUTION NO. 06-03, APPROVING ASSIGNMENT AND RELEASE OF CERTAIN 35 OBLIGATIONS UNDER THE CONTRACT FOR PRIVATE DEVELOPMENT 36 BETWEEN THE LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, THE 37 CITY OF LINO LAKES, AND HARTFORD DEVELOPMENT, INC. 38 39 Ms. Divine stated the EDA entered into a Contract for Private Development with the Hartford 40 Group on December 20, 2004, (amended on September 13, 2005) setting forth the terms and 41 conditions of redevelopment for Legacy at Woods Edge. 42 43 The Contract acknowledges that Hartford Group plans to sell certain portions of the development 44 property to subdevelopers, and requires that any proposed subdeveloper assume all the 45 obligations of the developer for the portion of the property being transferred. The subdeveloper 46 must agree to be subject to all the conditions and restrictions of the Contract, including the 47 construction of minimum improvements on the site. 48 EDA MINUTES November 13, 2006 DRAFT 2 This EDA action releases the Hartford Group from the conditions that will be assumed by the 49 subdeveloper (Avalon Homes) for Phase 1 of the Townhome site. This release will be delivered 50 upon approval of the site development agreement with Avalon Homes, Inc. 51 52 EDA Member Reinert moved to approve Resolution No. 06-03, as presented. EDA Member 53 Bergeson seconded the motion. Motion carried unanimously. 54 55 ADJOURNMENT 56 57 There being no further business, EDA Member Carlson moved to adjourn. EDA Member 58 Bergeson seconded the motion. Motion passed unanimously. 59 60 Meeting adjourned at 6:23 p.m. 61 62 AGENDA ITEM 3 STAFF ORIGINATOR: Mary Alice Divine DATE: 12/18/06 TOPIC: Resolution No. 06-04, Approving the Assignment and Release of Certain Obligations under the Contract for Private Development with Hartford Development, Inc. Vote Required: Simple Majority BACKGROUND: The Economic Development Authority entered into a Contract for Private Development with the Hartford Group on December 20, 2004, (amended on September 13, 2005) setting forth the terms and conditions of redevelopment for Legacy at Woods Edge. The Contract acknowledges that Hartford Group plans to sell certain portions of the development property to subdevelopers, and requires that any proposed subdeveloper assume all the obligations of the developer for the portion of the property being transferred. The subdeveloper must agree to be subject to all the conditions and restrictions of the Contract, including the construction of minimum improvements on the site. LLAH Limited Partnership is the limited liability corporation (subdeveloper) formed for the development of Lakewood Apartments. This EDA action releases the Hartford Group from the conditions that will be assumed by the subdeveloper for the construction of Lakewood Apartments . This release will be delivered upon approval of the site development agreement with LLAH Limited Partnership. The Assignment and Release also includes a provision that extends the Timeline for Commencement and Completion of Construction of the Lakewoods Apartments. Due to delays in project financing and approvals, project initiation was delayed. The new provisions require that c onstruction must commence by January 15, 2007 and be completed by April 15, 2008. RECOMMENDATION: Staff is recommending Approval of Resolution No. 06-04 Approving the Assignment and Release of Certain Obligations to LLAH Limited Partnership under the contract with Hartford Group. ATTACHMENTS: 1. Resolution No. 06-04 SJB-267750v1 LN140-80 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 06-04 RESOLUTION APPROVING ASSIGNMENT AND RELEASE OF CERTAIN OBLIGATIONS UNDER CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN THE LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, THE CITY OF LINO LAKES AND HARTFORD DEVELOPMENT, INC. BE IT RESOLVED By the Board of Commissioners ("Board") of the Lino Lakes Economic Development Authority ("Authority") as follows: Section 1. Recitals. 1.01. The Authority currently administers Development District No. 1 (the “Project)” pursuant to Minnesota Statutes, Sections 469.124 to 469.134 (“Development District Act”). 1.02. The Authority, the City of Lino Lakes (“City”) and Hartford Development, Inc. (the “Developer") entered into a into a Contract for Private Development dated December 20, 2004, as amended by a First Amendment thereto dated September 13, 2005 (the “Contract”), setting forth the terms and conditions of redevelopment of certain property within the Project, referred to generally as the Legacy at Woods Edge Project. 1.03. The Developer and Legacy Holdings-LL, LLC (the “Development Property Owner”) have determined need to assign certain obligations under the Contract to LLAH Limited Partnership, (the “Successor Developer”). 1.04. The Authority has reviewed an Approval of Assignment and Release of Obligations under Contract for Private Development, LLAH Limited Partnership, between the Authority, the City, the Developer and the Successor Developer (the “Assignment”), and finds that the execution thereof is in the best interest of the City and its residents. Section 2. Authority Approval; Further Proceedings. 2.01. The Assignment as presented to the Board is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.02. The President and Executive Director are hereby authorized to execute on behalf of the Authority the Assignment and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations thereunder. SJB-267750v1 LN140-80 2 Approved by the Board of Commissioners of the Lino Lakes Economic Development Authority this 18th of December, 2006. President ATTEST: Secretary AGENDA ITEM 4 STAFF ORIGINATOR: Mary Alice Divine DATE: 12/18/06 TOPIC: Resolution No. 06-05, Accepting the Metropolitan Council Grant and Approving Loan to LLAH Limited Partnership Vote Required: Simple Majority BACKGROUND: The City of Lino Lakes obtained a $225,000 grant under the Livable Communities Act Local Housing Incentives Account on December 16, 2004 for the purpose of helping to finance Lakewood Apartments in the Legacy at Woods Edge project. The grant agreement has an expiration of Decem ber 31, 2006. Hartford Group and LLAH Limited Partnership are expected to close on the financing of the property in late December and begin construction shortly thereafter. Due to delay in the start of construction, the city council will be requested to consider an extension of the grant agreement for one year at its December 18, 2006 meeting. Additionally, the developer has requested, in order to facilitate their financing, that the grant be provided in the form of a 30-year interest free loan. Because the EDA is the administrator of Development District No. 1 in which this project will occur, legal counsel has advised the EDA is the appropriate authority to provide this loan. Two actions will need to be undertaken by the city. The council will need to assign the loan to the EDA at its Dec. 18 meeting. The EDA will be accepting assignment of the grant and approving the loan to LLAH Limited Partnership. RECOMMENDATION: Staff is recommending approval of Resolution No. 06-05 Accepting the Metropolitan Council Grant and Approving Loan to LLAH Limited Partnership, contingent upon City Council approval of assigning the proceeds of the grant to the EDA.. ATTACHMENTS 1. Resolution No. 06-05 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 06-05 RESOLUTION ACCEPTING METROPOLITAN COUNCIL GRANT AND APPROVING LOAN TO LLAH LIMITED PARTNERSHIP BE IT RESOLVED By the Board of Commissioners ("Board") of the Lino Lakes Economic Development Authority ("Authority") as follows: Section 1. Recitals. 1.01. The City of Lino Lakes (the “City”) previously obtained a grant from the Metropolitan Council (the “Met Council”) in the amount of $225,000, pursuant to a Metropolitan Livable Communities Act Grant Agreement dated December 16, 2004 (the “Grant Agreement”). 1.02. Pursuant to the Grant Agreement, the City is authorized to make proceeds of the grant available to help finance a 60-unit affordable rental housing facility (referred to as the Lakewood Apartments”), as part of the Legacy at Woods Edge project. 1.03. The original Grant Agreement expires as of December 31, 2006, but the Met Council has approved an Amendment and Extension of Metropolitan Livable Communities Act Local Housing Incentives Account Grant Agreement (the “Extension”), which authorizes a one-year extension for use of the grant funds. 1.04. The Grant Agreement, as extended, authorizes the City to use the grant funds to make deferred loans, without interest, to carry out the purposes of the Grant Agreement. 1.05. The Authority currently administers Development District No. 1 (the “Project)” pursuant to Minnesota Statutes, Sections 469.124 to 469.134 (“Development District Act”), within which the Lakewood Apartments is to be constructed. 1.06. The City has determined to assign the grant proceeds to the Authority, with the direction that the Authority loan the grant funds to LLAH Limited Partnership (the “Borrower”) to assist in development of the Lakewood Apartments, pursuant to a Promissory Note (the “Note”), payable without interest on the later of the 30th anniversary of the date of the Note or the term of Borrower’s MHFA loan, or upon earlier default, and secured by a mortgage on the property on which the Lakewood Apartments will be constructed (the “Mortgage”). 1.07. In connection with such loan, the Authority expects to enter into a master subordination agreement (the “Master Subordination Agreement”) and a master disbursing agreement (the “Master Disbursing Agreement”) among the Authority, the Borrower, the Borrower’s title company, and other lenders participating in financing of the Lakewood Apartments. 2 Section 2. Authority Approval; Further Proceedings. 2.01. The Authority accepts the assignment from the City of the grant proceeds under the Grant Agreement, as extended under the Extension, and agrees to be bound by all terms and conditions of the Grant Agreement and the Extension. 2.02. The Authority approves the Note and Mortgage in the forms on file in City Hall and authorizes the Authority President and Executive Director to execute such documents, subject to modifications that do not alter the substance of the transaction and that are approved by the Authority President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.03. The Authority further authorizes the President and Executive Director to execute the Master Subordination Agreement, the Master Disbursing Agreement, and any other documents reasonably required to carry out the intent of this resolution, all in forms approved by those officials. Approved by the Board of Commissioners of the Lino Lakes Economic Development Authority this 18th of December, 2006. President ATTEST: Secretary 1 APPROVAL OF ASSIGNMENT AND RELEASE OF OBLIGATIONS UNDER CONTRACT FOR PRIVATE DEVELOPMENT LAKEWOOD APARTMENTS I. Recital. 1.1 The Effective Date of this Agreement is ________________, 2006. 1.2 The Parties to this Agreement are the LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic under the laws of Minnesota (the “Authority”), the CITY OF LINO LAKES, a Minnesota municipal corporation (the “City”) and HARTFORD DEVELOPMENT, INC., a Minnesota corporation (the “Master Developer”) and LLAH LIMITED PARTNERSHIP, a Minnesota limited partnership (“Successor Developer”). 1.3 The Authority, City and Master Developer are parties to a Contract for Private Development dated December 20, 2004, recorded December 29, 2004, as Document No. 1971748.006, in the Office of the Anoka County Recorder, as amended by a First Amendment thereto dated September 13, 2005 (the “Contract”). 1.4 Various real estate parcels are subject to the Contract and Successor Developer has entered into an agreement with Legacy Holdings-LL, LLC, an affiliate of Master Developer, to purchase certain of the parcels subject to the Contract for the purpose of developing 60 rental apartment units with first floor commercial space (the “Lakewood Development”). Such parcel is legally described as: Lot 1, Block 1, The Village No. 4, Anoka County, Minnesota (the “Subject Parcel”) 1.5 In connection with the sale of the Subject Parcel, Master Developer has requested approval of an assignment of and a release from the terms and conditions of the Contract as to the Subject Parcel pursuant to Article VIII of the Contract. 2 1.6 Master Developer desires to assign, and Successor Developer desires to assume Master Developer’s rights and obligations under the Contract with respect to the Subject Parcel. 1.7 City has approved the Subject Parcel for use consistent with the proposed Lakewood Development. On that basis, City and Authority are willing to approve an assignment of the Contract to Successor Developer and release Master Developer from the terms and conditions of the Contract subject to the terms and conditions of this assignment. THEREFORE, IT IS AGREED AS FOLLOWS: II. Agreement. 2.1 Master Developer hereby assigns, and Successor Developer hereby expressly assumes all of the rights and obligations of Master Developer under the Contract with respect to construction of the Lakewood Development on the Subject Parcel with a minimum market value of $7,450,000 (the “Lakewood Improvements”). 2.2 The parties hereto agree and understand that the Lakewood Improvements constitute a portion of the Rental Housing Component and the Commercial Component of the Minimum Improvements under the Contract. 2.3 The Authority and the City hereby consent to and approve the assignment in sections 2.1 and 2.2 above. 2.2 From and after the effective date set forth above, Master Developer is released from its obligations under the Contract as to the Subject Parcel and as to the portion of the Rental Housing and Commercial Components represented by the Lakewood Improvements, subject to the following: (a) Master Developer remains liable under the Contract as to all other parcels subject to the Contract that are not released hereby or previously released, and as to all other provisions of the Contract. (b) Successor Developer agrees and understands that the Subject Parcel is subject to the Assessment Agreement between the Authority and Master Developer dated October 26, 2006 (“Assessment Agreement”), setting a minimum market value for the Subject Parcel and the Lakewood Improvements constructed thereon for the period described in the Assessment Agreement. (c) Satisfactory completion by Successor Developer of the Lakewood Improvements will be considered satisfaction of Developer’s obligations as to a portion of the market value of Rental Housing and Commercial Component under Section 4.3 of the Contract, such portion being the minimum value of $7,450,000 or the actual value upon completion, whichever is greater. However, nothing in this agreement will relieve Developer of its obligation to construct the remainder of the Rental Housing and Commercial Components in accordance with the Contract. 3 This document drafted by: Hartford Group, Inc. (FAJ) 1300 Wells Fargo Plaza 7900 Xerxes Ave. S. Bloomington, MN 55431 Dated: , 2006 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic under the laws of Minnesota By Its President By Its Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this ____ day of ________, 2006 by __________ and ________________, the President and Executive Director of the Lino Lakes Economic Development Authority, on behalf of the Authority. [Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Development] 4 Dated: , 2006 CITY OF LINO LAKES, MINNESOTA, a municipal corporation under the laws of the State of Minnesota. By: Its: Mayor By: Its: City Clerk STATE OF MINNESOTA ) ) ss COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this ____ day of ________, 2006, by ________________, the _____________________ and ______________________, the _________________________ of the City of Lino Lakes, Minnesota on behalf of said City. _____________________________________ Notary Public [Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Development] 5 Dated: , 2006 HARTFORD DEVELOPMENT, INC., a Minnesota corporation By: Keith Gruebele Its: Chief Financial Manager STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _____ day of _________________, 2006, by ________________________, the ________________ of Hartford Development, Inc, a Minnesota Corporation on behalf of said Corporation. _____________________________________ Notary Public [Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Development] LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 06-05 RESOLUTION ACCEPTING METROPOLITAN COUNCIL GRANT AND APPROVING LOAN TO LLAH LIMITED PARTNERSHIP BE IT RESOLVED By the Board of Commissioners ("Board") of the Lino Lakes Economic Development Authority ("Authority") as follows: Section 1. Recitals. 1.01. The City of Lino Lakes (the “City”) previously obtained a grant from the Metropolitan Council (the “Met Council”) in the amount of $225,000, pursuant to a Metropolitan Livable Communities Act Grant Agreement dated December 16, 2004 (the “Grant Agreement”). 1.02. Pursuant to the Grant Agreement, the City is authorized to make proceeds of the grant available to help finance a 60-unit affordable rental housing facility (referred to as the Lakewood Apartments”), as part of the Legacy at Woods Edge project. 1.03. The original Grant Agreement expires as of December 31, 2006, but the Met Council has approved an Amendment and Extension of Metropolitan Livable Communities Act Local Housing Incentives Account Grant Agreement (the “Extension”), which authorizes a one-year extension for use of the grant funds. 1.04. The Grant Agreement, as extended, authorizes the City to use the grant funds to make deferred loans, without interest, to carry out the purposes of the Grant Agreement. 1.05. The Authority currently administers Development District No. 1 (the “Project)” pursuant to Minnesota Statutes, Sections 469.124 to 469.134 (“Development District Act”), within which the Lakewood Apartments is to be constructed. 1.06. The City has determined to assign the grant proceeds to the Authority, with the direction that the Authority loan the grant funds to LLAH Limited Partnership (the “Borrower”) to assist in development of the Lakewood Apartments, pursuant to a Promissory Note (the “Note”), payable without interest on the later of the 30th anniversary of the date of the Note or the term of Borrower’s MHFA loan, or upon earlier default, and secured by a mortgage on the property on which the Lakewood Apartments will be constructed (the “Mortgage”). 1.07. In connection with such loan, the Authority expects to enter into a master subordination agreement (the “Master Subordination Agreement”) and a master disbursing agreement (the “Master Disbursing Agreement”) among the Authority, the Borrower, the Borrower’s title company, and other lenders participating in financing of the Lakewood Apartments. 2 Section 2. Authority Approval; Further Proceedings. 2.01. The Authority accepts the assignment from the City of the grant proceeds under the Grant Agreement, as extended under the Extension, and agrees to be bound by all terms and conditions of the Grant Agreement and the Extension. 2.02. The Authority approves the Note and Mortgage in the forms on file in City Hall and authorizes the Authority President and Executive Director to execute such documents, subject to modifications that do not alter the substance of the transaction and that are approved by the Authority President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.03. The Authority further authorizes the President and Executive Director to execute the Master Subordination Agreement, the Master Disbursing Agreement, and any other documents reasonably required to carry out the intent of this resolution, all in forms approved by those officials. Approved by the Board of Commissioners of the Lino Lakes Economic Development Authority this 18th of December, 2006. President ATTEST: Secretary 6 Dated: , 2006 LLAH LIMITED PARTNERSHIP By:_________________________________ ____ Derek C. Brandt, Chief Manager of LLAH, LLC, General Partner of LLAH Limited Partnership STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN) The foregoing instrument was acknowledged before me this ____ day of , 2006, by Derek C. Brandt, the Chief Manager of LLAH, LLC, a Minnesota limited liability company, the General Partner of LLAH Limited Partnership, a Minnesota partnership, on behalf of said partnership. _____________________________________ Notary Public [Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Development]