HomeMy WebLinkAbout4.2 Amendment to Contract for Private Development and Subordination Agreement between the Cottage Grove Economic Development Authority and 80th & Hemingway LLC
TO: Economic Development Authority
FROM: Christine Costello, Economic Development Director
DATE: May 27, 2020
RE: First Amendment to Contract for Private Development and Subordination
Agreement between the Cottage Grove Economic Development Authority and
80th & Hemingway LLC.
Background
On March 10, 2020 the Economic Development Authority (EDA) approved (vote 4 to 0) and the
City Council ratified on March 18, 2020 the Contract for Private Development (Development
Agreement) and sale of 7516 80th Street to 80th & Hemingway LLC, (Developer), for development
of a four-story 120-unit market rate apartment building.
The market-rate apartment building will include a mix of units, which will include 31 studio units,
47 one-bedroom units, 38 two-bedroom units, and four three-bedroom units. The units will include
a deck or patio and in-unit washer and dryer. The development will also include other amenities
being sought in today’s market rate apartment search a resident community room, outdoor
community deck, resident storage, mail and package room, dog run, dog wash, and bike storage.
Many of these amenities are currently unavailable in existing apartment buildings in the
community.
Illustrative Site Design
Discussion
Economic Development Authority
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First Amendment DA and Subordination Agreement_80 Hemingway
May 27, 2020
Page 2 of 2
The approval of the project by the EDA and City Council happened in the very early stages of the
COVID-19 pandemic and as the pandemic has continued the Developer saw approximately a 3-
4 week delay for the architecture and design on the apartment building. In the Development
Agreement approved in March 2020, the closing on the former city hall property was to take place
on June 4th but the Developer has requested an extension to July 31, 2020 due to the impacts
that COVID-19 pandemic has taken initially on development as everyone adjusted to virtual work
and changes in the economy. The Developer is committed to the development and has continued
to move forward with the project. On May 21st, the Developer submitted to the Building Division
the foundation and footing permit, which is under review. The Developer has also submitted with
the initial Development Agreement earnest money ($20,000) for the project.
Additionally as part of the original Development Agreement the EDA and City agreed that their
interests in the development site would be secondary to the lien of the mortgage held by the
lender, in this case Bridgewater Bank who is providing the Developer the financing for
development. The execution of a subordination agreement is common practice for development
when the EDA and City are not providing financing of the project. The Subordination Agreement
is also recorded at Washington County as part of the development process.
Recommendation
Authorize the First Amendment to the Contract for Private Development between the
Cottage Grove Economic Development Authority and 80th & Hemingway LLC.
Authorize Subordination Agreement between the Cottage Grove Economic Development
Authority, City of Cottage Grove, and Bridgewater Bank.
Attachments
1. Resolution
2. First Amendment for Contract for Private Development
3. Contract for Private Development
4. Subordination Agreement
COTTAGE GROVE
ECONOMIC DEVELOPMENT AUTHORITY
WASHINGTON COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2020 -____
A RESOLUTION AMENDING THE CONTRACT FOR PRIVATE REDEVELOPMENT
BY AND BETWEEN THE COTTAGE GROVE ECONOMIC DEVELOPMENT
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AUTHORITY, CITY OF COTTAGE GROVE AND 80& HEMINGWAY LLC AND
AUTHORIZING EXECUTION OF THE SUBORDINATION AGREEMENT
WHEREAS, the Cottage Grove Economic Development Authority (“EDA”),the City of
th
Cottage Grove and 80& Hemingway LLC (“Developer”) enteredinto a Contract for Private
Redevelopment dated March 18, 2020 (“Contract”) for developing the property located at 7516
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80 Street South, Cottage Grove, MN 55016; and
WHEREAS, Developer has requested an extension of the closing date and modification
of terms in the Contract affected by such extension; and
WHEREAS, Developer has requested the EDA execute a Subordination Agreement with
its lender; and
WHEREAS, the EDA agrees to Developer’s requests.
NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the
Cottage Grove Economic Development Authority as follows:
1. The definition of “Closing” in Section 1.1 of the Contract is modified to read as
follows:
“Closing” or “Closing Date” means on or before July 31, 2020, unless otherwise
agreed to by the parties, and subject to extensions as provided in Section 3.5(c) of
this Agreement.
2. The definition of “Maturity Date” in Section 1.1 of the Contract is modified to read
as follows:
“Maturity Date” means the date when the Developer has satisfied its obligations
under the Agreement and the EDA has issued the Certificate of Completion, which
shall be no later than November 29, 2021, unless otherwise agreed to by the parties
in writing.
3. Section 7.2 of the Contract shall be amended and restated as follows:
For the foregoing reasons the Developer represents and agrees that until the
Maturity Date the Developer has not made or created, and that it will not make or
create, or suffer to be made or created, any total or partial sale, assignment,
conveyance or any trust or power, or transfer in any other mode or form of or with
respect to the Agreement or the Development Property or any part thereof or any
interest therein, or any contract or agreement to do any of the same.
Notwithstanding the foregoing, the Developer shall be permitted to grant a
mortgage interest in the Development Property and may collaterally assign the
Developer's interest in this Agreement to any lender providing construction or
permanent financing for the Project.Any transfer occurring from a foreclosure
action, deed in lieu, or transfer by Developer’s lender shall be a permitted transfer
under this Agreement.
4. Section 8.5 shall be added to the Contract.
Section 8.5 Notice to Lender. Upon any Event of Default referred to in Section 8.1
of this Agreement, the EDA shall provide thirty (30) days written notice to
Bridgewater Bank, a Minnesota banking corporation (“Lender”). Lender shall have
the right, but not the obligation, to cure the Event of Default within said thirty (30)
day period or a period reasonably satisfactory to the EDA if the Event of Default
cannot be cured within such thirty (30) period. Lender’s notice address is: 7831
East Bush Lake Road, Suite 300, Bloomington, Minnesota 55439, Attention: Erik
Schwegler.
5. The President and Executive Director are authorized to sign all necessary
documents to effectuate amending the Contract.
6. The President and Executive Director are authorized to signthe Subordination
Agreement with Developer’s lender.
nd
Passed this 2day of June,2020.
Myron Bailey, President
Attest:
Jennifer Levitt, Executive Director
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (“Agreement”) is made and entered into this
___ day of June, 2020, by and between the COTTAGE GROVE ECONOMIC DEVELOPMENT
AUTHORITY, a Minnesota public body corporate and politic (the “Authority”), and the CITY
OF COTTAGE GROVE, a Minnesota municipal corporation (the “City”) and BRIDGEWATER
BANK, a Minnesota banking corporation (“Bridgewater”).
RECITALS
WHEREAS, Bridgewater is making a mortgage loan to 80th & Hemingway LLC, a
Minnesota limited liability company (“Borrower”) in the amount of Eighteen Million Two
Hundred Thirty-Nine Thousand Six Hundred Twenty and 00/100 Dollars ($18,239,620.00) (the
“Senior Loan”), which Senior Loan is secured by a Combination Mortgage, Security
Agreement, Fixture Filing and Assignment of Leases and Rents granted by Borrower of even
date herewith, to be recorded with the Washington County Recorder’s Office (the “Senior
Mortgage”) as a first mortgage lien againstthe fee simple interest in real property locatedin the
City of Cottage Grove, County of Washington, State of Minnesota (the “Property”), as legally
described in Exhibit A attached hereto.
WHEREAS, Authority, City and Borrower have entered into a Contract for Private
Redevelopment dated March 18, 2020, as amended pursuant to a _______________ dated
_______________ (collectively, the “Development Contract”), which provides for certain
obligations and rights of the Borrower and Authority and City in connection with the
development of the Property, specifically the Authority’s and City’s right of reverter contained in
Section 8.2(d) of the Development Contract and in Exhibit D of the Development Contract
containing the Development Property Deed (the “Authority Rights”).
WHEREAS, that as a condition of Bridgewater making the Senior Loan as of the date
hereof, Authority and City must execute and deliver this Subordination Agreement agreeing to
subordinate the Authority Rights contained in the Development Contract with respect to the
Property, all as more fully set forth herein; and
NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good
2027341.v1
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by
each party hereto, it is hereby agreed as follows:
1. Subordination. The Authority Rightsheld by the Authority and City with respect
to the Property are hereby subjected and subordinated and shall remain in all respects and for all
purposes subject, subordinate, and junior to the lien of the Senior Mortgage, and to the rights and
interest of the holder of the Senior Mortgage, as fully and with the same effect as if the Senior
Mortgage had been duly executed, acknowledged, and recorded, and the indebtedness secured
thereby had been fully disbursed prior to the execution of the Development Contract containing
the Authority Rights.
3. Successors and Assigns. This Agreement and each and every covenant,
agreement, and other provisions hereof shall be binding upon the parties hereto and their
respective successors and assigns, including without limitation each and every holder of the
Senior Mortgage or any other person having an interest therein and shall inure to the benefit of
the Bridgewater and its successors and assigns.
4. Choice of Law. This Agreement is made and executed under and in all respects is
to be governed and construed by the laws of the State of Minnesota.
5. Captions and Headings. The captions and headings of the various sections of this
Agreement are for convenience only and are not to be construed as confirming or limiting in any
way the scope or intent of the provisions hereof. Whenever the context requires or permits, the
singular shall include the plural, the plural shall include the singular, and the masculine,
feminine, and neuter shall be freely interchangeable.
6. Notices. Any notice which any party hereto may desire to may be required to
give to any other party shall be in writing and shall be deemed given two (2) business days after
mailing thereof by first class mail, or equivalent, to the addresses as set forth below, or to such
other places any party hereto may by notice in writing designate shall constitute service of notice
hereunder.
Bridgewater:Bridgewater Bank
7831 East Bush Lake Road, Suite 300
Bloomington, Minnesota 55439
Attn: Erik Schwegler
Authority: Cottage Grove Economic Development Authority
12800 Ravine Parkway South
Cottage Grove, Minnesota 55016
Attn: Jennifer Levitt, EDA Executive Director
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City:City of Cottage Grove
12800 Ravine Parkway South
Cottage Grove, Minnesota 55016
Attn: City Administrator
7. Counterparts. Each of the executed counterparts of this Agreement shall be
original and all counterparts together shall constitute one and the same agreement.
8. Term. This Agreement shall continue in effect until the earlier of the Senior Loan
being paid in fullor the date that neither of the Authority Rights are any longer in effect.
\[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK\]
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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed as of the date first above written.
AUTHORITY:
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
By: ____________________________________
Myron Bailey
Its President
By: ____________________________________
Jennifer Levitt
Its Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2020, by Myron Bailey and Jennifer Levitt, the President and Executive Director respectively, of
the Cottage Grove Economic Development Authority, a public body corporate and politic
organized and existing under the Constitution and laws of Minnesota, on behalf of the EDA.
____________________________________
Notary Public
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CITY:
CITY OF COTTAGE GROVE
By:
Myron Bailey
Its Mayor
By:
Joseph Fischbach
Its City Clerk
STATE OF MINNESOTA )
)ss.
COUNTY OF WASHINGTON )
On this day of , 2020, before me a Notary Public within and
for said County, personally appeared Myron Bailey and Joseph Fischbach to me personally known,
who being each by me duly sworn, each did say that they are respectively the Mayor and City Clerk
of the City of Cottage Grove, the municipality named in the foregoing instrument, and that the said
instrument was signed in behalf of said municipality by authority of its City Council and said Mayor
and City Clerk acknowledged said instrument to be the free act and deed of said municipality.
Notary Public
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BRIDGEWATER:
BRIDGEWATER BANK,
a Minnesota banking corporation
By:
Erik Schwegler
Its: Senior Vice President
STATE OF MINNESOTA)
) ss.
COUNTY OF __________)
On this ______ day of March,2020, before me appearedErik Schwegler, the Senior Vice
President ofBridgewaterBank, aMinnesota banking corporation, on behalf of the bank.
Notary Public
This instrument was drafted by:
MESSERLI & KRAMER P.A. (MRJ)
1400 Fifth Street Towers
100 South Fifth Street
Minneapolis, MN 55402-4218
(612) 672-3718
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EXHIBIT A
Legal Description
That part of the Southeast Quarter (SE 1/4) of Section Eight (8), Township Twenty-seven (27),
Range Twenty-one (21), Washington County, Minnesota, described as beginning at a point on
the South line of said Southeast Quarter (SE 1/4) distant 2,216 feet West from the Southeast
corner of said Southeast Quarter; thence North, perpendicular to said South line, 330 feet; thence
at right angles West to the West line of said Southeast Quarter; thence South along said West
line to the Southwest corner of said Southeast Quarter; thence East along the South line of said
Southeast Quarter to the point of beginning.
Washington County, Minnesota
Abstract Property
19298940v1
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