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HomeMy WebLinkAboutHEDRA 08-12-10 PacketHASTINGS ECONOMIC DEVELOPMENT & REDEVELOPMENT AUTHORITY . Agenda for August 12, 2010, 6:00 pm City Hall CITY COUNCIL CHAMBER I. Quorum II. Minutes A.July 8, 2010 Workshop B.July 15, 2010 Special Meeting C.July 28, 2010 Special Meeting III. Bills IV. Business A.Authorize Signature: Development Agreement - TIF District No. 5. B.Authorization: Pay As You Go Note – TIF District No. 5 C.Review Guardian Angels Term Note D.2010 HEDRA Budget. V. Reports and Information A.Red Rock Station Area Study B.Downtown Hardwire Alarm Update V. Adjourn Next Meeting: September 9, 2010 HEDRA AGENDA NOTES FOR AUGUST 12, 2010 MINUTES Please see attached HEDRA Meeting minutes from July 8, 2010 workshop, July 15, 2010 special meeting, and July xx, 2010 special meeting for your review and approval. BILLS July Bills Bradley & Deike $928.00 Hudson Acquisition $48.00 TIF District No. 5 - Napa Ehlers & Associates $2,375.00 Hudson Acquisition $6,000.00 TIF District No. 5 – Napa Rivertown Tree Services $1,500.00 Installation of 3 Trees Please see attached general ledger detail for July. BUSINESS A.Authorize Signature: Development Agreement – TIF District No. 5 – Napa. Jonathan North of Ehlers and Associates will present the TIF Development agreement between HEDRA and Linn Companies. The agreement memorializes the terms, conditions, and procedures for issuing the district and issuing the TIF Note. ACTION – Authorize Signature of attached Development Agreement. B.Guardian Angels Term Note In 2003, the HRA issued a term note to Sherman Associates, Inc. to complete rehabilitation work on the former Guardian Angels Church. The original amount of the note was $150,000. With interest, the note is not estimated to be approximately $192,000. The HRA has amended the note to extend the payable date as follows: Original Agreement – 6/30/05 st 1 Amendment – 6/30/07 nd 2 Amendment – 6/30/08 rd 3 Amendment – 6/30/10 City staff has been in contact Sherman to collect payment. It appears Sherman will be seeking another two year extension to the payable date. Further information will be presented at the meeting. ACTION – Discuss and direct action on the attached GA Term Note C. 2011 HEDRA Budget Please see the attached budget summary for 2011. ACTION – Adopt 2011 HEDRA Budget. REPORTS A. Red Rock Station Area Study. The commuter parking lot project will not be funded through MN Dot Chapter 152 Funding; however the Red Rock Corridor Commission has authorized $600,000 towards construction of the lot.Our construction estimate was just over $600,000. The second round of Red Rock Station Area visioning sessions took place on July th 14. About 5-6 people were in attendance. The first open house is scheduled for th August 17 from 7:00-8:30 in the City Council Chambers. Red Rock will also nd make a presentation to the City Council at their August 2 meeting. B.Downtown Hard Wire Alarm Systems City Staff has completed a draft of the RFP for Downtown Hard Wire Alarm Systems and has submitted it to the Dakota CDA for compliance with Community Development Block Grant rules. ATTACHMENTS HEDRA Minutes – July 8, 2010 Workshop ¼ HEDRA Minutes – July 15, 2010 Special Meeting ¼ HEDRA Minutes – July xx, 2010 Special Meeting ¼ July General Ledger Statement ¼ Development Agreement – TIF District No. 5 – Napa ¼ 2011 HEDRA Budget ¼ Hastings Economic Development and Redevelopment Authority 6:00 p.m. Hastings City Hall Minutes of July 8, 2010 HEDRA Commissioners Dennis Peine, Bob Hollenbeck, and Danna Elling Schultz present Commissioner Pam Holzem, Ron Toppin, Kurt Keena and Anthony Alongi absent Others present Dan Fluegel, City Attorney; Jessica Cook, Ehlers and Associates; Jonathan North, Ehlers and Associates. Staff present: Community Development Director John Hinzman, City Administrator David Osberg, and Community Relations Specialist Shannon Rausch, A;6:15 QUORUM WAS NOT PRESENT A WORK SESSION WAS CALLED TO ORDER AT PM I.M INUTES No action was taken on this item because a quorum wasn’t present III.B ILLS No action was taken on this item because a quorum wasn’t present IV.B USINESS No business was conducted because a quorum wasn’t present A. Resolution: Authorize Interfund Loan – TIF district No. 5 – postponed discussion due to a lack of quorum B. Resolution: Adopt Modification to Redevelopment Plan/Establish TIF District No. 5 - Napa– postponed discussion due to a lack of quorum C. Resolution: Authorize Certain Actions Related to Acquisition - Hudson Manufacturing. – postponed discussion due to a lack of quorum D. Authorize Purchase Agreement - Mann Property City staff is negotiating purchase of the Dennis Mann Property at 23xx Vermillion Street. We have learned that the other bidder of the property is no longer seeking acquisition. Mann has countered our initial offer of $226,000 ($6.25 per sf) with $275,000 ($7.60 per sf). Staff has countered with $230,000. Commission agreed with Staff’s assessment that the purchase of the Dennis Mann property should not exceed $230,000. No official action was taken at this time other that to provide and update since a quorum wasn’t present. 1 Minutes – Hastings EDRA – 7/8/10 – Work Session Page E. Approve Request for Qualifications - Marketing Community Relations Specialist Shannon Rausch highlighted the changes made to the RFQ following May and June’s meeting. The Commission had no further comments and were pleased with the changes that had been made. Staff will wait until the next regular meeting to ask for approval to solicit qualifications when a quorum is present. V.R: EPORTS A. Red Rock Station Area Study The second round of Red Rock Station Area visioning sessions will take place July 14. The first open house is scheduled for August 17th. It does appear that one way or another the Park and Ride Parking lot here in Hastings will be built/funded this summer. It will either be paid for through a grant from MN/DOT, or by the Red Rock Commission. Currently they are proposing a surface parking lot on Block 16 next to the current depot. Eventually they may build a ramp with commercial space on the ground level and parking on the upper two levels on block one (across from graphic design on the north side of Second Street.) At this time they are not looking at using the existing depot structure due to too many complications. B. Purchase Agreement for Family Video th The City Council held a public hearing on May 17 to consider sale of a portion of land located between Walgreens and 1101 Vermillion Street. Action has been delayed pending further title examination issues, it may be before the Council on June 21st. Family Video is interested in purchasing the existing home at 1101 Vermilion Street (located directly south of Walgreens) and construct a 4,000 to 6,000 sf video rental store on the site. C. Downtown Hardwire Alarm Systems City Staff met with the Downtown Business Owners Association at their May 20th meeting. Over ten business owners as well as a handful of alarm system contractors were on hand. Business Owners were agreeable to the City drafting a Request for Proposals to seek a single contractor to complete work on all buildings. The 2010 CDBG budget allocates additional funding that may pay most (if not all) of the cost of alarm system installation. We are seeking a better estimate on the total cost and anticipate cost savings with a single contract. D. Commercial and Industrial Vacancy Update A: DJOURNMENT Work Session was adjourned at 6:35 p.m. 2 Minutes – Hastings EDRA – 7/8/10 – Work Session Page Thursday, August 12, 2010 The next regular meeting is scheduled for at 6:00pm in the Council Thursday, July 15, 2010 Chambers. A Special HEDRA Meeting has been called for at 6:00pm in the Council Chambers. Shannon M. Rausch, HEDRA Secretary 3 Minutes – Hastings EDRA – 7/8/10 – Work Session Page Hastings Economic Development and Redevelopment Authority 6:00 p.m. Hastings City Hall SPECIAL MEETING Minutes of July 15, 2010 HEDRA Commissioners Pam Holzem, Danna Elling Schultz, Ron Toppin, Bob Hollenbeck, Kurt Keena and Anthony Alongi present Commissioner Dennis Peine absent Others present Dan Fluegel, City Attorney; Jessica Cook, Ehlers and Associates; Staff present: Community Development Director John Hinzman and Community Relations Specialist Shannon Rausch, Q: UORUM A was establish and the meeting was called to order at 6pm with five members present. I.M INUTES A.Commissioner Toppin motioned to approve the minutes form the May 13, 2010 Regular Meeting, Commissioner Hollenbeck seconded the motion. Motion approved 5-0 B.Commissioner Toppin motioned to approve the minutes form the June 10, 2010 Workshop, Commissioner Holzem seconded the motion. Motion approved 5-0 III.B ILLS Commissioner Hollenbeck moved to pay the bills. Commissioner Toppin seconded the motion. Motion Passed 5-0 IV.B USINESS A. Resolution: Authorize Interfund Loan – TIF district No. 5 Jessica Cook of Ehlers and Associates presented a resolution authorizing HEDRA to provide an interfund loan of up to $25,000 to pay for certain qualified costs associated with the TIF Plan consisting of land/building acquisition, demolition, site improvements/preparation, public utilities, streets and sidewalks, interest and administrative costs. This amount 1 Minutes – Hastings EDRA – 7/15/10 – Special Meeting Page proposed, ($25,000) is expected to be higher than necessary, but is set so that is should cover any unexpected expenses. HEDRA would reimburse itself with future TIF proceeds. Commissioner Holzem motioned to adopt the resolution; Commissioner Elling Schultz seconded the motion. Motion passed 5 – 0 *Commissioner Alongi Arrived, 6:10pm B. Resolution: Adopt Modification to Redevelopment Plan/Establish TIF District No. 5 – Napa Jessica Cook of Ehlers and Associates presented a resolution adopting certain modifications to the Vermillion Street Redevelopment Plan, and establishing TIF District No. 5. Commissioner Hollenbeck verified that the TIF district could be modified at a future date if necessary, which Ms. Cook confirmed as long as it is done within the next 5 years. Commissioner Hollenbeck motioned to adopt the resolution; Commissioner Toppin seconded the motion. Motion passed 6 – 0 C. Resolution: Authorize Certain Actions Related to Acquisition - Hudson Manufacturing. A Special City Council Meeting on June 21, 2010, authorization was given for City Staff to continue to negotiate a purchase agreement and relocation of Hudson to the former Intek building at 800 10th Street E. There appears to be agreement on the acquisition price and terms; however disclosure of recent environmental documents warrant further investigation. Prior to any finalization of the purchase agreement, certain environmental, financial, and legal . due diligence items would need to be conductedThe City is asking for three months to conduct the environmental studies necessary to know exactly what they will be taking on. Hudson has indicated that the three month waiting period would mean they would be “closing” on the purchase at their busiest time of year, and there for are not thrilled by the time frame. Commissioner Toppin motioned to adopt the resolution; Commissioner Hollenbeck seconded the motion. Motion passed 6 – 0 D. Authorize Purchase Agreement - Mann Property An update was provided to the Commissioners that Mr. Mann’s representative at CB Richard Ellis has countered our last offer with an offer of $260,000, and is looking for HEDRA/City to bridge the gap between $260,000 and $230,000 for acquisition. Commissioner Holzem motion to cap HEDRA’s purchase price at $230,000 and if that is accepted then authorize staff to continue with any due diligence necessary. Commissioner Hollenbeck seconded the motion. Motion passed 6-0 2 Minutes – Hastings EDRA – 7/15/10 – Special Meeting Page E. Approve Request for Qualifications - Marketing Community Relations Specialist Shannon Rausch highlighted the changes made to the RFQ following the May and June’s meetings. Commissioners had no further comments and were pleased with the changes that had been made. Commissioner Holzem motioned to approve the RFQ and instructed staff to send it out for responses. Elling Schultz seconded the motion. Motion passes 6-0 A: DJOURNMENT Meeting was adjourned at 6:35 p.m. Thursday, August 12, 2010 Next meeting is scheduled for at 6:00pm in the Council Chambers. Shannon M. Rausch, HEDRA Secretary 3 Minutes – Hastings EDRA – 7/15/10 – Special Meeting Page Hastings Economic Development and Redevelopment Authority 6:00 p.m. Hastings City Hall SPECIAL MEETING Minutes of July 28, 2010 HEDRA Commissioners Dennis Peine, Bob Hollenbeck, Pam Holzem, Ron Toppin, and Kurt Keena were present Commissioner Danna Elling Schultz and Tony Alongi were absent Staff present: David Osberg, City Administrator, and Dan Fluegel, City Attorney; I.Q: UORUM A was establish and the meeting was called to order at 6pm with five members present. II.B USINESS A. Authorize Signature: Purchase Agreement – Hudson Manufacturing. City Administrator, Dave Osberg introduced the Purchas Agreement with City Attorney, Dan Fluegel, explaining some of the details, including the fact that Hudson Manufacturing has agreed to a later closing date to allow the HEDRA to conduct its environmental due diligence for the site. Also, both Hudson and the City have agreed not to pursue tax abatement for the site, but to add the value of the abatement (around $25,000) to the purchase price of the property. Hudson would likely delay relocating until after their peak production season this fall per the terms of the Post-Closing Occupancy Agreement. The City Council would also consider an agreement to waive certain development fees. Moved by Commissioner Toppin and seconded by Bob Hollenbeck to approve the Purchase Agreement with Hudson Manufacturing and outlined conditions for use of the building by Hudson until they move to the Intek facility. Motion passes 5-0 A: DJOURNMENT Meeting was adjourned at 6:15 p.m. Thursday, August 12, 2010 Next meeting is scheduled for at 6:00pm in the Council Chambers. Shannon M. Rausch, HEDRA Secretary 1 Minutes – Hastings EDRA – 7/28/10 – Special Meeting Page Memo To: John Hinzman, Community Development Director From: Jessica Cook and Jonathan North Cc: Dave Osberg, City Administrator Char Stark, Finance Director Date: July 27, 2010 Subject: TIF Assistance for the NAPA Auto Parts Store Linn Investment Properties is proposing to construct a NAPA Auto Parts at 1501 Vermillion Street. Currently this property has a market value of $239,900 and currently pays approximately $3,000 annually in taxes. Upon completion, the Napa Auto Parts when fully constructed is expected to have a market value of $1,300,000 and pay over $43,000 annually in taxes (including approximately $13,000 in tax increment). Linn Investment Properties (the “Developer”) has requested $128,000 of financial assistance from the Hastings Economic Development and Redevelopment Authority (HEDRA) in the form of Pay-As You-Go (PAYGO) tax increment over a sixteen (16) year period, to assist in offsetting some of the high redevelopment costs related to land acquisition, demolition, soil corrections, and site preparation associated with removing the old Jiffy gas station and house that were on the site. Ehlers has completed a review of the Developer’s proforma to determine how much assistance, if any, is warranted for the redevelopment. We have reviewed the project from the perspective of general industry standards for construction, purchase price of land, reasonable developer fees, and return on investment. We have also reviewed completed environmental reports, reports on soils conditions, prior marketing efforts, and other documentation provided by the developer. Project and Proforma Analysis As we complete this analysis we first look to determine whether the costs are appropriate and reasonable. We review the fees and return on investment that the private developer/owner will receive from the project over the long-term, and we analyze whether the project can support private financing and equity without tax increment assistance. Based on the analysis, the developers request for $128,000 in tax increment financing (TIF) appears justified and warranted. Specifically, the need for assistance can be supported by looking at three key elements of the project: Land costs, developer profit, and financing gap. 3060 Centre Pointe Drive Roseville, MN 55113-1105 Phone: 651-697-8545 Fax: 651-697-8555 jnorth@ehlers-inc.com 1.Land Costs. Land assembly for the project is $562,530 ($528,170 for land acquisition and $34,360 for demolition and environmental testing), which equates to $17.40 per square foot. This amount exceeds the range of $8 to $10 per/square foot for vacant, buildable sites for similar types of development elsewhere in the market area, which would result in land costs of approximately $300,000. 2.Developer Profit. The construction budget includes a developer fee of $50,000, or 4% of the total development costs. The typical range of developer fees for a commercial redevelopment project would be in the range of 7% to 10% of development costs. Based on our analysis, and even with the tax increment assistance, we expect the cash-on-cash return on investment to be less than 5%. By comparison, most real estate equity investors seek returns of 9% or more. 3.Financing Gap. A financing gap is the difference between the equity plus the mortgage financing the developer can obtain, and the costs of the project. First we determine the maximum mortgage amount by evaluating the income potential of the project. The developer intends to own and operate the NAPA store. Nonetheless, if he were to rent the building to a NAPA operator, he would receive $12-$15 per square foot. This rent would generate between $100,000 and $130,000 of annual revenue. The chart below shows the maximum mortgage amount this revenue could support, assuming a 20-year term at 5.75% interest rate. (The developer has a 5.75% interest rate locked for the first five years, but it will be re-set every five years.) Range LowHigh Annual Revenue100,000$ 130,000$ Less ROI for Equity Investors(35,480)$ (35,480)$ Available for Debt Service64,520$ 94,520$ Maximum Mortgage Supported755,300$ 1,106,500$ The total project costs, including redevelopment costs, are $1,774,000. Assuming the developer puts in 20% equity, or $355,480 he would need a return on equity of about 10%, or $35,000 per year. Using the above assumptions, which are consistent with current market conditions and the higher mortgage amount, the financing gap for this project is over $300,000. Total Project Costs$1,774,000 Less Developer Equity($354,800.0) Less Mortgage Financing(1,106,500)$ Financing Gap$312,700.0 To summarize, the developer’s request for $128,000 in tax increment financing (TIF) appears justified and warranted. Terms of Assistance The developer has requested up to $128,000 in TIF assistance in the form of a PAYGO note. This form of financing is the least risky for the HEDRA because no bonds are issued. Essentially, the HEDRA provides a Note to the developer promising to pay the developer a portion of the increment as it is received from the County. The developer uses the increment to reimburse himself for expenditures made to complete the project. It is proposed that 90% of the increment, up to a maximum amount of $128,000, be paid to the Developer. The remaining 10% would be available for HEDRA’s administrative costs, including the preparing of the TIF Plan and the Development Agreement. TIF is limited to eligible expenditures such as land acquisition, demolition, and site preparation. The developer will have to submit invoices showing his actual costs for these items prior to receiving the first TIF payment. The HEDRA’s attorney has drafted a development agreement and TIF Note for the Board’s consideration. Key Provisions of the Development Agreement 1.The HEDRA’s obligation to repay the developer is limited to 90% of the tax increment generated by the project. The note is not a general obligation of the HEDRA or the City of Hastings. 2.The HEDRA agrees that it will reimburse the Developer for up to $128,000 of site improvements and preparation, including tank removal, asbestos abatement, soil correction, and other costs that may be determined to be eligible. 3.The HEDRA’s reimbursement of the developer for these costs shall be accomplished through the issuance and delivery to the developer of a Tax Increment Note. 4.At its option, the HEDRA shall approve the construction plans, and any changes to those plans. 5.The Developer may not sell the property or the Note to another party without the prior written approval of the HEDRA. 6.Who pays the costs? MEMORANDUM TO: Charlene Stark FROM: Mary Ippel DATE: August 3, 2010 RE: REIMBURSEMENT RESOLUTION Enclosed is a resolution for consideration by the Board of Commissioners of the Hastings Economic Development and Redevelopment Authority at the board meeting to be held on August 12, 2010. The Resolution authorizes the Treasurer of the Board to make periodic Declarations of intent to reimburse expenditures from Bonds (the form is in Exhibit A to the Resolution). The general requirements of the tax regulations relating to reimbursing expenditures are as follows: 1. the Declaration must be made no later than sixty days after payment of project costs; 2. the Declaration must contain (a) a reasonable description of the project and (b) the maximum principal amount of bonds expected to be issued for the project. You will need to fill in a description for the project in paragraph 2 and a dollar amount in paragraph 3 on Exhibit A; and 3. the bonds must be issued within the later of (a) 18 months after the payment, or (b) the date the project is placed in service, but not more than three years after the payment. A Declaration is not required for preliminary and engineering costs as long as those costs do not exceed twenty percent of the bonds. If you have any questions, please call me. 2621577v1 RESOLUTION NO. ________ RESOLUTION ESTABLISHING PROCEDURES RELATING TO COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE BE IT RESOLVED by the Board of Commissioners of the Hastings Economic Development and Redevelopment Authority of the City of Hastings, Minnesota ("the Authority"), as follows: 1.Recitals. (a)The Internal Revenue Service has issued Treasury Regulations, Section 1.150-2 (as the same may be amended or supplemented, the "Regulations"), dealing with "reimbursement bond" proceeds, being proceeds of bonds used to reimburse the Authority for any project expenditure paid by the Authority prior to the time of the issuance of those bonds. (b)The Regulations generally require that the Authority (as the issuer of or the primary obligor under the bonds) make a declaration of intent to reimburse itself for such prior expenditures out of the proceeds of subsequently issued bonds, that such declaration be made not later than 60 days after the expenditure is actually paid, and that the bonding occur and the written reimbursement allocation be made from the proceeds of such bonds within 18 months after the later of (1) the date of payment of the expenditure or (2) the date the project is placed in service (but in no event more than 3 years after actual payment). (c)The Authority heretofore implemented procedures for compliance with the predecessor versions of the Regulations and desires to amend and supplement those procedures to ensure compliance with the Regulations. (d)The Authority's bond counsel has advised the Authority that the Regulations do not apply, and hence the provisions of this Resolution are intended to have no application, to payments of Authority project costs first made by the Authority out of the proceeds of bonds issued prior to the date of such payments. 2.Official Intent Declaration. The Regulations, in the situations in which they apply, require the Authority to have declared an official intent (the "Declaration") to reimburse itself for previously paid project expenditures out of the proceeds of subsequently issued bonds. The Board of Commissioners hereby authorizes the Treasurer to make the Authority's Declarations or to delegate from time to time that responsibility to other appropriate Authority employees. Each Declaration shall comply with the requirements of the Regulations, including without limitation the following: (a)Each Declaration shall be made not later than 60 days after payment of the applicable project cost and shall state that the Authority reasonably expects to reimburse itself for the expenditure out of the proceeds of a bond issue or similar borrowing. Each Declaration may be made substantially in the form of the Exhibit A which is attached to 2621526v1 and made a part of this Resolution, or in any other format which may at the time comply with the Regulations. (b)Each Declaration shall (1) contain a reasonably accurate description of the "project," as defined in the Regulations (which may include the property or program to be financed, as applicable), to which the expenditure relates and (2) state the maximum principal amount of bonding expected to be issued for that project. (c)Care shall be taken so that the Authority, or its authorized representatives under this Resolution, not make Declarations in cases where the Authority doesn't reasonably expect that reimbursement bonds will be issued to finance the subject project costs, and the Authority officials are hereby authorized to consult with bond counsel to the Authority concerning the requirements of the Regulations and their application in particular circumstances. (d)The Board of Commissioners shall be advised from time to time on the desirability and timing of the issuance of reimbursement bonds relating to project expenditures for which the Authority has made Declarations. 3.Reimbursement Allocations. If the Authority is acting as the issuer of the reimbursement bonds, the designated Authority officials shall also be responsible for making the "reimbursement allocations" described in the Regulations, being generally written allocations that evidence the Authority's use of the applicable bond proceeds to reimburse the original expenditures. 4.Effect. This Resolution shall amend and supplement all prior resolutions and/or procedures adopted by the Authority for compliance with the Regulations (or their predecessor versions), and, henceforth, in the event of any inconsistency, the provisions of this Resolution shall apply and govern. Adopted on August 12th, 2010, by the Board of Commissioners of the Hastings Economic Development and Redevelopment Authority of the City of Hastings, Minnesota. 2 2621526v1 CERTIFICATION The undersigned, being the duly qualified and acting President of the Hastings Economic Development and Redevelopment Authority of the City of Hastings, Minnesota, hereby certifies the following: The foregoing is true and correct copy of a Resolution on file and of official, publicly available record in the offices of the Authority, which Resolution relates to procedures of the Authority for compliance with certain IRS Regulations on reimbursement bonds. Said Resolution was duly adopted by the governing body of the Authority (the "Board of Commissioners") at a regular meeting of the Board of Commissioners held on August 12, 2010. The Board of Commissioners meeting was duly called, regularly held, open to the public, and held at the place at which meetings of the Board of Commissioners are regularly held. Member _________________ moved the adoption of the Resolution, which motion was seconded by Member ____________________. A vote being taken on the motion, the following members of the Board of Commissioners voted in favor of the motion to adopt the Resolution: and the following voted against the same: Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full force and effect and no action has been taken by the Board of Commissioners which would in any way alter or amend the Resolution. WITNESS MY HAND officially as the President of the Hastings Economic Development and Redevelopment Authority of the City of Hastings, Minnesota, on August 12, 2010. ____________________________________ President Hastings Economic Development and Redevelopment Authority 3 2621526v1 EXHIBIT A Declaration of Official Intent The undersigned, being the duly appointed and acting Treasurer of the Hastings Economic Development and Redevelopment Authority of the City of Hastings, Minnesota (the "Authority"), pursuant to and for purposes of compliance with Treasury Regulations, Section 1.150-2 (the "Regulations"), under the Internal Revenue Code of 1986, as amended, hereby states and certifies on behalf of the Authority as follows: 1.The undersigned has been and is on the date hereof duly authorized by the Board of Commissioners of the Authority to make and execute this Declaration of Official Intent (the "Declaration") for and on behalf of the Authority. 2.This Declaration relates to the following project, property or program (the "Project") and the costs thereof to be financed: 3.The Authority reasonably expects to reimburse itself for the payment of certain costs of the Project out of the proceeds of a bond issue or similar borrowing (the "Bonds") to be issued after the date of payment of such costs. As of the date hereof, the Authority reasonably expects that $____________ is the maximum principal amount of the Bonds which will be issued to finance the Project. 4.Each expenditure to be reimbursed from the Bonds is or will be a capital expenditure or a cost of issuance, or any of the other types of expenditures described in Section 1.150-2(d)(3) of the Regulations. 5.As of the date hereof, the statements and expectations contained in this Declaration are believed to be reasonable and accurate. Date: ____________, 2010. _______________________________________ Treasurer Hastings Economic Development and Redevelopment Authority A-1 2621526v1