Loading...
HomeMy WebLinkAboutIV.C.2 - Resolution No. 2021-16 - Consent and Subordination - The Quill217632v1 HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY DAKOTA COUNTY, MINNESOTA HEDRA RESOLUTION NO. 2021-16 RESOLUTION APPROVING SUBORDINATION AGREEMENT AND CONSENT AND ESTOPPEL CERTIFICATE FOR HASTINGS AH I, LLLP WHEREAS, the Hastings Economic Development Authority and Redevelopment Authority (“HEDRA”) and Hastings AH I, LLLP (“Developer”) have approved a Contract for Private Development, dated as of September 9th, 2021, (“Contract”) for the sale and development of property legally described as Lot 1, Block 1, Schoolhouse Square 4th Addition, Dakota County, Minnesota, according to the recorded plat thereof (“Property’); and WHEREAS, Developer has secured a loan in the original aggregate principal amount of $__________________ (the “Loan”) from the Dakota County Community Development Agency (“CDA”) in accordance with the terms of that certain Loan Agreement by and between Borrower and CDA (the “Loan Agreement”), through the CDA’s issuance and sale of bonds to fund the Loan, pursuant to an Indenture of Trust between the CDA and U.S. Bank National Association (“Trustee”) for the development of the Property; and WHEREAS, the CDA and the Trustee require that the Loan Agreement between the CDA and the Developer be secured by a (i) Combination Mortgage, Security Agreement, Fixture Financing State and Assignment of Leases and Rents (“Mortgage”) as a lien against the Property, which Mortgage will be assigned by the CDA to the Trustee; and (ii) an Assignment of Tax Increment Financing Documents to be executed by the Developer and the Trustee “Assignment of TIF Documents”) granting to the Trustee a collateral assignment of and a security interest in, all right, title and interest of the Developer in and to the Contract and the Tax Increment Note to be issued by HEDRA pursuant to the terms of the Contract and made payable to the Developer (the, “TIF Note”) and the CDA will assign its rights in the Mortgage to the Trustee; and WHEREAS, as a condition of issuing the bonds and making and disbursing the Loan the CDA and the Trustee require that HEDRA subordinate its rights under the Contract to the lien of the Mortgage, the repayment of the bonds and payment of all amounts due under the Loan Agreement through the execution of the Subordination Agreement attached hereto as Exhibit A (“Subordination Agreement”); and WHEREAS, also as a condition of issuing the bonds and disbursing the Loan, the CDA and the Trustee require that HEDRA execute the Consent and Estoppel Certificate concerning the Assignment of TIF Documents (“Estoppel Certificate”) in the form attached hereto as Exhibit B; 2 217632v1 NOW, THEREFORE, BE IT RESOLVED the Board of Commissioners (“Board”) of the Hastings Development and Redevelopment Authority, Dakota County, Minnesota (the “HEDRA”), as follows: 1. That the Subordination Agreement and Estoppel Certificate are approved substantially in the forms attached hereto as Exhibits A and B. The President and Secretary of the Board of Commissioners are hereby authorized and directed to execute and deliver the Subordination Agreement and Estoppel Certificate in accordance with its terms. All of the provisions of the Subordination Agreement and Estoppel Certificate when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Subordination Agreement and Estoppel Certificate shall be substantially in the forms attached hereto which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the President and the Secretary, in their discretion, shall determine, and the execution thereof by the President and the Secretary shall be conclusive evidence of such determination. 2. The President and Secretary are hereby authorized and directed to execute any documents deemed necessary to carry out the intentions of this resolution. Adopted by the Hastings Economic Development and Redevelopment Authority this 9th day of September, 2021. Ayes: Nays: Absent: Dennis Peine, President Eric Maass, Secretary 3 217632v1 EXHIBIT A SUBORDINATION AGREEMENT [attach] 4 217632v1 EXHIBIT A CONSENT AND ESTOPPEL CERTIFICATE [attach] 080714\241\5918992.v1 SUBORDINATION AGREEMENT (Contract for Private Redevelopment) THIS SUBORDINATION AGREEMENT (Contract for Private Redevelopment) (this “Agreement”) is made as of this 1st day of September, 2021, by the HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY, a public body corporate and politic organized under the laws of the State of Minnesota (the “Authority”), in favor of U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (together with its successors and assigns, the “Trustee”). RECITALS A. The Authority and Hastings AH I, LLLP, a Minnesota limited liability limited partnership (“Borrower”), are parties to that certain Contract for Private Redevelopment dated as of September __, 2021 (the “Redevelopment Contract”), with respect to the redevelopment of certain real property located in Hastings, Minnesota and legally described on Exhibit A attached hereto (the “Development Property”). B. Pursuant to Section 3.5 of the Redevelopment Contract, Borrower has executed and delivered to the Authority that certain Declaration of Restrictive Covenants dated as of September __, 2021 (the “Declaration”) setting forth certain affordability requirements in connection with the Project (as defined below). C. Pursuant to and in accordance with the laws of the State of Minnesota, including, without limitation, Minnesota Statutes, Chapters 462A, 462C and 474A, as amended, and that certain Indenture of Trust dated as of September 1, 2021 (the “Indenture”) between the Dakota County Community Development Agency, a public body corporate and politic organized and existing under the laws of the State of Minnesota (together with its successors and assigns the “Issuer”) and the Trustee, the Issuer has determined to issue and sell its Senior Multifamily Housing Revenue Bonds (Hastings AH I, LLLP Project), Series 2021, in the original aggregate principal amount of $__________________ (the “Bonds”) and to loan the proceeds to be derived from the sale thereof (the “Loan”) to the Borrower in accordance with the terms of that certain Loan Agreement dated as of September 1, 2021 by and between the Issuer and the Borrower, for the purpose of (i) the acquisition, rehabilitation and equipping of The Quill, a multifamily senior rental housing development consisting of 90 units and certain functionally related improvements thereto, designed for occupancy by low and moderate income seniors located at 211 10th Street E in the City of Hastings, Minnesota (the “Project”), (ii) funding of a reserve fund to secure the timely payment of the Bonds; (iii) paying a portion of the interest on the Bonds; and (iv) paying a portion of the costs of issuing the Bonds. D. The Bonds, and all liabilities and obligations of the Borrower under the Loan Agreement (including, without limitation, the repayment of the Loan), are secured by, among other things, a certain Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents dated as of September 1, 2021, executed by Borrower in favor of Issuer, granting a lien on and encumbering the Development Property and the Project (as such mortgage may be amended, modified or supplemented, the “Mortgage”). The Issuer has assigned 2 its rights under the Mortgage to the Trustee pursuant to that certain Assignment of Mortgage dated September __, 2021. E. As a condition to issuing the Bonds and making the Loan available to Borrower, the Issuer and the Trustee require that the Authority subordinate its rights under the Redevelopment Contract and under the Declaration to the lien of the Mortgage, the repayment of the Bonds and the payment of all amounts due under the Loan Agreement. NOW THEREFORE, in order to induce Issuer and Trustee to issue the Bonds and to make the Loan, the Authority hereby agrees as follows: 1. Defined Terms. Unless the context otherwise provides, each capitalized term not defined herein shall have the meaning therefor specified in the Redevelopment Contract. 2. Subordination. The Authority agrees that any and all now existing or hereafter arising rights, interests and liens, if any, of the Authority in and to the Development Property and the Project arising under and pursuant to the Redevelopment Contract, and the obligations of Borrower to the Authority contained in the Redevelopment Contract, are subject, junior and subordinate to all now existing or hereafter arising rights, interests and liens held by the Trustee pursuant to the Mortgage. The Authority further agrees that any and all now existing or hereafter arising rights, interests and liens, if any, of the Authority under the Declaration are subject, junior and subordinate to all now existing or hereafter arising rights, interests and liens held by the Trustee pursuant to the Mortgage. 3. Construction Completion. The Authority acknowledges and agrees that none of the Issuer, the Trustee, or their respective successors or assigns, shall be obligated to construct or complete the Project; provided, however, that, if the Trustee or its successors or assigns acquire the Development Property by foreclosure or by a conveyance in lieu of foreclosure, the Authority acknowledges and agrees that, upon substantial completion of the Minimum Improvements pursuant to and in accordance with the Redevelopment Contract, the Trustee shall be entitled to seek from the Authority a Certificate of Completion for the Project in accordance with the terms set forth in the Redevelopment Contract. 4. Entire Agreement; Modifications. The Authority acknowledges that neither the Issuer nor the Trustee is a party to the Redevelopment Contract, that this Agreement and that certain Consent and Estoppel Certificate dated on or about the date hereof executed by the Authority in favor of the Issuer and the Trustee constitutes the entire agreement between the Authority, the Issuer and the Trustee with respect to the Redevelopment Contract, and that this Agreement may be amended only in a writing executed by the Authority and the Trustee. 5. Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and their respective successors and assigns, including any subsequent holder of the Mortgage. 6. Notices. Any notices and other communications permitted or required by the provisions of this Agreement shall be in writing and shall be deemed to have been properly given or served by (i) personal delivery, (ii) depositing the same with the United States Postal Service, 3 or any official successor thereto, designated as Registered or Certified Mail, Return Receipt Requested, bearing adequate postage, (iii) depositing the same with a reputable private courier or overnight delivery service, in each case addressed as hereafter provided. Each such notice shall be effective upon (a) immediately upon personal delivery, (b) three (3) days after being deposited in the U.S. Mail, or upon delivery by facsimile or electronic mail, or (c) one (1) Business Day after being deposited with such courier service. The time period within which a response to any such notice must be given, however shall commence to run from the date of receipt of the notice by the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice sent. By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall have the right from time to time to change its address and shall have the right to specify as its address any other address within the United States of America: To the Authority: Hastings Economic Development and Redevelopment Authority 101 4th Street Hastings, MN 55033 Attention: Executive Director With a copy to: Campbell Knutson Professional Association Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, MN 55121 Attention: Andrea McDowell Poehler To Trustee: U.S. Bank National Association 60 Livingston Ave, 3rd Floor EP-MN-WS3C St. Paul, MN 55107-2292 Attention: Corporate Trust Services 7. Governing Law and Construction. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal substantive laws of the State of Minnesota, without giving effect to the conflicts of laws, rules and principals of such state. 8. Consent to Jurisdiction. The Authority hereby submits and consents to the personal jurisdiction to the courts of Dakota County, Minnesota and the courts of the United States of America located in that state for the enforcement of this instrument and waives any and all personal rights under the laws of any state or the United States of America to object to jurisdiction in such courts. Litigation may be commenced in the state court of general jurisdiction for any of such counties or the United States District Court located in Minnesota, at the election of Trustee. Nothing contained herein shall prevent Trustee from bringing any action in any other state or jurisdiction against any other person or exercising any rights against any security given to Trustee. Commencement of any such action or proceeding in any other state or jurisdiction shall not constitute a waiver of consent to jurisdiction of or the submission made by the Authority to personal jurisdiction within the State of Minnesota. In the event an action is commenced in another jurisdiction or venue under any tort or contract theory arising directly or indirectly from the 4 relationship created by this Agreement, Trustee, at its option, shall be entitled to have the case transferred to one of the jurisdictions and venues above described or any other jurisdiction, or if such transfer cannot be accomplished under applicable law, to have such case dismissed without prejudice. 9. Waiver of Jury Trial. THE AUTHORITY HEREBY VOLUNTARILY, KNOWINGLY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE AUTHORITY, THE ISSUER AND THE TRUSTEE ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY RELATIONSHIP BETWEEN THE AUTHORITY, THE ISSUER AND THE TRUSTEE. THIS PROVISION IS A MATERIAL INDUCEMENT TO ISSUER AND TRUSTEE TO ISSUE THE BONDS AND TO PROVIDE THE LOAN DESCRIBED HEREIN. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the Authority has executed this Agreement as of the day and year first written above. HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY By: Dennis Peine, President By: Eric Maass, Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this ____ day of __________, 2021, by Dennis Peine, the President, and Eric Maass, the Secretary of the Hastings Economic Development and Redevelopment Authority, a political subdivision of the State of Minnesota, on behalf of the political subdivision. Notary Public This Instrument Drafted By: Fabyanske, Westra, Hart & Thomson, P.A. 333 South Seventh Street, Suite 2600 Minneapolis, MN 55402 (612) 359-7600 Exhibit A to Subordination Agreement Legal Description of Development Property Lot 1, Block 1, Schoolhouse Square 4th Addition, Dakota County, Minnesota, according to the recorded plat thereof. 22369496v2 The Quill - Hastings 080714\241\5918820.v1 CONSENT AND ESTOPPEL CERTIFICATE THIS CONSENT AND ESTOPPEL CERTIFICATE (this “Estoppel Certificate”), is dated as of September __, 2021, and is from the HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY, a public body corporate and politic organized under the laws of the State of Minnesota (the “Authority”), to the DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY, a public body corporate and politic organized under the laws of the State of Minnesota (the “Issuer”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (together with its successors and assigns, the “Trustee”). The Authority hereby agrees with the Issuer and the Trustee as follows: 1. Unless the context otherwise indicates, capitalized terms used but not otherwise defined herein shall have the meanings given such terms in that certain Contract for Private Redevelopment dated as of September __, 2021 (the “Redevelopment Contract”), by and between the Authority and Hastings AH I, LLLP, a Minnesota limited liability limited partnership (the “Borrower”). 2. The Authority understands that, pursuant to and in accordance with the laws of the State of Minnesota, including, without limitation, Minnesota Statutes, Chapters 462A, 462C and 474A, as amended, and that certain Indenture of Trust dated as of September 1, 2021 between the Issuer and the Trustee (the “Indenture”), the Issuer has determined to issue and sell its Senior Multifamily Housing Revenue Bonds (The Quill Project), Series 2021, in the original aggregate principal amount of $__________________ (the “Bonds”) and to loan the proceeds to be derived from the sale thereof (the “Loan”) to the Borrower in accordance with the terms of that certain Loan Agreement dated of even date herewith by and between Borrower and Issuer (the “Loan Agreement”). The Bonds and Borrower’s obligations and liabilities under the Loan Agreement (including, without limitation repayment of the Loan) are secured by, among other things, (i) that certain Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents dated as of September 1, 2021 executed by Borrower in favor of Issuer granting a lien on and encumbering the Development Property and the Project, as assigned to Trustee pursuant to that Assignment of Mortgage dated as of September __, 2021 (as so assigned, the “Mortgage”) and (ii) that certain Assignment of Tax Increment Financing Documents as of September 1, 2021 executed by Borrower and the Trustee (the “Assignment of TIF Documents”), granting to the Trustee a collateral assignment of and a security interest in, all right, title and interest of Borrower in and to the Redevelopment Contract and that Tax Increment Note to be issued by the Authority pursuant to the terms of the Redevelopment Contract and made payable to the order of the Borrower (the “TIF Note”). 3. The Authority understands that the Issuer and the Trustee have required this Estoppel Certificate as a condition of issuing the Bonds and making and disbursing the Loan, and that the Issuer and the Trustee will rely on this Estoppel Certificate in connection therewith. 4. The Authority covenants, represents, and warrants to and agrees with the Issuer and the Trustee as follows: 2 a. The TIF Note has been duly authorized by the Authority and, upon its issuance and delivery, will be a valid and binding special limited obligation of the Authority, payable solely from the sources provided therefor in the TIF Note and the Redevelopment Contract. b. That the payments to be made by the Authority to the Borrower under the TIF Note have been assigned to the Trustee pursuant to the Assignment of TIF Documents and that the Authority will, upon the occurrence and during the continuance of an Event of Default (as defined in the Assignment of TIF Documents), deposit all payments due in accordance with the terms of the Redevelopment Contract and the TIF Note, and any optional prepayments, either in whole or in part, with the Trustee at the address set forth in Section 6 below, and upon such deposit the obligations of the Authority to the Borrower under the TIF Note with respect to such payment shall be deemed discharged to the extent paid directly to the Trustee pursuant to the terms of the Assignment of TIF Documents. c. That, unless Trustee is otherwise shown as the registered owner of the TIF Note upon its issuance, subject to the conditions set forth herein and in the Redevelopment Contract, in the event that Trustee exercises its remedies under the Assignment of TIF Documents and becomes the holder of the TIF Note, the Authority will either (i) issue a new fully registered note to the Trustee or its nominee or (ii) evidence the transfer of the TIF Note to the Trustee or its nominee on the registration records for the TIF Note maintained by the Authority. d. That it hereby consents to the execution and delivery of the Mortgage and the Assignment of TIF Documents, and to the respective liens, security interests and assignments created therein, as security for the Bonds and the Loan. e. That it has received and approved the Construction Plans pursuant to Section 3.2 of the Redevelopment Contract. f. That it has received and approved the Loan Agreement, the Mortgage and the Assignment of TIF Documents. g. That the Borrower has provided proof of insurance (and proof of the payment of all premiums therefor) as contemplated by Section 4.1 of the Redevelopment Contract. h. That, it has consented to the collateral assignment of the Redevelopment Contract, and the TIF Note to Lender pursuant to the Assignment of TIF Documents and to the exercise of Lender’s rights and remedies thereunder. 5. The Redevelopment Contract has not been amended or modified in any respect and represents the entire agreement of the parties thereto as to all of the subject matters dealt with therein. The Redevelopment Contract is in full force and effect, and the Authority has given no notice of any default thereunder. To the best of the Authority’s knowledge, the Borrower has 3 performed all of its obligations under the Redevelopment Contract which are required to be performed as of the date hereof. To the best of the Authority’s knowledge, the Borrower is not in default in the performance or observance of any of its covenants or agreements under the Redevelopment Contract or pursuant to any other agreement between Borrower and the Authority as of the date hereof. 6. Until the satisfaction or release of the Mortgage and the termination or release of the Assignment of TIF Documents, the Authority agrees to give the Trustee a copy of each notice or demand given to the Borrower with respect to any breach or default by the Borrower in its obligations under the Redevelopment Contract at the same time such notice, demand or other communication is given to the Borrower under the Redevelopment Contract, addressed to the Trustee as follows: U.S. Bank National Association 60 Livingston Ave, 3rd Floor EP-MN-WS3C St. Paul, MN 55107-2292 Attention: Corporate Trust Services 7. The Authority agrees to accept the cure by the Trustee of any default by the Borrower under the Redevelopment Contract within sixty (60) days after the later of (i) delivery of notice of such default to the Trustee pursuant to Section 6 above and (ii) the expiration of the time provided to Borrower to cure any such default or defaults pursuant to Sections 9.1 and 9.2 of the Redevelopment Contract; provided, that, the Authority acknowledges that the Trustee shall be under no obligation to cure any such default. No commencement of any performance by the Trustee of any obligation of the Borrower required under the Redevelopment Contract shall obligate the Trustee to continue or complete such performance or otherwise perform any of the Borrower’s obligations under the Redevelopment Contract. 8. The Authority acknowledges and agrees that none of the Issuer, the Trustee, or their respective successors or assigns shall be obligated to construct or complete the Minimum Improvements; provided, that, the Authority acknowledges and agrees that, upon substantial completion of the Minimum Improvements in accordance with the Redevelopment Contract, the Trustee shall be entitled to seek from the Authority, and the Authority shall be obligated to issue to the Trustee, a Certificate of Completion for the Minimum Improvements in accordance with the terms set forth in the Redevelopment Contract. 9. The Authority agrees to provide the Trustee with notice of any proposed modifications or amendments to be made to the Redevelopment Contract relating to the Development Property and/or the Project and the right to consent to such modifications or amendments. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the undersigned officers of the Authority have executed this Consent and Estoppel Certificate as of the date and year first written above. HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY By: ___________________________________ Dennis Peine, its President By: ___________________________________ Eric Maass, its Secretary STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this ____ day of __________, 2021, by Dennis Peine, the President of the Hastings Economic Development and Redevelopment Authority, a political subdivision of the State of Minnesota, on behalf of the political subdivision. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this ____ day of __________, 2021, by Eric Maass, the Secretary of the Hastings Economic Development and Redevelopment Authority, a political subdivision of the State of Minnesota, on behalf of the political subdivision. Notary Public 22369495v2