Sources
& Uses Schedule
Attachment 1: Midtown Exchange
Project Term Sheet (Amended and Restated May 14, 2004)
1. PROPOSED PROJECT
In response to an RFP, Ryan Companies US, Inc. (“Ryan”) proposes
to redevelop the former Sears retail and warehouse site located at the
northeast corner of the Chicago Avenue and Lake Street intersection as
a mixed-use project that will include office space, retail space, other
commercial uses, rental housing, for-sale housing, a hotel, parking, public
and green space areas, a transit hub and linkages to the neighboring Abbott
Northwestern Hospital campus and the Midtown Greenway. Ryan has named
this project Midtown Exchange. The total development cost for all of the
components comprising the project is currently estimated to be approximately
$181,000,000.
2. PARTIES
The parties to the redevelopment agreement to be entered into pursuant
to this Amended and Restated Term Sheet will be Ryan and the City of Minneapolis
and, if all or a portion of the development property continues to be held
by the Minneapolis Community Development Agency (“MCDA”),
the MCDA. (The City of Minneapolis and the MCDA will be collectively referred
to herein as the “City.”)
3. SITE
The development property (the “Site”) is generally located
within an approximately 3-block area bounded by Lake Street, the Midtown
Greenway, 11th Avenue and Chicago Avenue. Portions of the Site are located
over and north of the Midtown Greenway. The Site is legally described
on Exhibit A (subject to confirmation by survey) and generally located
as shown on Exhibit B. The Site currently contains the multi-story Sears
retail/warehouse building originally constructed in 1928 (the “1928
Building”), a multi-story warehouse extension originally constructed
in 1964 that bridges the Midtown Greenway (the “1964 Building”),
a one-story train shed located adjacent to and encroaching upon the Midtown
Greenway (the “Train Shed”), and a one-story building located
at 1010 East Lake Street (the “1010 Building”). The City intends
to convey the area within the Midtown Greenway to the Hennepin County
Regional Railroad Authority (“HCRRA”), but will retain ownership
in fee or by exclusive easement of that portion of the Train Shed, the
basement areas of the 1964 Building and the Elliot Avenue bridge that
lie within the Midtown Greenway. Subject to board of commissioners’
approval after a public hearing, the City will convey the Site, including
the afore-mentioned retained rights within the Midtown Greenway, to Ryan
(or any Assigned Developers that have been approved by the City’s
CPED director) by redevelopment quit claim deed and bill of sale. However,
the City’s CPED director and Ryan may agree that the portion of
the Train Shed lying easterly of the westerly line of 10th Avenue South
will not be included in the Site and will not be a part of the project.
If so, Ryan will construct the demising wall separating the Train Shed
owned by Ryan from the remainder of the Train Shed. The City will also
convey to Ryan the existing Elliot Avenue bridge and any portion of City
property located north of the Midtown Greenway which may be necessary
for the enclosed walkway connection from the project to the building owned
by Allina located north of the Midtown Greenway (the “1979 Building”).
In connection therewith, the City and Ryan intend to negotiate with Allina
for changes in the City’s rights regarding the Elliot Avenue bridge
and adjoining property owned by the City north of the Midtown Greenway.
The City and Ryan will cooperate in completing a registered land survey
to horizontally subdivide the Site from other land owned by the City and
create separate tax parcels resulting therefrom prior to closing. One
of the existing buildings on the Site, namely the 1928 Building, has historic
significance. Ryan will take title to the property subject to that certain
Reciprocal Easement and Operating Agreement (“REOA”) dated
December 30, 2002 between the MCDA and the owner of the 1979 Building
and the existing leases with Family Dollar Store and Sportsdome within
the 1010 Building, among other encumbrances. The City will attempt to
negotiate the termination of the existing Ionex lease within the 1964
Building basement prior to closing.
4. EAST PARCEL
In addition to conveyance of the Site, the City, subject to board of commissioners’
approval after a public hearing, will lease the property described on
Exhibit A-1 (the “East Parcel”) to Ryan for a term of 30 years
at a cost of $1 per year for surface parking. The lease will include a
purchase option that may be exercised on any anniversary of the closing
date during the first 5 years of the lease term at fair market value.
Ryan must resurface the lot and operate, maintain and repair the lot during
the lease term. Ryan will be responsible for pursuing any rezoning or
other approvals and making any improvements that are required for continued
use of the East Parcel as surface parking.
5. TRANSIT HUB
Ryan will negotiate with the Metropolitan Council regarding the location
of the Transit Hub on the Site and any other design, regulatory, real
estate, financing and construction issues related thereto. It is likely
that a new traffic signal will be required at the intersection of Chicago
Avenue and the boulevard entry to the project, which will be an entry
and exit point for Metro Transit buses, as well as for a portion of the
users and visitors of the project. Ryan and the Metropolitan Council will
equally share the costs of a traffic signal, if required, at the boulevard
intersection with Chicago Avenue.
6. EXCLUSIVE RIGHTS
The City has granted Ryan exclusive rights to negotiate a redevelopment
agreement for the Site for a period ending July 16, 2004, pursuant to
a Term Sheet approved by the City Council. Ryan has deposited an option
or development rights fee equal to $60,000. The City and Ryan have subsequently
refined the terms and conditions set out in the approved Term Sheet as
more fully described in this Amended and Restated Term Sheet, and intend
to use this Amended and Restated Term Sheet as a basis for negotiating
the redevelopment agreement between the parties. If the parties consummate
a redevelopment agreement, Ryan may apply the fee toward the good faith
deposit. If the parties are unable to consummate a redevelopment agreement,
the City will retain $10,000 per month beginning in January, 2004, to
off-set its staff time, and upon cessation of negotiations will refund
the balance, if any, to Ryan.
7. PROJECT DEVELOPMENT
COMPONENTS
Ryan must develop the Midtown Exchange project to include the components
listed in this Section, except as otherwise provided in Section 8 with
respect to the Transit Hub Development Component, the Service Center Development
Component and the Global Marketplace Development Component. Each of the
components must be developed by either Ryan, an affiliate of Ryan, or
a separate developer designated by Ryan (each, an “Assigned Developer”).
Ryan must obtain City CPED director approval of each Assigned Developer
prior to the earlier of (i) closing upon transfer of the component to
the Assigned Developer and (ii) start of construction of the interior
spaces for each such component. Conditions to City approval of an Assigned
Developer shall include appropriate representations and warranties from
such Assigned Developer, a written agreement between such Assigned Developer
and Ryan reasonably acceptable to the City’s CPED director whereby
the Assigned Developer assumes Ryan’s obligations under the redevelopment
agreement with respect to the component, component construction plans
and financing reasonably acceptable to the City’s CPED director,
and such other reasonable conditions as the City’s CPED director
deems appropriate, including, without limitation, evidence that the Assigned
Developer has the qualifications necessary to fulfill the obligations
of Ryan under the redevelopment agreement and that the Assigned Developer
has sufficient financial capacity to warrant release of Ryan. Written
acceptance of an Assigned Developer by the City’s CPED director
provides such Assigned Developer with the City’s consent to proceed
with such Assigned Developer’s component of the project. It is anticipated
that the Assigned Developers currently identified by Ryan will assist
in the negotiation and documentation of the redevelopment agreement for
their respective components.
Subject to the requirements
in the prior paragraph, Ryan anticipates and the City acknowledges that
Ryan will designate the following entities or affiliates thereof for each
of their respective components: a limited partnership with Sherman Associates,
Inc. as the general partner (“Sherman”) with respect to the
Rental Housing Development Component, a limited liability company with
Sherman as a member or Sherman and the Lander Group as members (“Sherman/Lander”)
with respect to the For-Sale Housing Development Component in the 1928
Building, Project for Pride in Living (“PPL”) with respect
to the For-Sale Housing Development Component fronting the parking ramp
on East 29th Street and 11th Avenue South (the “Liner Parcel”),
a Ryan joint venture (“Hotel Venture”) with respect to the
Hotel Development Component, Neighborhood Development Center (“NDC”)
with respect to the Global Marketplace Development Component, Hennepin
County (“County”) with respect to the Service Center Development
Component (provided that Hennepin County elects to proceed with the Service
Center Development Component), and Metropolitan Council with respect to
the Transit Hub Development Component. Due to market conditions or other
factors Ryan may subdivide ownership of the various components, create
additional components, or substitute other entities or add additional
entities for development of the various components in the project, subject
to the reasonable approval of the City’s CPED director. Affiliates
of Ryan will be responsible for any components not assigned to other entities.
Ryan will continue to seek potential
tenants/users for the project during negotiation of the redevelopment
agreement. Ryan shall not lease to a tenant/user whose primary business
involves sexually explicit entertainment, sexually explicit books and
magazines, or sexually explicit movies or videos.
The following summarizes certain
characteristics of the development components for the project. The estimated
development cost for each component includes base building shell, interior
improvements, tenant improvement allowances, contingencies and fees, and
land allocation costs. The date for start of construction of a component
in the 1928 Building will be start of construction of the interior spaces
in each such component, it being understood that demolition of the 1964
Building, environmental remediation, and renovation of the exterior shell
and of the 1928 Building will commence on or after the anticipated July
1, 2004 closing date.
The Office/Commercial
Development Component
- Anticipated
Component Developer: Ryan Affiliate
- Project Site
Location: Greenway Level (entire floor) 1st floor thru 9th floors
(north tower)
- Square Footage:
434,000 S.F.
- Tenants/Users:
Office and commercial uses, which may include retail, laboratories,
medical spaces, education facilities, fitness center, as well as common
areas and building operations
- Estimated Employment:
1,550
- Estimated Component
Development Cost: $53,000,000
- Parking Space
Needs: 1,423 (peak level)
- Estimated Construction
Worker-Hours: 306,000
- Projected Construction
Start Date: 7/15/04
- Projected Construction
Completion Date: 12/31/05
The Global Marketplace
Development Component
- Anticipated
Component Developer: NDC
- Project Site
Location: First floor (middle and south towers) and Greenway Level
(middle tower)
- Square Footage:
75,000 S.F.
- Tenants/Users:
Global Marketplace featuring internationally themed fresh and prepared
foods, groceries, and other products and goods from multiple vendors
- Estimated Employment:
200
- Estimated Component
Development Cost: $14,800,000
- Parking Space
Needs: 180 (peak level)
- Estimated Construction
Worker-Hours: 36,300
- Projected Construction
Start Date: 4/01/05
- Projected Construction
Completion Date:
06/01/06
The Rental and For-Sale
Housing Development Components in the 1928 Building
- Anticipated
Component Developer:
Sherman (Rental) and Sherman/Lander (Ownership)
- Project Site
Location: 2nd thru 12th floors (middle and south towers)
- Square Footage:
437,000 S.F.
- Total Number
of Units: 203-221 Rental, 82-110 Ownership
- Number of Affordable
Units: Will comply with CPED Affordable Housing Policy (i.e., at
least 57 to 67 rental units will be affordable at 50% MMI)
- Estimated Component
Development Cost: $62,300,000
- Parking Space
Needs: 242 (peak level-day)
356 (peak level-evening)
- Estimated Construction
Worker-Hours: 257,700
- Projected Construction
Start Date: 9/1/04
- Projected Construction
Completion Date: 03/31/06
The Service Center Development
Component
- Anticipated
Component Developer: Hennepin County
- Project Site
Location: Greenway Level
- Square Footage:
8,000
- Tenants/Users:
Hennepin County
- Estimated Employment:
25
- Estimated Component
Development Cost: $1,600,000
- Parking Space
Needs: 50
- Estimated Construction
Worker-Hours: 9,300
- Projected Construction
Start Date: To be determined
- Projected Construction
Completion Date: To be determined
The For-Sale Housing
Development Component (Liner Parcel)
- Anticipated
Component Developer: PPL
- Project Site
Location: Perimeter of parking ramp, along 29th Street and 11th
Avenue.
- Square Footage:
93,000 S.F.
- Total Number
of Units: 53-60
- Number of Affordable
Units: Will comply with CPED Affordable Housing Policy
- Estimated Component
Development Cost: $10,900,000
- Parking Space
Needs: 53-60 in Parking Ramp (peak level)
- Estimated Construction
Worker-Hours: 82,900
- Projected Construction
Start Date: 03/01/05
- Projected Construction
Completion Date: 12/31/05
The Hotel Development
Component
- Anticipated
Component Developer: Hotel Venture
- Project Site
Location: Outlot west of the 1928 Building, west end of Train Shed
- Square Footage:
80,000 S.F.
- Number of Rooms:
150
- Estimated Employment:
80
- Estimated Component
Development Cost: $18,000,000
- Parking Space
Needs: 150 (peak level)
- Estimated Construction
Worker-Hours: 90,600
- Projected Construction
Start Date: 04/01/05
- Projected Construction
Completion Date: 12/31/05
The Parking Development
Component
- Anticipated
Component Developer: Ryan Affiliate
- Project Site
Locations: Surface parking lots on West side of 1928 Building;
parking ramp, surface and on-street parking on East side
- Total Number
of Parking Spaces: 1640-1670
- Number of Parking
Spaces Per Location: 1,234 in parking ramp; balance in surface
parking spaces
- Estimated Employment:
5
- Estimated Component
Development Cost: $18,000,000
- Estimated Construction
Worker-Hours: 103,100
- Projected Construction
Start Date: 03/01/05
- Projected Construction
Completion Date: 12/31/05
The Transit Hub Development
Component
- Anticipated
Component Developer: Metropolitan Council
- Project Site
Location: Facilities flanking each side of entry boulevard on Chicago
Avenue.
- Land Area:
Land easements only, including along entry boulevard and Elliot Avenue
from main building entry south to Lake Street
- Description
of Transit Improvements: Two-three transfer shelters
- Estimated Component
Development Cost: $2,100,000
- Estimated Construction
Worker-Hours: 6,400
- Projected Construction
Start Date: 03/01/05
- Projected Construction
Completion Date: 12/31/05
An estimated sources and uses
of funds for the project is attached hereto as Exhibit C.
8. MINIMUM IMPROVEMENTS
The minimum improvements will consist of the Office/Commercial Development
Component, the Hotel Development Component, the Rental Housing Development
Component, the For-Sale Housing Development Component in the 1928 Building,
the Parking Development Component, connections to the Midtown Greenway,
the Global Marketplace Development Component, and the For-Sale Housing
Development Component on the Liner Parcel (collectively, the “Minimum
Improvements”). The Service Center Development Component will be
a Minimum Improvement if Hennepin County elects to proceed with such component;
if not, the space will be included in the Office/Commercial Development
Component. The Transit Hub Development Component will be a Minimum Improvement
if Ryan reaches agreement with the Metropolitan Council on acquisition
and construction of such component. If NDC is unable to close on the Global
Marketplace Development Component by December 31, 2004, Ryan must meet
with City representatives within 45 days to determine an alternative concept
for the space that is acceptable to the City’s CPED director. Construction
of the Minimum Improvements may be phased. Ryan anticipates development
of other potential improvements, but such additional improvements will
not be required under the redevelopment agreement. The 1964 Building will
be demolished as more fully described in this Amended and Restated Term
Sheet. No work will be required for the 1010 Building and such building
may be left in place, remodeled, or demolished, whether or not to be replaced
by new improvements. A site plan and a vertical stacking plan for the
1928 Building are attached hereto as Exhibit D.
9. PURCHASE PRICE AND
GOOD FAITH DEPOSIT
The purchase price for the Site, to be paid in full at closing, shall
be $2.2 million. This price assumes that Ryan accepts the Site “As
Is”, with no deductions for items such as environmental or geotechnical
conditions, demolition of the 1964 Building or REOA obligations with respect
to the 1979 Building. Ryan must deposit an amount equal to 10% of the
purchase price upon execution of the redevelopment agreement. The City
will refund the deposit in full upon any termination of the agreement
for failure of a developer contingency. If the agreement is not terminated,
an agreed-upon percentage of the deposit shall be refunded upon issuance
of each certificate of completion for components of the Minimum Improvements.
10. DEVELOPER CONTINGENCIES
Ryan’s obligations under the redevelopment agreement to purchase
and redevelop the Site shall be subject to satisfaction or waiver of the
following project contingencies by no later than the Closing Date:
(a) Ryan approval of title and
survey, including easements relating to the Train Shed and Elliot Avenue
bridge.
(b) City approval of all zoning
changes required by Ryan for the project, including PUDs, special conditional
use permits, amendments to overlay districts, variances, and site plan
approvals.
(c) Vacation of all streets,
alleys and utility easements within the Site required by Ryan for development
of the project.
(d) Approvals by the City and
other necessary governmental agencies of the Environmental Assessment
Worksheet, Transportation Demand Management Plan, any Environmental Impact
Statement or Alternative Urban Areawide Review and other governmental
environmental reviews required for the project, curb cuts, signalization,
and plans for the Transit Hub Development Component and linkage to the
Midtown Greenway, all as may be acceptable to Ryan.
(e) Changes in the physical
condition of the 1928 Building and Train Shed from their condition on
January 1, 2004, which are not acceptable to Ryan.
(f) No damage or destruction
has occurred to the buildings and no taking by a power of eminent domain
has occurred or is threatened as to all or any portion of the Site or
the buildings or improvements located thereon.
(g) Approval by Allina/Abbott
Northwestern of lease agreements for space in the Office/Commercial Development
Component, arrangements for enclosed pedestrian access from the 1928 Building
and Hotel to the Abbott-Northwestern Hospital, and other agreements related
to the project, all on terms acceptable to Ryan.
(h) Completion of all documentation
among the Assigned Developers for development of the project, including
any common interest community documents, easements and operating agreements,
development and construction agreements, and other documents required
by Ryan to proceed with the project.
(i) Ryan approval of all public
and private financing required for the project, including the arrangements
for City participation in financing construction of the Parking Development
Component and the final grant funding for environmental cleanup costs.
(j) Completion of all arrangements
for removal of the 1964 Building, including agreements for termination
of easements and construction of such improvements as are necessary in
connection therewith on terms acceptable to Ryan.
The contingencies set forth above are intended for the benefit of Ryan,
and may be insisted upon or waived by Ryan in its sole discretion.
11. CITY CONTINGENCIES
City’s obligation under the redevelopment agreement to close on
the conveyance of the Site shall be subject to satisfaction or waiver
of the following contingencies by no later than the Closing Date:
(a) Ryan is in compliance with
its obligations under the redevelopment agreement and no circumstances
exist that constitute an event of default or with the passage of time
would constitute an event of default.
(b) City’s CPED director
has approved the schematic plans and scope documents for each component
of the Minimum Improvements, including the Transit Hub Development Component
and the connections to the Midtown Greenway. If Ryan elects to do the
Global Marketplace Development Component, the For-Sale Housing Development
Component on the Liner Parcel and/or the Service Center Development Component
as a second phase as set forth in Section 13, the City will waive this
contingency with respect to those components until the commencement of
such second phase.
(c) Financing for each component
is committed and, consistent with Section 13, all conditions to the initial
disbursement of any loans have been satisfied other than those conditions
that may be satisfied only upon consummation of the conveyance, customary
construction disbursing conditions and other conditions reasonably acceptable
to City’s CPED director. If Ryan elects to do the Global Marketplace
Development Component, the For-Sale Housing Development Component on the
Liner Parcel and/or the Service Center Development Component as a second
phase as set forth in Section 13, the City will waive this contingency
with respect to those components until the commencement of such second
phase.
(d) City’s CPED director
has received and approved (i) a registered land survey, certified by a
duly licensed or registered land surveyor, and/or a condominium plat,
depicting the Site and showing the vertical and horizontal division or
subdivision thereof into the component parcels so as to permit the separate
financing and construction of the components, and (ii) necessary reciprocal
easement and operating agreements and/or declaration, bylaws and other
common interest community documents.
(e) Ryan has entered into agreements
reasonably acceptable to City’s CPED director providing for assignment
of the component development rights to, and an assumption of obligations
of Ryan under the redevelopment agreement by, the Assigned Developers.
(f) Ryan has obtained all zoning,
site plan, PUD, street vacation, utility relocation, variances, permits
and any other approvals from City and other regulatory agencies necessary
to develop the Site in accordance with the construction plans.
(g) Proof of worker’s
compensation, builder’s risk and commercial general liability insurance,
naming City as additional insured, as its interest may appear, and such
other insurance as may be reasonable and customary.
(h) Copies of requisite organizational
documents, resolutions and opinions from Ryan and each Assigned Developer.
(i) City has received evidence
that approved affirmative action plans are in effect and that SUBP, prevailing
wage, apprenticeship and similar construction requirements will be met.
(j) City has received evidence
that the Job Linkage, Living Wage/BSA, if applicable, Labor Peace and
similar City requirements will be met.
The conditions set forth above are intended for the benefit of City, and
may be insisted upon or waived by City’s CPED director in his sole
discretion.
12. CLOSING
The City will convey the Site to Ryan within 10 days after satisfaction
of the City conditions to closing. Closing shall occur by July 1, 2004,
or such other date as is mutually agreed upon by the parties; provided,
however, that in no event shall the closing occur later than September
1, 2004. Ryan has proposed that at or after Closing the Assigned Developers
shall be assigned and shall assume all of the respective rights, duties
and obligations with respect to their respective components of the project.
Ryan shall remain responsible for each of the components unless and until
such time, either at or after Closing, as an Assigned Developer has a
written assignment and assumption agreement with the City concerning such
component. Upon such assignment and assumption, Ryan shall have no further
obligation or responsibility for the component, subject to any completion
of construction obligations that may be imposed as part of the final redevelopment
and/or financing agreements. In order to facilitate the transfer of title
to certain components of the project to the Assigned Developers, Ryan
intends to complete a registered land survey vertically subdividing the
Site prior to Closing. If completed, the City at Closing will enter into
the plats and the necessary common interest community documents and easement
and operating agreements delineating the various components of the project
and deed its interest directly to the Assigned Developers that have been
approved by the City’s CPED director as provided in Section 7. Ryan
will also have the right to cure any defaults by an Assigned Developer,
coupled with a security interest in such component as will enable Ryan
or an affiliate of Ryan to acquire the interest of the Assigned Developer
in such component upon any such default.
13. CONSTRUCTION COMMENCEMENT/COMPLETION
Ryan or the Assigned Developers must commence construction by the Start
Dates provided in Section 7; provided, however, that Ryan may delay the
Start Date for the Global Marketplace Development Component, the For-Sale
Housing Development Component on the Liner Parcel and/or the Service Center
Development Component until December 31, 2005 in the event that Ryan decides
to do any or all of such components as a second phase. Subject to unavoidable
delays, Ryan or the Assigned Developers must substantially complete construction
of each component by the Completion Dates provided in Section 7 and of
the entire project by December 31, 2006. The City will retain reversionary
rights on each separate component, but such reversionary rights will be
subject to the right of Ryan and the lenders on that component to cure
a default by the Assigned Developer and take over such component. Reversion
of any component will not affect the right, title and interest of the
owners and tenants of the other components and their lenders.
14. PUBLIC FINANCING
Ryan anticipates that the City will make the following types of public
funds available with respect to various components of the project. The
City has not yet committed these funds, but will review and underwrite
financing applications from Ryan and/or Assigned Developers in accordance
with applicable policies and procedures. As noted above, Ryan’s
obligation to close and construct the project is contingent upon its approval
of project financing.
(a) TIF. The entire
project is expected to generate net tax increment of approximately $1,600,000
per year upon project completion. The City may use this revenue stream
to finance eligible project costs. Subject to normal underwriting criteria,
the parties currently anticipate issuance of pay-as-you-go TIF notes or
TIF revenue bonds as follows:
(i) Office/Commercial Development Component—Ryan has
requested a pay-as-you-go TIF note sufficient to provide net financial
assistance in an amount currently estimated to be $8,800,000 to this
project component. This note will be solely supported by available tax
increment generated from the Allina portion of the component (including
any associated parking).
(ii) Rental Housing Development Component—Sherman has
requested a pay-as-you-go TIF note sufficient to provide net financial
assistance in an amount currently estimated to be $3,035,000 (based
upon 221 units) to this project component. The note will be solely supported
by available tax increment generated from this component.
(iii) For-Sale Housing Development Component in the 1928 Building—Sherman/Lander
has requested TIF-supported revenue bonds or notes sufficient to provide
net financial assistance in an amount currently estimated to be $1,465,000
(based upon 82 units) to this project component. The bonds or notes
will be solely supported by available tax increment generated from this
component.
(iv) Parking Development Component—Ryan has requested
a pay-as-you-go TIF note sufficient to provide net financial assistance
in an amount currently estimated to be $2,963,000 to this project component.
The note will be solely supported by available tax increment generated
from every project component not already identified above, including
the 1010 Building parcel(s) but not including the Swenson, Johnson and
Boosalis parcels (which are in the TIF district but not part of the
project or Site). This note will be subordinate to a pledge of the same
tax increment to repayment of the HUD Section 108 loan.
Prior to closing, CPED staff will ask the City Council to approve a
modification of the TIF and redevelopment plans, accept special legislation,
if any, clarifying the duration of the TIF district, cap the administrative
fee at 5%, approve recapture terms, and authorize the issuance of the
pay-as-you-go TIF notes or TIF revenue bonds. The principal amounts,
interest rates, maturity dates and other terms of the notes and bonds
will be established at that time.
(b) HUD 108 Loan/EDI Grant. The City has requested HUD approval
of a Section 108 loan to the City in the amount of $6,500,000 and an EDI
grant to the City in the amount of $2,000,000. The Section 108 loan would
have a maximum term of 20 years and a variable interest rate as determined
by HUD (currently equal to the 3-month LIBOR interest rate plus 0.2%).
If received, the City will loan or grant the HUD funds to Ryan to partially
finance the privately-owned parking ramp. As noted above, the City intends
to repay the Section 108 loan with tax increment generated by certain
project components. In addition, the City will require Ryan to guaranty
any debt service shortfalls on the Section 108 loan. Upon HUD approval,
CPED staff will ask the City Council to authorize the Section 108 loan,
EDI grant and subrecipient agreements with HUD and Ryan.
(c) AHTF, NRP, EZ.
The City is considering loans of up to $4,250,000 from the City’s
Affordable Housing Trust Fund, NRP and EZ for the Rental Housing Development
Component. CPED staff will return to the City Council in May 2004 with
the AHTF funding recommendations and request authorization to make one
or more loans. Sherman will be required to apply for additional AHTF,
NRP and EZ funds equal to the difference between the May AHTF award and
$4,250,000 in future rounds.
(d) Housing Gap. Due
to the accelerated project schedule, the housing components in the 1928
Building may require an interim standby line of credit of up to $11,550,000
to cover potential timing and/or funding gaps at closing of approximately
$13,400,000. Sherman and Sherman/Lander are expected to close by September
1, 2004. The initial amount will be reduced by any awards from the City’s
AHTF, EZ, or NRP programs, as described in item (c) above, and from any
other soft lenders such as MHFA, FHF, FHLB and Hennepin County that are
committed prior to closing. Further, Sherman and Sherman/Lander would
be allowed to draw on the line of credit only as the last funds disbursed
for each component, i.e., after all other funds that are committed to
these components at closing and/or awarded to these components after closing
have been expended. CPED staff must negotiate the terms of this financing
with Sherman, Sherman/Lander and their lenders and will return to the
City Council prior to closing for specific authorization.
(e) Housing Revenue Bonds.
Sherman intends to apply to the City for an allocation of housing revenue
bonds, which includes an automatic 4% low-income-housing tax credit allocation,
of approximately $21,000,000. Upon receipt and evaluation of the application,
CPED staff will return to the City Council with recommendations regarding
preliminary and final approval of the bonds prior to closing.
(f) Parking Ramp Loan.
Ryan has asked the City for a loan of up to $1,100,000, sourced from the
Leveraged Opportunity Fund, to cover any demonstrated funding gap in the
parking ramp. This would be a non-amortizing loan bearing interest at
a rate equal to the City’s cost of funds with a term of 30 years
and payable solely from tax increment generated by the Swenson, Johnson
and Boosalis parcels, if any, and a portion of net income from the Parking
Development Component (which portion is to be negotiated between Ryan
and the City). CPED staff will return to the City Council prior to closing
with a request for authorization to make the described loan.
(g) Environmental Grants.
The City Council recently approved applications to the Metropolitan Council
and Hennepin County for environmental grants of $250,000 and $750,000,
respectively, for the project. The Metropolitan Council is expected to
make its funding decisions on June 9 and Hennepin County is expected to
make its funding decisions on June 29. Prior to closing, CPED staff will
ask the City Council to accept the awards or anticipated awards and authorize
the requisite grant and subrecipient agreements with the funders and Ryan.
The City has also requested state bonding bill funds for environmental
remediation of the project and may apply to DEED and Hennepin County for
low-interest loans to Ryan of up to $700,000 if necessary. CPED staff
will return to the City Council for appropriate authorizations to pursue
either funding source or any other funding sources. See also “Environmental
Conditions” below.
(h) DEED Grant. A grant of
$433,334 from DEED for the parking ramp.
15. ENVIRONMENTAL CONDITIONS
The City has a Metropolitan Council TBRA grant with a remaining balance
of approximately $365,000. The City has agreed to make $126,355 available
from such grant to cover certain environmental testing costs. Upon City
Council approval of this Amended and Restated Term Sheet, the City will
make the rest of the TBRA grant available to Ryan for further environmental
testing and clean up of the Site. The environmental costs were initially
estimated to be between $1,800,000 and $2,600,000, but recent testing
suggests that there may be additional costs. The City will apply for the
additional grants and loans described in Section 14(g) above to cover
environmental costs in excess of the $365,000 TBRA Grant. Ryan (or the
Assigned Developers) will be responsible for the environmental costs for
which outside grants and loans are not available.
16. HEALTH CAREERS
INSTITUTE
If the state awards bonding bill money to the City for the Health Careers
Institute, Ryan and the City will negotiate, in good faith, the acquisition
and financing arrangements necessary to facilitate the move of the Health
Careers Institute to the project.
17. PROJECT COLLATERAL
AND PERFORMANCE SECURITY
A right of reversion for each component will be contained in the City
deed, subordinated to project financing consistent with Minnesota Statutes,
section 469.028. The appropriate collateral and other requirements for
any City funding will be separately negotiated and documented as part
of such financing transactions.
18. EMPLOYMENT AND CONTRACTING
GOALS
The parties have agreed upon the following goals for the project:
- Construction Trades (Workforce): Women - 5%; Skilled minorities
–15%; Unskilled minorities – 20%
- SUBP: MBEs – 12%; WBEs – 11%
- Pre-apprenticeships (Step-up): 5% of on-site construction worker-hours
(estimated to be 45,000 construction worker-hours).
19. COMPLIANCE WITH
CITY DEVELOPMENT REQUIREMENTS
The redevelopment agreement will contain standard City provisions, including
but not limited to the following:
- Construction plans
and specifications approval by City’s CPED director
- CPED director approval
of any material construction plan changes
- Insurance certificates
- Indemnity and
hold harmless to City
- Payment and performance
bonds, provided Ryan (and any Assigned Developers) may request waiver
for certain non-federally funded components, which City’s CPED
director may grant or deny based upon the criteria set forth in section
422.180, Minneapolis Code of Ordinances; provided further the City will
at Ryan’s (or an Assigned Developer’s) request attempt to
obtain waiver by HUD of bonding requirements if and to the extent bonding
requirements are applicable to project components by reason of HUD funding,
based upon adequate protection of HUD’s interests through assurances
other than bonding (e.g., corporate guaranty of completion).
- Pre-bidding conference
for Ryan, contractors, and City
- City construction
contracting requirements, including affirmative action, prevailing wage,
apprenticeship, small and underutilized business enterprise program
as such employment goals are outlined in Section 18 herein.
- City employment
programs
- Job Linkage Program
- Living Wage/Business Subsidy Act Program, if applicable
- Developer of Hotel
Development Component must agree to comply with the Labor Peace Policy
- Developers of
the Rental Housing Development Component and both For-Sale Development
Components must comply with applicable provisions of CPED’s Affordable
Housing Policy and policies concerning developer fee limitations and
profit sharing/recapture
- Remedies for Ryan
(or Assigned Developer) defaults, including without limitation, any
legal or equitable remedies which may appear necessary or desirable
to collect payments or enforce performance or observance of the redevelopment
and related agreements; provided, however, that upon assignment and
assumption, each separately owned and financed component will not be
subject to cross default provisions with other separately owned and
financed components
- Competitive bidding
to the extent required by federal, state or local laws, regulations
or policies for project components assisted with federal or City funds.
The City acknowledges that Ryan was selected through a competitive RFP
process and will work in good faith with Ryan to develop a plan for
procuring other contractors and subcontractors that comports with applicable
procurement policies and procedures.
20. REMOVAL OF THE 1964
BUILDING
Ryan intends to remove all of the 1964 Building from the Site, except
the basement area located north of the Midtown Greenway (the “1964
Basement”). Ryan must coordinate its removal plans with the owner
of the 1979 Building as provided in the REOA. The 1964 Basement will be
preserved to provide support for the 1979 Building. Ryan will install
the roof and roofing for the 1964 Basement, a façade for the party
wall above the remaining portion of the1964 and 1979 Buildings which will
be architecturally consistent with the 1979 Building, and drainage control
for the storm water drainage from the roof area over the 1964 Basement.
Ryan will remove the columns supporting the 1964 Building in the Midtown
Greenway, but, provided HCRRA consents and subject to applicable regulatory
requirements, will not be required to remove such columns more than 2
feet below grade. Ryan will provide any equipment required to replace
the existing service provided by boilers in the 1928 Building. Ryan will
also make such connections to the steam/hot water piping and electric
distribution system currently within the 1964 Building as will be necessary
to remove the 1964 Building. Ryan’s purchase of the Site will include
all rights and interests in the existing generator and related equipment
in the 1964 Building. Ryan may remove the existing generator and related
equipment from the 1964 Building and install it in or about the 1928 Building.
Ryan intends to convey the 1964 Basement and that part of the Site located
north of the Midtown Greenway to the owner of the 1979 Building, subject
to such easements and rights as may be appropriate for construction and
maintenance of the bridge and enclosed walkway. Ryan does not expect to
receive any sale proceeds from this transaction. Ryan and the owner of
the 1979 Building will allocate responsibility for the costs of operating,
maintaining, repairing and replacing the 1964 Basement, including such
roof, roofing, facade, boilers and utilities. Ryan must also coordinate
demolition of the 1964 Building with HCRRA’s trail project and the
City’s bridge project in the immediate vicinity.
21. VACATION OF STREETS
AND ALLEYS
Ryan has applied for the vacation of certain alleys located within the
Site, including the portion of the north-south alley in Block 4 of Allen
and Anderson’s Second Addition north of the north line of Lot 18
and the east-west alley or right-of-way easement lying north of Lot 20
in Block 4. If it is necessary to relocate the east-west alley and north-south
alleys which lie to the east of the north-south public alley adjacent
to Lot 18 to service or provide access to the buildings located southwesterly
of the Site facing Chicago Avenue and East Lake Street, Ryan must create
such rights before conveying any land to the Metropolitan Council or as
necessary for other project development. The City will cooperate with
Ryan in its vacation applications and will assist Ryan in obtaining vacation
of any utility easements affecting the Site. The City’s cooperation
offered herein is not to be construed as granting any approvals of such
vacation requests. The value of the land included in such streets, alleys
and utility easements are included in the purchase price set out above.
22. REZONING
Ryan will apply for the rezoning of the Site as may be necessary to develop
and use the various components of the project. The City’s CPED director
will authorize Ryan to submit such applications and, through CPED staff,
will cooperate with Ryan in its rezoning applications. The City’s
cooperation offered herein is not to be construed as granting any approvals
of such rezoning requests. The purchase price for the Site will not be
affected by the rezoning.
23. EAW/EIS/AUAR/TDM
City and Ryan will cooperate on preparation of an Environmental Assessment
Worksheet (EAW) and Transportation Demand Management (TDM) plan for the
project. Based upon initial feedback from the City’s planning division,
Ryan does not anticipate that any Environmental Impact Statement (EIS)
or Alternative Urban Areawide Review (AUAR) will be required.
24. APPROVAL PROCESS
The City will cooperate with Ryan to facilitate all traffic management
plans, necessary PUDs, conditional use permits, variances, amendments
to overlay districts, site plan reviews and other zoning and governmental
approvals. Ryan and the City will identify all City approvals required
for the project, develop a schedule to address processing requirements
for the various public approvals, and work together in assuring review
of applications in a timely manner.
25. STREET AND SIDEWALK
IMPROVEMENTS
Ryan and the City acknowledge that the anticipated upgrades of Chicago
Avenue and East Lake Street will affect the construction and use of the
project. Ryan and the City, through the City Engineer, will attempt to
coordinate the design and construction of the Chicago Avenue upgrade and
will work together with Hennepin County on the design and construction
of the East Lake Street upgrade to facilitate the construction and intended
use of the Midtown Exchange project.
26. STREET AND LANE
CLOSURES
During the course of constructing and redeveloping the project, Ryan may
close the parking lane on East Lake Street in front of the 1928 Building
to facilitate construction in accordance with the City’s policies
for such lane closures, including payment of any fees. If Hennepin County
intends to do reconstruction work on Lake Street during periods when construction
of the project will be carried out, the City will try to assist Ryan in
coordinating Lake Street reconstruction activity with the County to support
availability of Lake Street for project construction.
27. HISTORIC DESIGNATION
One of the existing buildings on the Site, namely the 1928 Building, has
historic significance. Ryan anticipates that such building will be eligible
for federal historic tax credits and such tax credits will be a key element
in assuring the financial viability of the project. The City, through
CPED staff, will cooperate with Ryan in obtaining all necessary governmental
approvals as may be required for obtaining such tax credits. Further,
Ryan with City assistance will negotiate a section 106 agreement with
the State Historic Preservation Office, HUD and any other necessary parties
to facilitate federal funding of the project, including the Transit Hub
Development Component.
28. WELLS
City will keep the existing wells on the Site in place through Closing
and at its cost maintain the proper licenses and permits therefor. The
City will provide a list of the licenses and permits to Ryan at Closing.
Ryan will seal any wells not required for the project and assume responsibility
for maintaining the others.
29. LEGAL EFFECT
Except for the exclusive rights to negotiate a redevelopment agreement
upon payment of the fee set out in Section 6 and the recognition by the
City and Ryan of their intent to provide access to the Site and building
and cooperate on various matters, this term sheet shall not be a binding
legal agreement between the City and Ryan but merely serves as a basis
for further negotiation of the redevelopment agreement and other documents
required for acquisition and development of the Site.
EXHIBIT A TO TERM SHEET:DESCRIPTION
OF SITE
Certificate Number 1098354 (MCDA)
Parcel 1:
Lots 7 and 21, Block 2, Allan & Anderson’s Second Addition to
Minneapolis, Hennepin County, Minnesota;
That part of the East half of the vacated alley, dedicated in Block 2,
said addition, which lies between the Westerly extensions of the North
line and of the South line of said Lot 7; and
That part of the West half of the vacated alley, dedicated in Block 2,
said addition, which lies between the Easterly extensions of the North
line and of the South line of said Lot 21.
Parcel 2:
Lots 1, 2, 25, and 28;
That part of the vacated alley, which lies East of the centerline thereof
and between the Westerly extensions of the North line of said Lot 1 and
the South line at said Lot 2;
That part of the vacated alley, which lies West of the centerline thereof
and between the Easterly extensions of the North and the South lines of
said Lot 25;
That part of the vacated alley which lies West of the centerline thereof
and between the Easterly extensions of the North and the South lines of
said Lot 28;
That part of the vacated Elliot Avenue South, dedicated in the plat as
9th Avenue South, which lies East of the centerline thereof and between
the Westerly extensions of the North and South lines of Lot 25;
That part of vacated 29th Street East lying between the extensions across
it of the east line of said Lot 1 and the West line of said Lot 28;
That part of the East ½ of vacated Elliot Avenue South, dedicated
in the plat of Allan & Anderson’s Second Addition to Minneapolis
as 9th Avenue South lying South of the North line of said plat (being
the North line of the South ½ of the Southeast Quarter of the Southwest
Quarter, Section 35, Township 29, Range 24) and North of the Westerly
extension of the South line of said Lot 28;
All in Block 3, Allan & Anderson’s 2nd Addition to Minneapolis.
Parcel 3:
Lots 16 and 17;
That part of the adjoining alley vacated, lying between the extensions
across it of the North lines of said Lots 16 and 17 and the South line
of Block 3;
That part of the East ½ of vacated Elliot Avenue South dedicated
in the plat of Avery’s Chicago Avenue Addition to Minneapolis as
9th Avenue South lying between the Westerly extensions of the North and
South lines of said Lot 17;
All in Block 3, Avery’s Chicago Avenue Addition to Minneapolis.
Parcel 4:
That part of the North Half of the Southeast Quarter of the Southwest
Quarter of Section 35, Township 29, Range 24; lying South of the South
line of Block 3, Avery’s Chicago Avenue Addition to Minneapolis,
and between the extensions South of the East and West lines of said Block
3.
Certificate Number 1098354.5 (MCDA)
Parcel 2:
Lots 1 through 6 inclusive, Lots 8 through 20 inclusive; and Lots 22 through
28 inclusive; all in Block 2, Allan & Anderson’s Second Addition
to Minneapolis.
All of the vacated alleys dedicated in Block 2, Allan & Anderson’s
Second Addition to Minneapolis, except that part of the East half of said
vacated alley which lies between the Westerly extensions of the North
and South lines of Lot 7 said block and addition, and except that part
of the West half of said vacated alley which lies between the Easterly
extensions of the North and South lines of Lot 21, said block and addition.
Parcel 3:
Lots 3 through 24 inclusive; and Lots 26 and 27; all in Block 3, Allan
& Anderson’s Second Addition to Minneapolis.
That part of the East Half of vacated Elliot Avenue South, dedicated in
said plat as 9th Avenue South, lying between the westerly extensions of
the South line of said Lot 17 and of the North line of said Lot 24.
That part of the East Half of vacated Elliot Avenue South, dedicated in
said plat as 9th Avenue South, lying between the westerly extensions of
the South line of said Lot 26 and of the North line of said Lot 27.
That part of the vacated alley in said Block 3 abutting said Lots 11 through
18 inclusive, which lies South of the most southerly line of said Lot
11 and its westerly extension.
That part of the East Half of the vacated alley in said Block 3 lying
between the westerly extensions of the most southerly line of said Lot
11 and the North line of said Lot 3.
That part of the West Half of the vacated alley in said Block 3 lying
South of the easterly extension of the North line of said Lot 24 and North
of the westerly extension of the most southerly line of said Lot 11.
That part of the West Half of vacated alley in said Block 3 lying between
the easterly extensions of the south line of said Lot 26 and of the North
line of said Lot 27.
Parcel 4:
Lots 1 through 13 inclusive; and Lots 19 through 28 inclusive, all in
Block 4, Allan & Anderson’s Second Addition to Minneapolis.
That part of the West Half of vacated Elliot Avenue South, dedicated in
the plat as 9th Avenue South, lying South of the North line of said plat,
and North of the Easterly extension of the South line of said Lot 12.
That part of vacated East 29th Street, dedicated in said plat, lying between
the Northerly extensions of the East line and of the West line of said
Block 4.
That part of vacated alley in said Block 4 lying between the easterly
extensions of the North line of said Lot 28 and the Easterly extension
of a line parallel with and 9 feet southerly, as measured at right angles,
from the South line of said Lot 22.
That part of the North Half of vacated alley in said Block 4, lying between
the southerly extensions of the East line and of the most westerly line
of said Lot 11.
That part of the South Half of vacated alley in said Block 4 lying between
the northerly extensions of the West line of said Lot 13 and the East
line of said Lot 12.
Parcel 5:
That part of the following described tract:
Lots 15 and 18, Block 3, Avery’s Chicago Avenue Addition to Minneapolis,
and
That part of the East Half of vacated Elliot Avenue South, dedicated in
said plat as 9th Avenue South, lying between the Westerly extensions of
the North and South lines of said Lot 18, and
That part of the East Half of the vacated alley in said Block 3 lying
between the Westerly extensions of North and South lines of said Lot 15,
and
That part of the West Half of the vacated alley in said Block 3 lying
between the Easterly extensions of North and South lines of Lot 18,
Which lies Southerly of the following described Line A:
Commencing at the Northeast corner of said Block 3, thence South 0 degrees
10 minutes 14 seconds East, along the East line of said Block 3 a distance
of 476.95 feet to the point of beginning of the line to be described;
thence South 89 degrees 22 minutes 29 seconds West, a distance of 294.99
feet to the West line of the East Half of vacated Elliot Avenue and there
terminating.
Other Land: Non-exclusive appurtenant easements set forth in
Reciprocal Easement Agreement dated December 30, 2002, filed February
14, 2003, as Document Number 3684414, Office of Registrar of Titles, Hennepin
County, Minnesota, between Allina Health System and Minneapolis Community
Development Agency.
EXHIBIT A-1 TO TERM SHEET: DESCRIPTION OF EAST PARCEL
Certificate Number 1098394.5(MCDA)
Parcel 1: Lots 23 through 27 inclusive, Block 1, Allan &
Anderson’s Second Addition to Minneapolis.
Other Land: Lot 28, Block 1, Allan & Anderson’s Second
Addition to Minneapolis.
