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DEVELOPMENT AGREEMENT
THIS AGREEMENT, made as of the 30th day of
March, 2007, by and between the City of Lanesboro, Minnesota (the “City”), a
municipal corporation organized and existing under the laws of the State of
Minnesota and Church Hill Cooperative, Ltd (the “Developer”), a Minnesota
corporation.
WITNESSETH:
WHEREAS. pursuant to Minnesota Statutes, Section
469.124 through 469.134,
WHEREAS. pursuant to the provisions of Minnesota
Statutes, Section 469.174 through 469.179, as amended, (hereinafter the “Tax
Increment Act”), the City has created, within the Development District, Tax
Increment Financing District No. 2-2 (the “Tax Increment District”), and has
adopted a tax increment financing plan, dated December 15, 2003 therefore (the “Tax
Increment Plan”) which provides for the use of tax increment financing in
connection within the Development District; and
WHEREAS. in order to achieve the objectives of the
Development Program and particularly to make the land in the Development
District available for the development by private enterprise in conformance
with the Development Program, the City has determined to assist the Developer
with the financing of certain costs of the Project (as hereinafter defined) to
be constructed within the Tax Increment District and particularly set forth in
this Agreement; and
WHEREAS. the City believes that the development and
construction of the Project. and fulfillment of this Agreement are vital and
are in the best interests of the City, the health, safety, morals and welfare
of residents of the City, and in accordance with the public purpose and
provisions of the applicable state and local laws and requirements under which
the Project has been undertaken and is being assisted.
NOW, THEREFORE. in consideration of the premises and
the mutual
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms
used and not otherwise defined
Agreement
means this Agreement, as the same may be from time to time modified, amended or
supplemented;
Business Day
means any day except a Saturday, Sunday or a legal holiday or a day on which
banking institutions in the City are authorized by law or executive order to
close:
City means
the City of Lanesboro, Minnesota;
County means
Fillmore County. Minnesota;
Developer
means Church Hill Cooperative Ltd, its successors and assigns;
Development District means the real property described in the Development Program;
Development Program means the development program approved in connection with the
Development District;
Development Property means the real property legally described in Exhibit A attached to
this Agreement;
Event of Default
means any of the event described in Section 4.1 hereof;
Note Payment Date means December 1, 2008, and each December 1 of each year thereafter to
and including December 1, 2033; provided, that if any such Note Payment Date
should not be a Business Day, the Note Payment Date shall be the next
succeeding Business Day;
Project
means the approximately 35,000 square foot common-interest
Improvements
means the cost of improvements constructed or installed on the Development
Property described in Exhibit C to this Agreement:
State means
the State of Minnesota;
Tax Increment Act means Minnesota Statutes. Sections 469.174 through
Tax Increment District means Tax Increment Financing District No. 2-2 located within the Development District, the legal description of which is set forth in the Tax Increment Financing Plan, which was qualified as a redevelopment district under the Tax Increment Act;
Tax Increment Note means the Tax Increment Revenue Note (Church Hill Cooperative Ltd) to
be executed by the City and delivered to the Developer pursuant to Article III
hereof, a copy of which is attached hereto as Exhibit B;
Unavoidable Delays means delays, outside that control of the party claiming its
occurrence, which are the direct result of strikes, other labor troubles,
usually severe or prolonged bad weather, acts of God, fire or other casualty to
the Project. litigation commenced by third parties which, by injunction or
other similar judicial action or by the exercise of reasonable discretion,
directly results in delays, or acts of any federal, state or local government
unit (other than the City) which directly result in delays.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the
City. The City makes the following representations and warranties:
(1) The City is a municipal corporation and has the
power to enter into this Agreement and carry out its obligations hereunder.
(2) The Tax Increment District is a “redevelopment
district” within the meaning of Minnesota Statutes, Section 469.174,
Subdivision 10. and was created, adopted and approved in accordance with the
terms of the Tax Increment Act.
(3) The development contemplated by this Agreement is
in conference with the development objectives set forth in the Development
Program.
(4) To finance certain costs within the Tax Increment
District, the City proposes, subject to the further provisions of this
Agreement, to apply Tax Increments to reimburse the Developer for a portion of
the cost of the Site Improvements in connection with the Project as further
provided in this Agreement.
(5) The City makes no representation or warranty,
either express or implied, as to the Development Property or its condition or
the soil conditions thereon, or that the Development Property shall be suitable
for the Developer’s purposes or needs.
Section 2.2. Representations and Warranties of the
Developer. The Developer makes the following representations and
warranties:
(1)The Developer is a Minnesota corporation and has
the power to enter into this Agreement and to perform its obligations hereunder
and is not in violation of the laws of the State.
(2) The Developer shall cause the Project to be
installed in accordance with the terms of this Agreement. the
Development Program, and all local, state and federal laws and regulations
(including, but not limited to, environmental, zoning, energy conservation,
building code and public health laws and regulations).
(3) The construction of the Project would not be
undertaken by the Developer, and in the opinion of the Developer would not be
economically feasible within the reasonably foreseeable future, without the
assistance and benefit to the Developer provided for in this Agreement.
(4) Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement is
prevented, limited by or conflicts with or results in a breach of, the terms,
conditions or provision of any contractual restriction, evidence of
indebtedness, agreement or instrument of whatever nature to which the Developer
is now a party or by which they are bound, or constitutes a default under any
of the foregoing.
(5) The Developer will reasonably cooperate with the
City with respect to any litigation commenced with respect to the Project.
(6) The Developer will reasonably cooperate with the
City in resolution of any traffic, parking, trash removal or public safety
problems which may arise in connection with the construction and operation of
the Project.
(7) The construction of the Project has commenced and,
barring Unavoidable Delays, the Project will be substantially completed by
December 31, 2008.
ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3.1. Demolition Expenses. Site Improvements
and Redevelopment Expenses. The cost of the Site Improvements shall be paid
by the Developer. The City shall reimburse the Developer for a portion of the
cost of the Site Improvements in the amount of $254,000 (the “Reimbursement
Amount”) as further provided in Section 3.2 hereof.
Section 3.2. Reimbursement: Tax Increment Revenue
Note. The City shall reimburse for the costs identified in Section 3.1
through the issuance of the City’s Tax Increment Revenue Note in substantially
to the form attached to this Agreement as Exhibit B. subject to the following
conditions:
(I) The Note shall be dated as of March 30, 2007 and
shall be issued and delivered when the Developer shall have demonstrated in
writing to the reasonable
satisfaction
of the City that the construction of the Site Improvements have been completed
and that the Developer has incurred and paid all Costs of the Site
Improvements, as described in and limited by Section 3.1 and shall have
submitted paid invoices in an amount not less than the Reimbursement Amount.
(2) The unpaid
principal amount of the Note shall bear interest from the date of the Note at
5.00% per annum. Interest shall be computed on a basis of a 360 day year
consisting of twelve (12) months.
(3) The
principal amount of the Note and the interest thereon shall be payable solely
from the Tax Increments.
(4) On each Note
Payment Due and subject to the provisions of the Note, the City shall pay,
against the principal and interest outstanding on the Note, 90% of any Tax
Increments received by the City during the preceding 12 months. All such
payments shall be applied first to accrued interest and then to reduce the
principal of the Note.
(5) The Note
shall be a special and limited obligation of the City and not a general
obligation of the City, and only Tax Increments shall be used to pay the
principal and interest on the Note. If, on any Note Payment Date, the Tax
Increments for the payment of the accrued and unpaid interest on the Note are
insufficient for such purposes, the difference shall be carried forward,
without interest accruing thereon, and shall be paid if and to the extent that
on a future Note Payment Date there are Tax Increments in excess of the amounts
needed to pay the accrued interest then due on the Note.
(6) The City’s
obligation to make payments on the Note on any Note Payment
(7) The Note
shall be governed by and payable pursuant to the additional terms thereof. as
set forth in Exhibit B. In the event of any conflict between the terms of the
Note and the terms of this Section 3.2. the terms of the Note shall govern. The
issuance of the Note pursuant an subject to the terms of this Agreement, and
the taking by the City of such additional actions as bond counsel for the Note
may require in connection therewith, are hereby authorized and approved by the
City.
Section 3.3 Business Subsidies Act.
(I) This
Agreement is exempt from the provisions of Minnesota Statutes. Sections 1
16J.993 to 1 16J.995 (the Business Subsidies Act”) because (A) it is a housing
project and (B) it is a redevelopment project, not new construction.
ARTICLE V
EVENTS OF DEFAULT
Section 4.1. Events of Default
Defined. The following shall be ‘Events of Default” under this Agreement
and the term ‘Events of Default” shall mean whenever it is used in this
Agreement any one or more of the following events:
(a) Failure by the Developer to timely pay any ad
valorem real property taxes assessed with respect to the Development
Property.
(b) Failure by the Developer to cause the
installation of the Project to be completed pursuant to the terms, conditions
and limitations of this Agreement.
(c) Failure by the Developer to observe or
perform any other covenant, condition, obligation, or agreement on its part be
observed or performed under this Agreement.
(d) The holder of any mortgage on the Development
Property or any improvements thereon, or any portion thereof. commences
foreclosure proceedings as a result of any default under the applicable
mortgage documents.
If
the Developer shall
(A) file any petition in bankruptcy or for any
reorganization. arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under the United States Bankruptcy Act of 197K,
as amended or under any similar federal or state law; or
(B) make an assignment for the benefit of their
creditors; or
(C) admit in writing its inability to pay debts
generally as they become due; or
(D) be adjudicated a bankrupt or insolvent; or if
a petition or answer proposing the adjudication of the Developer, as a bankrupt
or its reorganization under any present or future federal bankruptcy act or
similar federal or state law shall be filed in any court and such petition or
answer shall not be discharged or denied within sixty (60) days after the
filing thereof; or a receiver, trustee or liquidator of the Developer, or of
the Project, or part thereof; shall be appointed in any proceeding brought
against the Developer, and shall not be discharged within sixty (60) days
Section 4.2. Remedies on Default. Whenever any
Event of Default referred to in Section 4.1 occurs and is continuing, the City,
as specified below. may lake any one or more of the following actions after the
giving of thirty (30) days’ written notice to the Developer citing with
specificity the item or items of default and notifying the Developer that is
has (30) days within which to cure said Even of Default. If the Event of
Default has not been cured within said thirty (30) days:
(a) The City may
suspend its performance under this Agreement until it receives assurances from
the Developer, deemed adequate by the City, that the Developer will cure its
default and continue its performance under this Agreement.
(b) The City may
cancel and rescind the Agreement.
(c) The City may
take action, including legal or administrative action, in law or equity, which
may appear necessary or desirable to enforce performance and observance of any
obligation, agreement, or covenant of the Developer under this Agreement.
Section 4.3. No Remedy Exclusive. No remedy
herein conferred upon or reserved to the City is intended to be exclusive of
any other available remedy or remedies, 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 stature. 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. buy any such right and power may be exercised from time to time and as
often as may be deemed expedient.
Section 4.4. No Implied Waiver. In the event
any agreement contained in this Agreement should be breached by any party and
thereafter waived by any other 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.
Section 4.5. Agreement to Pay Attorney’s
Fees and Expenses. Whenever any Event of Default occurs and the City shall
employ attorneys or incur other expenses for the collection of payments due or
to become due or for the enforcement or performance or observance of any
obligation or agreement on the part of the Developer herein contained, the
Developer agrees that they shall, on demand therefore, pay to the City the
reasonable fees of such attorneys and such other expenses so incurred by the City.
Section 4.6. Indemnification of the City.
(1) The
Developer releases from and covenants and agrees that the City, its governing body
members, officers, agents, including the independent contractors. consultants
and legal counsel, servants and employees thereof (hereinafter, for purposes of
this Section. collectively and “Indemnified Parties”) shall not be liable for
and agrees to indemnify and hold harmless the indemnified 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, provided that the
foregoing indemnification shall not be effective for any actions of the
Indemnified Parties that are not contemplated by this Agreement.
(2) Except for
any willful misrepresentation or any willful or wanton misconduct of the
Indemnified Parties, the Developer agrees to protect and defend the Indemnified
Parties, now and forever, and further agrees to hold the aforesaid harmless
from any claim, demand, suit, action or other proceeding whatsoever by any
person or entity whatsoever arising or purportedly arising from the actions or
inactions of the Developer (or if other persons acting on its behalf or under
its direction or control) under this Agreement, or the transactions
contemplated hereby or the acquisition, construction, installation, ownership,
and operation of the Project: provided, that this indemnification shall not
apply to the warranties made or obligations undertaken by the City in this
Agreement or to any actions undertaken by the City in this Agreement which are
not contemplated by this Agreement but shall, in and event and without regard
to any fault on the part of the City, apply to any pecuniary loss or penalty
(including interest thereon from the date of the loss is incurred or penalty is
paid by the City at a rate equal to the reference rate of U.S. Bank Trust
National Association) as a result of the Project causing the Tax Increment
District to not qualify or cease to quality as a “redevelopment district” under
Section 469.174, Subdivision 10, of the Act or to violate limitations as to the
use of Tax Increments as set forth in Section 469.176, Subdivision 4j.
(3) All
covenants, stipulations, promises, agreements and obligations of the City
contained herein shall be deemed to be the covenants, stipulations, promises,
agreements and obligations of the City and not of any governing body member,
officer, agent, servant or employee of the City, as the case may be.
ARTICLE V
DEVELOPER’S OPTION TO TERMINATE AGREEMENT
Section 5.1 The Developer’s Option to Terminate,
This Agreement may be terminated by Developer, if (i) the Developer is in
compliance with all material terms of this Agreement and no Event of Default
has occurred; and (ii) the City fails to comply with any material term of this
Agreement, and,, after written notice by the Developer of such failure, the
City has failed to cure such noncompliance within ninety (90) days of
Section 5.2. Action to Terminate.
Termination of this Agreement pursuant to Section 5.1 must be accomplished by
written notification by the Developer to the City within sixty (60) days after
the date and when such option to terminate may first be exercised. A failure by
the Developer to terminate this Agreement within such period constitutes a
waiver by the Developer of its rights to terminate this agreement due to such
occurrence or event.
Section
5.3. Effect of Termination. If this Agreement is terminated
pursuant to this Article V. this Agreement shall be from such date forward null
and void and of no further effect; provided. however, the termination of this
Agreement shall not affect the right of either party to institute any action,
claim or demand for damages suffered as a result of breach or default of the
terms of this Agreement by the other party. or to recover amounts which had
accrued and become due and payable as of the date of such termination. Upon
termination of this Agreement pursuant to this Article V. the Developer shall
be free to proceed with the Project at its own expense and without regard to
the provisions of this Agreement: provided, however, that the City shall have
no further obligations to the Developer with respect to reimbursement of the
expenses set forth in
ARTICLE VI
ADDITIONAL PROVISIONS
Section 6.1. Restrictions on Use. The
Developer agrees for itself, its successors and assigns and every successor in
interest to the Development Property. or any part thereof, that the Developer
and such successors and assigns shall operate, or cause to be operated, the
project as a multi-family housing facility and shall devote the Development
Property to, and in accordance with. the uses specified in this Agreement.
Section 6.2. Conflicts of Interest. No
member of the governing body or other official of the City shall have any
financial interest, direct or indirect, in this Agreement. the Development
Property or the Project. or any contract, agreement or other transaction
contemplated to occur or be undertaken there under 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 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 shall be personally liable to the City in the event of any default
or breach by the Developer or successor or on any obligations under the terms
of this Agreement.
Section 6.3. 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.
Section 6.4. 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
sufficiently given or delivered if it is dispatched by registered or certified
mail. postage prepaid, return receipt requested, or delivered personally, and
Church Hi11 Cooperative, Ltd
101 Ridgeview Ave.
Lanesboro, MN 55949
in
the case of the City is addressed to or delivered personally to the City at:
City of Lanesboro
P.O. Box 333
Lanesboro, MN 55949
(507) 467-3722
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.
Section 6.5. Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall constitute one
and the same instrument.
Section 6.6; Law Governing. This Agreement will
be governed and construed in accordance with the laws of the State.
Section 6.7. Expiration. This Agreement shall
expire on December 1, 2011 unless earlier terminated or rescinded in accordance
with its terms.
Section 6.8. Provisions Surviving Rescission or
Expiration. Sections 4.5 and 4.6 shall survive any rescission.
termination or expiration or this Agreement with respect to or arising out of
any event, occurrence or circumstance existing prior to the date thereof.
Section 6.9. Assignability of Agreement and Note.
This Agreement and the Note may only be assigned with prior written approval by
the City.
IN WITNESS WHEREOF.
the City has cause this Agreement to be duly executed in its name and on its
behalf and its seal to be hereunto duly affixed and the Developer has caused
this Agreement to be duly executed in their names on or as of the date first
above written.
THE CITY OF LANESBORO
By
_________________________________
Steven Rahn. Its Mayor
By
_________________________________
Bobbie Torgerson Its City Administrator
This
is a signature page to the Development Agreement by and between the City of
Lanesboro) and Church Hill Cooperative Ltd.
Church Hill Cooperative Ltd
By ____________________________________
Daniel Anderson Its President
This a signature page to the Development Agreement by and between the City of Lanesboro and Church Hill Cooperative Ltd.
EXHIBIT A
Legal Description of Development Property
One parcel of land in the City of Lanesboro. Fillmore
County, Minnesota
More
particularly described as: Lots 1,2,3 and 10,11,12 Block 27,
Original Town Plat.
EXHIBIT B
Form of Tax Increment Note
$254,000
UNITED STATES OF AMERICA
STATE OF
MINNESOTA
COUNTY OF FILLMORE
IN AND FOR THE CITY OF LANESBORO
TAX INCREMENT REVENUE
NOTE 0F 2007
CHURCH HILL COOPERATIVE, Ltd
The City of Lanesboro, Minnesota (the “City”). hereby
acknowledges itself to be indebted and, for value received, hereby promises to
pay the amounts hereinafter described (the ‘Payment Amounts”) to Church Hill
Cooperative, Ltd or its registered assigns the (“the Registered Owner”), but
only in manner. at the times, from the sources of revenue. and to the extent
hereinafter provided.
The principal amount of this Note shall equal from
time to time the principal amount state above, as reduced to the extent that
such principal installments shall have been paid in whole or in part pursuant
to the terms hereof; provided that the sum of the principal amount listed above
shall in no event exceed $254,000 as provided in that certain Development
Agreement dated July 11, 2004, as the same may be amended from time to time
(the “Development Agreement”). by and between the City of Lanesboro, Minnesota
(the “City”) and Church Hill Cooperative, Ltd (the “Company”). The unpaid
principal amount hereof shall bear interest from the date of this Note at the
simple non-compounded rate of five percent (5.00%) per annum. Interest shall be
computed on the basis on a 360 day year consisting of twelve (12) 30-day
months.
Business
Day (the ‘Payment Dates”). On each Payment Date the City shall pay by check or
draft or mailed to the person that was the Registered Owner of this Note at the
close of the last business day of the City preceding such Payment Date an
amount equal to the sum of 90% of the Tax increments (hereinafter
defined) received by the City during the twelve month period preceding such
Payment Date. All payments made by the City under this Note shall first be
applied to accrued interest and then to principal.
The Payment Amounts due hereon shall be payable solely
from tax increment derived from the Development Property (the “Tax Increments”)
within the City’s Tax Increment Financing District No. 2-2 (the “Tax Increment
District“) within its Municipal Development District No. 2 which are paid to
the City and which the City is entitled to retain pursuant to the provisions of
Minnesota Statutes, Sections 469.174 through 469.179, as the same may be
amended or supplemented from time to time (the “Tax Increment District”). This
Note shall terminate and be of no further force and effect following the last
Payment Date defined above, on any date upon which the City shall have
terminated the Development Agreement under Section 4.2 (b) thereof or the
Developer shall have terminated the Development Agreement under Article V
thereof, or on the date that all principal interest payable hereunder shall
have been paid in full. whichever occurs earliest.
The City makes no representation or covenant, express
or implied that the Tax Increments will be sufficient to pay. in whole or in
part. the amounts which are or may become due and payable hereunder.
The City’s payment obligations hereunder shall be
further conditioned on the fact that no Event of Default under the Development
Agreement shall have occurred and be continuing at the time payment is
otherwise due hereunder, but such unpaid amounts shall become payable if said
Event of Default shall thereafter have been cured; and, further, if pursuant to
the occurrence of an Event of Default under the Development Agreement of the
City elects to cancel and rescind the Development Agreement, the City shall
have no further debt or obligation under this Note whatsoever. Reference is
hereby made to all of the provisions of the Development Agreement, including
without limitation Section 3.2 thereof for a fuller statement of the rights and
obligations of the City to pay the principal of this Note, and said provisions
are hereby incorporated into this Note as though set out in full herein.
This
Note is a special. limited revenue obligation and not general obligation of the
City and is payable by the City only from the sources and subject to the
qualifications stated or referenced herein. This Note is not a general
obligation oldie City of Lanesboro. Minnesota, and neither full faith and
credit nor the taxing powers of the City are pledged to the payment of the
principal of this Note and no property or other asset of the City, save and
except the above-referenced Tax Increments, is or shall be a source of payment
of the City’s obligations hereunder.
This
Note is issued by the City in aid of financing a project pursuant to and in
full conformity with the Constitution and laws of the State of Minnesota.
including the Tax increment Act.
This
Note and the underlying Development Agreement shall not be assignable except
with the prior written approval of the City of Lanesboro.
IT
IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required
by the Constitution and laws of the State of Minnesota and Charter of the City
to be done, to have happened, and to be performed precedent to and in the
issuance of this Note have been done, have happened, and have been performed in
regular and due from, time, and manner as required by law; and that this Note,
together with all other indebtedness of the City outstanding on the date hereof
and on the date of its actual issuance and delivery, does not cause the
indebtedness of the City to exceed any constitutional or statutory or Charter
limitation thereon.
IN
WITNESS WHEREOF. City of Lanesboro. Minnesota, by its City Council, has
caused
this Note to be executed by the manual signatures of its Council President and
City
Administrator and has caused this Note to be dated as of March 30, 2007 and
issued on December 1, 2007.
CITY OF LANESBORO
_______________________________Mayor
BY: Steven Rahn, Its Mayor
_____________________________________
BY: Bobbie Torgerson, City Clerk/Admin.
CERTIFICATION OF REGISTRATION
It
is hereby certified that the foregoing Note, as originally issued as of
____________ was on said date registered in the name Church Hill Cooperative,
Ltd. and that, at the request of the Registered Owner of this Note, the
undersigned has this day registered the Note in the name of the Registered
Owner, as indicated in the registration blank below, on the books kept by the
undersigned for such purposes.
NAME AND ADDRESS OF REGISTERED OWNER
Church
Hill Cooperative, Ltd
101
Ridgeview Lane
Lanesboro,
MN 55949
DATE OF REGISTRATION ________________
SIGNATURE OF CITY ADMINISTRATOR
EXHIBIT C
IMPROVEMENTS
Design.
demolition, excavating and grading, and building rehabilitation in substantial
conformance with the attached plans (Exhibits C-1 to C-5).