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HomeMy WebLinkAboutContract 1958 Execution Copy December 7, 2006 CONTRACT FOR PRIVATE REDEVELOPMENT By and Between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY COLUMBIA HEIGHTS, MINNESOTA and PRATT ORDWAY, LLC, d/b/a PRATT ORDWAY PROPERTIES Dated as of: November 28,2006 This document was drafted by: KENNEDY & GRA VEN, Chartered (SJB) 470 US Bank Plaza 200 South Sixth Street Milmeapolis, Minnesota 55402 Telephone: (612) 337-9300 PREAMBLE Section 1.1. Section 2.1. Section 2.2. Section 3.1. Section 3.2. Section 3.3. Section 3.4. Section 3.5. Section 3.6. Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 5.1. Section 5.2. Section 5.3. Section 6.1. Section 6.2. TABLE OF CONTENTS .... ..... ..... ........ ....... ... ...... ........ ...... .......................... ........ .............. ..... .............. .... 1 ARTICLE I Definitions Definitions......................................................................................................... 2 ARTICLE II Representations and Warranties Representations by the Authority...................................................................... 5 Representations and Warranties by the Redeveloper........................................ 5 ARTICLE III Land Transaction; Demolition Status of Redevelopment Property.................................................................... 7 Demolition; Grant Disbursement...................................................................... 7 Business Subsidy. ............................................................................................. 8 Environmental Conditions................................................................................ 8 Payment of Administrative Costs..................................................................... 9 Records ............................................................................................................. 9 ARTICLE IV Construction of Minimum Improvements and Public Improvements Construction of Minimum Improvements and Public Improvements............ 10 Construction Plans.......................................................................................... 10 Completion of Construction............................................................................ 11 Certificate of Completion............................................................................... 11 ARTICLE V Insurance Insurance......................................................................................................... 13 Subordination........ .................................... ....................... ........... .... .... ............ 14 Qualifications.................................................................................................. 14 ARTICLE VI Taxes Right to Collect Delinquent Taxes ............. .................. ............... ............ ........ 15 Review of Taxes .... ............ ......... ............ ........................................................ 15 Section 7.1. Section 8.1. Section 8.2. Section 8.3. Section 9.1. Section 9.2. Section 9.3. Section 9.4. Section 9.5. Section 10.1. Section 10.2. Section 10.3. Section 10.4. Section 10.5. Section 10.6. Section 10.7. Section 10.8. Section 10.9. Section 10.10. Section 10.11. ARTICLE VII Financing Mortgage Financing....................................................................... ................. 16 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Representation as to Redevelopment.............................................................. 17 Prohibition Against Redeveloper's Transfer of Property and Assignment of Agreement.............................................................................. 17 Release and Indemnification Covenants......................................................... 18 ARTICLE IX Events of Default Events of Default Defined............... ........................................................ ........ 20 Renledies on Default....... ................................................................................ 20 No Remedy Exclusive....... ....... ..... ............... ..... ...................................... ........ 21 No Additional Waiver Implied by One Waiver.............................................. 21 Attorney Fees ........... .................................. ................. .............................. ...... 21 ARTICLE X Additional Provisions Conflict of Interests; Authority Representatives Not Individually Liable ...... 22 Equal Employment Opportunity..................................................................... 22 Restricti ons on Use......................................................................................... 22 Provisions Not Merged With Deed................................................................. 22 Titles of Articles and Sections ........................................................................ 22 Notices and Demands..................................................................................... 22 Counterparts.................................................................................................... 23 Recording........................................................................................................ 23 Amendlnent..................................................................................................... 23 Authority or City Approvals ........................................................................... 23 Termination..................................................................................................... 23 EXHIBIT A Description of Property EXHIBIT B Site Plan EXHIBIT C Certification of Completion 11 CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made on or as of the 28th day of November, 2006, by and between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, COLUMBIA HEIGHTS, MINNESOTA, a public body corporate and politic (the "Authority"), established pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (hereinafter referred to as the "Act"), and PRATT ORDWAY, LLC, a Minnesota limited liability company, dba PRATT ORDWAY PROPERTIES (the "Redeveloper"). WITNESSETH: WHEREAS, the Authority was created pursuant to the Act and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Columbia Heights ("City"); and WHEREAS, the City and the Authority (as successor to the Housing and Redevelopment Authority in and for the City of Columbia Heights) have undertaken a program to promote redevelopment of land which that is characterized by blight and blighting factors within the City pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA AcC); and WHEREAS, pursuant to the Act and the HRA Act, the Authority is authorized to undertake certain activities to facilitate the redevelopment of real property by private enterprise; and WHEREAS, the Authority and Redeveloper have previously entered into a Preliminary Development Agreement dated as of March 28, 2006 proposed redevelopment of the property described in Exhibit A hereto, designated as the Redevelopment Property; and WHEREAS, this Agreement is intended to supersede and replace the Preliminary Development Agreement in all respects; and WHEREAS, the Authority believes that the redevelopment of the Redevelopment Property pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes 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 obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means the Economic Development Authority Act, Minnesota Statutes, Sections 469.090 to 469.108, as amended. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Columbia Heights Economic Development Authority, or any successor or assIgn. "Authority Representative" means the Executive Director of the Authority, or any person designated by the Executive Director to act as the Authority Representative for the purposes of this Agreement. "Business Day" means any day except a Saturday, Sunday, legal holiday, a day on which the City is closed for business, or a day on which banking institutions in the City are authorized by law or executive order to close. "Business Subsidy Act" means Minnesota Statues, Sections 1161.993 to 116J.995, as amended. "Demolition Work" has the meaning provided in Section 3.2 hereof. "Certificate of Completion" means the certification provided to the Redeveloper, or the purchaser of any part, parcel or unit of the Redevelopment Property, pursuant to Section 4.4 of this Agreement. "City" means the City of Columbia Heights, Minnesota. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Redevelopment Property which a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the City, and (b) shall include at least the following for each building: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) landscape plan; and (8) such other plans or supplements to the foregoing plans as the Authority may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. 2 "County" means the County of Anoka, Minnesota. "Event of Default" means an action by the Redeveloper listed in Article IX of this Agreement. "Holder" means the owner of a Mortgage. "Minimum Improvements" means the construction on the Redevelopment Property of a 58-unit rental housing facility intended primarily for occupancy by seniors. "Mortgage" means any mortgage made by the Redeveloper which is secured, in whole or in part, with the Redevelopment Property and which is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. "Outlot" means the portion of the Property to be platted as a separate parcel by Redeveloper under Section 3.1. "Property" means the property so described on Exhibit A. "Preliminary Development Agreement" means the Preliminary Development Agreement between the Authority and the Redeveloper dated as of March 28, 2006. "Redeveloper" means Pratt Ordway, LLC, dba Pratt Ordway Properties or its permitted successors and assigns. "Redevelopment Property" means the portion of the Redevelopment Property on which the Minimum Improvements must be constructed, as described in Section 3.1. "State" means the State of Minnesota. "Tax Official" means any County assessor; County auditor; County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Termination Date" means the date the Authority issues the Certificate of Completion. "Transfer" has the meaning set forth in Section 8.2(a) hereof. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of war, significant weather conditions such as floods, tornadoes, or the like, terrorism, strikes, other labor troubles, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority in exercising its rights under this Agreement) which directly result in delays. Unavoidable Delays shall not include delays in the Redeveloper's obtaining of permits or governmental approvals necessary to enable construction 3 of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement. 4 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is an economic development authority duly organized and existing under the laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The activities of the Authority are undertaken to foster the redevelopment of certain real property which for a variety of reasons is presently underutilized, to eliminate current blighting factors and prevent the emergence of further blight at a critical location in the City, to create increased tax base in the City, to stimulate further development in the City as a whole. Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper is a limited liability company duly organized and in good standing under the laws of the State of Minnesota, is not in violation of any provisions of its article of organization or the laws of the State, is duly authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its members. (b) Upon acquisition of the Redevelopment Property, the Redeveloper will cause the Minimum Improvements to be constructed in accordance with the terms of this Agreement and all applicable local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (c) The Redeveloper has received no notice or communication from any local, state or federal official that the activities of the Redeveloper or the Authority may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware). The Redeveloper is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state or federal environmental law, regulation or review procedure. (d) The Redeveloper will cause the Minimum Improvements to be constructed in accordance with all local, state or federal energy-conservation laws or regulations. (e) The Redeveloper will obtain or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. 5 (f) 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 provisions of any corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Redeveloper is now a party or by which it is bound, or constitutes a default under any of the foregoing. (g) The Redeveloper shall promptly advise City in writing of all litigation or claims affecting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Redeveloper or its business which may delay or require changes in construction of the Minimum Improvements. 6 ARTICLE III Land Transaction; Demolition Section 3.1. Status of Redevelopment Property. (a) Redeveloper has secured an option to acquire the Property from a third party. The Authority has no obligation to acquire the Property or any portion thereof. (b) Redeveloper shall exercise its option to acquire the Property and shall, at its cost, prepare and obtain approval by the City of a plat of the Property in accordance with City ordinances and procedures, to create two parcels: (i) the Redevelopment Property, which is the site for redevelopment under this Agreement; and (ii) the Outlot, which the parties agree and understand will be made available for other development that is not the subject of this Agreement; such parcels having the approximate size and configuration shown in the site plan attached as Exhibit B hereto. Section 3.2. Demolition Work. (a) In order to facilitate construction of the Minimum Improvements, the Authority will undertake, and pay up to $115,000 of the cost of, the Demolition Work on the Property. The term "Demolition Work" means the demolition of existing the structure, removal of debris, concrete and blacktop, and general grading to all for proper drainage of the Property. The cost of the Demolition Work includes the cost of any pre- demolition analysis and reporting prepared by consultants retained by the Authority or City. (b) The Redeveloper grants the Authority and City and their employees, agents and contractors, a right of entry on the Property in order to carry out the Demolition Work. The Authority will commence the Demolition Work promptly upon satisfaction of the following conditions precedent: (i) No Event of Default under this Agreement or event which would constitute such an Event of Default but for the requirement that notice be given or that a period of grace or time elapse, shall have occurred and be continuing; (ii) Redeveloper has acquired fee title to the Property; (iii) Redeveloper has submitted, and the Authority has approved, Construction Plans for the Minimum Improvements in accordance with Article IV hereof, and financing commitment in accordance with Article VII hereof; and (iv) Redeveloper has made the escrow deposit required under Section 3.1 ( c), if any, and has paid the administrative fee required under Section 3.5. 7 (c) When bids have been awarded for all the Demolition Work (but prior to commencement of the work), the Redeveloper shall deposit with the Authority, within 15 days after receipt of written notice from the Authority, the amount by which the total cost of the Demolition Work exceeds $115,000. The Authority will maintain that amount in escrow dedicated to paying costs of Demolition Work in excess of $115,000. Upon completion of the Demolition Work, the Authority will promptly return to Redeveloper any balance of escrowed funds. If the Authority determines that the total cost of the Demolition Work will exceed $115,000 plus the amount escrowed (for example, because of change orders or unexpected costs), the Authority may provide written notice to Redeveloper of such additional costs, and Redeveloper shall pay such amounts within 15 days after receipt of the notice. (d) Notwithstanding anything to the contrary in this Agreement, if Redeveloper should default by failing complete construction of the Minimum Improvements by the date specified in Section 4.3(a) the Redeveloper shall promptly repay to the Authority the cost of the Demolition Work paid by the Authority (e.g., $115,000, or the actual costs of Demolition Work ifless than that amount). Section 3.3. Business Subsidy. The parties agree and understand that the financial assistance under this Agreement that benefits the Property does not constitute a business subsidy pursuant to Section 116J.993, subd. 3, clause (17) of the Business Subsidy Act because the assistance is to accomplish redevelopment of the Property, and the Redeveloper's investment in purchase of the Property is more than 70 percent of the County assessor's estimated market value for taxes payable in 2007 (the most recent market value). As evidence of eligibility for that exemption, Redeveloper warrants and represents that its purchase price for the Property is at least $1,500,000, and the County assessor's estimated market value of the Property for taxes payable in 2007 is $869,100. The parties further agree and understand that, though part of the Demolition Work will occur on the portion of the Property that will be platted as the Outlot, the costs of the Demolition Work reasonably allocable to the Outlot will not exceed $25,000. Therefore, any assistance allocable to the Outlot is not a business subsidy pursuant to Section 1161.993, subd. 3(1). The Redeveloper releases and waives any claim against the Authority and its governing body members, officers, agents, servants and employees thereof arising from application of the Business Subsidy Act to this Agreement, including without limitation any claim that the Authority failed to comply with the Business Subsidy Act with respect to this Agreement. Section 3.4. Environmental Conditions. (a) The Redeveloper acknowledges that the Authority makes no representations or warranties as to the condition of the soils or environmental conditions on the Property or the fitness of such property for construction of the Minimum Improvements or any other purpose for which the Redeveloper may make use of such property, and that the assistance provided to the Redeveloper under this Agreement (including without limitation the Demolition Work) neither implies any responsibility by the Authority or the City for any contamination of the Property nor imposes any obligation on such parties to participate in any cleanup of such property. (b) Without limiting its obligations under Section 8.3 of this Agreement the Redeveloper further agrees that it will indemnify, defend, and hold harmless the Authority, the City, 8 and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Property and the activities of any contractor or agent in conducting the Demolition Work on the Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of the City or Authority under State or federal law, including without limitation Minnesota Statutes Sections 466.04 and 604.02. The provisions of this Section 3.4(b) shall not become effective until the date on which Redeveloper acquires fee title to the Redeve I opment Property." Section 3.5. Payment of Administrative Costs. (a) The Redeveloper is responsible for the Authority's "Administrative Costs," which means out-of-pocket costs incurred by the Authority attributable to or incurred in connection with the negotiation and preparation of this Agreement, the Preliminary Development Agreement, and other documents and agreements in connection with the Redevelopment Property. In order to secure partial payment of the Administrative Costs, the Redeveloper delivered to the Authority $5,000 upon execution of the Preliminary Development Agreement. The Authority will utilize such funds to payor reimburse itself for Administrative Costs. If at anyone or more times during the term of this Agreement, the Authority determines that Administrative Costs will exceed $5,000 and that additional security is required, the Authority shall notify the Redeveloper of the amount of such additional security. Within ten calendar days of receipt of such notice, the Redeveloper shall deliver to the Authority the required additional security. Failure of the Redeveloper to deliver the requested additional security will result in the Authority suspending its obligations under this Agreement until the security is provided. (b) Redeveloper shall also pay to the Authority an administrative fee in the amount of $5,750, representing reimbursement of Authority and City internal costs related to this Agreement. The fee is due and payable within 15 days after Redevelopers' receipt of written notice from the Authority that the Authority has determined all costs of the Demolition Work. Section 3.6. Records. The Authority or its representatives shall have the right at all reasonable times aftcr reasonable notice to inspect, examine and copy all books and records of Redeveloper relating to demolition on the Property and construction of the Minimum Improvements. 9 ARTICLE IV Construction of Minimum Improvements and Public Improvements Section 4.1. Construction of Minimum Improvements and Public Improvements. The Redeveloper agrees that, upon acquisition of the Property, it will construct or cause construction of the Minimum Improvements on the Redevelopment Property, in substantial compliance with approved Construction Plans and at all times while Redeveloper owns the Redevelopment Property, will operate and maintain, preserve and keep the respective components of the Minimum Improvements or cause such components be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 4.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, and before the Authority commences any Demolition Work, the Redeveloper shall submit to the Authority Construction Plans. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in conformity with this Agreement and all applicable State and local laws and regulations. The Authority Representative will approve the Construction Plans in writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds available to the Redeveloper from all sources (including Redeveloper's equity) for construction of the Minimum Improvements; and (vi) no Event of Default has occurred. Approval may be based upon a review by the City's Engineer and Building Official of the Construction Plans. No approval by the Authority Representative shall relieve the Redeveloper of the obligation to comply with the terms of this Agreement or of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority Representative shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Redeveloper in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority Representative, in whole or in part. Such rejections shall set forth in detail the reasons therefore, and shall be made within 15 days after the date of their receipt by the Authority. If the Authority Representative rejects any Construction Plans in whole or in part, the Redeveloper shall submit new or corrected Construction Plans within 15 days after written notification to the Redeveloper of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority Representative's approval shall not be unreasonably withheld, delayed or conditioned. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements to be constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. 10 (b) If the Redeveloper desires to make any material change in the Construction Plans after their approval by the Authority, the Redeveloper shall submit the proposed change to the Authority for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of Section 4.2 of this Agreement with respect to such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Redeveloper in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Redeveloper, setting forth in detail the reasons therefor. Such rejection shall be made within 15 days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans will not be unreasonably withheld. Section 4.3. Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper must commence construction of the Minimum Improvements by May 1, 2007 and must substantially complete construction of the Minimum Improvements by May 1, 2008. All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in substantial conformity with the Construction Plans as submitted by the Redeveloper and approved by the Authority and the City. If the Redeveloper is making substantial progress with respect to the redevelopment project, and is unable to meet one or more of the above-referenced deadlines, the Authority and the Redeveloper shall negotiate in good faith for a reasonable period to extend the time in which necessary action(s) must be taken or occur, the lapse of which time would otherwise constitute a default under this Agreement. (b) The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and such successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed subject to Unavoidable Delay within the period specified in this Section 4.3 of this Agreement. Subsequent to conveyance of the Redevelopment Property, or any part thereof, to the Redeveloper, and until construction of the Minimum Improvements has been completed, the Redeveloper shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Redeveloper with respect to such construction. Section 4.4. Certificate of Completion. (a) Promptly after substantial completion of the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of the Redeveloper to construct the Minimum Improvements (including the dates for completion thereof), the Authority will furnish the relevant Redeveloper with a Certificate of Completion in substantially the form attached as Schedule C. Such certification by the Authority shall be a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Redeveloper, and its successors and assigns, to construct the relevant component of the Minimum Improvements and the dates for the completion thereof. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any obligation of the Redeveloper to any Holder 11 of a Mortgage, or any insurer of a Mortgage, securing money loaned to finance the Minimum Improvements, or any part thereof. (b) The Certificate of Completion provided for in this Section 4.4 of this Agreement shall be in such form as will enable it to be recorded in the proper office for the recordation of deeds and other instruments pertaining to the Redevelopment Property. If the Authority shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 of this Agreement, the Authority shall, within thirty (30) days after written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts it will be necessary, in the opinion of the Authority, for the Redeveloper to take or perform in order to obtain such certification. (c) The construction of the Minimum Improvements shall be deemed to be substantially completed when the Redeveloper has received a certificate of occupancy from the City, and all site improvements have been substantially completed as reasonably determined by the Authority Representative. 12 ARTICLE V Insurance Section 5.1. Insurance. (a) The Redeveloper will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so-called "Builder's Risk Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in non-reporting form on the so-called "all risk" form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); (iii) Automobile liability insurance to cover claims for damages because of bodily injury or death of any person or property damage arising out of the ownership, maintenance or use of any motor vehicle of not less than $1,000,000; and (iv) Workers' compensation insurance, with statutory coverage. (b) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby, and shall name the Authority, the City and any Mortgagee as an additional named insured thereunder. Upon request, the Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. 13 (c) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Redeveloper will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Redeveloper will apply the net proceeds of any insurance relating to such damage received by the Redeveloper to the payment or reimbursement of the costs thereof. The Redeveloper shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the net proceeds of insurance received by the Redeveloper for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction and restoration shall be the property of the Redeveloper. (d) The Redeveloper and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate on the Termination Date. Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V, the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all respects, be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to Article VII of this Agreement. Section 5.3. Qualifications. Notwithstanding anything herein to the contrary, the parties acknowledge and agree that: (a) Upon transfer of the Redevelopment Property or portion thereof to another person or entity, the Redeveloper will remain obligated under Section 5.1 hereof relating to such portion transferred, unless the Redeveloper is released from such obligations in accordance with the terms and conditions of Section 8 .2(b), (c), or 8.3 hereof. 14 ARTICLE VI Taxes Section 6.1. Right to Collect Delinquent Taxes. The Redeveloper acknowledges that the Authority is providing financial assistance in furtherance of the redevelopment described in this Agreement, and that part of the consideration for such assistance is the improvement of tax base in the City. To that end, the Redeveloper agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Redevelopment Property and the Minimum Improvements. The Redeveloper acknowledges that this obligation creates a contractual right prior to the Termination Date to sue the Redeveloper or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney fees. Section 6.2. Review of Taxes. The Redeveloper agrees that prior to the Termination Date, it will not cause a reduction in the real property taxes paid in respect of the Redevelopment Property through: (A) willful destruction of the Redevelopment Property or any part thereof; or (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement. The Redeveloper also agrees that it will not, prior to the Termination Date, apply for a deferral of property tax on the Redevelopment Property pursuant to any law, or transfer or permit transfer of the Redevelopment Property to any entity whose ownership or operation of the property would result in the Redevelopment Property being exempt from real estate taxes under State law (other than any portion thereof dedicated or conveyed to the City or Authority in accordance with this Agreement). 15 ARTICLE VII Financillf! Section 7.1. Mortgage Financing. (a) Before the Authority commences any Demolition Work, the Redeveloper shall submit to the City evidence of one or more commitments for financing which, together with committed equity for such construction, is sufficient for payment of the Construction Costs for the Minimum Improvements. Such commitments may be submitted as short term financing, long term mortgage financing, a bridge loan with a long term take-out financing commitment, or any combination of the foregoing. (b) If the financing is sufficiently committed and adequate in amount to pay the costs specified in paragraph (a) then the Authority staff shall notify the Redeveloper in writing of its approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given within ten (10) days from the date when the Authority is provided the evidence of financing. A failure by the Authority staff to respond to such evidence of financing shall be deemed to constitute an approval hereunder. If the Authority staff rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection. In any event the Redeveloper shall submit adequate evidence of financing within ten (10) days after such rejection. (c) In the event that there occurs a default under any Mortgage authorized pursuant to Section 7.1 of this Agreement, the Redeveloper shall cause the Authority to receive copies of any notice of default received by the Redeveloper from the holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Redeveloper within such cure periods as are available to the Redeveloper under the Mortgage documents. In the event there is an event of default under this Agreement, the Authority will transmit to the Holder of any Mortgage a copy of any notice of default given by the Authority pursuant to Article IX of this Agreement. (d) In order to facilitate the securing of other financing, the Authority agrees to subordinate its rights under this Agreement provided that such subordination shall be subject to such reasonable terms and conditions as the Authority and Holder mutually agree in writing. Notwithstanding anything to the contrary herein, any subordination agreement must include the provision described in Section 7 .1 (c). 16 ARTICLE VIII Prohibitions A2ainst Asshrnment and Transfer~ Indemnification Section 8.1. Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of redevelopment of the Redevelopment Property and not for speculation in land holding. Section 8.2. Prohibition Against Redeveloper's Transfer of Property and Assignment of Agreement. The Redeveloper represents and agrees that prior to issuance of the Certificate of Completion for the Minimum Improvements: (a) Except as specifically described in this Agreement, the Redeveloper has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, to any person or entity (collectively, a "Transfer"), without the prior written approval of the Authority's board of commissioners. The term "Transfer" does not include (i) encumbrances made or granted by way of security for, and only for, the purpose of obtaining construction, interim or permanent financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Property or to construct the Minimum Improvements or component thereof, or (ii) any lease, license, easement or similar arrangement entered into in the ordinary course of business related to operation of the Minimum Improvements. (b) If the Redeveloper seeks to effect a Transter prior to issuance ofthe Certificate of Completion, the Authority shall be entitled to require as conditions to such Transfer that: (i) any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper as to the portion of the Redevelopment Property to be transferred; and (ii) Any proposed transferee, by instrument in wntmg satisfactory to the Authority and in form recordable in the public land records of Anoka County, Minnesota, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Redeveloper under this Agreement as to the portion of the Redevelopment Property to be transferred and agreed to be subject to all the conditions and restrictions to which the Redeveloper is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Redevelopment Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Redevelopment Property, the Minimum Improvements or any part 17 thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Redevelopment Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally, or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Redevelopment Property that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the Redevelopment Property, from any of its obligations with respect thereto; and (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Redevelopment Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. (c) If the conditions described in paragraph (b) are satisfied then the Transfer will be approved and the Redeveloper shall be released from its obligation under this Agreement, as to the portion of the Redevelopment Property that is transferred, assigned, or otherwise conveyed. The provisions of this paragraph (c) apply to all subsequent transferors, assuming compliance with the terms of this Article. (d) Upon issuance of the Certificate of Completion, the Redeveloper may transfer or assign the Minimum Improvements and/or the Redeveloper's rights and obligations under this Agreement with respect to such property without the prior written consent of the Authority. (e) The parties agree and understand that Redeveloper intends to Transfer the Redevelopment Property and Redeveloper's rights and obligations under this Agreement to CLP Development, LLC, d/b/a Comforts of Horne ("Comforts of Home"), which entity will construct the Minimum Improvements. The Authority consents to such Transfer and release of Redeveloper from its obligations under this Agreement as described in Section 8.2(c), subject to compliance by Comforts of Home with the requirements of Section 8.2(b )(ii). Section 8.3. Release and Indemnification Covenants. (a) The Redeveloper releases from and covenants and agrees that the Authority and the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority and the City and the governing body members, officers, agents, servants and employees thereof 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 Minimum Improvements or the Public Improvements, except for any such damages or injuries directly related to the gross negligence of the Authority or the City. 18 (b) Except for any willful or negligent misrepresentation or any willful or wanton misconduct or negligence of the following named parties, the Redeveloper agrees to protect and defend the Authority and the City and the governing body members, officers, agents, servants and employees thereof (the "Indemnified Parties"), now or forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements and Public Improvements. (c) Except for any negligence of the Indemnified Parties (as defined in clause (b) above), and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants or employees or any other person who may be about the Minimum Improvements or Public Improvements due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. 19 ARTICLE IX Events of Default Section 9.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, anyone or more of the following events, after the non-defaulting party provides 30 days written notice to the defaulting party of the event, but only if the event has not been cured within said 30 days or, if the event is by its nature incurable within 30 days, the defaulting party does not, within such 30-day period, provide assurances reasonably satisfactory to the party providing notice of default that the event will be cured and will be cured as soon as reasonably possible: (a) Failure by the Redeveloper or the Authority to observe or perform any material covenant, condition, obligation, or agreement on its part to be observed or performed under this Agreement; (b) The Redeveloper: (i) files any petition in bankruptcy or for any reorganization, arrangement, composItIOn, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law; (ii) makes an assignment for benefit of its creditors; (iii) admits in writing its inability to pay its debts generally as they become due; (iv) is adjudicated a bankrupt or insolvent; or (v) fails to payor escrow for the Authority's Administrative Costs. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the non-defaulting party may exercise its rights under this Section 9.2 after providing thirty days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default is by its nature incurable within thirty days, the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. 20 (b) Notwithstanding anything to the contrary herein, if there is an Event of Default by Redeveloper prior to the Authority's commencement of Demolition Work, the Authority's remedies are limited to termination of this Agreement and recovery of attorney fees under Section 9.5; and if there is an Event of Default by Redeveloper after Authority's commencement of Demolition Work, the Authority's remedies are limited to termination of this Agreement together with recovery of any costs of Demolition Work incurred by the Authority together with attorney fees under Section 9.5. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or Redeveloper 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 statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the 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 9.5. Attorney Fees. Whenever any Event of Default occurs and if the Authority or Redeveloper shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper or Authority under this Agreement, the non-prevailing party in any such action agrees that it shall, within 10 days of written demand by the prevailing party, pay to the prevailing party the reasonable fees of such attorneys and such other reasonable expenses so incurred. 21 ARTICLE X Additional Provisions Section 10.1. Conflict of Interest; Authority Representatives Not Individually Liable. The Authority and the Redeveloper, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the Authority or County or for any amount which may become due to the Redeveloper or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 10.3. Restrictions on Use. The Redeveloper agrees that until the Termination Date, the Redeveloper, and such successors and assigns, shall devote the Redevelopment Property to, the operation of the Minimum Improvements for uses described in the definition of such term in this Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any improvements erected or to be erected thereon, or any part thereof. Section 10.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Redevelopment Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. 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 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the 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 (a) in the case ofthe Redeveloper, is addressed to or delivered personally to the Redeveloper at 3500 Willow Lake Blvd., Suite 100, Vadnais Heights, MN 55110, Attn: Leonard Pratt; and 22 (b) in the case of the Authority, is addressed to or delivered personally to the Authority at 590 - 40th Avenue NE, Columbia Heights, Minnesota 55421, Attn: Executive Director; or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 10.7. Counterparts. This Agreement may be executed In any number of counterparts, each of which shall constitute one and the same instrument. Section 10.8. Recording. The Authority may record this Agreement and any amendments thereto with the Anoka County recorder. The Redeveloper shall pay all costs for recording. Section 10.9. Amendment. This Agreement may be amended only by written agreement approved by the Authority and the Redeveloper. Section 10.10. Authority or City Approvals. Unless otherwise specified, any approval required by the Authority under this Agreement may be given by the Authority Representative. Section 10.11. Termination. This Agreement terminates on the Termination Date, except that termination of the Agreement does not terminate, limit or affect the rights of any party that arises before the date the City issues the Certificate of Completion, or as otherwise provided herein. 23 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Redeveloper has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By ,~~ Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTYOFANOKA ) The foregoing instrument was acknowledged before me this day of 2006, by D ~ ~~ LJ _- and r the President and Executive Director of the Columbia Heights Economic Development Authority, a public body politic and corporate, on behalf of the Authority. 24 DBA PRA '/) ,~ STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ) Ij& day of r:}.~{ ,2006 by L!.(;f\.~J w. !),-Jf; the (!l;c~ rYl~ of Pratt Ordway, LLC, dba Pratt Ordway Properties, a Minnesota limited liability company, on behalf of the company. C{1'i1 ~ r2 rrJ ~-L-- Notary Public 25 SCHEDULE A Legal Description of Property Lots 13, 14, 15, 16 and 17, Block 2, Waltons Sunny Acres Second Addition to the City of Columbia Heights, Anoka County, Minnesota. A-I I I I 1 , I , , , I 1 I I I I I I I ~. 11 If\ t F 1'1 J.r~' I I I I i .-J !~ ~...JJI/ .-"1 . I ~ l.l. I [I '.I.:! 1 i~, " I . ~ . l ~ n "-.-' 1=11 t... iil, r ~Ib I . i1_ I I r, I ,,\ I l\ I \ I \1 \. ~\ I \ I \ I. l \ \ ...., iii , \ \ , \ , \ \ \ , . I~ C ,e i I ~I ~S ~ I 1l:;lJ !Z 1m ~III i i : 1, \ . ~;'l I . I I , , , , ! I I I I Iii !~ I -1 ijg I SCHEDULE B Site Plan for Property 'It Iii III U 1111 II Ii B-1 ~~ ,..,..,~- ""'~ ~~".", . ~-" ......- ........... .......,.,. ,.;i"" .,.,..,.,..... ? ... , I Iii;;;;;;;;! I I I ... I , _mH.. I , ---I , , I , I I I I I I I I I I 1iI . 11'1 RII III1 !III ill I; ~I ~i;I':~""''' .1.1 I~ .Ht~,.. rlUr i ~lll CD ~~ il I. I. II II I ~ I ~ N' 1I1I I'll! I i ~ I II .111111 ;: ~ 001 ...- -"" ~ i 'I '\ I :I: j;J .. I. -I p;l 4 II ~ I I ~;.,c II C." g~ Z I H II. ~, I~ I~ I~ SCHEDULE C CERTIFICATE OF COMPLETION The undersigned hereby certifies that Pratt Ordway, LLC (the "Redeveloper") has fully complied with its obligations under Articles III and IV of that document titled "Contract for Private Redevelopment," dated November 28, 2006 between the Columbia Heights Economic Development Authority and the Redeveloper (the "Contract"), with respect to construction of the Minimum Improvements in accordance with the Construction Plans, and that the Redeveloper is released and forever discharged from its obligations to construct the Minimum Improvements under Articles III and IV. Dated: ,20_ COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director STATE OF MINNESOTA) ) ss COUNTYOFANOKA ) On this _ day of , 20_, before me, a Notary Public within and for said County, personally appeared , to me personally known, who, being by me duly sworn, did say that (s)he is the President of the Authority named in the foregoing instrument; that the seal affixed to said instrument is the seal of said Authority; that said instrument was signed and sealed in behalf of said Authority by authority of its governing body; and said acknowledged said instrument to be the free act and deed of said Authority. Notary Public C-l STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) On this _ day of , 20_, before me, a Notary Public within and for said COWlty, personally appeared , to me personally known, who, being by me duly sworn, did say that (s)he is the Executive Director of the Authority named in the foregoing instrument; that the seal affixed to said instrument is the seal of said Authority; that said instrument was signed and sealed in behalf of said Authority by authority of its governing body; and said acknowledged said instrument to be the free act and deed of said Authority. Notary Public C-2