CC Staff Report 03-22-21CITY COUNCIL STAFF REPORT
Monday,March 22,2021
Subject Resolution No.2021-XX:Modification to the Development Program for the Downtown
Chanhassen Redevelopment Project Area and Establishment of Tax Increment Financing District
No.12
Section PUBLIC HEARINGS Item No:H.1.
Prepared By Kate Aanenson,AICP,Community
Development Director
File No:
PROPOSED MOTION
The City Council approves the attached resolution adopting a modification to the Redevelopment Plan for the
Downtown Chanhassen Redevelopment Project area and approves a Tax Increment Finance Plan for Tax Increment
Financing District No.12."
Approval requires a Simple Majority Vote of members present.
SUMMARY
The City Council will hold a public hearing on the modification to the Development Program for the Downtown
Chanhassen Redevelopment Project Area and Establishment of Tax Increment Financing,and will consider a
resolution approving the TIF Plan documents and establishing TIF District No.12.
BACKGROUND
Todd Simning proposed an apartment building on the last lot of the Powers Ridge Development.The developer
requested additional units as a density bonus.Approval of these units is contingent upon providing 50 affordable units
at 60%of the area's medium income.On January 25,2021,the City Council approved a site plan for the Lakes at
Chanhassen subject to providing 50 units of affordable housing.
On March 8,2021,the city’s EDA reviewed the TIF Plan documents.The developer is requesting approval of the TIF
District to provide the affordability requirement.There were questions raised by the EDA that were requested to
be addressed at the public hearing.These questions included affordable housings needs,rental and income limits.
DISCUSSION
The Housing Chapter of the city's 2040 Comprehensive Plan demonstrates the need for affordable senior housing.There
had been no affordable senior housing built in the city since 2002 when the Presbyterian Homes TIF District included 35
of the 90 independent units affordable.That project also included 71 assisted-living units.
The Comprehensive Plan includes the need for 580 adult rental units and 285 affordable units.The Lakes of
Unit sq.ft.Number of Units Number of Bedrooms Rent
701 12 1 BR 1 BA $950
800 18 1 BR 1 BA $1,164
933 15 2 BR 1 BA $1,300
1,125 5 2 BR 2 BA $1,395
Total 50
CITY COUNCIL STAFFREPORTMonday,March 22,2021SubjectResolution No.2021-XX:Modification to the Development Program for theDowntownChanhassenRedevelopmentProjectAreaandEstablishmentofTaxIncrementFinancingDistrictNo.12SectionPUBLIC HEARINGS Item No:H.1.Prepared By Kate Aanenson,AICP,CommunityDevelopmentDirector File No:PROPOSED MOTION“The City Council approves the attached resolution adopting a modification to the Redevelopment Plan fortheDowntownChanhassenRedevelopmentProjectareaandapprovesaTaxIncrementFinancePlanforTaxIncrementFinancingDistrictNo.12."Approval requires a Simple Majority Vote of members present.SUMMARYTheCityCouncil will hold a public hearing on the modification to the Development Program for theDowntownChanhassenRedevelopmentProjectAreaandEstablishmentofTaxIncrementFinancing,and will consideraresolutionapprovingtheTIFPlandocumentsandestablishingTIFDistrictNo.12.BACKGROUNDToddSimningproposed an apartment building on the last lot of the Powers Ridge Development.Thedeveloperrequestedadditionalunitsasadensitybonus.Approval of these units is contingent upon providing 50 affordableunitsat60%of the area's medium income.On January 25,2021,the City Council approved a site plan for the LakesatChanhassensubjecttoproviding50unitsofaffordablehousing.On March 8,2021,the city’s EDA reviewed the TIF Plan documents.The developer is requesting approval of theTIFDistricttoprovidetheaffordabilityrequirement.There were questions raised by the EDA that were requestedtobeaddressedatthepublichearing.These questions included affordable housings needs,rental and income limits.DISCUSSIONTheHousingChapter of the city's 2040 Comprehensive Plan demonstrates the need for affordable senior housing.Therehadbeennoaffordableseniorhousingbuiltinthecitysince2002whenthePresbyterianHomesTIFDistrictincluded35ofthe90independentunitsaffordable.That project also included 71 assisted-living units.
The Comprehensive Plan includes the need for 580 adult rental units and 285 affordable units.The Lakes of
Chanhassen will create 50 affordable units.
The developer's proforma demonstrates that the project meets the rental income limits by bedroom size.Household
income levels will very by the developers as part the rental agreement.An annual report by the developer is required
to ensure they are complying with income limits for Carver County.
Income Limits by Household Size
1 2 3
60%AMI $43,440 $49,460 $55,860
Maximum Gross Rents by Bedroom Size
0 1 2
AMI $1,086 $1,164 $1,396
Developer's Proposal
ATTACHMENTS:
Resolution
TIF Agreement No.12
Senior Rental Demand
Senior Commission Support
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CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
DATE: March 22, 2021 RESOLUTION: 2021-
MOTION: SECONDED BY:
RESOLUTION ADOPTING A MODIFICATION TO THE EDEVELOPMENT PLAN
FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA
AND APPROVING A TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT NO. 12
BE IT RESOLVED by the City Council (the “Council”) of the City of Chanhassen,
Minnesota (the “City”), as follows:
Section 1. Recitals
1.01. The Board of Commissioners of the Chanhassen Economic Development Authority
the “EDA”) has heretofore established the Downtown Chanhassen Redevelopment Project Area
the “Project Area”) and adopted the Redevelopment Plan therefor. It has been proposed by the EDA
that the City approve and the EDA adopt a Modification to the Redevelopment Plan for the Project
Area (the “Redevelopment Plan Modification”) and a Tax Increment Financing Plan (the “TIF
Plan”) for the establishment of Tax Increment Financing District No. 12 (the “District”) therein (the
Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the
Plans”); all pursuant to and in conformity with applicable law, including Minnesota Statutes,
Sections 469.090 to 469.1082 and Sections 469.174 to 469.1794, all inclusive, as amended, (the
Act”) all as reflected in the Plans, and presented for the Council’s consideration.
1.02. The EDA and City have investigated the facts relating to the Plans and have caused
the Plans to be prepared.
1.03. The EDA and City have performed all actions required by law to be performed prior
to the establishment of the District and the adoption and approval of the proposed Plans, including,
but not limited to, notification of Carver County and Independent School District No. 112 having
taxing jurisdiction over the property to be included in the District, a review of and written comment
on the Plans by the City Planning Commission, adoption of the Plans by the EDA on March 8,
2021, and the holding of a public hearing upon published notice as required by law.
1.04. Certain written reports (the ‘‘Reports”) relating to the Plans and the activities
contemplated therein have heretofore been prepared by staff and consultants and submitted to the
Council and/or made a part of the City files and proceedings on the Plans. The Reports include data,
information and/or substantiation constituting or relating to the basis for the other findings and
determinations made in this resolution. The Council hereby confirms, ratifies and adopts the
Reports, which are hereby incorporated into and made as fully a part of this resolution to the same
extent as if set forth in full herein.
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1.05 The City is not modifying the boundaries of the Project Area, but is, however,
modifying the Redevelopment Plan to include activities related to the District.
Section 2. Findings for the Adoption and Approval of the Plans.
2.01. The Council hereby finds that the Plans are intended and, in the judgment of this
Council, the effect of such actions will be, to provide an impetus for development in the public
interest and accomplish certain objectives as specified in the Plans, which are hereby incorporated
herein.
Section 3. Findings for the Establishment of the District
3.01. The Council hereby finds that the District is in the public interest and is a “housing
district” under Minnesota Statutes, Section 469.174, Subd. 11 of the Act.
3.02. The Council further finds that the proposed redevelopment would not occur solely
through private investment within the reasonably foreseeable future, that the TIF Plan conforms to
the general plan for the development or redevelopment of the City as a whole; and that the TIF Plan
will afford maximum opportunity consistent with the sound needs of the City as a whole, for the
development or redevelopment of the District by private enterprise.
3.03. The Council further finds, declares and determines that the City made the above
findings stated in this Section and has set forth the reasons and supporting facts for each
determination in writing, attached hereto as Exhibit A.
3.04. The EDA elects to calculate fiscal disparities for the District in accordance with
Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means any fiscal disparities
contribution would be taken from inside the District.
Section 4. Public Purpose
4.01. The approval of the Plans conforms in all respects to the requirements of the Act and
will help fulfill a need to develop an area of the City which is already built up, to provide housing
opportunities, to improve the tax base and to improve the general economy of the State and thereby
serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits
directly derive from the tax increment assistance provided under the TIF Plan. A private developer
will receive only the assistance needed to make this development financially feasible. As such, any
private benefits received by a developer are incidental and do not outweigh the primary public
benefits.
Section 5. Approval and Adoption of the Plans
5.01. The Plans, as presented to the Council on this date, including without limitation the
findings and statements of objectives contained therein, are hereby approved, ratified, established,
and adopted and shall be placed on file in the office of the Community Development Director.
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5.02. The staff of the City, the City’s advisors and legal counsel are authorized and directed
to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this
Council for its consideration all further plans, resolutions, documents and contracts necessary for
this purpose.
5.03 The Auditor of Carver County is requested to certify the original net tax capacity of
the District, as described in the Plans, and to certify in each year thereafter the amount by which the
original net tax capacity has increased or decreased; and the EDA is authorized and directed to
forthwith transmit this request to the County Auditor in such form and content as the Auditor may
specify, together with a list of all properties within the District, for which building permits have been
issued during the 18 months immediately preceding the adoption of this resolution.
5.04. The EDA Executive Director is further authorized and directed to file a copy of the
Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State
Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a.
Passed and adopted by the Chanhassen City Council this 22nd day of March, 2021.
ATTEST:
Elise Ryan, Mayor Laurie Hokkanen, City Manager
YES NO ABSENT
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EXHIBIT A
RESOLUTION NO. 2021-XX
The reasons and facts supporting the findings for the approval of the Tax Increment Financing
Plan (TIF Plan) for Tax Increment Financing District No. 12, as required pursuant to Minnesota
Statutes, Section 469.175, Subdivision 3 are as follows:
1. Finding that Tax Increment Financing District No. 12 is a housing district as defined in
M.S., Section 469.174, Subd. 11.
Tax Increment Financing District No. 12 consists of one (1) parcel and its internal and adjacent
rights-of-way. The development will consist of a new 110-unit mixed-income senior housing
apartment facility in the city, all or a portion of which will receive tax increment assistance and
will meet income restrictions described in M.S. 469.1761. At least 40 percent of the units receiving
assistance will have incomes at or below 60 percent of area median income.
2. Finding that the proposed development, in the opinion of the City Council, would not
reasonably be expected to occur solely through private investment within the reasonably
foreseeable future.
This finding is supported by the fact that the development proposed in this plan is a housing district
that meets the City’s objectives for development and redevelopment and is intended for occupancy,
in part, by low and moderate-income persons. At least 40% of the assisted housing units are
intended to be income restricted. Due to decreased rental income from affordable units, there is
insufficient cash flow to provide a sufficient rate of return, pay operating expenses, and service the
debt necessary to develop the housing. This leaves a gap in the funding for the project and makes
this housing development feasible only through assistance, in part, from tax increment financing.
The necessity of public assistance is true for most affordable housing development in Minnesota.
The developer was asked for and provided a letter and a proforma outlining project source and
uses as well as projected rent, vacancy and financing assumptions. City staff and the City’s
advisors reviewed the information and have determined the project is not feasible without the
proposed assistance due anticipated rent levels and market returns not supporting the development
costs for the site. Based on the review, the City does not expect that a development of this type
would occur in the reasonably foreseeable future but-for the use of tax increment assistance.
3. Finding that the TIF Plan for Tax Increment Financing District No. 12 conforms to the
general plan for the development or redevelopment of the municipality as a whole.
The Planning Commission reviewed the TIF Plan on March 2, 2021 and approved a
recommendation to the City Council that the TIF Plan conforms to the general plan for
development or redevelopment of the City.
4. Finding that the TIF Plan for Tax Increment Financing District No. 12 will afford
maximum opportunity, consistent with the sound needs of the City as a whole, for the development
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CH135\62\708438.v2
or redevelopment of the Downtown Chanhassen Redevelopment Project Area by private
enterprise.
Through the implementation of the TIF Plan, the City will provide an impetus for
residential development, which is desirable and necessary for providing for an increased
population and increased need for life-cycle housing within the City.
g:\admin\resol\2021\03-22-21\tif 12.docx
CH135\62\706685.v3
DRAFT
March 17, 2021
CONTRACT
FOR
PRIVATE DEVELOPMENT
By and Between
THE CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY
and
LAKES AT CHANHASSEN, LLC
This document drafted by:
KENNNEDY & GRAVEN, CHARTERED (RHB)
150 South Fifth Street
Suite 700
Minneapolis, MN 55402
612) 337-9300
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TABLE OF CONTENTS
PAGE
PREAMBLE ....................................................................................................................................1
ARTICLE I
Definitions
Section 1.1. Definitions................................................................................................................2
Section 1.2. Exhibits ...................................................................................................................4
Section 1.3. Rules of Interpretation ............................................................................................5
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the EDA ....................................................................................5
Section 2.2. Representations and Warranties by the Developer ..................................................6
ARTICLE III
Acquisition of Development Property; Public Assistance
Section 3.1. Acquisition of Development Property .....................................................................7
Section 3.2. Issuance of Pay-As-You-Go Note ...........................................................................7
Section 3.3. Conditions Precedent to Issuance of the Note .........................................................7
Section 3.4. Records ....................................................................................................................8
Section 3.5. No Business Subsidy................................................................................................8
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements ...............................................................8
Section 4.2. Preliminary Plans and Construction Plans ...............................................................8
Section 4.3. Commencement and Completion of Construction ...................................................9
Section 4.4. Certificate of Completion ........................................................................................9
Section 4.5. Declaration Regarding Income Restrictions; Qualification of the TIF District .....10
Section 4.6. Senior Housing.......................................................................................................11
ARTICLE V
Insurance
Section 5.1. Insurance ................................................................................................................11
Section 5.2. Evidence of Insurance ...........................................................................................12
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ARTICLE VI
Payment of Taxes; Use of Tax Increment
Section 6.1. Taxes ......................................................................................................................12
Section 6.2. Right to Collect Delinquent Taxes and Special Assessments ................................12
Section 6.3. Housing District; Use of Tax Increment ................................................................13
ARTICLE VII
Restrictions on Sale of Minimum Improvements; Termination of Agreement
Section 7.1. Prohibition Against Sale of Minimum Improvements ...........................................13
Section 7.2. Termination of Agreement .....................................................................................14
ARTICLE VIII
Events of Default
Section 8.1. Events of Default Defined .....................................................................................14
Section 8.2. Remedies on Default ..............................................................................................15
Section 8.3. Remedies after Certificate of Completion .............................................................16
Section 8.4. No Remedy Exclusive............................................................................................16
Section 8.5. No Additional Waiver Implied by One Waiver .....................................................16
ARTICLE IX
Additional Provisions
Section 9.1. Conflict of Interests; Representatives Not Individually Liable .............................16
Section 9.2. Equal Employment Opportunity ............................................................................17
Section 9.3. Restrictions on Use ................................................................................................17
Section 9.4. Notices and Demands ............................................................................................17
Section 9.5. Counterparts ...........................................................................................................17
Section 9.6. Disclaimer of Relationships ...................................................................................17
Section 9.7. Amendment ............................................................................................................17
Section 9.8. Recording; Agreement Runs with the Land ...........................................................18
Section 9.9. Release and Indemnification Covenants ................................................................18
Section 9.10. Titles of Articles and Sections ...............................................................................18
Section 9.11. Governing Law; Venue ..........................................................................................18
Section 9.12. Fees and Charges ...................................................................................................18
TESTIMONIUM............................................................................................................................19
SIGNATURES ......................................................................................................................... 19-20
EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
EXHIBIT B LIST OF PRELIMINARY PLANS
EXHIBIT C FORM OF CERTIFICATE OF COMPLETION
EXHIBIT D FORM OF AUTHORIZING RESOLUTION WITH NOTE
EXHIBIT E FORM OF INVESTMENT LETTER
EXHIBIT F FORM OF DECLARATION OF RESTRICTIVE COVENANTS
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CONTRACT FOR PRIVATE DEVELOPMENT
This Contract for Private Development (the “Agreement”) is made this _____ day of
2021, by and between the Chanhassen Economic Development Authority, a
public body corporate and politic under the laws of Minnesota, having its principal office at 7700
Market Boulevard, Chanhassen, Minnesota 55317 (the “Chanhassen Economic Development
Authority” or the “EDA”), and Lakes at Chanhassen, LLC, a Minnesota limited liability company,
having its principal office at 350 Highway 7, Suite 218, Excelsior, Minnesota 55331(the
Developer”).
WITNESSETH:
WHEREAS, the City of Chanhassen (the “City”) previously established the Downtown
Chanhassen Redevelopment Project Area and adopted a Redevelopment Plan to encourage
development and redevelopment in a portion of the community; and
WHEREAS, the EDA finds that it is in the public interest, helpful for the tax base and
beneficial for the health, safety and welfare of the community as a whole to promote affordable
multi-family housing in the community in locations where it is compatible with surrounding land
uses; and
WHEREAS, the EDA finds that, due to market conditions which exist today and are likely
to persist for the foreseeable future, the private sector alone is not able to accomplish construction
of affordable multi-family housing and, therefore, such will not occur without public intervention;
and
WHEREAS, in order to foster the development described above, the EDA intends to
modify the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area to
more fully implement the goals and objectives thereof, all pursuant to Minnesota Statutes, sections
469.001 through 469.047; and
WHEREAS, the EDA also intends to establish Tax Increment Financing District No. 12, a
housing district, within the Downtown Chanhassen Redevelopment Project Area and adopt a tax
increment financing plan related thereto, all pursuant to Minnesota Statutes, sections 469.174
through 469.1799; and
WHEREAS, the Developer has proposed to develop the property located at 1361 Lake
Drive West, and defined in this Agreement as the Development Property, through a 110-unit multi-
family affordable senior housing project, as more fully described herein; and
WHEREAS, the EDA believes is in the vital and best interests of Chanhassen and the
health, safety and welfare of its residents, and in accord with the public purposes and provisions
of the applicable state and local laws and requirements for which the Downtown Chanhassen
Redevelopment Project Area and Tax Increment Financing District No. 12 were or will be
established.
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NOW, THEREFORE, in consideration of the covenants 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 the following terms shall have the meanings
given below unless a different meaning clearly appears from the context:
Administrative Costs” means the administrative expenses incurred by the EDA regarding
the TIF District as defined in section 469.174, subd. 14 of the TIF Act.
Agreement” means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
Assessor” means the county assessor of Carver County.
Authorizing Resolution” means the resolution, in substantially the form attached hereto
as Exhibit D, which authorizes the issuance of the Note by the EDA Executive Director upon
satisfaction of the conditions precedent specified in Section 3.3 of this Agreement.
Available Tax Increment” means 90 percent of the Tax Increment paid to the EDA by the
County with respect to the Development Property and the Minimum Improvements.
Certificate of Completion” means the certificate, in substantially the form attached hereto
as Exhibit C, which will be provided to the Developer pursuant to Article IV of this Agreement.
City” means the city of Chanhassen, a municipal corporation under the laws of Minnesota.
City Approvals” means, collectively, the site plan and any other land use approvals
required by the City prior to constructing the Minimum Improvements.
Construction Plans” means the final plans for construction of the Minimum Improvements
which shall be submitted by the Developer pursuant to section 4.2 of this Agreement.
County” means Carver County, Minnesota.
Declaration” means the Declaration of Restrictive Covenants substantially in the form
attached hereto as Exhibit F.
Developer” means Lakes at Chanhassen, LLC, a Minnesota limited liability company.
Development Property” means the property generally located at 1361 Lake Drive West in
Chanhassen. The property is legally described in Exhibit A attached hereto.
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Economic Development Authorities Act” or “EDA Act” means Minnesota Statutes,
sections 469.090 through 469.108, as amended.
Economic Development Authority” or “EDA” means the Chanhassen Economic
Development Authority, a public body corporate and politic under the laws of Minnesota.
Event of Default” means an action by the Developer or the EDA listed in Article VIII of
this Agreement.
Housing and Redevelopment Authorities Act” or “HRA Act” means Minnesota Statutes,
sections 469.001 through 469.047, as amended.
Material Change” means a substantial change in the Construction Plans or one which will
adversely affect the generation of tax increment attributable to the Minimum Improvements.
Maturity Date” means the date the Note has been paid in full or terminated, whichever is
earlier.
Minimum Improvements” means a 110-unit three-story senior apartment building and
related amenities and improvements. After completion of the Minimum Improvements, the term
shall mean the Development Property as improved by the Minimum Improvements.
Note” means the taxable Tax Increment Revenue Note, in substantially the form set forth
in the Authorizing Resolution, to be delivered by the EDA to the Developer to reimburse the
Developer for the Qualifying Costs pursuant to Article III of this Agreement.
Preliminary Plans” means the plans of the Minimum Improvements referenced in
Exhibit B attached hereto.
Public Assistance” means the financial assistance to be offered by the EDA to the
Developer through issuance of the Note.
Qualifying Costs” means the cost of public infrastructure, site preparation, site
improvements and other qualifying expenditures made by the Developer related to completion of
the Minimum Improvements which the EDA intends to partially reimburse through the Note.
Redevelopment Plan” means the Redevelopment Plan for the Downtown Chanhassen
Redevelopment Project Area, which was modified most recently on March 22, 2021.
Redevelopment Project” or “Project” means the Downtown Chanhassen Redevelopment
Project.
Rental Housing Unit” means one of the 110 rental housing units constructed as part of the
Minimum Improvements.
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Sale” means any conveyance of fee simple title in and to the Minimum Improvements or
the Development Property, as more fully defined in Article VII of this Agreement.
Site Plan Agreement” means Site Plan Agreement #2021-04 between the City and the
Developer regarding the Minimum Improvements.
State” means the state of Minnesota.
Substantial Completion” means completion of the Minimum Improvements to a degree
allowing the issuance of a certificate of occupancy by the City’s building official.
Tax Increment” means the tax increment, as that term is defined in Minnesota Statutes,
section 469.174, subd. 25, which is paid to the EDA by the County with respect to the Minimum
Improvements and the Development Property.
Tax Increment Financing Act” or “TIF Act” means Minnesota Statutes, sections 469.174
through 469.1799, as amended.
Tax Increment Financing District” or “TIF District” means Tax Increment Financing
District No. 12, a housing district.
Tax Increment Financing Plan” or “TIF Plan” means the tax increment plan for Tax
Increment Financing District No. 12 which was approved by the EDA and the City on March 22,
2021.
Tax Official” means the Assessor, County auditor, County or state board of equalization,
the commissioners 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 Tax Increment Financing District No. 12 terminates,
which date is the earlier of: (a) after 25 years after the date of receipt of the first Tax Increment,
or (b) the date all of the EDA’s financial obligations with regard to the TIF District have been
satisfied, or (c) the date that this Agreement and the Note are terminated by the EDA for any
reason; or (d) payment of all amounts owed under the Note.
Unavoidable Delays” means delays which are the direct result of adverse weather
conditions; strikes or 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, except those of the EDA or the City reasonably contemplated by this
Agreement, any acts or omissions of any federal, State or local governmental unit which directly
result in delays in construction of the Minimum Improvements; default or unanticipated delay by
the EDA or the City under this Agreement; or any other cause beyond the reasonable control of a
party.
Section 1.2. Exhibits. The following exhibits are attached to and by reference made a part
of this Agreement:
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Exhibit A. Legal Description of Development Property
Exhibit B. List of Preliminary Plans
Exhibit C. Form of Certificate of Completion
Exhibit D. Form of Authorizing Resolution with Note
Exhibit E. Form of Investment Letter
Exhibit F. Form of Declaration of Restrictive Covenants
Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance
with and governed by the laws of Minnesota.
b) The words “herein” and “hereof” and words of similar import, without reference to
any particular section or subdivision, refer to this Agreement as a whole rather than any particular
section or subdivision hereof.
c) References herein to any particular section or subdivision hereof are to the section
or subdivision of this Agreement as originally executed.
d) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded in construing or interpreting any of
its provisions.
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the EDA. The EDA makes the following representations
as the basis for the undertaking on its part herein contained:
a) The EDA is an economic development authority duly organized and existing under
the EDA Act and also having the powers of a housing and redevelopment authority under the HRA
Act. The EDA has the authority to enter into this Agreement and carry out its obligations
hereunder.
b) The EDA has approved execution of this Agreement. The individuals executing
this Agreement and related agreements and documents on behalf of the EDA have the authority to
do so and to bind the EDA by their actions.
c) The Downtown Chanhassen Redevelopment Project is a redevelopment project
within the meaning of the HRA Act and was created, adopted and approved in accordance with
the HRA Act.
d) TIF District No. 12 is a housing tax increment financing district within the meaning
of the TIF Act and was created, adopted and approved in accordance with the TIF Act.
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e) There are no previous agreements to which the EDA is a party pertaining to the
Development Property which would preclude the parties from entering into this Agreement or
which would impede the fulfillment of the terms and conditions of this Agreement.
f) The activities of the EDA pursuant to this Agreement are undertaken pursuant to
the modified Redevelopment Plan and the TIF Plan and are for the purpose of development of the
Development Property with a mixed income multi-family senior rental apartment project.
g) The EDA will act in a timely manner to consider all approvals required under this
Agreement and will cooperate with the Developer in seeking consideration of approvals which
must be granted by the City or other public entities.
Section 2.2. Representations and Warranties by the Developer. The Developer makes the
following representations and warranties as the basis for the undertaking on its part herein
contained:
a) The Developer is a limited liability company validly existing under the laws of the
state of Minnesota. The Developer has the authority to enter into this Agreement and carry out its
obligations hereunder.
b) The persons executing this Agreement and related agreements and documents on
behalf of the Developer have the authority to do so and to bind the Developer by their actions.
c) The Developer has entered into a purchase agreement to acquire the Development
Property and will close by June 30, 2021.
d) The Developer will construct the Minimum Improvements in substantial
accordance with the terms of this Agreement, the Redevelopment Plan, the TIF Plan, the
Construction Plans and all local, State and federal laws and regulations, including, but not limited
to, environmental, zoning, building code and public health laws and regulations.
e) The Developer will apply for and use all reasonable efforts to obtain, in a timely
manner, all required permits, licenses and approvals from the City, and will meet, in a timely
manner, the 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 or used for
their intended purpose.
f) The Developer has analyzed the economics of acquisition of the Development
Property, the cost of the public infrastructure improvements, site preparation, site improvements,
and construction of the Minimum Improvements and concluded that, absent the Public Assistance
to be offered under this Agreement, it would not undertake this project.
g) 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 organizational documents or any evidence of
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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.
h) No more than 20 percent of the square footage of the Minimum Improvements will
consist of commercial, retail or other non-residential uses.
ARTICLE III
Acquisition of Development Property; Public Assistance
Section 3.1. Acquisition of Development Property. The Developer agrees to acquire the
Development Property in fee by June 30, 2021. The EDA makes no representations to the Developer
regarding the suitability of the Development Property for the use and purpose intended by the
Developer.
Section 3.2. Issuance of Pay-As-You-Go Note. (a) In consideration of the Developer
incurring the Qualifying Costs while constructing the Minimum Improvements, the EDA will issue
to the Developer the Note in the principal amount of $3,065,000 in substantially the form set forth in
the Authorizing Resolution attached hereto as Exhibit D. The EDA and the Developer agree that the
consideration from the Developer for the purchase of the Note will consist of the Developer’s payment
of the Qualifying Costs which are eligible for reimbursement with Tax Increment and which are
incurred by the Developer in at least the principal amount of the Note. The Authorizing Resolution
will authorize delivery of the Note by the EDA Executive Director upon satisfaction by the Developer
of all the conditions precedent specified in section 3.3 of this Agreement.
b) The Developer understands and acknowledges that the EDA makes no
representations or warranties regarding the amount of Available Tax Increment, or that revenues
pledged to the Note will be sufficient to pay the Note. Any estimates of Tax Increment prepared
by the EDA or its financial advisors in connection with the TIF District or this Agreement are for
the benefit of the EDA and are not intended as representations on which the Developer may rely.
Section 3.3. Conditions Precedent to Issuance of the Note. Notwithstanding anything in
this Agreement to the contrary, the EDA Executive Director is authorized to issue the Note to the
Developer only after all of the following conditions precedent have been satisfied:
a) The Developer has acquired the Development Property in fee;
b) The Developer has executed this Agreement and it has been recorded against the
Development Property;
c) The Developer has executed the Declaration of Restrictive Covenants and it has
been recorded against the Development Property;
d) The Developer has completed the Minimum Improvements and the EDA has issued
the Certificate of Completion;
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e) The Developer has submitted evidence, including paid receipts and lien waivers, it
has incurred and paid for the Qualifying Costs in an amount not less than the principal amount of
the Note;
f) The Developer has submitted the Investment Letter in the general form attached hereto
as Exhibit E;
g) The EDA has adopted the Authorizing Resolution; and
h) There has been no Event of Default on the part of the Developer which has not been
cured.
Section 3.4. Records. The EDA and its representatives will have the right at all reasonable
times after reasonable notice to inspect, examine and copy invoices paid by the Developer and/or
its general contractor relating to the Minimum Improvements and the Qualifying Costs for which
the Developer will be reimbursed under the Note.
Section 3.5. No Business Subsidy. The Public Assistance offered to the Developer under
this Agreement and the Note is related to the construction of housing and therefore is not a
business subsidy” within the meaning of Minnesota Statutes, sections 116J.993 to 116J.995.
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements. The Developer agrees that it will
construct the Minimum Improvements on the Development Property in accordance with the
Preliminary Plans and the Construction Plans. The Developer acknowledges that, in addition to
the requirements of this Agreement, construction of the Minimum Improvements will necessitate
compliance with the City Approvals and possibly approvals by other governmental agencies. To
the extent such approvals have not already been obtained, the Developer agrees to submit in a
timely manner all applications for and pursue to their conclusion all other approvals needed prior
to constructing the Minimum Improvements.
Section 4.2. Preliminary Plans and Construction Plans. (a) The Developer has submitted
and the EDA has approved the Preliminary Plans listed in Exhibit B attached hereto. Prior to
beginning construction on the Minimum Improvements, the Developer shall submit dated
Construction Plans to the EDA. The Construction Plans shall provide for the construction of the
Minimum Improvements and shall be in substantial conformity with the Preliminary Plans and this
Agreement. The EDA will approve the Construction Plans if they (1) are consistent with the
Preliminary Plans; (2) conform to all applicable federal, State and local laws, ordinances, rules and
regulations; (3) are adequate to provide for the construction of the Minimum Improvements; (4)
conform to the State building code; and (5) if there has occurred no uncured Event of Default on
the part of the Developer. Except as otherwise set forth herein, no approval by the EDA shall
relieve the Developer of the obligation to comply with the terms of this Agreement and the terms
of all applicable federal, State and local laws, ordinances, rules and regulations in the construction
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of the Minimum Improvements. Except as otherwise set forth herein, no approval by the EDA
shall constitute a waiver of an Event of Default. The EDA shall use good faith efforts to review
the Construction Plans and either approve or reject them in writing within 15 business days after
receipt. Any rejection, in whole or in part, shall set forth in detail the reasons for rejection.
b) No more than 20 percent of the square footage of the Minimum Improvements shall
consist of commercial, retail or other non-residential uses.
c) If the Developer desires to make any Material Change in the Construction Plans
after approval, the Developer shall submit the proposed change to the EDA for its approval. If the
proposed change is consistent with the Preliminary Plans or is otherwise acceptable to the EDA
and meets all other requirements of section 4.2(a) above, the EDA shall approve the proposed
change. Such change in the Construction Plans shall be deemed approved by the EDA unless
rejected within the required 10 business day period, in whole or in part, by written notice by the
EDA to the Developer, setting forth in detail the reasons for rejection. Such rejection shall be
made within 15 business days after receipt by the EDA of the written notice of such change from
the Developer.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Developer shall commence construction of the Minimum Improvements by no later
than September 1, 2021. 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. The Developer shall make such reports to the EDA regarding construction of
the Minimum Improvements as the EDA deems necessary or helpful in order to monitor progress
on construction of the Minimum Improvements. The Developer shall have achieved Substantial
Completion of the Minimum Improvements by no later than December 31, 2022.
Section 4.4. Certificate of Completion. (a) After Substantial Completion of the Minimum
Improvements in accordance with the Construction Plans and at the written request of the
Developer, the EDA will, within 20 days thereafter, furnish the Developer with an appropriate
Certificate of Completion so certifying in the form of Exhibit C attached hereto. Such Certificate
of Completion by the EDA shall be a conclusive determination of satisfaction and termination of
the agreements and covenants in this Agreement with respect to the obligations of the Developer
to construct the Minimum Improvements and the dates for the beginning and completion thereof.
b) The Certificate of Completion shall be in such form set forth in Exhibit C and as
will enable it to be recorded in the proper County office for the recordation of deeds and other
instruments pertaining to the Development Property. If the EDA shall refuse to provide a
Certificate of Completion in accordance with the provisions of this section 4.4, the EDA shall
promptly notify Developer within the same 20 day period following receipt of request by the
Developer for the Certificate of Completion, and such notification from the EDA shall include a
written statement, indicating in adequate detail in what respects the Developer has failed to
complete the relevant portion of the Minimum Improvements in accordance with the Construction
Plans and what measures or acts will be necessary, in the opinion of the EDA, for the Developer
to take or perform in order to obtain such certification. If the EDA fails to issue such a written
statement within such 20-day period, the EDA shall be deemed to have waived its right to do so
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and shall be deemed to have issued a Certificate of Completion to the Developer. The Developer
shall have 60 days following receipt of the EDA’s written response to cure or agree to terms with
the EDA regarding issues to be resolved prior to the Developer obtaining a Certification of
Completion from the EDA.
Section 4.5. Declaration Regarding Income Restrictions; Qualification of the TIF District.
The Developer agrees that the Minimum Improvements will be subject to the following tenant
income restrictions:
a) The Developer will cause 50 (44%) or more of the Rental Housing Units in the
Minimum Improvements to be occupied by Qualifying Tenants whose household income is 60
percent or less of the area median gross income, all as further described in the Declaration attached
hereto as Exhibit F. Prior to any payment under the Note, the Developer will deliver the executed
Declaration to the EDA in recordable form.
b) As a condition to initial and continuing occupancy, each person who is intended to
be a Qualifying Tenant will be required annually to sign and deliver to the Developer a certification
in which the prospective Qualifying Tenant certifies as to his or her income. In addition, the person
will be required to provide whatever other information, documents, or certifications are reasonably
deemed necessary by the Executive Director of the EDA to substantiate his or her income, on an
ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant.
Certifications will be maintained on file by the Developer with respect to each Qualifying Tenant
who resides in a Rental Housing Unit or resided therein during the immediately preceding calendar
year.
c) The form of lease to be utilized by the Developer in renting any Rental Housing
Unit to any person who is intended to be a Qualifying Tenant will provide for termination of the
lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant
as a result of any material misrepresentation made by the person with respect to income.
d) On or before April 15 of each year during the term of the Declaration, commencing
on the first April 15 after issuance of the Certificate of Completion, the Developer must submit
evidence of tenant incomes, showing that at least 50 (44%) of the Rental Housing Units meet the
income restrictions set forth in the Declaration. The EDA will review the submitted evidence
related to the income restrictions required by Section 469.1761 of the TIF Act to determine that
the TIF District remains qualified as a housing district under the TIF Act.
e) While the covenants in this Section 4.5 are in effect, the EDA and its representatives
will have the right at all reasonable times, and after reasonable notice, to inspect and to examine
and copy all books and records of the Developer and its successors and assigns relating to the
covenants described in this Section 4.5 and in the Declaration.
f) The Developer acknowledges that the primary purpose for requiring compliance by
the Developer with the rental restrictions provided in this Agreement and the Declaration is to
ensure compliance of the Minimum Improvements with the income covenants set forth herein and
the continued eligibility of TIF District No. 12 as a housing tax increment financing district under
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the TIF Act. If prior to the Termination Date the EDA reasonably determines, based on the reports
submitted by the Developer or, if the EDA receives notice from the State Department of Revenue,
the State Auditor any Tax Official or any court of competent jurisdiction that the TIF District does
not qualify or no longer qualifies as a housing district due to action or inaction of the Developer,
such event will be deemed an Event of Default by the Developer under this Agreement; provided,
however, that the EDA may not terminate this Agreement so long as the determination is being
contested in good faith and has not been finally adjudicated. In addition to any remedies available
to the EDA under Article VIII hereof, the Developer will indemnify, defend and hold harmless the
EDA for any damages or costs resulting therefrom, including any Tax Increment the EDA may be
required or agrees to repay as a result of any action taken under section 469.1771 of the TIF Act
for violation of said Act relating to disqualification of the TIF District.
g) The Developer covenants and agrees that the Developer will cause or require as a
condition precedent to any conveyance, transfer, assignment, or any other disposition of the
Minimum Improvements prior to the Termination Date that the transferee assume in writing, in a
form acceptable to the EDA, all duties and obligations of the Developer under this section 4.5
regarding income restrictions and verification of Qualified Tenants by means of an assumption
agreement acceptable to the EDA. The Developer will deliver an executed copy of the assumption
agreement to the EDA prior to the transfer.
Section 4.6. Senior Housing. The Developer agrees the one hundred percent of the Rental
Housing Units must be occupied by at least one person who is at least 55 years of age of the time
of initial occupancy. This restriction shall terminate no earlier than the Termination Date.
ARTICLE V
Insurance
Section 5.1. Insurance. The Developer or its general contractor will provide and maintain
at all times during the process of constructing the Minimum Improvements a Special Form Basis
Insurance Policy and, from time to time during that period, at the request of the EDA no more
frequently than once annually, furnish the EDA with proof of payment of premiums on policies
covering the following:
1) 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 applicable portion of the Minimum Improvements at the date of
completion, and with coverage available in reporting form on the so-called “special” form
of policy;
2) Commercial general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) with limits against bodily injury and property damage of not less than
2,000,000 for each occurrence (to accomplish the above-required limits, an umbrella
excess liability policy may be used); and
3) Workers’ compensation insurance, with statutory coverage.
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Section 5.2. Evidence of Insurance. All insurance required in this Article V of this
Agreement must be taken out and maintained in responsible insurance companies selected by the
Developer which are authorized under the laws of Minnesota to assume the risks covered thereby.
In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella
policies, or a combination thereof, having the coverage required herein. Upon written request by
the EDA, the Developer agrees to deposit with the EDA a certificate or certificates or binders of
the respective insurers stating that such insurance is in force and effect.
ARTICLE VI
Payment of Taxes; Use of Tax Increment
Section 6.1. Taxes. The Developer agrees that prior to the Termination Date: (i) it will
not seek administrative or judicial review of the applicability of any tax statute determined by any
Tax Official to be applicable to the Minimum Improvements or the Development Property or raise
the inapplicability of any such tax statute as a defense in any proceedings, including delinquent
tax proceedings; (ii) it will not seek administrative or judicial review of the constitutionality of any
tax statute determined by any Tax Official to be applicable to the Minimum Improvements or the
Development Property or raise the unconstitutionality of any such tax statute as a defense in any
proceedings, including delinquent tax proceedings; and (iii) it will not cause a reduction in the
assessed value of the Minimum Improvements or the Development Property through:
a) willful destruction of the Minimum Improvements or any part thereof;
b) an application to the commissioner of revenue of the State or to any local taxing
jurisdiction requesting an abatement or deferral of real estate taxes on the Minimum Improvements
or the Development Property;
c) a transfer of the Minimum Improvements or the Development Property, or any part
thereof, to an entity exempt from the payment of real estate taxes under State law and that entity
applies for tax exemption; or
d) any other proceedings, whether administrative, legal or equitable, with any
administrative body within the County or the State or with any court of the State or the federal
government.
Section 6.2. Right to Collect Delinquent Taxes and Special Assessments. The Developer
acknowledges that at all times prior to the Termination Date the EDA shall have the right to sue
the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty
or interest thereon and special assessments due on the Development Property or the Minimum
Improvements and to pay over the same as a tax payment to the County auditor. In any such suit
in which the EDA prevails, the EDA shall also be entitled to recover its reasonable out-of-pocket
costs and expenses, including attorney fees.
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Section 6.3. Housing District; Use of Tax Increment. TIF District No. 12 is a housing tax
increment financing district within the meaning of section 469.174, subd. 11 of the TIF Act.
Except for payments to the Developer as provided for in this Agreement and the Note, the EDA
shall be free to use any Tax Increment it receives from the County with respect to TIF District No.
12 for any purpose for which such increment may lawfully be used under the TIF Act and the EDA
shall have no obligations to the Developer with respect to the use of such Tax Increment.
ARTICLE VII
Restrictions on Sale of Minimum Improvements; Termination of Agreement
Section 7.1. Prohibition Against Sale of Minimum Improvements.
a) The Developer represents and agrees that its use of the Development Property and
its other undertakings pursuant to the Agreement, are, and will be, used for the purpose of
construction of the Minimum Improvements on the Development Property and not for speculation
in land holding. The Developer represents and agrees that, prior to the issuance of a Certificate of
Completion regarding the Minimum Improvements, there shall be no Sale of the Development
Property or the Minimum Improvements constructed thereon nor shall the Developer suffer any
such Sale to be made, without the prior written approval of the EDA; provided however,
notwithstanding the foregoing, the Developer shall be entitled to lease Rental Housing Units of
the Development Property to third parties without the prior written approval of the EDA. As a
condition of approval of any such sale, the EDA shall require, at a minimum, that the proposed
transferee shall have entered into an agreement whereby the transferee expressly assumes all of
the Developer’s obligations under this Agreement. Any such agreement shall include the EDA as
a party and otherwise be in form and substance reasonably acceptable to the EDA. No approval
of the EDA shall be needed for any Sale after the issuance of a Certificate of Completion regarding
the Minimum Improvements.
b) Notwithstanding anything in this Agreement to the contrary, Developer is
authorized, without the approval of EDA, to obtain construction and permanent financing for the
Minimum Improvements and to mortgage the Development Property to provide security for the
construction and permanent financing, and the EDA is authorized to subordinate this Agreement
to such mortgage. In the event of foreclosure, deed-in-lieu of foreclosure or other transfer of the
Minimum Improvements or the Development Property as a result of default under such mortgage,
the acquiring party shall not need the approval of the EDA for the transfer and shall not be subject
to the obligations of this Agreement.
c) After a Certificate of Completion has been issued, Developer or other transferor
may freely, without the approval of EDA, sell or transfer all or any portion of the Minimum
Improvements or the Development Property to any person at any time. In the event that the
Developer or other transferor sells or transfers the Minimum Improvements or the Development
Property or any portion to any person, then, within 15 days after request, the EDA shall
acknowledge and certify certain facts in connection with this Agreement and the status of
obligations of Developer/transferor under this Agreement. The EDA shall provide this
certification to Developer/transferor and any potential buyer or transferee of the Minimum
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Improvements or the Development Property or any portion. The certification shall reference the
following: (1) that the Developer/transferor and transferee may rely on the representations and
agreements made by the EDA in the certification; (2) the status of the completion of the
construction obligations of the Minimum Improvements; (3) the amount of payments made under
the Note and the outstanding principal balance of the Note, if any, and that any amounts owed
under the Note will be paid to Developer and not the transferee unless the rights under the Note
are specifically assigned to the transferee; (4) that the Developer and not the transferee remains
responsible for construction obligations under this Agreement, and that transferee and any
subsequent owners of the Minimum Improvements or the Development Property are released from
all construction obligations under this Agreement; (5) that the transferee and not the
Developer/transferor shall be responsible for all non-construction obligations under this
Agreement arising subsequent to the sale or transfer of the Minimum Improvements or the
Development Property for the portion of the Development Property owned by the transferee so
long as the transferee has assumed such obligations by written instrument, and that the
Developer/transferor is released from all such non-construction obligations under this Agreement;
and (6) whether or not there exists any defaults, events of default, or conditions which with the
passage of time or giving of notice would constitute a default under this Agreement.
Section 7.2. Termination of Agreement. Upon the occurrence of the Termination Date,
the parties agree to execute and record a document terminating this Agreement.
ARTICLE VIII
Events of Default
Section 8.1. Events of Default Defined. Each and every one of the following shall be an
Event of Default under this Agreement:
a) Failure by the Developer to seek approval from the EDA, the City and other entities
necessary in order to construct the Minimum Improvements diligently and in good faith; provided
that if a Certificate of Completion is issued by the EDA, such failure shall no longer be an Event
of Default;
b) Failure of the Developer to pay real estate taxes or special assessments on the
Minimum Improvements or the Development Property as they become due;
c) Failure by the Developer to commence and completion construction of the
Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this
Agreement, including the timing thereof, unless such failure is caused by an Unavoidable Delay
or waived by the Developer and the EDA;
d) If there is an event of default by the Developer under the Site Plan Agreement;
e) If the Developer shall file a petition in bankruptcy, or shall make an assignment for
the benefit of its creditors or shall consent to the appointment of a receiver;
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f) If there is a violation by the Developer of the Declaration with regard to the required
income or age limitations or if the Developer fails to deliver the annual rent and income reports
required by the Declaration;
g) Sale of the Minimum Improvements or the Development Property, or any portion
thereof, by the Developer in violation of Article VII of this Agreement;
h) Any action or inaction by the Developer which disqualifies the TIF District as a
housing district under the TIF Act prior to the Termination Date; or
i) Failure by either party to observe or perform any material covenant, condition,
obligation or agreement on its part to be observed or performed under this Agreement, including
but not limited to any action necessary for the establishment of the TIF District.
Section 8.2. Remedies on Default. Whenever any Event of Default referred to in
section 8.1 of this Agreement occurs, the non-defaulting party may take any one or more of the
following actions 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 from the receipt
of Notice or, if the Event of Default is by its nature incurable within 30 days, the defaulting party
does not provide assurances to the non-defaulting party 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 until it receives assurances from the
defaulting party, deemed adequate by the non-defaulting party, that the defaulting party will cure
its default and continue its performance under this Agreement;
b) Prior to issuance of the Certificate of Completion, cancel and rescind or terminate
this Agreement;
c) If the default occurs after issuance of the Certificate of Completion, the EDA may
suspend payments under the Note, subject to the provisions of section 8.3 of this Agreement;
d) Suspend payments under the Note upon the Developer’s failure to provide annual
rental and income reports required under the Declaration within 30 days of the date they are due
or terminate the Note if the reports are not provided within six months of the date they are due,
subject to the right to contest matters in good faith as provided in section 4.5(f) of this Agreement;
and
e) Take whatever action, including legal or administrative action, which may appear
necessary or desirable to the non-defaulting party to collect any payments due under this
Agreement, including reimbursement of the Redevelopment Assistance previously granted, or to
enforce performance and observance of any obligation, agreement, or covenant of the defaulting
party under this Agreement.
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Section 8.3. Remedies after Certificate of Completion. The EDA may exercise its rights
under Section 8.2(c) only for the following Events of Default:
1) the Developer fails to pay real estate taxes or special assessments on the Minimum
Improvements or the Development Property or any part thereof when due and the taxes or special
assessments have not been paid, or provision satisfactory to the EDA made for their payment,
within 45 days after written demand by the EDA to do so; or
2) the Developer takes or permits an action prohibited by section 6.1 of this
Agreement; or
3) the Developer takes an action or fails to take an action which disqualifies the TIF
District as a housing district under the TIF Act prior to the Termination Date; or
4) the Developer transfers the Minimum Improvements or the Development Property,
or any part thereof, to an entity exempt from the payment of real estate taxes under State law.
Section 8.4. No Remedy Exclusive. No remedy conferred herein or reserved to the parties
is intended to be exclusive of any other available remedy or remedies, but each and every 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. 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 EDA or the Developer to exercise any remedy reserved
to it, it shall not be necessary to give notice, other than such notice as may be required under this
Agreement.
Section 8.5. No Additional Waiver Implied by One Waiver. In the event any covenant or
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.
ARTICLE IX
Additional Provisions
Section 9.1. Conflict of Interests; Representatives Not Individually Liable. No member,
official, or employee of the EDA shall have any personal financial 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 or her personal financial interests or the interests of
any corporation, partnership, or association in which he or she is, directly or indirectly, interested.
No member, official, or employee of the EDA shall be personally liable to the Developer, or any
successor in interest, in the event of any default or breach or for any amount which may become
due or on any obligations under the terms of this Agreement.
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Section 9.2. Equal Employment Opportunity. 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 equal employment and nondiscrimination laws
and regulations.
Section 9.3. Restrictions on Use. The Developer agrees that through the Termination
Date it will use the Minimum Improvements for only such uses as permitted under the City’s land
use regulations and in compliance with the City Approvals.
Section 9.4. Notices and Demands. Except as otherwise expressly provided in this
Agreement, any notice, demand, or other communication under the Agreement or any related
document by either party to the other shall be sufficiently given or delivered if it is dispatched by
registered or certified United States mail, postage prepaid, return receipt requested, or delivered
personally to:
a) in the case of the Developer: Lakes at Chanhassen, LLC
350 Highway 7, Suite 218
Excelsior, MN 55331
Attn: Todd M. Simning
b) in the case of the EDA: Chanhassen Economic
Development Authority
7700 Market Boulevard
Chanhassen, MN 55317
Attn: Executive Director
and with a copy to: Kennedy & Graven, Chartered
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
Attn: Ronald H. Batty
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 9.4.
Section 9.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 9.6. Disclaimer of Relationships. The Developer acknowledges that nothing
contained in this Agreement nor any act by the EDA or the Developer shall be deemed or construed
by the Developer or by any third person to create any relationship of third-party beneficiary,
principal and agent, limited or general partner, or joint venture between the EDA and the
Developer.
Section 9.7. Amendment. This Agreement may be amended only by the written agreement
of the parties.
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Section 9.8. Recording; Agreement Runs with the Land. The EDA intends to record this
Agreement among the County land records and the Developer agrees to pay for the cost of
recording same. This Agreement runs with the Development Property and shall bind the
successors and assigns of the EDA and the Developer.
Section 9.9. Release and Indemnification Covenants. a) Except for any negligent act of
the following named parties, the Developer hereby releases from and covenants and agrees that
the EDA, and its governing body members, officers, agents, servants, and employees (the
Indemnified Parties”) shall not be liable for, and hereby agrees to indemnify and hold harmless
the Indemnified Parties against any loss or damage to property or any injury to or death of any
person occurring at or about or resulting from any defect in the Minimum Improvements.
b) The aforesaid indemnification shall not apply to willful misrepresentation or any
willful or wanton misconduct or negligence of the EDA.
c) Except for any negligent or willful act of the EDA, the Indemnified Parties shall
not be liable for any damage or injury to the persons or property of the Developer or its partners,
officers, agents, servants or employees or any other person who may be about the Minimum
Improvements or the Minimum Improvements due to any act of negligence of any person.
Section 9.10. 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 9.11. Governing Law; Venue. This Agreement shall be construed in accordance
with the laws of Minnesota. Any dispute arising from this Agreement shall be heard in the State
or federal courts of Minnesota, and all parties waive any objection to the jurisdiction thereof,
whether based on convenience or otherwise.
Section 9.12. Fees and Charges. The Developer agrees to pay the EDA for all fees or costs
for legal, financial advisory, engineering, planning or other staff time for preparation of the TIF
Plan and related documents and analysis, drafting or negotiating this Agreement and for reviewing
any plans regarding the Minimum Improvements submitted in satisfaction of this Agreement.
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IN WITNESS WHEREOF, the EDA and the Developer have caused this Agreement to be
duly executed in their names and behalves on or as of the date first above written.
THE CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
By:
Its President
By:
Its Executive Director
STATE OF MINNESOTA )
ss.
COUNTY OF _________ )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2021, by _______________________ and ___________________, the President and Executive
Director, respectively, of the Chanhassen Economic Development Authority, a public body
corporate and politic under the laws of Minnesota, on behalf of the Economic Development
Authority.
Notary Public
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LAKES AT CHANHASSEN, LLC
By: ___________________________
Todd M. Simning, Manager
STATE OF MINNESOTA )
ss.
COUNTY OF _________ )
The foregoing instrument was executed before me this _____ day of _______________,
2021, by Todd M. Simning, the Manager of Lakes at Chanhassen, LLC, a Minnesota limited
liability company, on behalf of the company.
Notary Public
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EXHIBIT A TO
DEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
Lot 2, Block 1, Powers Ridge Apartment Homes 2nd Addition, Carver County, Minnesota.
The property’s PID Number is 25.636.0020.
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EXHIBIT B TO
DEVELOPMENT AGREEMENT
LIST OF PRELIMINARY PLANS
The following constitute the Preliminary Plans of the Minimum Improvements:
1. Site Plan prepared by CivilSite Group dated December 4, 2020
2. Grading, Drainage and Erosion Control Plans prepared by CivilSite Group dated
December 4, 2020
3. Landscaping Plan prepared by CivilSite Group dated December 4, 2020
4. Utility Plans prepared by CivilSite Group dated December 4, 2020
5. SWPPP prepared by CivilSite Group dated December 4, 2020
6. Architectural Plans prepared by Tushie Montgomery Architects dated December 4,
2020
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EXHIBIT C TO
DEVELOPMENT AGREEMENT
FORM OF
CERTIFICATE OF COMPLETION
WHEREAS, the Chanhassen Economic Development Authority, a public body corporate
and politic under the laws of Minnesota (the “EDA”), and Lakes at Chanhassen, LLC, a Minnesota
limited liability company (the “Developer”), have entered into a certain Contract for Private
Development (the “Agreement”) dated the ____ day of ____________, 2021, and recorded in the
office of the County Recorder in Carver County, Minnesota, as Document No. __________, which
Agreement contained certain covenants and restrictions regarding completion of the Minimum
Improvements, as defined in the Agreement; and
WHEREAS, the Developer has performed said covenants and conditions in a manner
deemed sufficient by the EDA to permit the execution and recording of this certification.
NOW, THEREFORE, this is to certify that all construction of the Minimum Improvements
specified to be done and made by the Developer has been completed and the County Recorder in
Carver County, Minnesota, is hereby authorized to accept for recording and to record the filing of
this instrument, to be a conclusive determination of the satisfactory termination of the covenants
and conditions relating to completion of the Minimum Improvements.
Dated: _______________.
CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
By:
Its President
By:
Its Executive Director
STATE OF MINNESOTA )
ss.
COUNTY OF _________ )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by _______________________ and ___________________, the President and Executive
Director, respectively, of the Chanhassen Economic Development Authority, a public body
corporate and politic under the laws of Minnesota, on behalf of the Economic Development
Authority.
Notary Public
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EXHIBIT D TO
DEVELOPMENT AGREEMENT
FORM OF AUTHORIZING RESOLUTION WITH NOTE
CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. ______
RESOLUTION APPROVING THE ISSUANCE OF, AND
PROVIDING THE FORM, TERMS, COVENANTS AND
DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX
INCREMENT REVENUE NOTE, SERIES 201__ IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
3,065,000
BE IT RESOLVED BY the Chanhassen Economic Development Authority (the “EDA”), as
follows:
Section 1. Authorization; Award of Sale.
1.01. Authorization. The EDA has heretofore approved the establishment of Tax
Increment Financing District No. 12 (the “TIF District”) within the Downtown Chanhassen
Redevelopment Project Area (“Redevelopment Project”), and has adopted a tax increment
financing plan for the purpose of financing certain improvements within the Redevelopment
Project.
Pursuant to Minnesota Statutes, Section 469.178, the EDA is authorized to issue and sell
its bonds for the purpose of financing a portion of the public development costs of the Minimum
Improvements and Development Property in the Redevelopment Project. The bonds are payable
from all or any portion of revenues derived from the Minimum Improvements and the
Development Property in the TIF District and pledged to the payment of the bonds. The EDA
hereby finds and determines that it is in the best interests of the EDA that it issue and sell its taxable
Tax Increment Revenue Note, Series 201__ (the “Note”), in the aggregate principal amount of
3,065,000, for the purpose of financing certain public costs of the Redevelopment Project.
1.02. Agreement Approved; Issuance, Sale and Terms of the Note. The EDA has
previously approved the Contract for Private Development (the “Agreement”) between the EDA
and Lakes at Chanhassen, LLC, a Minnesota limited liability company (the “Owner”), and
authorized the Executive Director and President to execute the Agreement. Pursuant to the
Agreement, the Note will be issued to the Owner. The Note will be dated as of the date of delivery
and will bear no interest. In exchange for the EDA’s issuance of the Note to the Owner, the Owner
will pay certain costs related to the Minimum Improvements (the Qualifying Costs, as defined in
the Agreement) pursuant to Section 3.2 of the Agreement. The Note will be delivered in the
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principal amount of $3,065,000 for reimbursement of the Owner’s costs in accordance with the
terms of Sections 3.2 and 3.3 of the Agreement.
Section 2. Form of Note. The Note will be in substantially the following form, with
the blanks to be properly filled in and the principal amount and payment schedule adjusted as of
the date of issue:
UNITED STATE OF AMERICA
STATE OF MINNESOTA
CARVER COUNTY
CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY
No. R-1 $3,065,000
TAXABLE TAX INCREMENT REVENUE NOTE
SERIES 202__
Date
Rate of Original Issue
Zero% __________
The Chanhassen Economic Development Authority (the “EDA”), for value received,
certifies that it is indebted and hereby promises to pay to Lakes at Chanhassen, LLC, or registered
assigns (the “Owner”), the principal sum of $3,065,000 with no interest thereon, as and to the
extent set forth herein.
1. Payments. Principal (“Payments”) will be paid on August 1, 2023, and each
February 1 and August 1 thereafter until the earlier of payment in full or February 1, 2042
Payment Dates”), in the amounts and from the sources set forth in Section 3 herein.
Payments are payable by mail to the address of the Owner or any other address as the
Owner may designate upon 30 days written notice to the EDA. Payments on this Note are payable
in any coin or currency of the United States of America which, on the Payment Date, is legal tender
for the payment of public and private debts.
2. No Interest. No interest will be paid on this Note.
3. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on
each Payment Date, 90 percent of the Tax Increment attributable to the Development Property and
Minimum Improvements (as defined in the Agreement) and paid to the EDA by Carver County in
the six months preceding the Payment Date, all as the terms are defined in the Contract for Private
Development between the EDA and Owner dated as of ______________, 2021 (the “Agreement”).
Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is
an uncured Event of Default by the Owner under the Agreement.
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The EDA will have no obligation to pay principal on this Note on each Payment Date from
any source other than Available Tax Increment, and the failure of the EDA to pay the entire amount
of principal on this Note on any Payment Date will not constitute a default hereunder as long as
the EDA pays principal to the extent of Available Tax Increment. The EDA will have no obligation
to pay unpaid balance of principal that may remain after the final Payment on February 1, 2042.
4. Optional Prepayment. The principal sum payable under this Note is pre-payable in
whole or in part at any time by the EDA without premium or penalty. No partial prepayment will
affect the amount or timing of any other regular payment otherwise required to be made under this
Note.
5. Suspension of Payment for Default. At the EDA’s option, the EDA’s obligation to
make any payments under this Note will be suspended upon the occurrence of an Event of Default
on the part of the Developer as defined in Section 8.1 of the Agreement, but only if the Event of
Default has not been cured in accordance with Section 8.2 of the Agreement.
6. Nature of Obligation. This Note is a single note in the total principal amount of
3,065,000 issued to aid in financing certain public costs of a Redevelopment Project undertaken
by the EDA pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and
is issued pursuant to an authorizing resolution (the “Resolution”) duly adopted by the EDA on
201__, pursuant to and in full conformity with the Constitution and laws of the
State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179, as amended. This
Note is a limited obligation of the EDA which is payable solely from Available Tax Increment
pledged to the payment hereof under the Resolution. This Note will not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including, without
limitation, the EDA or the city of Chanhassen. Neither the State of Minnesota, nor any political
subdivision thereof will be obligated to pay the principal of this Note or other costs incident hereto
except out of Available Tax Increment, and neither the full faith and credit nor the taxing power
of the State of Minnesota or any political subdivision thereof is pledged to the payment of the
principal of this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by
the EDA or its financial advisors in connection with the TIF District or the Agreement are for the
benefit of the EDA, and are not intended as representations on which the Owner may rely.
THE EDA MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF
THIS NOTE.
8. Registration and Transfer. As provided in the Resolution, and subject to certain
limitations set forth herein, this Note is issuable only as a fully registered note without coupons.
This Note is transferable upon the books of the EDA kept for that purpose at the principal office
of the Executive Director of the EDA as Registrar, by the Owner hereof in person or by the
Owner’s attorney duly authorized in writing, upon surrender of this Note together with a written
instrument of transfer satisfactory to the EDA, duly executed by the Owner. Upon the transfer or
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exchange and the payment by the Owner of any tax, fee, or governmental charge required to be
paid by the EDA with respect to the transfer or exchange, there will be issued in the name of the
transferee a new Note of the same aggregate principal amount and maturing on the same dates.
This Note may be transferred, assigned or pledged without the approval of the EDA;
provided that this Note will not be transferred to any person other than an affiliate, or other related
entity, of the Owner unless the EDA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory to the EDA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws. Notwithstanding
anything to the contrary in this Note, in no event will a lender providing funds to the Developer
and taking an assignment of the Note as security for such funds be required to sign an investment
letter at either the time of execution of an assignment or transfer of the Note as a result of the
assignment.
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 exist, to happen, and to be
performed in order to make this Note a valid and binding limited obligation of the EDA according
to its terms, have been done, do exist, have happened, and have been performed in due form, time
and manner as so required.
IN WITNESS WHEREOF, the board of commissioners of the Chanhassen Economic
Development Authority, has caused this Note to be executed with the manual signatures of its
President and Executive Director, all as of the Date of Original Issue specified above.
CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
President Executive Director
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REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the Executive Director of the EDA, in the name of the person last listed below.
Date of Registration Registered Owner Signature of EDA Executive Director
Lakes at Chanhassen, LLC
350 Highway 7, Suite 218
Excelsior, MN 55331
Attn: Todd M. Simning
Federal Tax ID #___________
End of Form of Note]
Section 3. Terms, Execution and Delivery.
3.01. Denomination, Payment. The Note will be issued as a single typewritten note
numbered R-1.
The Note will be issuable only in fully registered form. Principal of the Note will be
payable by check or draft issued by the Registrar described herein.
3.02. Dates. Principal of the Note will be payable by mail to the owner of record thereof
as of the close of business on the fifteenth day of the month preceding the Payment Date, whether
or not the day is a business day.
3.03. Registration. The EDA hereby appoints the Executive Director to perform the
functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration
and the rights and duties of the EDA and the Registrar with respect thereto will be as follows:
a) Register. The Registrar will keep at her office a bond register in which the Registrar
will provide for the registration of ownership of the Note and the registration of transfers and
exchanges of the Note.
b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in form reasonably
satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly
authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the
name of the designated transferee or transferees, a new Note of a like aggregate principal amount
and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note will not be
transferred to any person other than an affiliate, or other related entity, of the Owner unless the
EDA has been provided with an investment letter in a form substantially similar to the investment
letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the EDA,
that the transfer is exempt from registration and prospectus delivery requirements of federal and
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applicable state securities laws. The Registrar may close the books for registration of any transfer
after the fifteenth day of the month preceding each Payment Date and until the Payment Date.
c) Cancellation. The Note surrendered upon any transfer will be promptly cancelled
by the Registrar and thereafter disposed of as directed by the EDA.
d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar
for transfer, the Registrar may refuse to transfer the same until she is satisfied that the endorsement
on the Note or separate instrument of transfer is legally authorized. The Registrar will incur no
liability for her refusal, in good faith, to make transfers which she, in her judgment, deems
improper or unauthorized.
e) Persons Deemed Owners. The EDA and the Registrar may treat the person in
whose name the Note is at any time registered in the bond register as the absolute owner of the
Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account
of, the principal of the Note and for all other purposes, and all the payments so made to any
registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the
liability of the EDA upon the Note to the extent of the sum or sums so paid.
f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar
may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee,
or other governmental charge required to be paid with respect to the transfer or exchange.
g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or
is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, maturity dates
and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu
of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable
expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen,
or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was lost,
stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an
appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the
EDA and the Registrar will be named as obligees. The Note so surrendered to the Registrar will
be cancelled by her and evidence of the cancellation will be given to the EDA. If the mutilated,
lost, stolen, or destroyed Note has already matured or been called for redemption in accordance
with its terms, it will not be necessary to issue a new Note prior to payment.
3.04. Preparation and Delivery. The Note will be prepared under the direction of the
Executive Director and will be executed on behalf of the EDA by the signatures of its President
and Executive Director. In case any officer whose signature appears on the Note ceases to be the
officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for
all purposes, the same as if the officer had remained in office until delivery. When the Note has
been so executed, it will be delivered by the EDA to the Owner following the delivery of the
necessary items delineated in Section 3.3 of the Agreement.
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Section 4. Security Provisions.
4.01. Pledge. The EDA hereby pledges to the payment of the principal of the Note all
Available Tax Increment as defined in the Note. Available Tax Increment will be applied to
payment of the principal of the Note in accordance with the terms of the form of Note set forth in
Section 2 of this resolution.
4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal
thereof (to the extent required to be paid pursuant to this resolution) remains unpaid, the EDA will
maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of
the principal of the Note. The EDA irrevocably agrees to appropriate to the Bond Fund in each
year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund will be
transferred to the EDA’s account for the TIF District upon the payment of all principal to be paid
with respect to the Note.
Section 5. Certification of Proceedings.
5.01. Certification of Proceedings. The officers of the EDA are hereby authorized and
directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and
records of the EDA, and the other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all the
certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed
representations of the EDA as to the facts recited therein.
Section 6. Effective Date. This resolution will be effective upon execution by the President
and Executive Director following authorization by the board of commissioners of the EDA.
Adopted by the board of commissioners of the Chanhassen Economic Development Authority,
this ____ day of ________, 202___.
President
Executive Director
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EXHIBIT E TO
DEVELOPMENT AGREEMENT
FORM OF INVESTMENT LETTER
To the Chanhassen Economic Development Authority (the “EDA”)
Attention: Executive Director
Dated: __________________, 201__
Re: $3,065,000 Tax Increment Revenue Note (Lakes at Chanhassen Project)
The undersigned, as Purchaser of $3,065,000 in principal amount of the above-captioned
Tax Increment Revenue Note (Lakes at Chanhassen Project) (the “Note”), approved by the Board
of Commissioners of the Chanhassen Economic Development Authority on ______________,
202__, hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota,
as legal counsel to the EDA, as follows:
1. We understand and acknowledge that the Note is delivered to the Purchaser on this
date pursuant to the Contract for Private Development by and between the EDA and the Purchaser
dated __________________, 2021 (the “Agreement”).
2. The Note is payable solely from Available Tax Increment pledged to the Note, as
defined therein.
3. We have sufficient knowledge and experience in financial and business matters,
including purchase and ownership of municipal obligations, to be able to evaluate the risks and
merits of the investment represented by the purchase of the above-stated principal amount of the
Note.
4. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering document or disclosure containing material information with respect to
the EDA and the Note has been issued or prepared by the EDA, and that, in due diligence, we have
made our own inquiry and analysis with respect to the EDA, the Note and the security therefor,
and other material factors affecting the security and payment of the Note.
5. We acknowledge that we have either been supplied with or have access to
information, including financial statements and other financial information, to which a reasonable
investor would attach significance in making investment decisions, and we have had the
opportunity to ask questions and receive answers from knowledgeable individuals concerning the
EDA, the Note and the security therefor, and that as reasonable investors we have been able to
make our decision to purchase the above-stated principal amount of the Note.
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6. We have been informed that the Note (i) is not being registered or otherwise
qualified for sale under the “Blue Sky” laws and regulations of any state, or under federal securities
laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will
carry no rating from any rating service.
7. We acknowledge that the EDA and Kennedy & Graven, Chartered, as legal counsel
to the EDA, have not made any representations or warranties as to the status of payments on the
Note for the purpose of federal or state income taxation.
8. We represent to you that we are purchasing the Note for our own account and not
for resale or other distribution thereof, except to the extent otherwise provided in the Note or as
otherwise approved in writing by the EDA.
9. All capitalized terms used herein have the meaning provided in the Agreement
unless the context clearly requires otherwise.
10. The Purchaser’s federal tax identification number is __________________.
11. We acknowledge receipt of the Note on the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the
date and year first written above.
LAKES AT CHANHASSEN, LLC
By: ___________________________
Todd M. Simning, Manager
STATE OF MINNESOTA )
ss.
COUNTY OF___________ )
The foregoing instrument was executed before me this _____ day of _______________,
2021, by Todd M. Simning, the Manager of Lakes at Chanhassen, LLC, a Minnesota limited
liability company, on behalf of the company.
Notary Public
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EXHIBIT F TO
DEVELOPMENT AGREEMENT
FORM OF DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated this ___ day of
2021 (the “Declaration”), by Lakes at Chanhassen, LLC, a Minnesota limited
liability company (the “Developer”), is given for the benefit of the Chanhassen Economic
Development Authority, a public body corporate and politic under the laws of Minnesota (the
EDA”).
RECITALS
WHEREAS, the EDA and the Developer entered into that certain Contract for Private
Development, dated __________, 2021, (the “Agreement”); and
WHEREAS, pursuant to the Agreement, the Developer is obligated to cause construction of
110-unit three-story senior apartment building, and all related amenities and improvements (the
Project”) to be located on the property described in Exhibit A attached hereto (the “Development
Property”), and to cause compliance with certain affordability covenants described in Section 4.5 of
the Agreement; and
WHEREAS, Section 4.5 of the Agreement requires that the Developer cause to be executed
an instrument in recordable form substantially reflecting the covenants set forth in that section of the
Agreement; and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set
forth herein will be and are covenants running with the Development Property for the term described
herein and binding upon all subsequent owners of the Development Property for the term described
herein, and are not merely personal covenants of the Developer; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the
Agreement unless otherwise defined herein.
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:
1. Term of Restrictions.
a) Occupancy and Rental Restrictions. The term of the Occupancy Restrictions set forth
in Section 3 of this Declaration will commence on the date a certificate of occupancy is received from
the City for all Rental Housing Units on the Development Property and continue through the
Declaration Termination Date defined below (the “Qualified Project Period”).
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b) Termination of Declaration. This Declaration shall terminate upon the earlier of (i)
the date the TIF District is terminated in accordance with the TIF Act or (ii) the date (A) the Note is
paid in full or the EDA cancels the Note upon a written request for termination by the Developer and
B) the EDA determines, in its sole discretion, that such termination will not limit or interfere with
the EDA’s ability to pool Tax Increment generated within the TIF District for affordable housing in
accordance with the TIF Act.
In addition, in the event of foreclosure or transfer of title by deed in lieu of foreclosure, upon
completion of the foreclosure and expiration of the applicable mortgagee redemption period, or
recording of a deed in lieu of foreclosure, any mortgagee (or any assignee of the mortgagee) or any
purchasers at or after foreclosure thereof, by the successful bidder at the sale, to the title to the
Development Property, may terminate this Declaration, by providing written notice to the EDA and
by filing a termination document in the applicable real property records in Carver County, and
thereafter this Declaration shall be of no further force and effect; provided, however, that the
preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall
be reinstated if, at any time subsequent to the termination of this Declaration as the result of the
foreclosure, or the delivery of a deed in lieu of foreclosure, or a similar event, the Developer or any
related person (within the meaning of Section 1.103-10(e) of the Treasury Regulations) obtains an
ownership interest in the Project for federal income tax purposes.
Each of the events set forth in the first two paragraphs of this Section 1(b) are referred to
individually and collectively herein as the “Declaration Termination Date.” The Developer
acknowledges, on behalf of itself and its successors and assigns that, upon any termination of this
Declaration prior to the payment in full of the Note, the EDA will terminate the Note.
c) Removal from Real Estate Records. After the Declaration Termination Date of this
Declaration, the EDA will, upon request by the Developer or its assigns, file any document
appropriate to remove this Declaration from the real estate records of Carver County, Minnesota.
2. Project Restrictions.
a) The Developer represents, warrants, and covenants that:
i) All leases of Rental Housing Units to Qualifying Tenants (as defined in
Section 3(a) hereof) will contain clauses, among others, wherein each individual lessee:
1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(b) hereof); and
2) Agrees that the family income at the time the lease is executed will be
deemed a substantial and material obligation of the lessee’s tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Developer or the EDA, and that
the lessee’s failure or refusal to comply with a request for information with respect
thereto will be deemed a violation of a substantial obligation of the lessee’s tenancy.
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b) The Developer will permit any duly authorized representative of the EDA to inspect
the books and records of the Developer pertaining to the income of Qualifying Tenants residing in
the Project.
3. Occupancy Restrictions. The Developer represents, warrants, and covenants that:
a) Qualifying Tenants. Throughout the Qualified Project Period, (i) all of the Rental
Housing Units shall be occupied by at least one person who is at least 55 years of age at the time
of initial occupancy and shall be otherwise administered in accordance with 42 USC Section
3607(b) and Minnesota Statutes, Section 363A.21, subdivision 2; and (ii) at least 50 (44%)% of the
Rental Housing Units shall be occupied (or treated as occupied as provided herein) or held vacant and
available for occupancy by Qualifying Tenants. “Qualifying Tenants” means those persons and
families who are determined from time to time by the Developer to have combined adjusted income
that does not exceed 60% of the median income for the standard metropolitan statistical area which
includes Chanhassen, Minnesota, as that figure is determined and announced from time to time by
HUD, as adjusted for family size (the “Median Income”) for the applicable calendar year. For
purposes of this definition, the occupants of a Rental Housing Unit will not be deemed to be
Qualifying Tenants if all the occupants of such Rental Housing Unit at any time are “students,” as
defined in Section 152(f)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), not
entitled to an exemption under the Code. The determination of whether an individual or family is of
low or moderate income will be made at the time the tenancy commences and on an ongoing basis
thereafter, determined at least annually. If during their tenancy a Qualifying Tenant’s income exceeds
140% of the Median Income, the next available Rental Housing Unit (determined in accordance with
the Code and applicable regulations) (the “Next Available Unit Rule”) must be leased to a Qualifying
Tenant or held vacant and available for occupancy by a Qualifying Tenant. If the Next Available
Unit Rule is violated, the Rental Housing Unit will not continue to be treated as a Qualifying Unit.
b) Certification of Tenant Eligibility. As a condition to initial and continuing occupancy,
each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver
to the Developer a Certification of Tenant Eligibility substantially in the form attached as Exhibit B
hereto, or in any other form as may be approved by the EDA (the “Eligibility Certification”), in which
the prospective Qualifying Tenant certifies as to having a qualifying low or moderate income. In
addition, at least one person in each Rental Housing Unit shall certify as to being 55 years of age or
older. The Qualifying Tenant will be required to provide whatever other information, documents, or
certifications are deemed necessary by the EDA to substantiate the Eligibility Certification, on an
ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant within the
meaning of Section 3(a) hereof. Eligibility Certifications will be maintained for the duration of the
Qualified Project Period on file by the Developer with respect to each Qualifying Tenant who resides
in a Rental Housing Unit or resided therein during the Qualified Project Period.
c) Lease. The form of lease to be utilized by the Developer in renting any Rental
Housing Units in the Project to any person who is intended to be a Qualifying Tenant will provide for
termination of the lease and consent by the person to immediate eviction for failure to qualify as a
Qualifying Tenant as a result of any material misrepresentation made by the person with respect to
the Eligibility Certification. The Developer covenants and agrees that during the Qualified Project
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Period it will not increase the rent charged to any tenant of a Rental Housing Unit within the Project
during such tenant’s lease term and, at any rate, will not increase the rent charged to any tenant more
than once in any 6-month period.
d) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the EDA on or before July 1 of each year, a certificate
substantially in the form of Exhibit C attached hereto, executed by the Developer, (a) identifying the
tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including
the number and percentage of the Rental Housing Units of the Project which were occupied by
Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times
during the year preceding the date of the certificate; (b) describing all transfers or other changes in
ownership of the Project or any interest therein; and (c) stating, that to the best knowledge of the
person executing the certificate after due inquiry, all the Rental Housing Units were rented or
available for rental on a continuous basis during the year to members of the general public and that
the Developer was not otherwise in default under this Declaration during the year.
e) Notice of Non-Compliance. The Developer will immediately notify the EDA if at any
time during the term of this Declaration fewer than 50 (44%)% of the Rental Housing Units in the
Project are occupied or available for occupancy as required by the terms of this Declaration.
4. Transfer Restrictions. The Developer covenants and agrees that the Developer will
cause or require as a condition precedent to any conveyance, transfer, assignment, or any other
disposition of the Project prior to the termination of the Occupancy Restrictions provided herein (the
Transfer”) that the transferee of the Project pursuant to the Transfer assume in writing, in a form
acceptable to the EDA, all duties and obligations of the Developer under this Declaration, including
this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the Rental
Restrictions and Occupancy Restrictions provided herein (the “Assumption Agreement”). The
Developer will deliver the Assumption Agreement to the EDA prior to the Transfer.
5. Enforcement.
a) The Developer will permit, during normal business hours and upon reasonable notice,
any duly authorized representative of the EDA to inspect any books and records of the Developer
regarding the Project with respect to the incomes of Qualifying Tenants.
b) The Developer will submit any other information, documents or certifications
requested by the EDA which the EDA deems reasonably necessary to substantiate the Developer’s
continuing compliance with the provisions specified in this Declaration.
c) The Developer acknowledges that the primary purpose for requiring compliance by
the Developer with the restrictions provided in this Declaration is to ensure compliance of the property
with the housing affordability covenants set forth in Section 4.5 of the Agreement, and by reason
thereof, the Developer, in consideration for assistance provided by the EDA under the Agreement that
makes possible the construction of the Project (as defined in the Agreement) on the Development
Property, hereby agrees and consents that the EDA will be entitled, for any breach of the provisions
of this Declaration, and in addition to all other remedies provided by law or in equity, to enforce
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CH135\62\706685.v3
specific performance by the Developer of its obligations under this Declaration in a state court of
competent jurisdiction. The Developer hereby further specifically acknowledges that the EDA cannot
be adequately compensated by monetary damages in the event of any default hereunder.
d) The Developer understands and acknowledges that, in addition to any remedy set forth
herein for failure to comply with the restrictions set forth in this Declaration, the EDA may exercise
any remedy available to it under Article VIII of the Agreement.
6. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless, the EDA from and against all liabilities, losses, damages, costs, expenses (including
attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of
any nature arising from the consequences of a legal or administrative proceeding or action brought
against them, or any of them, on account of any failure by the Developer to comply with the terms of
this Declaration, or on account of any representation or warranty of the Developer contained herein
being untrue.
7. Agent of the EDA. The EDA will have the right to appoint an agent to carry out any
of its duties and obligations hereunder, and will inform the Developer of any agency appointment by
written notice.
8. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
9. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
designate in writing. The Developer and the EDA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the EDA: Chanhassen Economic Development Authority
7700 Market Boulevard
Chanhassen, MN 55317
Attn: Executive Director
and with a copy to: Kennedy & Graven, Chartered
150 South Fifth Street
Suite 700
Minneapolis, MN 55402
Attn: Ronald H. Batty
To the Developer: Lakes at Chanhassen, LLC
350 Highway 7, Suite 218
Excelsior, MN 55331
Attn: Todd M. Simning
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10. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
11. Attorneys’ Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the
Developer agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred
by the EDA in connection with the action.
12. Declaration Binding. This Declaration and the covenants contained herein will run
with the Development Property and will bind the Developer and its successors and assigns and all
subsequent owners of the Development Property or any interest therein, and the benefits will inure to
the EDA and its successors and assigns until the Declaration Termination Date of this Declaration as
provided in Section 1(b) hereof.
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CH135\62\706685.v3
IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
LAKES AT CHANHASSEN, LLC
By:
Todd M. Simning, Manager
STATE OF MINNESOTA )
SS.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2021, by Todd M. Simning, the Manager of Lakes at Chanhassen, LLC, a Minnesota limited
liability company, on behalf of the company.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (RHB)
150 South Fifth Street
Suite 700
Minneapolis, MN 55402
612) 337-9300
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This Declaration is acknowledged and consented to by:
CHANHASSEN ECONOMIC DEVELOPMENT
AUTHORITY
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of _____________,
2021, by _____________ and ____________, the President and Executive Director, respectively, of
the Chanhassen Economic Development Authority, a public body corporate and politic under the
laws of Minnesota, on behalf of the EDA.
Notary Public
F-A-1
CH135\62\706685.v3
Exhibit A to Declaration of Restrictive Covenants
Description
The land subject to the foregoing Restrictive Covenants is legally described as follows:
Lot 2, Block 1, Powers Ridge Apartment Homes 2nd Addition, Carver County,
Minnesota.
F-B-1
CH135\62\706685.v3
Exhibit B to Declaration of Restrictive Covenants
Certification of Tenant Eligibility
TENANT INCOME CERTIFICATION
Initial Certification Recertification Other
Effective Date: _________________________
Move-in Date: __________________________
MM/DD/YY): _________________________
PART I. DEVELOPMENT DATA
Property Name:
Senior Apartments
Address:
Chanhassen, Minnesota
County:
Carver
Unit Number: ________________
BIN #:
Bedrooms:
PART II. HOUSEHOLD COMPOSITION
HH
Br # Last Name
First Name &
Middle Initial
Relationship to
Head of
Household
Date of Birth
MM/DD/YY)
F/T Student
Y or N)
Social Security
or Alien Reg.
No.
1 HEAD
2
3
4
5
6
PART III. GROSS ANNUAL INCOME (USE ANNUAL AMOUNTS)
HH
Br #
A)
Employment or Wages
B)
Soc. Security / Pensions
C)
Public Assistance
D)
Other Income
TOTAL $ $ $ $
Add totals from (A) through (D) above TOTAL INCOME (E): $
F-B-2
CH135\62\706685.v3
PART IV. INCOME FROM ASSETS
HH
Mbr#
F)
Type of Asset
G)
C/I
H)
Cash Value of Asset
I)
Annual Income from Asset
TOTALS: $ $
Enter Column (H) Total Passbook Rate
if over $5,000 $________________ x 2.00 % = (J) Imputed Income
Enter the greater of the total column I, or J: imputed income TOTAL INCOME FROM ASSETS (K)
L) Total Annual Household Income from all sources [Add (E) + (K)] $
HOUSEHOLD CERTIFICATION & SIGNATURES
The information on this form will be used to determine maximum income eligibility. I/we have provided for each
person(s) set forth in Part II acceptable verification of current anticipated annual income. I/we agree to notify the
landlord immediately upon any member of the household moving out of the unit or any new member moving in. I/we
agree to notify the landlord immediately upon any member becoming a full-time student.
Under penalties of perjury, I/we certify that the information presented in this Certification is true and accurate to the
best of my/our knowledge and belief. The undersigned further understands that providing false representations herein
constitutes an act of fraud. False, misleading or incomplete information may result in the termination of the lease
agreement.
Signature Date) Signature Date)
Signature Date) Signature Date)
PART V. DETERMINATION OF INCOME ELIGIBILITY
TOTAL ANNUAL HOUSEHOLD
INCOME FROM ALL SOURCES
From Item (L) on page 1
Current Income Limit per Family Size: $
Household Income at Move-in
Household Meets
Income Restriction
at:
60% 50%
40% 30%
RECERTIFICATION ONLY:
Current Income Limit x 140%
Household income exceeds 140% at
recertification:
Yes No
Household Size at Move-in:
F-B-3
CH135\62\706685.v3
PART VI. RENT
Not Applicable
PART VII. STUDENT STATUS
ARE ALL OCCUPANTS FULL-TIME
STUDENTS?
yes no
If yes, enter student explanation**
also attach documentation)
Student explanation:
1. TANF assistance
2. Job training program
3. Single parent/dependent child
4. Married/joint return*
Exception for married/joint return is the only exception available for units necessary to qualify tax-exempt bonds.
PART VIII. PROGRAM TYPE
Mark the program(s) listed below (a. through e.) for which this household’s unit will be counted toward the property’s occupancy
requirements. Under each program marked, indicate the household’s income status as established by this certification/recertification
a. Tax Credit b. HOME c. Tax Exempt d. AHDP e. ____________
Name of Program)
See Part V above. Income Status Income Status Income Status Income Status
50% AMGI
60% AMGI
80% AMGI
0I **
50% AMGI
60% AMGI
80% AMGI
0I **
50% AMGI
80% AMGI
0I ** 0I **
Upon recertification, household was determined over income (OI) according to eligibility requirements of the program(s) marked
above.
SIGNATURE OF
OWNER /
REPRESENTATIVE
Based on the representations herein and upon the proofs and documentation required to be submitted, the
individual(s) named in Part II of this Tenant Income Certification is/are eligible under the provisions of Section 42
of the Internal Revenue Code, as amended, and the Regulatory Agreement (if applicable), to live in a unit in this
Project.
SIGNATURE OF OWNER / REPRESENTATIVE DATE
Enter
1-4
F-B-4
CH135\62\706685.v3
INSTRUCTIONS FOR COMPLETING
TENANT INCOME CERTIFICATION
This form is to be completed by the owner or an authorized representative.
Part I – Development Data
Check the appropriate box for Initial Certification (move-in), Recertification (annual
recertification), or Other. If Other, designate the purpose of the recertification (i.e., a unit transfer,
a change in household composition, or other state-required recertification).
Move-in Date Enter the date the tenant has or will take occupancy of the unit.
Effective Date Enter the effective date of the certification. For move-in, this should be the
move-in date. For annual recertification, this effective date should be no
later than one year from the effective date of the previous (re)certification.
Property Name Enter the name of the development.
County Enter the county (or equivalent) in which the building is located.
BIN # Enter the Building Identification Number (BIN) assigned to the building
from IRS Form 8609).
Address Enter the street address.
Unit Number Enter the unit number.
Bedrooms Enter the number of bedrooms in the unit.
Part II – Household Composition
List all occupants of the unit. State each household member’s relationship to the head of the
household by using one of the following coded definitions:
H Head of household S Spouse
A Adult co-tenant O Other family member
C Child F Foster child
L Live-in caretaker N None of the above
Enter the date of birth, student status, and Social Security number or alien registration number for
each occupant.
If there are more than seven occupants, use an additional sheet of paper to list the remaining
household members and attach it to the certification.
F-B-5
CH135\62\706685.v3
Part III – Annual Income
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income,
including acceptable forms of verification.
From the third party verification forms obtained from each income source, enter the gross amount
anticipated to be received for the 12 months from the effective date of the (re)certification.
Complete a separate line for each income-earning member. List the respective household member
number from Part II.
Column (A) Enter the annual amount of wages, salaries, tips, commissions, bonuses, and
other income from employment; distributed profits and/or net income from
a business.
Column (B) Enter the annual amount of Social Security, Supplemental Security Income,
pensions, military retirement, etc.
Column (C) Enter the annual amount of income received from public assistance (i.e.,
TANF, general assistance, disability, etc.)
Column (D) Enter the annual amount of alimony, child support, unemployment benefits,
or any other income regularly received by the household.
Row (E) Add the totals from columns (A) through (D) above. Enter this amount.
Part IV – Income from Assets
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income from
assets, including acceptable forms of verification.
From the third party verification forms obtained from each asset source, list the gross amount
anticipated to be received during the 12 months from the effective date of the certification. List
the respective household member number from Part II and complete a separate line for each
member.
Column (F) List the type of asset (i.e., checking account, savings account, etc.)
Column (G) Enter C (for current, if the family currently owns or holds the asset), or I
for imputed, if the family has disposed of the asset for less than fair market
value within two years of the effective date of (re)certification).
Column (H) Enter the cash value of the respective asset.
Column (I) Enter the anticipated annual income from the asset (i.e., savings account
balance multiplied by the annual interest rate).
F-B-6
CH135\62\706685.v3
TOTALS Add the total of Column (H) and Column (I), respectively.
If the total in Column (H) is greater than $5,000, you must do an imputed calculation of asset
income. Enter the Total Cash Value, multiply by 2% and enter the amount in (J), Imputed Income.
Row (K) Enter the Greater of the total in Column (I) or (J)
Row (L) Total Annual Household Income from All Sources Add (E) and (K) and
enter the total
F-C-7
CH135\62\706685.v3
Exhibit C to Declaration of Restrictive Covenants
Certificate of
Continuing Program Compliance
Date: ___________________
The following information with respect to the Project located at __________________,
Chanhassen, Minnesota (the “Project”), is being provided by Lakes at Chanhassen, LLC (the
Owner”) to the Chanhassen Economic Development Authority (the “EDA”), pursuant to that certain
Declaration of Restrictive Covenants, dated the ____ day of ____________, 2021 (the
Declaration”), with respect to the Project:
A) The total number of Rental Housing Units which are available for occupancy
is 110. The total number of these units occupied is _________________.
B) The following Rental Housing Units (identified by unit number) are currently
occupied by “Qualifying Tenants” as the term is defined in the Declaration (for a total of 50
units):
Small one bedroom
One bedroom
One bedroom plus den
Two bedroom
Two bedroom plus den
C) The following Rental Housing Units which are included in (B) above, have
been re-designated as Rental Housing Units for Qualifying Tenants since _______________,
20___, the date on which the last “Certificate of Continuing Program Compliance” was filed
with the EDA by the Owner:
Unit
Number
Previous Designation
of Unit (if any)
Replacing
Unit Number
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CH135\62\706685.v3
D) The following Rental Housing Units are considered to be occupied by
Qualifying Tenants”, as the term is defined in the Declaration based on the information set
forth below (for a total of at least 50 units):
Unit
Number
Last
Name of
Tenant
Number
of
Persons
Residing
in the
Unit
Number
of
Bedrooms
Total
Adjusted
Gross
Income
Date of
Initial
Occupancy
Age
Date
Vacated and
Held for
Qualifying
Tenants, if
Applicable
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
expand to cover 99 units for Qualifying Tenants]
E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form
provided as Exhibit B to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant named
in (D) above who signed such a Certification since ______________, 20___, the date on
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CH135\62\706685.v3
which the last “Certificate of Continuing Program Compliance” was filed with the EDA by
the Owner.
F) In renting the Rental Housing Units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants and persons meeting the minimum age restrictions); and none of the units
listed in (D) above has been rented for occupancy entirely by students, no one of which is
entitled to file a joint return for federal income tax purposes. All of the Rental Housing Units
in the Project have been rented pursuant to a written lease, and the term of each lease is at
least 12 months.
G) The information provided in this “Certificate of Continuing Program
Compliance” is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate or
incomplete in any respect.
H) The Project is in continuing compliance with the Declaration.
I) At least one person in each Rental Housing Unit certified as to being 55 years
of age or older.
J) The Owner certifies that as of the date hereof at lease 50 (44%)% of the
residential dwelling units in the Project are occupied or held open for occupancy by
Qualifying Tenants, as defined and provided in the Declaration.
K) The Project is in continuing compliance with the Declaration.
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on
20__.
LAKES AT CHANHASSEN, LLC
By: ____________________________
Its: ____________________________
Initial Demand Assessment for Senior Rental
Housing in Chanhassen, Minnesota
Subject site Location:
1361 Lake Drive, Chanhassen, Minnesota
Prepared for:
Todd Simning
Prepared by:
Viewpoint Consulting Group
Date:
July 9, 2020
Viewpoint Consulting Group, Inc. / 6931 87th Lane / Greenfield, MN 55373
P. 763-273-4303 / www.viewpointconsult.com
Viewpoint Consulting Group, Inc. / 6931 87th Lane / Greenfield, MN 55373
P. 763-273-4303 / www.viewpointconsult.com
July 9, 2020
To: Todd Simning
From: Jay Thompson
Viewpoint Consulting Group, Inc.
RE: Initial Demand Assessment for Senior Rental Housing in Chanhassen, Minnesota
Introduction
This memorandum provides an initial assessment of the demand for senior housing in
Chanhassen, Minnesota. The purpose of this initial assessment is to broadly assess the depth of
demand for senior rental housing, including market rate and affordable units, in the local area
to determine if potential exists to support a new development. As we understand, the location
for the proposed development is a parcel at 1361 Lake Drive.
Included in this initial assessment is a demand calculation for affordable (at 60% AMI) and
market rate rental housing that is age restricted to age 55+ households. Potential demand is
calculated based on analysis of the income/asset-qualified target market for senior housing and
the supply of competitive senior housing units serving the primary market area. The ability of
the subject development to capture unmet market area demand is discussed in this assessment
and recommendations on monthly achievable rents are provided.
A full market feasibility study, which examines in greater detail the desirability of the subject
site and competitive properties and would also provide detailed reco mmendations on a project
concept and absorption projections, could be conducted at a later date.
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 2
July 9, 2020
Primary Market Area Definition
The subject site (“Site”) for the proposed senior housing development is in Chanhas sen, on a
parcel at 1361 Lake Drive. This location is just off Powers Boulevard, between Highway 5 and
Highway 212. Chanhassen is a suburban community of 26,557 people (2020 estimate). It is
located in Carver County, just west of Eden Prairie (pop. 64,893) and just east of Chaska (pop.
26,989). Highways 5 and 212 are the primary arteries connecting Chanhassen to the remainder
of the Twin Cities Metro Area.
Chanhassen is an appealing community in which a new housing development will draw many
residents currently living outside the community. Based on the characteristics of Chanhassen,
community orientation, proximity to other senior housing properties in the surrounding area,
and our knowledge of senior housing draw areas, it is estimated that a market rate senior rental
housing development on the Site in Chanhassen would attract approximately 75% of its
residents from a draw area (Primary Market Area, or “PMA”) that includes the census tracts
listed below. Because of a greater shortage of affordable housing metrowide, affordable
housing would likely attract a higher proportion of residents from outside the PMA (two -thirds
from within the PMA and one-third from outside the PMA).
Chanhassen Eden Prairie
905.01 260.13
905.02 260.14
905.03 260.21
906.01 260.22
906.02
907.01 Chaska
907.02 909
The PMA comprises an area that extends approximately a three-mile radius of the Site. The
remaining portion of senior housing demand (25% for market rate and 33% for affordable)
would come from outside the PMA, particularly parents of adult children living in the PMA as
well as seniors living in nearby suburbs.
A map of the PMA is shown on the following page.
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 3
July 9, 2020
Primary Market Area
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 4
July 9, 2020
Demographic Analysis
Tables 1 through 5 on Pages 6 through 8 show key economic and demographic variables related
to the demand for senior housing in the PMA (age distribution of the senior population and
household base, senior household income, senior homeownership rates, and estimated home
values). This demographic and home value data is from ESRI, a national demographics firm.
The key demographic and economic findings are summarized on the following pages.
Senior Population and Household Trends
The total population in the PMA was estimated at 54,749 in 2020. The population increased
by 10.6% from 2000 to 2010. The growth stemmed from new housing construction that
resulted in the addition of 1,819 households during the decade.
While the overall population in the PMA increased by 10.6% last decade, the senior
population (age 65+) grew by 90.6%, increasing from 3,355 in 2010 to 6,396 seniors in 2020.
Seniors ages 75+ are a primary target market for senior rental housing. This group increased
by 47.4% in the PMA last decade (to 1,885 in 2020).
Between 2020 and 2025, the age 65+ senior population is projected to grow by another
2,746 persons (+42.9%). The age group 75 and over is projected to grow at an even greater
growth rate over the next five years. It is projected to grow by 47.6%, resulting in the
addition of 897 older seniors.
Senior Household Incomes
Incomes in the PMA are above average compared to the Twin Cities Metro Area, meaning
an above average proportion of seniors should be able to afford market rate housing. The
estimated median income of age-65-to-74-households in the PMA in 2020 is $91,470,
compared to the Twin Cities Metro Area’s median of $69,060 for this age group. The
estimated median income of age 75+ households in the PMA in 2020 is $54,498, compared
to the Metro Area’s median of $42,332 for this age group.
The target market for market rate senior rental housing is generally senior households age
65 and older with incomes of at least $50,000 (plus some lower-income senior
homeowners). By allocating 40% of their income toward rent, seniors with this income
could afford gross rents beginning at approximately $1,600. Seniors can allocate a higher
proportion of their income toward rent since they generally have fewer expenses than
younger households. In 2020, an estimated 2,783 households age 65 and older have
incomes of at least $50,000. This is about three-quarters of all age-65+ households.
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 5
July 9, 2020
One-person senior households with incomes below about $43,000 would income-qualify for
rental housing affordable at 60% of area median income (and couples with incomes below
about $50,000). Income-limits (2020 limits for projects placed in service after 4/1/20) for
the Low Income Housing Tax Credit program (LIHTC) from the Minnesota Housing Finance
Agency are shown below.
2020 LIHTC Income Limits
1 Person 2 Person
30% $21,720 $26,840
50% $36,200 $41,400
60% $43,440 $49,680
2020 LIHTC Maximum Gross Rents at 60% AMI
Studio $1,086
1BR $1,164
2BR $1,396
3BR $1,613
Senior Household Tenure
Seniors who own their homes have an additional source of income through the sale of their
home that can be utilized for alternative housing. Seniors in the PMA have a slightly higher
homeownership rate compared to the Twin Cities Metro Area (78.3% for 65+ households
compared to 75.8% metrowide).
Home Value Trends
Seniors can use the proceeds from the sale of their home to offset the cost of senior
housing. The median home value in the PMA is above average compared to the Twin Cities
Metro Area (estimated at $398,471 in 2020, compared to $280,679 metrowide).
A senior selling their home for $398,000 could receive an investment return of
approximately $920 monthly from the sale (sale price minus 7% sales agent fees, and a 3%
annual return on their investment).
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 6
July 9, 2020
Table 1
Senior Population Growth Trends and Projections
Primary Market Area
2000 to 2025
Table 2
Senior Household Growth Trends and Projections
Primary Market Area
2000 to 2025
Age 2000 2010 2020 2025 No.Pct.
55 to 59 1,413 3,634 5,294 4,295 -999 -18.9%
60 to 64 886 2,150 4,137 4,609 472 11.4%
65 to 69 607 1,307 2,848 3,791 943 33.1%
70 to 74 460 769 1,663 2,569 906 54.5%
75 to 79 318 506 941 1,467 526 55.9%
80 to 84 167 409 473 764 291 61.5%
85+146 364 471 551 80 17.0%
Total 65+1,698 3,355 6,396 9,142 2,746 42.9%
Total 75+631 1,279 1,885 2,782 897 47.6%
Total Population 44,030 49,491 54,749 56,999 2,250 4.1%
City of Chanhassen 20,321 22,934 26,557 28,104 1,547 5.8%
Carver County 70,205 91,042 108,499 118,897 10,398 9.6%
Twin Cities Metro Area 2,642,062 2,849,567 3,138,873 3,293,284 154,411 4.9%
Sources: ESRI; Census Bureau; Viewpoint Consulting Group, Inc.
Change, 2020 to 2025
Age 2000 2010 2020 2025 No.Pct.
55 to 64 1,426 3,484 5,244 4,741 -503 -9.6%
65 to 74 636 1,283 2,589 3,469 880 34.0%
75+442 886 1,179 1,652 473 40.1%
Total 65+1,078 2,169 3,768 5,121 1,353 35.9%
Total Households 14,740 17,635 19,454 20,240 786 4.0%
City of Chanhassen 6,914 8,345 9,702 10,310 608 6.3%
Carver County 24,356 32,891 39,118 42,856 3,738 9.6%
Twin Cities Metro Area 1,021,456 1,117,749 1,225,905 1,285,299 59,394 4.8%
Sources: ESRI; Census Bureau; Viewpoint Consulting Group, Inc.
Change, 2020 to 2025
Senior Housing Demand Assessment: Chanhassen, MN
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Table 3
Household Incomes by Age of Householder
Primary Market Area
2020 and 2025
Income 55 - 64 65-74 75+
15,000 151 75 135
15,000 to $24,999 120 81 97
25,000 to $34,999 117 125 117
35,000 to $49,999 180 203 152
50,000 to $74,999 326 446 327
75,000 to $99,999 452 501 95
100,000 to $149,999 1,197 506 135
150,000+2,701 652 121
Total 5,244 2,589 1,179
Median HH Income $153,221 $91,470 $54,498
Chanhassen Median HH Income $150,036 $91,537 $53,197
Carver County Median HH Income $110,086 $79,128 $47,921
Twin Cities Metro Median HH Income $93,530 $69,060 $42,332
Income 55 - 64 65-74 75+
15,000 112 82 162
15,000 to $24,999 84 83 113
25,000 to $34,999 88 132 149
35,000 to $49,999 132 234 209
50,000 to $74,999 210 473 394
75,000 to $99,999 337 588 138
100,000 to $149,999 966 704 229
150,000+2,812 1,173 258
Total 4,741 3,469 1,652
Median HH Income $171,742 $107,047 $59,513
Chanhassen Median HH Income $163,257 $103,597 $58,301
Carver County Median HH Income $121,939 $87,517 $52,313
Twin Cities Metro Median HH Income $103,165 $77,234 $46,716
Sources: ESRI; Viewpoint Consulting Group, Inc.
2020 Households by Age
2025 Households by Age
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Table 4
Tenure by Age of Householder
Primary Market Area
2010
Table 5
Estimated Home Values
Primary Market Area
2020
Households No.Pct.No.Pct.
Age 55 to 64 3,307 94.9%177 5.1%
Age 65 to 74 1,159 90.3%124 9.7%
Age 75 to 84 435 71.2%176 28.8%
Age 85+105 38.2%170 61.8%
Total 5,006 88.6%647 11.4%
Total Age 65+1,699 78.3%470 21.7%
Total Age 75+540 60.9%346 39.1%
Twin Cities Metro Area
Age 65+75.8%24.2%
Age 75+68.6%31.4%
Sources: ESRI; Viewpoint Consulting Group, Inc.
Owners Renters
Median Average
Home Value Home Value
PMA $398,471 $462,515
Chanhassen $403,553 $478,032
Carver County $333,694 $387,344
Twin Cities Metro Area $280,679 $333,896
Sources: ESRI; Viewpoint Consulting Group, Inc.
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Senior Housing Supply
Senior Housing Defined
Senior housing encompasses a wide variety of product types. The properties that include the
lowest level of services are adult properties, which offer virtually no support services or health
care, but restrict tenancy to those age 55 and over. Adult properties can be rental or owner -
occupied (attached or detached townhomes, condominiums and cooperatives). Congregate
properties, better known as independent living, offer support services such as meals and
housekeeping. These services are either included in the rent or offered a-la-carte so that
residents can choose whether or not to pay for them. Independent living projects attract an
older and frailer senior population than adult properties (generally seniors age 75 and over).
The most service-intensive housing types are assisted living, memory care, and enhanced care
suites as they offer the highest level of services short of a nursing home. Some of the typical
services they provide are meals, housekeeping, linen changes, personal laundry, 24-hour
emergency response and a wide range of personal-care and therapeutic services. The meals
and services are built into the monthly fee, charged through a tiered service package or offered
a-la-carte.
Competitive Senior Housing Properties
Table 6 shows the inventory of senior housing properties that would provide competition to a
new rental development on the Site in Chanhassen. For each competitive property, Table 6
provides information on location, year built, total number of units, wheth er or not it is located
in the PMA, its distance from the Site, its estimated competitiveness and its total competitive
units. The competitive percentage is a measure of draw area overlap and is estimated based on
a property’s distance from the Site, its location within or near the PMA, its community
orientation (i.e., its estimated primary draw area), and unique characteristics of the property.
The following are key highlights about the competitive supply.
A total of six competitive properties were identified in and near the PMA. One is affordable
and the other five are market rate. Combined, the properties have a total of 358 units.
However, only two of the properties are located in the PMA (Centennial Hill and Powers
Ridge) and accounting for draw area overlap, the properties in Table 6 supply the PMA with
65 competitive affordable units and 106 competitive market rate units.
Powers Ridge Senior Living is the closest competitive property. It is adjacent to the subject
Site. It was built in 2017 and consists of 76 market rate units in a three-story building.
Because of its proximity to the Site, it is fully competitive. Powers Ridge is the only market
rate property in the PMA. The next closest competitive property is Sterling Ponds in Eden
Prairie. Sterling Ponds consists of two 26-year-old buildings – one being general-occupancy
and the other senior. While there are three properties in Shakopee, they are south of the
Minnesota River in Scott County, and would only be marginally competitive. Altogether, the
Senior Housing Demand Assessment: Chanhassen, MN
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properties in Table 6 supply the Site with 106 competitive units, not including some
competitive overlap with Centennial Hill, a property affordable at 100% AMI.
Table 6
Competitive Senior Housing Supply
Primary Market Area
July 2020
Centennial Hill is the only competitive affordable property located in the PMA. Centennial
Hill is a 65-unit building by the Carver County CDA that has income-limits set at 100% of
AMI. Because of the high income-limit, Centennial Hill would have some market overlap
with a market rate property. Thus, later in this assessment, half the units are subtracted
from affordable demand calculations and half from market rate demand calculations.
There are other senior housing properties in and near the PMA. However , they are either
congregate/assisted living (e.g., Mission Hill and Summerwood of Chanhassen) or subsidized
e.g., The Landings, Talheim and Waybury in Chaska). These subsidized (income-qualified
residents pay 30% of their income for rent) and congregate/assisted living properties would
not be competitive with market rate age 55+ rental housing that does not offer services.
Miles Percent
Year Number In the from Comp-Compet-
Property Name Location Built of Units PMA Site etitive1 itive Units
Centennial Hill**Chanhassen 1996 65 Yes 1.3 100%65
Subtotal 65 65
Powers Ridge Senior Living Chanhassen 2017 76 Yes 0.1 100%76
Sterling Ponds Eden Prairie 1990 56 No 4.1 40%22
Northridge Court Shakopee 2004 58 No 5.7 5%3
River City Shakopee 1998 52 No 5.7 5%3
The Henderson Shakopee 2016 51 No 6.0 5%3
Subtotal 293 106
Source: Viewpoint Consulting Group, Inc.
Affordable*
Market Rate
1 Percent Competitive is estimated by the researcher based on the competitive property's distance from the subect Site, location
within/near the PMA, its community orientation, and specific characteristics unique to the property.
Affordable properties exclude subsidized properties in which very low income seniors pay 30% of their adjusted gross income
for rent.
Centennial Hill is a Carver County CDA property that is income restricted at 100% of AMI.
Senior Housing Demand Assessment: Chanhassen, MN
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Senior Rental Properties In and Near the PMA
Centennial Hill
Sterling Pond
Northridge Court
River City Apts.
The Henderson
Powers Ridge Senior Living
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Monthly Rents at Selected Competitive and Comparable Senior Rental Properties
Monthly rents at Powers Ridge, the only competitive property in the PMA, and two other
nearby properties are shown in Table 7. Monthly rents are shown by unit type, with unit
sizes also being presented. Powers Ridge has rents of $1,475 to $1,970 for one-bedroom
units and $1,985 to $2,200 for two-bedroom units. These rents include all utilities. Rents at
Powers Ridge are higher than at Sterling Ponds and The Henderson, the closest market rate
senior rental properties to the Site. At Sterling Ponds, which is a 1990 building, rents are
1,040 to $1,290 for one-bedroom units and $1,160 to $1,560 for two-bedroom units. The
Henderson is a property by the Scott County CDA. It opened in 2016 and has rents of $1,049
to $1,065 for one-bedroom units and $1,374 to $1,391 for two-bedroom units.
Table 7 includes three market rate, 55+ rental properties that are scheduled to open in the
Twin Cities Metro Area in 2020. They are The Elmwood in St. Louis Park, The Hendrickson in
Falcon Heights, and The Heights in Mendota Heights. They are similar in size, ranging from
63 units at The Heights to 70 units at The Elmwood. Rents at these three properties average
1,525 for one-bedroom units and $2,215 for two-bedroom units. Their rents include heat,
water/sewer, trash, and recycling.
Centennial Hill has income-limits at 100% of AMI, which is $70,000 for one-person and
80,000 for two-person households. Rents are $934 to $937 for one-bedroom units and
1,246 for two-bedroom units. Rents include water/sewer, trash, and heat.
The most recently developed senior rental properties affordable at 60% AMI in the Twin
Cities Metro Area have been by Dominium. Two of these properties, Grainwood in Prior
Lake and The Legends of Apple Valley, are shown in Table 7. Grainwood has 168 units that
opened in 2017. Rents are $1,097 for one-bedroom units, $1,313 for two-bedroom units,
and $1,532 for three-bedroom units. Legends of Apple Valley has 163 units that opened in
2018. Rents are $1,109 for one-bedroom units, $1,328 for two-bedroom units, and $1,530
for three-bedroom units. Rents at both these properties are the maximum allowable for
LIHTC properties at 60% AMI. Common areas at the property are numerous; they include a
community room, fitness center, craft/card room, underground parking , outdoor dog run,
theater room, and outdoor patio.
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Table 7
Summary of Monthly Rents
Competitive/Comparable Senior Housing Properties, July 2020
Income
Property Name Limit Comments
Powers Ridge Senior MR 1BR 709 -1,041 $1,475 -$1,970
1321 Lake Dr.1BR+D 1,065 -1,065 $1,985 -$1,985
Chanhassen 2BR 1,066 -1,175 $1,985 -$2,200
3BR 1,426 -1,453 $2,360 -$2,400
The Henderson MR Stu 551 -551 $794 -$812
500 Sommerville St. S 1BR 698 -698 $1,049 -$1,065
Shakopee 1BR+D 825 -902 $1,191 -$1,235
2BR 1,071 -1,071 $1,374 -$1,391
3BR 1,332 -1,332 $1,706 -$1,722
Sterling Ponds MR 1BR 634 -918 $1,040 -$1,290
16355 Wagner Way 1R+D 972 -972 $1,390 -$1,500
Eden Prairie 2BR 918 1,015 $1,160 $1,560
The Elmwood MR 1BR 765 -765 $1,699 -$1,749
5605 W 36th 1BR+D 1,015 -1,135 $1,899 -$2,049
St. Louis Park 2BR 980 -1,230 $2,049 -$2,649
2BR+D 1,230 -1,230 $2,699 -$2,749
The Hendrickson MR Stu 577 -701 $1,350 -$1,475
1750 Larpenteur Ave W 1BR 716 -728 $1,495 -$1,695
Falcon Heights 2BR 1,000 -1,255 $1,925 -$2,250
The Heights MR 1BR 772 -772 $1,375 -$1,450
2180 Hwy 13 1BR+D 876 -988 $1,570 -$1,695
Mendota Heights 2BR 1,131 -1,329 $2,160 -$2,250
Centennial Hill Aff 1BR 700 -750 $934 -$937
820 Santa Vera Dr.1BR/D 976 -984 $1,160 -$1,160
Chanhassen 2BR 1,060 -1,060 $1,246 -$1,246
Grainwood Aff 1BR 726 -868 $1,097 -$1,097
5119 Gateway St. SE 2BR 892 -1,187 $1,313 -$1,313
Prior Lake 3BR 1,259 -1,297 $1,532 -$1,532
The Legends of Apple Aff 1BR 680 -811 $1,109 -$1,109
Valley 2BR 944 -1,336 $1,328 -$1,328
14050 Granite Ave 3BR 1,339 -1,546 $1,530 -$1,530
Source: Costar; Viewpoint Consulting Group, Inc.
55+ 163 units opened in 2018. Income-
restricted at 60% AMI. Rent includes
w/s & trash. UG parking = $60/mo.
Age 55+. 76 units, opened in 2017. 3-
story building with UG parking. Rent
includes all utilities.
Age 55+. Rent includes heat,
water/sewer, & trash. UG parking
available for $40/month.
Comparable Market Rate Senior Rental Properties Elsewhere in the Metro Area
62+. 70 units expected to open in
August 2020. UG parking $80-$150/mo.
Rent includes water, heat, trash, sewer
and air conditioning.
Age 55+. 66 Opened in 2020. Rent
includes heat, water/sewer/ and trash.
UG parking = $65/mo.
Comparable Affordable Senior Rental Properties Elsewhere in the Metro Area
Age 55+. 63 units. Rent includes
water/sewer & trash. UG parking = $55.
55+ 168 units opened in 2017. Income-
restricted at 60% AMI. Rent includes
w/s & trash. UG parking = $60/mo.
Competitive Market Rate Senior Rental Properties In and Near the PMA
55+. Rent includes w/s, trash, & heat.
UG parking is available for $40/mo.
Unit Monthly
Unit Mix Size (sf)Rent
Age 55+. Rent includes heat,
water/sewer, & trash. UG parking
included.
Competitive Affordable Senior Rental Properties In and Near the PMA
Senior Housing Demand Assessment: Chanhassen, MN
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Monthly Rents at Newer General-Occupancy Apartments
Seniors seeking rental housing as an alternative to their existing owner-occupied homes
generally a single-family home) have choices of age-restricted properties, such as those listed
in Table 7, as well as general-occupancy apartments. Because some seniors may cross-shop the
two product types, rents were collected at newer general-occupancy apartments in and near
the PMA. Information on these general-occupancy apartments is presented in Table 8. The
following are key highlights.
The most recent general-occupancy apartment in Chanhassen is Venue, which opened in
2019 at 525 West 78th Street (about two miles from the subject Site). It is a six-story
building with 134 units and ground-floor retail. Venue has rents of $1,325 to $1,794 for one-
bedroom units and $1,710 to $1,850 for two-bedroom units. With Venue’s smaller unit
sizes, these rents equate to averages of $1.92 per square foot for one-bedroom units and
1.87 for two-bedroom units.
Before Venue, two of the more recent apartments in Chanhassen are Lake Susan
Apartments and Powers Ridge, both of which opened in 2001. Powers Ridge is a
condominium development adjacent to the Site that has units that are leased. Lake Susan
has 162 units in three three-story buildings. Rents range from $1,261 to $1,487 for one-
bedroom units to $1,608 to $1,627 for two-bedroom units. These rents equate to averages
of $1.48 per square foot for one-bedroom units and $1.42 for two-bedroom units.
Lake Jonathan Flats opened in Chaska in 2019 with 117 units. Units in the four-story building
have rents of $1,585 to $1,600 for one-bedroom units and $1,725 to $2,669 for two-
bedroom units. Overall, these rents average $2.02 per square foot for one-bedroom units
and $1.98 per square foot for two-bedroom units.
Victoria Flats is just west of Chaska, in Victoria. It opened in in 2018 with 81 units in a four-
story building. Rents are $1,427 to $1,513 for one-bedroom units and $2,182 to $2,616 for
two-bedroom units. Overall, these rents average $1.97 per square foot for one-bedroom
units and $2.07 per square foot for two-bedroom units.
Overall, the rents at these four general-occupancy rental buildings average $1,500 for one-
bedroom units and $2,000 for two-bedroom units. These are similar to rents at the three
comparable 55+ rental properties in Table 7, which averaged $1,525 for one-bedroom units
and $2,215 for two-bedroom units.
Planned and Proposed Senior Housing Developments
No new planned or proposed senior rental housing developments that may increase the future
competitive supply in the PMA were identified. Thus, future demand calculations presented
later in this assessment account for just the existing competitive supply identified in Table 6.
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Table 8
Summary of Monthly Rents
Selected General-Occupancy Apartments In the PMA
July 2020
Year No. of Average
Built Units Type Rent / Sq. Ft.
Lake Jonathan Flats 2019 117 Stu 516 -559 $1,165 -$1,400 $2.39
3000 N Chestnut St.1BR 768 -811 $1,585 -$1,600 $2.02
Chaska 1BR+D 950 -993 $1,865 -$2,055 $2.02
2BR 951 -1,267 $1,725 -$2,669 $1.98
Lake Susan Apts 2001 162 1BR 821 -1,031 $1,261 -$1,487 $1.48
8260 Market Blvd 2BR 1,125 -1,153 $1,608 -$1,627 $1.42
Chanhassen 3BR 1,344 -1,344 $1,850 -$1,850 $1.38
Venue 2019 134 Stu 447 -447 $1,128 -$1,128 $2.52
525 W 78th St.1BR 646 -982 $1,325 -$1,794 $1.92
Chanhassen 2BR 894 -1,009 $1,710 -$1,850 $1.87
3BR 1,357 -1,357 $2,515 -$2,515 $1.85
Victoria Flats 2018 81 Stu 572 -572 $1,310 -$1,310 $2.29
1699 Steiger Lake Ln 1BR 714 -777 $1,427 -$1,513 $1.97
Victoria 1BR+D 968 -980 $1,822 -$2,000 $1.96
2BR 1,099 -1,216 $2,182 -$2,616 $2.07
Sources: Costar; Viewpoint Consulting Group, Inc.
Notes: Residents pay all utilities
Notes: Residents pay all utilities
Notes: Residents pay all utilities
Unit Types, Sizes, and Rent ------
Sq. Ft.Monthly Rent
Notes: Residents pay all utilities
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Senior (Age 55+) Rental Demand Calculations
Tables 9 and 10 provide demand calculations for the number of senior rental housing units that
can be supported in the PMA in 2020 and 2025, along with an estimate on the number of units
that can be captured the Site. Table 9 shows demand for affordable senior rental housing while
Table 10 shows demand for market rate housing.
Affordable Demand (at 60% AMI)
Table 9 provides an initial demand calculation of the number of affordable senior rental units
that can be supported on the Site in Chanhassen in 2020 and 2025. As shown in Table 9, unmet
demand for affordable senior rental housing on a site is calculated for 98 units in 2020. Demand
is projected to increase to 135 units in 2025 as the overall 65+ population is projected to grow
by 42.9% over the five-year period. The following points summarize the demand methodology.
The target market for affordable senior rental housing is senior households age 55+ with
incomes that would qualify them for the LIHTC program at 60% AMI. These are about incomes
of $32,000 to $49,000, plus homeowners with incomes between $20,000 and $32,000. Very
low-income seniors (<$20,000) are excluded as they generally would not be able to afford
contract rents at affordable properties. Very low-income seniors are a market for deep
subsidized housing where they pay 30% of their income for rent. Seniors in the qualifying band
would be under the maximum income limit yet could afford gross rents allowable at 60% AMI
1,164 for one-bedroom units and $1,396 for two-bedroom units).
A capture rate – or “penetration rate” – is applied to the income-qualified base of older adults
and younger and older seniors. The penetration rates are based on those being achieved in
other markets within the Twin Cities Metro Area. The estimated achievable penetration rates of
affordable senior rental housing among income-qualified households are 1.5% for 55-to 64-
year-olds, 15.0% for 65-to-74-year-olds, and 30.0% for seniors ages 75 and over. Applying the
income-qualifying and capture rate percentages to the households in each age group equates
to total potential demand for 130 units from seniors living in the PMA in 2020. It is estimated
that seniors currently residing outside the PMA will generate 33% of the total demand for
affordable senior rental housing. This demand from outside the PMA increases total demand to
194 units in 2020, increasing to 256 units in 2025.
The number of existing competitive units is subtracted from the total demand. There is one
affordable property in the PMA – Centennial Hill. However, it is affordable at 100% AMI, and
thus has market overlap with market rate housing. Half of Centennial Hill’s 65 units, minus a 5%
vacancy factor, are subtracted from the affordable demand calculations in Table 9 (the other
half are subtracted from the market rate calculations in Table 10). Subtracting these units
results in unmet demand for 163 units in the PMA in 2020. No planned or proposed affordable
senior rental developments that would increase the PMA supply were identified. Subtracting
existing units from 2025 demand results in unmet demand potential for 226 units in 2025.
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Table 9
Affordable Senior Rental Housing Demand Calculation (<60% of AMI)
Primary Market Area
2020 and 2025
No single location or development can capture all the demand in a draw area. Based on the
geographic size of the PMA and the Site’s location within the PMA, plus the overall limited
choices of affordable housing, it is estimated that the Site can capture 60% of the unmet
demand potential. This results in unmet demand on a site for 98 affordable senior rental units
in 2020 increasing to 135 units in 2025.
2020 2025
A 55 to 64 Households in the PMA 5,244 4,741
B Percent income-qualified*6%6%
C Potential capture rate of senior rental housing 1.5%1.5%
D Potential demand from 55-64 households in the PMA (A x B x C)5 4
E 65 to 74 Households in the PMA 2,589 3,469
F Percent income-qualified*13%12%
G Potential capture rate of senior rental housing 15.0%15.0%
H Potential demand from 65-74 households in the PMA (E x F x G)50 64
I 75+ Households in the PMA 1,179 1,652
J Percent income-qualified*21%21%
K Potential capture rate of senior rental housing 30.0%30.0%
L Potential demand from75+ households in the PMA (I x J x K)75 104
M Total potential market in the PMA (D + H + L)130 172
N Estimated percent of demand from outside the PMA 33%33%
O Total demand for senior rental units in the PMA (M /(1- N))194 256
P Competitive senior rental housing supply 31 31
Q Unmet senior rental demand in the PMA (O - P)163 226
R Estimated percent of unmet demand capturable by subject Site 60%60%
S Senior rental housing demand on the Site (Q x R)98 135
Source: Viewpoint Consulting Group, Inc.
Income-qualified households are those with incomes between $31,000 and $48,000, plus homeowners with
incomes between $20,000 and $31,000.
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July 9, 2020
Market Rate Demand
Table 10 provides a demand calculation of the number of market rate senior rental units that
can be supported on the Site in Chanhassen in 2020 and 2025. As shown in Table 10, demand is
calculated for 93 units on the Site in 2025. The following points summarize the demand
methodology.
The target market for new market rate adult rental housing is senior households age 55+ with
incomes above $50,000, plus homeowners with incomes between $35,000 and $50,000. By
allocating 40% of their gross monthly income for rent, senior households with incomes of
50,000 could afford units with rents of about $1,600. A capture rate – or “penetration rate” –
is applied to the income-qualified base of older adults and younger and older seniors. The
penetration rates are based on the current capture rates being achieved in other markets of the
Twin Cities Metro Area. The estimated penetration rates of market rate senior rental housing
that can be achieved in the PMA are 0.5% for 55-to-64-year-olds, 4.0% for 65-to-74-year-olds,
and 10.0% for seniors ages 75 and over.
Applying the income-qualifying and capture rate percentages to the households in each age
group equates to total potential demand for 184 units from seniors living in the PMA in 2020.
Based on the characteristics of the PMA, it is estimated that seniors currently residing outside
the PMA will generate 25% of the total demand. This demand from outside the PMA increases
total demand to 245 units in 2020, increasing to 318 units in 2025.
The number of existing market rate units (minus a 5% vacancy factor) is subtracted from the
total demand. There is one existing market rate property in the PMA (Powers Ridge Senior
Living), and four outside the PMA that would be partially competitive. In addition, as discussed
in the demand calculation for affordable senior rental housing, one property affordable at 100%
AMI would be partially competitive due to market overlap (Centennial Hill). Half its units are
subtracted from the demand calculations in Table 10. After subtracting existing competitive
units (minus a 5% vacancy factor) from total demand, unmet demand is calculated for 113 units
in the PMA in 2020. No pending developments were identified that would increase the PMA
competitive supply. Subtracting existing units from 2025 demand results in unmet demand
potential for 186 units.
Again, no single site or development can capture all the demand in a draw area. Based on the
geographic size of the PMA and the level of market rate senior rental options, it is estimated
that the Site can capture 50% of the unmet market rate demand potential. This results in
demand on a site for 57 market rate senior rental units in 2020, increasing to 93 units in 2025.
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Table 10
Market Rate Senior Rental Housing Demand Calculation
Primary Market Area
2020 and 2025
2020 2025
A Age 55 to 64 Households in the PMA 5,244 4,741
B Percent income-qualified*91%91%
C Potential capture rate of senior rental housing 0.5%0.5%
D Potential demand from 55-64 households in the PMA (A x B x C)24 22
E Age 65 to 74 Households in the PMA 2,589 3,469
F Percent income-qualified*85%85%
G Potential capture rate of senior rental housing 4.0%4.0%
H Potential demand from 65-74 households in the PMA (E x F x G)88 117
I Age 75+ Households in the PMA 1,179 1,652
J Percent income-qualified*61%61%
K Potential capture rate of senior rental housing 10.0%10.0%
L Potential demand from75+ households in the PMA (I x J x K)72 100
M Total potential market in the PMA (D + H + L)184 239
N Estimated percent of demand from outside the PMA 25%25%
O Total demand for senior rental units in the PMA (M /(1- N))245 318
P Competitive senior rental housing supply**132 132
Q Unmet senior rental demand in the PMA (O - P)113 186
R Estimated percent of unmet demand capturable by Site 50%50%
S Senior rental housing demand at Site(s) (Q x R)57 93
Competitive units minus a 5% vacancy factor
Source: Viewpoint Consulting Group, Inc.
Income-qualified households are those with incomes above $50,000 plus homeowners with incomes between
35,000 and $50,000.
Senior Housing Demand Assessment: Chanhassen, MN
Viewpoint Consulting Group, Inc. Page 20
July 9, 2020
Senior (Age 55+) Rental Recommendation
Based on the demographic analysis and supply of competitive properties, there is demand for
up to 135 affordable units and 93 market rate units on the Site by 2025. Combined, this is 199
units, which equates to 4.5% of the projected total of 5,121 age 65+ households in the PMA in
2025, and 55% of the unmet demand in the PMA (412 affordable and market rate units).
A new senior rental development should contain large sized units with high -end finishes along
with common area amenities such as a community room, activity room, fitness room, and
underground parking. Unit features should include washer/dryers, walk-in closets, kitchen
islands, balconies, and contemporary finishes. A new development with these features and the
rents as recommended in Table 11 would be positioned as the market leader in the Chanhassen
area.
As shown in Table 11, we recommend market rate rents ranging from $1,500 to $1,850 for one-
bedroom units to $2,400 to $2,500 for three-bedroom units. With the recommended unit sizes,
these rents equate to a building with an average rent of approximately $1.95 per square foot,
depending on the exact unit mix. If affordable at 60% AMI, we recommend maximum allowable
gross rents. Since residents would pay electricity, the recommended affordable rents in Table
11 are adjusted for a utility allowance.
Table 11
Rent and Unit Size Recommendations
Proposed Chanhassen Senior (55+) Rental Development
July 2020
As noted in the introduction of this report, the purpose of this initial assessment is to broadly
assess the depth of demand for senior housing in the local area to determine if potential exists
to support a new development. Thus, the findings are preliminary and should be viewed in that
light. A full market feasibility study would more closely examine factors such as the desirability
of the subject site and the performance of competitive buildin gs, both of which may impact
demand.
Avg. M. R.
Unit Type Rent/Sq. Ft.
1BR 725 -900 $1,085 -$1,085 $1,500 -$1,850 $2.06
1BR+D 925 -1,025 $1,850 -$2,050 $2.00
2BR 1,050 -1,150 $1,295 -$1,295 $2,050 -$2,250 $1.95
3BR 1,375 -1,425 $1,485 -$1,485 $2,400 -$2,500 $1.75
Source: Viewpoint Consulting Group, Inc.
Aff. at 60% AMISq. Ft.Market Rate
Recommended Rents --
Recommended rents are quoted in 2020 dollars and include utilities except electricity, activities, and
common spaces.