7. Rottlund Homes: Private Redevelopment Agreement.CITY OF
CHASH
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
MEMORANDUM
TO: Don Ashworth, City Manager
FROM: Todd Gerhardt, Assistant City Manager
DATE: April 9, 1997
SUBJ: Consider Approval of the Private Redevelopment. Agreement with The Rottlund
Company, Inc.
Attached for the council's consideration is the Private Development Agreement between the City
of Chanhassen and The Rottlund's North Bay project (a single family residential development)
reducing the price of 35 owner - occupied homes, so as to be affordable under the Metropolitan
Livable Communities Act (LCA). In order to accomplish this objective, last June the city council
created a tax increment financing district to assist in reducing the cost of each unit in order to
meet the LCA. The Metropolitan Council's definition of affordable is those occupied units under
$120,000. Under this plan, the city would provide assistance to 35 of the 76 units in the Rottlund
development.
The agreement calls for at least 18 units to be designated and sold to owner- occupants through a
first -time home buyer program and at a purchase price of no more than $95,000. The resale price
of these parcels can only be adjusted by the average annual increase in the purchase price of
single family residences in the Minneapolis -St. Paul metropolitan statistical area and from the
date of each prior sale, plus an additional 7% to accommodate for sales commission, for a period
of 30 years after the date of initial sale of the $95,000 unit (see Attachment #2 for example).
The last 17 units can be sold to any owner- occupant regardless if the individual is a first time
home buyer or not. The purchase price of the units cannot be for more than $120,000 (see
Attachment #2 for example). The resale price of these parcels can only be adjusted by the
average annual increase in the purchase price of single family residences in the Minneapolis -St.
Paul metropolitan statistical area and from the date of each prior sale, plus an additional 7% to
accommodate sales commission, fora period of 30 years after the date of initial sale of the
$120,000 unit (see Attachment #2 for example).
i
Mr. Don Ashworth
April 9, 1997
Page 2
Attachment! #2 shows an example oi� the impact the 7 realtor's fees has on the affordability of
the units over time. However, stafflalso believes if the homeowner is not building enough equity,
the homeowner will not have an incentive to keep his home maintained, finish off the basement„
add a deck, etc. Staff would like to discuss these two options with the council on Monday
evening.
The propose d development curr` p ently pays $7,166 per year in taxes which will be the "base
original taxcapacity" (this amount will.continue to go to the school, city, and county) and the
"captured tax capacity is estimated to be $60,481. The total estimated amount of taxes captured
through the life of the district (15 years) totals $1,624,464 (see Attachment #3). The total
obligation to Rottlund is as follows:]
1. The city proposes to assume $350;000 in sewer, water, and roadway improvement costs
against the site.
2. Land write down to further reduce their housing project costs of $400,000 plus interest.
j Total Incentives: $750,000
Recommendation
Staff recommends that the city-council approve the Private Redevelopment Agreement with The
Rottlund Company, Inc. and the, Lim ited Revenue Tax Increment Note for $400,000.
I
Attachments
1. Private Redevelopment Contract.
2. Examples of the 7% Impact on Future Home Values.
3. Tax Increment Runs for the Project.
I
gAadmin \tg\rottlurid.doc
CONTRACT
FOR
PRIVATE DEVELOPMENT
By and Between the
CITY OF CHANHASSEN, MINNESOTA
and
THE ROTTLUND COMPANY, INC.
Dated as of:
This document was drafted by:
KENNEDY & GRAVEN, Chartered
470 Pillsbury Center
Minneapolis, Minnesota 55402
Telephone: 337 -9300
CH130 -48
TABLE OF CONTENTS
Page
PREAMBLE..................... ............................... 1
ARTICLE I
Definitions
Section 1.1. Definitions ............. ............................... 2
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City .. ............................... 4
Section 2.2. Representations and Warranties by the Developer .................. 4
ARTICLE III
Public Improvements; Public Assistance
Section 3.1. Soil Conditions .......... ............................... 6
Section 3.2. Issuance of Note .......... ............................... 6
Section 3.3. Special Assessments ....... ............................... 6
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements ......................... 7
Section 4.2. Construction Plans ......... ............................... 7
Section 4.3. Commencement and Completion of Construction .................... 8
Section 4.4. Certificate of Completion ..... ............................... 8
Section 4.5. Affordable Housing Covenants . ............................... 8
ARTICLE V
Payment of Taxes
Section 5.1. Insurance ............... ............................... 9
Section 5.1. Right to Collect Delinquent Taxes .............................. 9
ARTICLE VI
Prohibitions Against Assignment and Transfer; Indemnification
Section 6.1. Representation as to Development ............................. 10
Section 6.2. Prohibition Against Developer's Transfer
of Property and Assignment of Agreement ................. 10
Section 6.3. Release and Indemnification Covenants ......................... 11
4
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ARTICLE VII
Events of Default
Section 7.1. Events of Default Defined ... ............................... 12
Section 7.2. Remedies on Default ...................................... 12
Section 7.3. No Remedy Exclusive ...... ............................... 13
Section 7.4. No Additional Waiver Implied by One Waiver .................... 13
Section 7.5. Special Assessments ....... ............................... ..13
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not Individually
Liable................. ............................... 13
Section 8.2. Equal Employment Opportunity .............................. 13
Section 8.3. Titles of Articles and Sections ............................... 14
Section 8.4. Notices and Demands ...... ............................... 14
Section 8.5. Counterparts ............ ............................... 14
Section 8.6. Recording .............. ............................... 14
Section 8.7. Termination of Agreement ... ............................... 14
TESTIMONIUM ................... ............................... 15
SIGNATURES ................. ..........:.................... 15,16
EXHIBIT A
Legal Description of Development Property
EXHIBIT B
Form of Limited Revenue Tax Increment Note
EXHIBIT C
Form of Certificate of Completion
EXHIBIT D
Form of Declaration of Restrictive Covenants
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CH130 -48 11
CONTRACT FOR PRIVATE DEVELOPMENT
THIS AGREEMENT, made on or as of the day of , 1997, by
and between the CITY OF CHANHASSEN, a municipal corporation under the laws of Minnesota
(the "City "), and THE ROTTLUND COMPANY, INC., a Minnesota corporation (the
"Developer ").
WITNESSETH:
WHEREAS, the City is authorized pursuant to Minnesota Statutes sections 469.124
through 469.134 (the "Act ") to establish development districts in order to encourage development
in areas of the community which have not developed to their potential; and
WHEREAS, pursuant to the Act, the City has created a development district known as
Development District No. 5 (the "Project ") in an area located in the City; and
WHEREAS, the City has established within the Project a housing tax increment financing
district (the "TIF District" or "TIF District No. 5 -1 ") and adopted a tax increment financing plan
(the "TIF Plan") for the TIF District to facilitate the financing of public development and
redevelopment costs in the Project; and
WHEREAS, the City deems it to be in the public interest to facilitate and encourage
development of the Project by a combination of public and private activity in that area in
accordance with the TIF Plan adopted by the City; and
WHEREAS, the City wishes to encourage the construction of owner- occupied housing
which is priced to be Affordable, as that term is defined herein; and
WHEREAS, the Developer has proposed a development (the "Development ") within the
Project which the City believes will promote and carry out the objectives for which the Project
has been established, including the construction of Affordable owner- occupied housing, will be
in the vital best interests of the City, will promote the health, safety, morals, and welfare of its
residents and will be in accord with the public purposes and provisions of the applicable state and
local laws and requirements under which activities within the Project have been undertaken and
are being assisted; and
WHEREAS, the Developer is willing to develop certain land within the Project (the
"Development Property ") for and in accordance with this Agreement; and
WHEREAS, consistent with the TIF Plan, the City is willing to provide financial
assistance to the Developer with regard to the Development Property in accordance with the
provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each does hereby covenant and agree with the other as follows:
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ARTICLE I
Definitions
Section 1.1. Definitions In this Agreement, the following terms shall have the meanings
given below, unless a different meaning clearly appears from the context:
"Act" means the City Development Districts Act, Minnesota Statutes sections 469.124 to
469.134, as amended.
"Affordable ", as the term relates to owner- occupied housing, shall have the meaning given
to it in Section 4.5 of this Agreement.
"Agreement" means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
"Authorizing Resolution" means the resolution to be adopted by the City to authorize
issuance of the Note.
"Available Tax Increment" shall have the meaning given to it in the Note.
"City" means the City of Chanhassen, a Minnesota municipal corporation.
"Certificate of Completion" means the certification provided to the Developer or the
purchaser of any Parcel of the Development Property, pursuant to Section 4.4 of this Agreement.
"Construction Plans" means the plans, specifications, drawings and related documents on
the construction work to be performed by the Developer on the Development Property which (a)
shall be as detailed as the plans, specifications, drawings and related documents which are
submitted to the appropriate building official 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 City may
reasonably request to allow it to ascertain the nature and quality of the proposed construction
work.
"County" means the County of Carver, Minnesota.
"Developer" means The Rottlund Company, Inc., a Minnesota corporation, or its permitted
successors and assigns.
"Development Property" means the real property described in Exhibit A of this
Agreement.
"Event of Default" means an action by the Developer or the City listed in Article VII of
this Agreement.
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"Maturity Date" means the date on which the Note has been paid in full or terminated in
accordance with its terms, whichever is earlier.
"Minimum Improvements" means the construction on the Development Property of 43
townhouse units.
"Note" means a Limited Revenue Tax Increment Note, substantially in the form attached
hereto as Exhibit B, to be delivered by the City to the Developer in accordance with this
Agreement.
"Parcel" means any lot of the Development Property upon which the Developer constructs
a townhouse unit. For purposes of Section 4.5 of this Agreement, the term shall include the land
and the townhouse unit constructed thereon.
"Project" means the City's Development District No. 5.
"Public Improvements" means the roadway, sanitary sewer, water and other public
infrastructure improvements constructed by the City and benefitting the Development Property
by an amount at least equal to the Special Assessments.
"Site Improvement Costs" means the Developer's actual and reasonable costs of
excavation, soil correction and general site preparation of the Development Property, but not
more than $400,000.
"Special Assessments" means the special assessments in the amount of $350,000 levied
or to be levied against the Development Property for the Public Improvements.
"State" means the State of Minnesota.
"Tax Increment" means that portion of the real property taxes which is paid with respect
to the Development Property and which is remitted to the City as tax increment pursuant to the
Tax Increment Act.
"Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota
Statutes sections 469.174 to 469.179, as amended.
"Tax Increment District" or "TIF District" means the City's housing Tax Increment
Financing District No. 5 -1.
"Tax Increment Plan" or "TIF Plan" means the City's Tax Increment Financing Plan for
the TIF District.
"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.
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CH130 -48
"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 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 City in exercising its rights under this Agreement)
which directly result in delays. Unavoidable Delays shall not include delays in the Developer's
obtaining of permits or governmental approvals necessary to enable construction of the Minimum
Improvements by the dates such construction is required under Section 4.3 of this Agreement.
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City The City makes the following representations
as the basis for the undertakings on its part herein contained:
(a) The City is a municipal corporation under the laws of the State. Under the
provisions of the Act and the TIF Act, the City has the power to enter into this Agreement and
carry out its obligations hereunder.
(b) The City will use its best efforts to facilitate development of the Minimum
Improvements.
(c) The City will issue the Note, subject to all the terms and conditions of this
Agreement.
(d) The activities of the City are undertaken for the purpose of fostering the
development of Affordable owner- occupied housing on the Development Property.
(e) If any Event of Default shall occur and if the Developer 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 City
under this Agreement, the City agrees that it shall, within ten days of written demand by the
Developer, pay to the Developer the reasonable fees of such attorneys and such other expenses
so incurred by the Developer.
Section 2.2. Representations and Warranties by the Developer The Developer represents
and warrants that:
(a) The Developer is a corporation, duly organized and in good standing under the
laws of the State, is not in violation of any provisions of its articles of incorporation, bylaws 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 board of directors.
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(b) The Developer will construct the Minimum Improvements in accordance with the
terms of this Agreement, the TIF Plan and all local, State and federal laws and regulations,
including, but not limited to, environmental, zoning, building code and public health laws and
regulations.
(c) The Developer will use reasonable efforts to secure all permits, licenses and
approvals necessary for construction of the Minimum Improvements.
(d) The Developer has received no notice or communication from any local, State or
federal official that the activities of the Developer or the City in the Project may be or will be
in violation of any environmental law or regulation. The Developer 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.
(e) The Developer will cause the Minimum Improvements to be constructed in
accordance with all local, State and federal energy - conservation laws and regulations.
(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 evidence of indebtedness,
agreement or instrument of whatever nature to which the Developer is now a party or by which
it is bound, or constitutes a default under any of the foregoing.
(g) If any Event of Default shall occur and if the City 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 Developer under
this Agreement, the Developer agrees that it shall, within ten days of written demand by the City,
pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the
City.
(h) The development of Affordable owner- occupied housing on the Development
Property by the Developer would not occur but for the tax increment financing assistance being
provided by the City hereunder.
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ARTICLE III
Public Improvements; Public Assistance
Section 3.1. Soil Conditions The Development Property is owned in fee by the
Developer. The City shall have no obligation to acquire the Development Property or any portion
thereof. The Developer acknowledges that the City makes no representations or warranties as to
the condition of the soils on the Development Property or its fitness for construction of the
Minimum Improvements or any other purpose for which the Developer may make use of such
land.
Section 3.2. Issuance of Note In order to induce the Developer to make the Minimum
Improvements Affordable, and to reimburse the Developer for the Site Improvement Costs, the
City shall issue and the Developer shall purchase the Note in the maximum principal amount of
$400,000. The City and the Developer agree that the consideration from the Developer for the
purchase of the Note shall consist of the Developer's payment of the Site Improvement Costs.
The City shall approve the Authorizing Resolution and shall issue and deliver the Note upon the
Developer's delivery to the City of written evidence satisfactory to the City that the Site
Improvement Costs incurred by the Developer are at least equal to the principal amount of the
Note.
Section 3.3. Special Assessments The City has levied or will levy the Special
Assessments against the Development Property in the aggregate amount of $350,000. The
Special Assessments shall be prorated so that each Parcel shall be assessed 1/35 of the Special
Assessments or such other amount as may be agreed to by the City and the Developer. At the
time of issuance of each Certificate of Completion, the City agrees to assume liability for the
portion of the Special Assessments levied against each Parcel for the Public Improvements. The
City will pay immediately the full amount of the Special Assessments against each Parcel upon
sale of said Parcel or will begin making payments for the same over such period as the Special
Assessments were originally levied. So long as there is no Event of Default by the Developer
or any successor in interest, the City will pay the full amount of the Special Assessments.
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ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements The Developer agrees that it will
construct or cause construction of the Minimum Improvements on the Development Property in
accordance with the approved Construction Plans. The Developer intends to sell each Parcel to
a homeowner who will be responsible for compliance with the terms and conditions of this
Agreement thereafter until the Maturity Date with regard to the homeowner's Parcel.
Section 4.2. Construction Plans (a) Before the Developer commences construction
of the Minimum Improvements, the Developer shall submit Construction Plans to the City. The
Construction Plans shall provide for the construction of the Minimum Improvements and shall
be in conformity with the TIF Plan, this Agreement, and all applicable State and local laws and
regulations. The City will approve the Construction Plans in writing if. (i) the Construction Plans
conform to all terms and conditions of this Agreement; (ii) the Construction Plans conform to the
goals and objectives of the TIF 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; and (v) no Event of Default
has occurred. No approval by the City shall relieve the Developer of the obligation to comply
with the terms of this Agreement or of the TIF Plan, applicable federal, State and local laws,
ordinances, rules and regulations, or to construct the Minimum Improvements in accordance
therewith. No approval by the City shall constitute a waiver of an Event of Default. If approval
of the Construction Plans is requested by the Developer in writing at the time of submission, such
Construction Plans shall be deemed approved unless rejected in writing by the City, in whole or
in part. Such rejections shall set forth in detail the reasons therefore, and shall be made within
30 days after the date of their receipt by the City. If the City rejects any Construction Plans in
whole or in part, the Developer shall submit new or corrected Construction Plans within 30 days
after written notification to the Developer of the rejection. The provisions of this Section 4.2
relating to approval, rejection and resubmission of corrected Construction Plans shall continue
to apply until the Construction Plans have been approved by the City. The City's approval shall
not be unreasonably withheld or delayed. Approval shall constitute a conclusive determination
that the Construction Plans, and the Minimum Improvements, constructed in accordance with said
plans, comply to the City's satisfaction with the provisions of this Agreement.
(b) If the Developer desires to make any material change in the Construction Plans
after their approval by the City, the Developer shall submit the proposed change to the City for
its approval. If the Construction Plans, as modified by the proposed change, conform to the
requirements of this Section 4.2 of this Agreement with respect to such previously approved
Construction Plans, the City shall approve the proposed change and notify the Developer in
writing of its approval. Such change in the Construction Plans shall, in any event, be deemed
approved by the City unless rejected, in whole or in part, by written notice by the City to the
Developer, setting forth in detail the reasons therefor. Such rejection shall be made within ten
(10) days after receipt of the notice of such change. The City's approval of any such change in
the Construction Plans will not be unreasonably withheld or delayed.
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Section 4.3. Commencement and Completion of Construction (a) S u b j e c t to
Unavoidable Delays, the Developer shall commence and complete construction of the Minimum
Improvements by no later than December 31, 1998. All work with respect to the Minimum
Improvements to be constructed or provided by the Developer on the Development Property shall
be in conformity with the Construction Plans as submitted by the Developer and approved by the
City.
(b) The Developer agrees for itself, its successors and assigns, and every successor,, in
interest to the Development Property, or any Parcel thereof, that the Developer shall promptly
begin and diligently prosecute to completion the development of the Development Property
through the construction of the Minimum Improvements thereon, and that such construction shall
in any event be commenced and completed within the period specified in this Section 4.3 of this
Agreement. Until construction of the Minimum Improvements has been completed, the
Developer shall make reports, in such detail and at such times as may reasonably be requested
by the City, as to the actual progress of the Developer with respect to such construction.
Section 4.4. Certificate of Completion (a) Promptly after completion of the Minimum
Improvements on each Parcel, the City will furnish the Developer with a Certificate of
Completion in the form attached hereto as Exhibit C. This certification shall be a conclusive
determination of satisfaction of the obligation of the Developer to construct the Minimum
Improvements on said Parcel.
(b) If the City shall refuse or fail to provide any certification in accordance with the
provisions of this Section 4.4 of this Agreement, the City shall, within 10 days after written
request by the Developer, provide the Developer with a written statement, indicating in adequate
detail in what respects the Developer 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 City, for the Developer to take or perform in
order to obtain such certification.
Section 4.5 Affordable Housing Covenants The Developer and the City agree that the
Minimum Improvements will be Affordable if the following affordability covenants are met:
(a) At least 35 Parcels of the Minimum Improvements must be Affordable as defined
herein. Parcels will be deemed Affordable i£
(i) at least 18 Parcels are initially sold to an owner- occupant through a first -time
homebuyer program that is satisfactory to and approved by the City, for a purchase price
of no more than $95,000, and the purchase price of such Parcels upon any resale, for a
period of 30 years after the date of such initial sale, does not exceed $95,000 adjusted by
the average annual increase in purchase price of single family residences in the
Minneapolis -St. Paul metropolitan statistical area (the "Metro Area ") from the date of each
prior sale, plus an additional seven percent of such adjusted amount; and
(ii) at least 17 Parcels are initially sold to an owner- occupant (regardless of
whether a first time home - buyer) for a purchase price of no more than $120,000, and the
purchase price of such Parcels upon any resale, for a period of 30 years after the date of
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such initial sale, does not exceed $120,000 adjusted by the average annual increase in
purchase price of single family residences in the Metro Area from the date .of each prior
sale, plus an additional seven percent of such adjusted amount.
Upon or before closing on the initial sale of each Affordable Parcel to any person, and upon each
subsequent sale of any such Parcel, the Developer shall deliver or cause to be delivered written
evidence satisfactory to the City of compliance with the covenants in this section 4.5.
(b) In order to ensure compliance with this Section 4.5, the Developer shall execute
and record against the Development Property covenants in the form attached hereto as Exhibit
D. The City and its representatives shall have the right at all reasonable times while the
covenants required by this Section 4.5 are in effect, after reasonable notice, to inspect, examine
and copy all books and records of the Developer and its successors and assigns relating to such
covenants.
ARTICLE V
Insurance; Payment of Taxes
Section 5.1. Insurance The Developer will provide and maintain at all times during the
construction of the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and,
from time to time during that period, at the request of the City, furnish the City with proof of
payment of premiums on policies covering the following:
(a) 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 nonreporting
form on the so- called "all risk" form of policy. The interest of the City shall be protected in
accordance with a clause in form and content satisfactory to the City;
(b) Comprehensive general liability insurance, including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability insurance,
together with an Owner's Protective Liability 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. The City shall be listed as an
additional insured on the policy; and
(c) Workers' compensation insurance, with statutory coverage.
Section 5.2. Right to Collect Delinquent Taxes The Developer acknowledges that the
City is providing substantial aid and assistance in furtherance of the construction of Affordable
owner- occupied housing on the Development Property. The Developer understands that the Tax
Increment intended to pay expenses of the City and the Developer is derived from real estate
taxes on the Development Property, which taxes must be promptly and timely paid. To that end,
the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant
to State statute to pay real estate taxes, that it is also obligated by reason of this Agreement to
DJG119503 9 CH130 -48
pay before delinquency all real estate taxes assessed against the Development Property and the
Minimum Improvements to the extent of its ownership interest in same. The Developer
acknowledges that this obligation creates a contractual right on behalf of the City to sue the
Developer 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 City shall also be entitled to recover its costs, expenses and reasonable attorneys' fees.
ARTICLE VI
Prohibitions Against Assignment and Transfer; Indemnification
Section 6.1. Representation as to Development The Developer represents and agrees that
its purchase of the Development Property, and its other undertakings pursuant to the Agreement,
are, and will be used, for the purpose of development of the Development Property and not for
speculation in land holding.
Section 6.2. Prohibition Against Developer's Transfer of Property and Assignment of
Agreement The Developer represents and agrees that prior to issuance of the Certificate of
Completion for the last Parcel:
(a) Except only by way of security for, and only for, the purpose of obtaining
financing necessary to enable the Developer or any successor in interest to the Development
Property, or any Parcel, to perform its obligations with respect to making the Minimum
Improvements under this Agreement, and any other purpose authorized by this Agreement, the
Developer 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 Development Property or any
Parcel or any interest therein, or any contract or agreement to do any of the same, without the
prior written approval of the City unless the Developer remains liable and bound by this
Agreement in which event the City's approval is not required.
(b) In the event the Developer, upon transfer or assignment of the Development
Property or any Parcel, seeks to be released from its obligations under this Agreement as to the
portions of the Development Property that is transferred or assigned, the City shall be entitled to
require, except as otherwise provided in the Agreement, as conditions to any such release that:
(i) Any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the City, necessary and adequate to fulfill
the obligations undertaken in this Agreement by the Developer as to the portion of the
Development Property to be transferred;
(ii) Any proposed transferee, by instrument in writing satisfactory to the City
and in form recordable among the County land records, shall, for itself and its successors
and assigns, and expressly for the benefit of the City, have expressly assumed all of the
obligations of the Developer under this Agreement as to the portion of the Development
Property to be transferred and agreed to be subject to all the conditions and restrictions
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to which the Developer is subject as to such portion; provided, however, that the fact that
any transferee of, or any other successor in interest whatsoever to, the Development
Property, or any Parcel, 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 City, deprive the City of any rights or
remedies or controls with respect to the Development Property or any part 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 Development Property or any
Parcel, or any interest therein, however consummated or occurring, and whether voluntary
or involuntary, shall operate, legally or practically, to deprive or limit the City of or with
respect to any rights or remedies on controls provided in or resulting from this Agreement
with respect to the Minimum Improvements that the City would have had, had there been
no such transfer or change. In the absence of specific written agreement by the City to
the contrary, no such transfer or approval by the City thereof shall be deemed to relieve
the Developer, or any other party bound in any way by this Agreement or otherwise with
respect to the construction of the Minimum Improvements, 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 Development Property governed by
this Article VI, shall be in a form reasonably satisfactory to the City.
In the event the foregoing conditions are satisfied, the Developer shall be released from its
obligation under this Agreement, as to the portion of the Development Property that is
transferred, assigned or otherwise conveyed.
After issuance of the Certificate of Completion for the last Parcel of the Minimum
Improvements, the Developer may transfer or assign any portion of the Development Property
or the Developer's interest in this Agreement without the prior written consent of the City,
provided that the transferee or assignee is bound by all the Developer's obligations hereunder.
The Developer shall submit to the City written evidence of any such transfer or assignment,
including the transferee or assignee's express assumption of the Developer's obligations under
this Agreement. If the Developer fails to provide such evidence of transfer and assumption, the
Developer shall remain bound by all it obligations under this Agreement.
(c) Nothing in this Section 6.2 shall be construed to in any way limit the conveyance
of a Parcel upon which has been constructed a townhouse unit and for which the City has issued
a Certificate of Completion or to apply to such a Parcel and townhouse after its conveyance,
provided that such conveyance is to a person other than the Developer or a person who is an
"affiliate" of the Developer as that term is defined by Minnesota Statutes section 515B.1- 103(2).
Section 6.3. Release and Indemnification Covenants (a) The Developer releases from
and covenants and agrees that neither the City, nor the governing body members, officers, agents,
servants or employees thereof, shall be liable for and agrees to indemnify and hold harmless the
City, and the governing body members, officers, agents, servants and employees thereof, against
DJG119503 11
CH130 -48 1
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.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of
the following named parties, the Developer agrees to protect and defend the City, and the
governing body members, officers, agents, servants and employees thereof, now or 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
this Agreement, or the transactions contemplated hereby or the acquisition, construction,
installation, ownership, maintenance and operation of the Minimum Improvements.
(c) The City, and its governing body members, officers, agents, servants and
employees thereof, shall not be liable for any damage or injury to the persons or property of the
Developer or its officers, agents, servants or employees or any other person who may be about
the Development Property or Minimum Improvements due to any act of negligence of any
person.
(d) 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 in their individual capacity.
ARTICLE VII
Events of Default
Section 7.1. Events of Default Defined The following shall be an "Event of Default"
under this Agreement and that term shall mean, whenever it is used in this Agreement, unless the
context otherwise provides, any failure by either party to observe or perform any other covenant,
condition, obligation or agreement on its part to be observed or performed under this Agreement.
Section 7.2. Remedies on Default Whenever any Event of Default referred to in Section
7.1 of this Agreement occurs, the non - defaulting party may exercise the following rights under
this Section 7.2 after providing 30 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 30 days or, if the Event
of Default is by its nature incurable within 30 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) Suspend its performance under this Agreement or the Note until it receives
assurances that the defaulting party will cure its default and continue its performance under this
Agreement or the Note; or
(b) Cancel and rescind or terminate this Agreement or the Note.
DJG119503
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7.3 No Remedy Exclusive No remedy herein conferred upon or reserved to the City
or the Developer 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 either
party to exercise any remedy reserved to it, it shall not be necessary to give notice, other than
such notice as may be required in section 8.4 of this Agreement.
Section 7.4. 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 7.5. Special Assessments The City agrees to pay or otherwise satisfy the portion
of the Special Assessments levied against each Parcel upon sale of said Parcel by the Developer
to a homeowner. If the Developer or any successor in interest shall fail to pay real estate taxes
with regard to any Parcel, the City shall have the right to suspend its payments of the Special
Assessments levied against said Parcel or to relevy special assessments against the Development
Property or said Parcel. The Developer hereby acknowledges for itself, its successors and
assigns, that the Development Property as a whole and each Parcel individually is benefitted by
the Public Improvements constructed by the City in an amount at least equal to the Special
Assessments levied against said Parcel. The Developer waives, for itself, its successors and
assigns, notice of hearing and hearing on new special assessments in an amount equal to the
unpaid portion of the Special Assessments, and waives all right to appeal such special assessments
under Minnesota Statutes Chapter 429.
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interest, Representatives Not Individually Liable The City
and the Developer, to the best of their respective knowledge, represent and agree that no officer
of the City shall voluntarily have any personal financial interest, direct or indirect, in this
Agreement. No member, officer, or employee of the City shall be personally liable to the
Developer, or any successor in interest, in the event of any default or breach by the City or for
any amount which may become due to the Developer or successor or on any obligations under
the terms of this Agreement.
Section 8.2. Equal Employment Opportunity (a) The Developer, for itself and its
successors and assigns, agrees that during the construction of the Minimum Improvements
provided for in this Agreement, it will comply with all applicable federal, State and local equal
employment and non - discrimination laws and regulations.
DJG119503 13
CH130 -48
(b) The Developer agrees that it 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
Development Property or any Parcel or the Minimum Improvements to be erected thereon.
Section 8.3. Titles of Articles and Sections Any titles of the several parts, Articles, and
Sections of this Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 8.4. Notices and Demands Unless otherwise expressly provided, a notice,
demand, or other communication under this Agreement by either party to the other shall be
sufficiently given or delivered if it is dispatched by United States registered or certified mail,
postage prepaid, return receipt requested, or delivered personally:
As to the Developer: The Rottlund Company, Inc.
2681 Long Lake Road
Roseville, MN 55113
As to the City: City of Chanhassen
690 Coulter Drive
Chanhassen, MN 55317 -0147
Attn: City Manager
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 8.4.
Section 8.5. Counterparts This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 8.6. Recording The City may record this Agreement and any amendments
thereto with the County Recorder or Registrar of Titles. The Developer shall pay all costs for
recording.
Section 8.7. Termination of Agreement Unless terminated earlier, this Agreement
automatically terminates on the Maturity Date.
DJG119503
CH130 -48 14
IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and behalf and its seal to be hereunto duly affixed and the Developer has caused this
Agreement to be duly executed in its name and behalf on or as of the date first above written.
STATE OF MINNESOTA )
SS.
COUNTY OF )
CITY OF CHANHASSEN
By
Its Mayor
By
Its City Manager
The foregoing instrument was acknowledged before me this day of
, 1997, by and , the mayor and city
manager, respectively, of the City of Chanhassen, a Minnesota municipal corporation, on behalf
of the City.
Notary Public
DJG119503 15
CH130 -48
THE ROTTLUND COMPANY, INC.
LIZ
STATE OF MINNESOTA )
COUNTY OF )
The foregoing instrument was acknowledged
, 1997, by
and respectively,
Minnesota corporation, on behalf of the corporation.
Its
Its
before me this day of
and , the
of The Rottlund Company, Inc., a
Notary Public
DLTG119503
CH130 -49 16
EXHIBIT A
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
[Insert legal]
DJG119503 A-1
CH130 -48
EXHIBIT B
FORM OF NOTE
$400,000
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF CARVER
THE CITY OF CHANHASSEN
LIMITED REVENUE TAX INCREMENT NOTE
The City of Chanhassen, Minnesota (the "City "), hereby acknowledges itself to be
indebted and, for value received, promises to pay to the order of The Rottlund Company, Inc.,
a Minnesota corporation, or its assigns, ( "The Rottlund Company, Inc. "), solely from the
Available Tax Increment generated by the Redevelopment Property and Minimum Improvements,
to the extent and in the manner hereinafter provided, the principal amount of this Note, being
Four Hundred Thousand Dollars ($400,000), on the Payment Dates (as hereinafter defined) or
such lesser amount, if any, which the City is required to pay in accordance with the terms of this
Note, plus interest on the unpaid principal of the rate of nine percent per annum.
Each payment on this Note is payable in any coin or currency of the United States of
America which on the date of such payment is legal tender for public and private debts and shall
be made by check or draft made payable to The Rottlund Company, Inc. and mailed to The
Rottlund Company, Inc. at its postal address within the United States which shall be designated
from time to time by The Rottlund Company, Inc.
The Note is a special and limited obligation and not a general obligation of the City,
which has been issued by the City to aid in financing a "project ", as defined in Minnesota
Statutes section 469.174, of the City consisting generally of defraying certain capital and
administration costs incurred and to be incurred within and for the benefit of Development
District No. 5 (the "Project "), and Tax Increment Financing District No. 5 -1 (the "TIF District ").
EXCEPT AS TO THE OBLIGATION TO MAKE PAYMENTS FROM AVAILABLE
TAX INCREMENT, THE NOTE IS NOT A DEBT OF THE CITY OF CHANHASSEN OR
THE STATE OF MINNESOTA (THE "STATE "), AND NEITHER THE CITY OF
CHANHASSEN, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE
LIABLE ON THE NOTE, NOR SHALL THE NOTE BE PAYABLE OUT OF ANY FUNDS
OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT, AS DEFINED BELOW.
Any payments on this Note which are due on any Payment Date shall be payable solely
from and only to the extent that the City shall have received Available Tax Increment as of such
Payment Date. For the purpose of this Note, Available Tax Increment means any Tax Increment
generated by the Minimum Improvements in the years 1999 through 2013 inclusive and received
during the six (6) month period preceding a Payment Date, after first deducting therefrom the
following amounts:
DJG119503 B-1
CH130 -48
(i) $37,200 to be retained by the City on each Payment Date from February
1, 1999 through August 1, 2006, inclusive in order to pay for Special Assessments levied
to pay for certain Public Improvements; provided that if on any Payment Date there is
insufficient Available Tax Increment to meet the obligation regarding the Special
Assessments, such deficiency shall be deferred and shall be paid, without interest thereon,
on the next Payment Date on which the City has Available Tax Increment in excess of
the amount otherwise due on such Payment Date; and provided further, that any
deficiency in the amounts retained by the City on any or all Payment Dates through
August 1, 2006 shall be paid to the City out of Tax Increment generated in the years 2007
through 2013, inclusive, and such payments to the City shall be deducted from Tax
Increment before any Available Tax Increment shall be paid to The Rottlund Company,
Inc.; or
(ii) any payment made to The Rottlund Company, Inc. of amounts due
hereunder with respect to previous Payment Dates.
For the purposes of this Note, "Tax Increment" means the portion of the real property taxes
generated with respect to the Development Property and Minimum Improvements.
For purposes of this Note, a "Payment Date" shall mean each of the Scheduled Payment
Dates set forth on Schedule A attached hereto. Notwithstanding anything to the contrary in this
Note, on each of the Payment Dates, the City shall pay to The Rottlund Company, Inc. all of the
Available Tax Increment up to the amount of the Scheduled Payment; but in no event shall the
aggregate of all such principal payments be in excess of $400,000. To the extent that on any
Payment Date the City is unable to make a payment from Available Tax Increment at equal to
the Scheduled Payment due on such date as a result of having received, as of such date,
insufficient Available Tax Increment, such failure shall not constitute a default under this Note
and, except as provided below, the City shall have no obligation under this Note, or otherwise,
to subsequently pay any such deficiency. If, on any Payment Date there is insufficient Available
Tax Increment to make the Scheduled Payment due on such date, the amount of such deficiency
in the Scheduled Payment shall be deferred and shall be paid on the next Payment Date on which
the City has Available Tax Increment in excess of the amount necessary to make the Scheduled
Payment due on such Payment Date. In no case, shall the term of this Note and the City's
obligation to make payments hereunder, extend beyond the last date upon which the City receives
Tax Increment based upon construction of the Minimum Improvements or the expiration of the
TIF District, whichever comes first.
The City reserves the right, at its sole option, to pay to The Rottlund Company, Inc. on
any Scheduled Payment Date an amount greater than the Scheduled Payment set forth on
Schedule A from Available Tax Increment or from any other source.
This Note shall not be payable from or constitute a charge upon any funds of the City,
and the City shall not be subject to any liability hereon or be deemed to have obligated itself to
pay hereon from any funds except the Available Tax Increment, and then only to the extent and
in the manner herein specified.
DJG119503 B_2
CH130 -48
The Rottlund Company, Inc. has no right to compel any exercise of any taxing power of
the City or of any other public body, and neither the City nor any member, officer, employee or
agent of the City, nor any person executing or registering this Note shall be liable personally
hereon by reason of the issuance or registration hereof or otherwise.
This Note shall not be transferable or assignable, in whole or in part, by The Rottlund
Company, Inc. without the prior written consent of the City.
This Note is given subject to the limitations contained in the Contract for Private
Development by and between the City and The Rottlund Company, Inc. dated the day of
1997 regarding the Development Property legally described in Schedule B attached
hereto.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required
by the Constitution and laws of the State of Minnesota 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 form, 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 limitation thereon.
IN WITNESS WHEREOF, the City Council of the City has caused this Note to be
executed by the manual signatures of the Mayor and the City Manager of the City and has caused
this Note to be dated as of
Mayor
City Manager
DJG119503
CH130 -48 B -3
Schedule B to Note
[Insert legal]
Legal Description of Development Property
DJG119503
CH130 -48 B_5
Schedule A to Note
Scheduled Payment Dates
and Amounts of Scheduled Payments
Scheduled
Scheduled
Payment Dates
Payments'
February 1, 1999
6,516
August 1, 1999
6,516
February 1, 2000
8,382
August 1, 2000
8,382
February 1, 2001
10,323
August 1, 2001
10,323
February 1, 2002
12,341
August 1, 2002
12,341
February 1, 2003
14,440
August 1, 2003
14,400
February 1, 2004
16,622
August 1, 2004
16,622
February 1, 2005
18,893
August 1, 2005
18,893
February 1, 2006
21,253
August 1, 2006
21,253
February 1, 2007
60,909
August 1, 2007
60,909
February 1, 2008
63,462
August 1, 2008
63,462
February 1, 2009
66,118
August 1, 2009
66,118
February 1, 2010
68,880
August 1, 2010
68,880
February 1, 2011
71,753
August 1, 2011
71,753
February 1, 2012
74,740
August 1, 2012
74,740
February 1, 2013
33,797
'Scheduled payments are to be .made up to these amounts but only from Available Tax
Increment.
DJG119503
CH130 -48 D D-4
EXHIBIT C
FORM OF CERTIFICATE OF COMPLETION
WHEREAS, the City of Chanhassen, a municipal corporate under the laws of Minnesota
(the "City ") has entered into a Contract for Private Development (the "Agreement ") with The
Rottlund Company, Inc., a Minnesota corporation (the "Developer "), in connection with
development of the following described land in County of Carver and State of Minnesota, to-wit:
[LEGAL DESCRIPTION of Parcel here]
and
WHEREAS, Article IV of the Agreement contained certain covenants and restrictions
regarding construction of certain Minimum Improvements; and
WHEREAS, the Developer has performed said covenants and conditions regarding
construction of a townhouse on the above described Parcel in a manner deemed sufficient by the
City;
NOW, THEREFORE, this is to certify that all building construction and other physical
improvements specified to be done and made by the Developer have been completed with respect
to the above - referenced Parcel, and the above covenants and conditions in Article IV of the
Agreement have been performed by the Developer with regard to same. This instrument is a
conclusive determination of the satisfactory termination of the covenants and conditions of Article
IV of the Agreement with respect to the above - referenced Parcel, but any other covenants and
agreements between the City and the Developer shall remain in full force and effect.
Dated: , 199_. CITY OF CHANHASSEN
Its Mayor
By
Its City Manager
THIS DOCUMENT DRAFTED BY:
Kennedy & Graven, Chartered
470 Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402
(612) 337 -9300
DJG119503 !. -1
CH130 -48 l
EXHIBIT D
FORM OF DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS (this "Agreement ") dated as
of , 1997, by The Rottlund Company, Inc. (the "Developer ") is given to the City
of Chanhassen, Minnesota (the "City "). I
RECITALS
WHEREAS, the City entered into that certain Contract for Private Development by and
between the City and the Developer dated as of of , 1997 (the "Contract ");
and
WHEREAS, pursuant to the Contract, the Developer is obligated to construct certain
townhouse units on certain property, including the Parcel described in Exhibit A attached hereto
(the "Property "), and to comply with certain affordability covenants described in Section 4.5 of
the Contract, all in consideration of certain tax increment financing assistance provided by the
City to the Developer as described in the Contract; and
WHEREAS, the Contract requires Developer to cause to be executed an instrument in
recordable form substantially reflecting the covenants set forth in Section 4.5 of the Contract; and
WHEREAS, the Developer under this Agreement intends, declares and covenants that the
restrictive covenants set forth herein governing the transfer of the Property shall be and are
covenants running with the Property for the term described herein and binding upon all
subsequent owners of the Property for such term, and are not merely personal covenants of the
Developer.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Developer agrees as follows:
Section 1. Definitions In this Agreement, the following terms shall have the meanings
given to them, unless a different meaning appears from the context:
a) "Maximum Purchase Price" means a Purchase Price that does not exceed $95,000
[$120,000], adjusted each year during a Calculation Period by the Average Percent Increase in
Average Sales Price during such Calculation Period, plus 7 percent of the resulting adjusted
amount, where:
1) A "Calculation Period" is the period from and including the calendar year
in which this Agreement is entered into, through and including the most recent calendar
year for which an Average Sales Price is available as of the date of the subject Transfer.
DJG119503
CH130 -48 D -I
2) The "Average Sales Price" for any calendar year is the average sales price
for single family detached homes, condominiums, townhouses and twinhomes, in the area
reported by the Minneapolis Area Association of Realtors ( "MAAR "), as reported in the
Residential Real Estate Activity Report published annually by MAAR; or, in the event the
report described herein is no longer produced by MAAR, any reasonably comparable
index of average sales price for the Minneapolis /St. Paul metropolitan area that is
reasonably comparable to the data provided by MAAR and is approved by the City.
3) The "Average Percent Increase" is the total percent increase in Average
Sales Price from the first year of the Calculation Period to the last year of the Calculation
Period, divided by the number of years in the Calculation Period. Example for a Transfer
that occurs in 2000 (when the most recent Average Sales Price available is for calendar
year 1999): 1996 Average Sales Price = $100,000 and 1999 Average Sales Price =
$110,000; the Average Percent Increase for that Calculation Period is 10 %/3 = 3.333 %.
The Maximum Purchase Price equals $95,000, increased by 3.333% for three years
($104,810), plus 7% of the adjusted amount ($7,337), for a total Maximum Purchase Price
of $112,148. [Substitute Comparable Example for $120,000 Parcel.]
b) "Purchase Price" means the cost of acquiring the Property from the Developer and
includes the following: all amounts paid, either in cash or in kind, by the purchaser (or a related
party or for the benefit of the purchaser) to the Developer (or a related party or for the benefit
of the Developer) as consideration for Transfer of the Property to the purchaser. Whether or not
the purchaser purports to purchase separately such items which are fixtures under State law (such
as light fixtures or wall -to -wall carpeting), the cost of those items must be included in the cost
of acquisition. Property which is not considered a fixture under State law, such as appliances
which are not built in, is not considered part of the Property and the cost of acquiring such
property is not included in the cost of acquiring the Property (unless the acquisition costs of such
excess items exceeds their fair market value, in which case the amount of the excess must be
included in the acquisition cost of the Property). If, as part of the purchase of the Property the
purchaser agrees to pay or assume liability for a debt of the Developer, the principal amount of
such debt must be included as part of the cost of acquiring the Property. If the terms of the
Transfer provide for installment payments by the purchaser to the Developer, the Purchase Price
shall be determined using the principal amount owing to the Developer as of the date of Transfer,
or, if no principal amount is stated under any instrument of Transfer, then the Purchase Price
shall be determined by calculating the present value of the installment payments as of the date
of the Transfer, assuming a discount rate equal to the prevailing market rate for owner- occupied
residential mortgage loans in the Minneapolis /St. Paul metropolitan area as of the date of the
Transfer, as approved by the City.
For the purposes of this definition, the cost of acquiring the Property does not include the
usual and reasonable settlement and financing costs. Settlement costs include titling and transfer
costs, title insurance, survey fees or other similar costs. Financing costs include credit reference
fees, legal fees, appraisal expenses, permitted origination fees that are paid by the buyer, or other
costs of financing the acquisition.
C) "Property" means the real property described in Exhibit A hereto, together with
all improvements and fixtures thereon. +
DJG119503 D-2
C14130-48
d) "State" means the State of Minnesota.
e) "Transfer" means any total sale, assignment, conveyance, or transfer in any other
mode or form of or with respect to the Property, or any contract or agreement to do any of the
same. A lease of the Property without purchase option, or a lease with option to purchase at fair
market value, shall not constitute a Transfer. Any lease with option to purchase at less than fair
market value shall constitute a Transfer.
Section 2. Recording and Filing; Covenants to Run With the Land (a) Upon execution
and delivery by the Developer, the Developer shall cause this Agreement to be recorded and filed
with Carver County, and shall pay all fees and charges incurred in connection therewith. Upon
recording, the Developer shall immediately transmit to the City an executed original of the
recorded Agreement showing the date and document numbers of record, or a duly certified copy
of the executed original.
(b) The Developer intends, declares and covenants, on behalf of itself and all future
owners of the Property during the term of this Agreement, that this Agreement and the covenants
set forth herein restricting the Transfer of the Property (i) shall be and are covenants running with
the Property, encumbering the Property for the term of this Agreement, binding upon the
Developer's successor's in title and all subsequent owners of the Property, (ii) are not merely
personal covenants of the Developer, and (iii) shall bind the Developer and the benefits shall
inure to the City and its respective successors and assigns during the term of this Agreement.
The Developer hereby agrees that any and all requirements of the laws of the State to be satisfied
in order for the provisions of this Agreement to constitute deed restrictions and covenants running
with the land shall be deemed to be satisfied in full, and that any requirements or privileges of
estate are intended to be satisfied, or in the alternate, that an equitable servitude has been created
to insure that these restrictions run with the land. For the term of this Agreement, each and every
contract, deed, or other instrument hereafter executed conveying the Property or portion thereof
shall expressly provide that such conveyance is subject to this Agreement; provided, however,
that the covenants contained "herein shall survive and be effective regardless of whether such
contract, deed or other instrument hereafter executed conveying the Property or portion thereof
provides that such conveyance is subject to this Agreement.
Section 3. Representations. Covenants and Warranties of the Owner (a) The Developer
is a corporation organized under the laws of the State, and is qualified to transact business under
the laws of the State, has the power and authority to own its properties and assets and to carry
on its business as now being conducted, and has the full legal right, power and authority to
execute and deliver this Agreement.
(b) The execution and performance of this Agreement by the Developer will not violate,
or as applicable, have not violated any provision of law, rule or regulation, or any order of any
court or other agency or governmental body, and will not violate, or as applicable, have violated
any provision of any indenture, agreement, mortgage, mortgage note, or other instrument to which
the Developer is a party or by which it is bound, and will not result in the creation or imposition
of any prohibited encumbrance of any nature.
DJG119503
CH130 -48 D -3
(c) The Developer will, at the time of execution and delivery of this Agreement, have
good and marketable title to the premises constituting the Property free and clear of any lien or
encumbrance.
(d) The Developer warrants that it has not and will not execute any other agreement with
provisions contradictory to, or in opposition to, the provisions hereof, and that in any event, the
requirement of this Agreement are paramount and controlling as to the rights and obligations
herein set forth and supersede any other requirements in conflict herewith.
Section 4. Restriction on Transfer (a) During the term of this Agreement, the
Developer, its successors and assigns shall not make or allow to be made or created any Transfer
of the Property for a Purchase Price that exceeds the Maximum Purchase Price. The Developer
may make or allow to be made without restriction any Transfer for a Purchase Price that is equal
to or less than the Maximum Purchase Price.
(b) Upon or before closing on any Transfer, the Developer shall deliver to the City
written evidence reasonably satisfactory to the City that the subject Transfer complies with the
provisions of this Agreement. Evidence of the Purchase Price shall include at least the following
items: an executed purchase agreement; an executed certificate of real estate value complying
with State law; and an executed bill of sale for personal property located on or in the Property.
(c) Promptly after receipt by the City of evidence of compliance with the terms of this
Section as to each Transfer, the City will furnish the Developer with an appropriate instrument
so certifying. Such certification by the City shall be, and it shall be so provided in the
certification itself, a conclusive determination of satisfaction of the covenants in this Agreement
with respect to the obligations of the Developer with respect to the subject Transfer. Such
certification and such determination shall not constitute evidence of compliance with or
satisfaction of any obligation of the Developer, its successor or assigns with respect to any
subsequent Transfer during the term of this Agreement.
(d) The certificate provided for in Sections 4(c) 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 Property. If the City shall refuse or fail to provide any certification
in accordance with the provisions of this Section, the City shall, within 30 days after written
request by the Developer, provide a written statement, indicating in adequate detail in what
respects the Developer has failed to comply with the restrictions on Transfer under this Section
4 and what measures or acts it will be necessary, in the opinion of the City, for the Developer
to take or perform in order to obtain such certification.
(e) ANY TRANSFER IN VIOLATION OF THE TERMS OF THIS SECTION SHALL
BE DEEMED VOID.
Section 5. Term of Agreement This Agreement and the restrictions on Transfer specified
herein shall commence on the date hereof and end on the date which is 30 years after the date
hereof.
Section 6. Enforcement The Developer acknowledges that the primary purpose for
requiring compliance by the Developer with the restrictions provided in this Agreement is to
DJG119503 D -4
CH130 -48
ensure compliance of the Property with the housing affordability covenants set forth in Section
4.5 of the Contract, and by reason thereof, the Developer, in consideration for assistance provided
by the City under the Contract that makes possible the initial construction of a townhouse unit
on a Parcel and sale thereof for a Purchase Price at or below the Maximum Purchase Price,
hereby agrees and consents that the City shall be entitled, for any breach of the provisions of this
Agreement, and in addition to all other remedies provided by law or in equity, to enforce specific
performance by the Developer of its obligations under this Agreement in a State court of
competent jurisdiction. The Developer hereby further specifically acknowledges that the City
cannot be adequately compensated by monetary damages in the event of any default hereunder.
Section 7. Miscellaneous (a) Severability The invalidity of any clause, part or
provision of this Agreement shall not affect the validity of the remaining portions thereof.
(b) Notices Any notice, demand, or other communication under this Agreement shall
be sufficiently given or delivered if it is dispatched by United States registered or certified mail,
postage prepaid, return receipt requested, or delivered personally to parties at the addresses set
forth below:
As to the Developer: The Rottlund Company, Inc.
2681 Long Lake Road
Roseville, MN 55113
As to the City: City of Chanhassen
690 Coulter Drive
Chanhassen, MN 55317 -0417
Attn: City Manager
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 7.
(c) Governing Law This Agreement shall be governed by the laws of the State of
Minnesota.
(d) Counterparts This Agreement may be executed in any number of counterparts, each
of which shall constitute one and the same instrument.
DJG119503
CH130 -48 D-5
IN WITNESS WHEREOF, the Developer has caused this Agreement to be signed by its
duly authorized representatives, as of the day and year first above written.
STATE OF MINNESOTA )
COUNTY OF )
DEVELOPER
THE ROTTLUND COMPANY, INC.
Its
The foregoing instrument was acknowledged before me this
, 1997, by , the
Rottlund Company, Inc, a Minnesota corporation, on behalf of the corporation.
day of
of The
Notary Public
This document was drafted by:
KENNEDY & GRAVEN, Chartered
470 Pillsbury Center
Minneapolis, Minnesota 55402
Telephone: 337 -9300
DJG119503 D-6
CH130 -48
EXHIBIT A TO DECLARATION OF
RESTRICTIVE COVENANTS
[Insert legal]
LEGAL DESCRIPTION OF PROPERTY
DLTG119503
CH130 -48 D -7
APR 08 '97 09 :04AM EHLERS & ASSOCIATES
NORTH BAY PROJECT - CITY OF CHANHASSEN COVENANTS ON FUTURE SALES
Initial Acquisition Cost - 1997
Example with
- - Adding 7% to Base
95,000
P. 2/2
Example without
Adding 7%
- -- 95 ,000
2 Average MAAR Sales Price - 1996
110,000
110,000
3 Average MAAR Sales Price - 1999
121,000
121,000
4 Percent Increase 3 Years (line Mine 2 less 1)
10.00%
10.00%
5 Average Percent Increase (line 4/3)
3.33%
3.33%
6 Purchase Price - 2000
104,820
104,820
(line 1 compounded by line 5 three times)
7 Realtor Cost - 7% (line 6 times 7 %)
Z_lu
7,33.7
8 Total Purchase Price (line 6 plus 7)
112,158
112
9 Owner Gain Realized (line 6 less line 1)
9,820
9,820
10 Second Owner Acquisition Price
112,158
112,158,--
11 New Base for Next Sale Calculation
112,158
104,820
12 Average MAAR Sales Price - 1999
121,000
121,000
13 Average MAAR Sales Price - 2002
133,100
133,100
14 Percent Increase 3 Years
10.00%
10 .00%
15 Average Percent Increase
3.33%
3.33%
16 Purchase Price - 2003
123,751
115,655
17 Realtor Cost - 7%
8,663
BUM-
18 Total Purchase Price
132,414
123,751
19 Owner Gain Realized
11,594
3,498
20 Third Owner Acquisition Price
132,414
123,751
21 New Base for Next Sale Calculation
132,414
115,655
22 Average MAAR Sales Price - 2002
133,100
133
23 Average MAAR Sales Price - 2005
146,410
146,410
24 Percent Increase 3 Years
10.00%
10 -00%
25 Average Percent Increase
3.33%
3.33%
26 Purchase Price - 2006
146,102
127,611
27 Realtor Cost - 7%
� o-227
2�m
28 Total Purchase Price
156,329
136,544
2 9 Owner Gain R ealized
13
3,859
.,
04/08/97 Prannrprl h%, 1=h1=rc /prrh1ir.nrr, EZni n- IAIVA
„R-09-97 11:24 FROM:KENNEDY & GRAVEN ID:6123379310 PAGE 4/7
MAR 25 1 97 10:44AM EHLERS & ASSOCIATES
-
CitlatLl cr pmjm- K&-iv Dowd
P I
I.T,]F..CASH FLOW ASSIOD�OK�S_
rNft Raw
4.0000%
p InUng Efate
tkuuuw
1.466910 Pay 96
Tax edernion Rate*
0.00%
Fiscal DMpaf%” Rate:
BASF, VALUE WFORMATIM
TOW MM*A Total
c
vak- I Irmcapacky
4.000
T axes
5, PAY
PmDdf
2001WO 4 00
5.082
Clew Paw -MODO
2-0=%
45MO00
1,0000%
PROJECT
Type of 8x to anerd Dstnct
HOUSM Lim=
TOW TOW Per Unit Taxes
Total Tax Year
MAO Tffic L%Wh* per
uWs pay"
value value UM _
1,710,000 77 ,240 95,000 I
is 1989
To 2
2,0&0,000 23.660 120.000 2.462
17
Im
Townhoff wm 3
_
1360 35 8 1 000 2 9W
----
7 IM
42
yC6,
o kr-nL
4 , 6 9 5 ,000 M
6
4
Pr oumd by plokm I=
APR -09 -97 11 :24 FROM :KENNEDY & GRAVEN ID :6123379310 PAGE
MAR 2!!5 ' 97 10: 44AM EHLERS & H55 S N I t..5 page 2
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C ASH FLAW
_
T AX INCREMEW
- ---- ,�i
Gam
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lax
Tax
Tax Gr= Tax
6
800°.6
,.;
8.0996 Yrs. Mt17_ Y r.
�E WD
BEGINNIN
l
1 0 -0016 _10.OQ
-
0
0 0.0 0 1987
Yrs. ,
tultlt. n.
d 4
p
Q
0
- 0 1
0 0.0 02 -01 1998
0.0
0.0
0207 19$7
08 -01 t
4,000
4,000
4,000
0
0
0
4
0
0
0
0
0
0 0.0 08.01 1995
0.0 02 -01 12%
p.0
IQ
o
02-0t {998
o8-09
4.000
41000
4,000
0
0
43716
0
(4.M
11
4,372
a
137 00)
0
54 0.5 08-01 1999
65 1 1.0 02 -01 2000
0.0
02-01 1999
4X0
596W
43.716
(4An)
4,372
4,858
(3(37,20D) DJ
(8.380 1.5 08-01 2000
200
O p
p2 -01 200 •
4 000
65,2
6'1,206
62206
45.582
45,682
(4,`'''�')
(4AW
4,55$
(37,200)
(8.38 2-0 02 -01
10.32;1) 7 6 08-01., 2001
( 10.323)
1.3
08-0 2000
4.oaQ
56.20$
64.Ss5
47.523
(4,75'
4.752
Wxa)
(3 m
3.0 02-01' 2002
2.0
02 -01 2001
2001
4.000
4,000
OU.
84,855
47.523
(4,752)
(4,954)
4,752
4.954
(3 SAO)
(12,341) 3_S 06-01 2002
2003
2.5
. 3,0
0"1
02 -01 2002
4.000
71.648
'71,609
67
67,609
49,541
49.S4l
(4,954}
4,954
('71M
72.34 4.0 02-01
(14,440) 4.5 08-01 2 00:3
3.5
08-0 2002
4.000
74.473
70,473
51,840
(5,164)
(VIM
(14A40) 5A 02-01 2004
4.0
02 -07 2003
2003
4,000
•4,000
74.473
70,473
51.640
(5,364)
(8•°
164
5,382
WX0
(16.672) 5.5 08-01 2004
02 2005
4 5
5.0
0&01
02-07 •2004
4�
77.452
77.452
73,452
73,452
53.82
53.822
(�)
(37.200)
(3
(16.622) 6.9 -0i'°
(98.193} 6 5 08 09 2005
5.5
6.0
08-01 2W4
02 -01 2005
4 000+•«. , 80550
76.550
56.093
56•0m
(5,,3M
(5. o)
5,609
SP9
.240)
(37.200)
(18,893) 7.0 02-0 2006
1 53 7.* 08-01 2006
S.5
08 -01 2005
4.000
a tM0
80.550
83.772
76,510
79,772
58,453
(5,845)
5.845
S,B45
x' 200
('�, )
(21 n53) 8.0 Q2 -01 2007
7.0
7 5
02 -07 2006
0$x{71 2096
4-000
g377z
7'9.772
83,1'22
58,453
60.949
(5,845)
196,085)
6.091
(fi0,909) 8.5 08-0 2007
(50,90®) 4.0 d2 -01 2M
8.0
02-01 2007
4.000
87,123
87,123
83,123
60.909
(5.
��
(68,462) 9.5 08.01 2005
V 8 5
90
48-01 2007
02ti 2008
4.000
g0,SON
86
86, 605
83,4b2
6 3 , 462
(6,346)
( 6,34 0
(gg q 10.0 02-0 2009
66 ,9 18) 1 0.5 08-01 2009
g.5
OB -0i 2608
4. 000
4.000
90,608
$4.232
90.232
66,118
(6,612)
g 612
(66.11$) 11.0 02-01 2010
2010
10.0 02 -0t 200J
10.5 08-01 2009
4.000
go
34,002
mils
�Bgp
(6,6
(6,888?
6,$85
(68,$80) 11.5 oa -01
884 12.0 02 - 0 9 2011
(68. )
11.0 02 -01 2010
4.0-00
9.002
98,002
94,002
68.8 $0
(6,8 88)
6 •M
7.175
(71.753) 12.5 o"I 20
11.5 08 - 0 1 2010
02'•01 2011
4.000
4,000
101.922
97.9 22
71753
71,753
(?. 175)
(
7,175
(71,7'53) 13.0 o"I 2012
13.5 08-01 2012
12.9
92.5 -0 i 2011
4.000
1Q.1,92x
97.922
101.999
74740
(7.474)
7,474
(74,710)
($8.454314.0 0 2013
13.0
02- 2012
2092
4.000
4000
705.399
105 999
501.9
7,4
1,F ?4,A64
7�
(
7474
j 8
_
630
---
13 _ 0-01
T
Totals
'�
(78.4441
0 8
-
V gE
�
7$4, 44
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