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5.0. 6.0. 7.0. EDSR 07-12-1999 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MEMORANDUM TO: Economic Development.Authority FROM: Paul T.Steinman, Director of Economic Development DATE: July 8, 1999 SUBJECT: Agenda Memo for July 12, 1999, EDA Meeting 5. Review/Discuss Advertising and Marketing Issues Issue Last year during budgeting discussions an EDA member suggested a more specific review of the EDA's advertising and marketing budget. The purpose of this agenda item is to allow the EDA to provide input • on this issue prior to considering the 2000 budget at the meeting on August 9, 1999. Background The EDA has budgeted and spent approximately$17,000 - $20,000 on print advertisingover the past several years. These print advertisements typically appeared in the following publications: • Minnesota Real Estate Journal • City Business • Midwest Industrial Properties Magazine • Corporate Report Ventures • Business and Industry Magazine Staff has generally referred to these dollars being spent on awareness advertising, that is keeping our city's name out in front of a variety of people who are hopefully making decisions on business expansion and relocation. Staff can recall only several instances when prospects called specifically due to having seen the city's advertisement in one of the publications. When asked however, a • majority of prospects have viewed one or more print ads that have appeared over the last several years. 13065 Orono Parkway • P. O. Box 490 • Elk River, MN 55330-1743• (612) 441.7420 • Fax (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment EDA Agenda Memo July 12, 1999,Meeting Page 2 Staff has concluded that in order to make the most out of the EDA's marketing budget, a marketing plan needs to be developed. Staff anticipates this will be one of the directives initiated under the recent Strategic Plan modification process. Such marketing plan will help direct our marketing efforts including the following: • ' Better targeting the print advertising • Help determine targeted distribution of additional marketing materials • Develop ideas for additional marketing events/activities • Provide a better understanding of our current industrial market, competition, and Elk River's positioning strategy within such market. Staff proposes within the next several months to ask the EDA to plan a couple of educational sessions on economic development marketing, potentially with an outside professional. The purpose of these sessions would be to provide the framework for development of a marketing plan, which would subsequently be implemented over the next several years. It is important to note the complexity of the marketing environment within which we'are working including addressing Aft several key questions: • ' What is the product we are selling? • What is Elk River's"position" in the market place? • Who are the consumers of our products? • How do we use limited resources to reach such consumers? Staff feels the current level of advertising/marketing that is being done by the EDA is only a"shell"which needs to have a plan developed within it in order to direct and focus our limited resources. Staff is recommending within the 2000 budget to retain the current advertising/marketing efforts at previous year's levels,with the addition of a $7,000 expenditure for a major marketing event. This proposed expenditure is in anticipation of completing a marketing plan that would likely propose additional expenditures in order to accomplish the goals of the plan. 6. Consider Resolution 99- Approving and Authorizing a Tax Increment Pledge Agreement Regarding TIF District No. 19 Ask Issue IIP The city's bond attorney,Jim O'Meara, is recommending approval of the attached resolution as part of the overall bond sale that was approved by the City Council on June 28, 1999. EDA Agenda Memo July 12, 1999,Meeting Page 3 • Background The city's bond attorney is recommending approval of the attached resolution to formalize the process of using tax increments from District No. 19 to pay$630,000 of the bonds that were sold on June 28, 1999. This is the cost of construction of the lift station within TIF District No. 19 and has always been an anticipated tax increment expenditure from this District. The reason the EDA is being asked to consider this resolution is because TIF District No. 19 is a "EDA" TIF District, meaning it was initiated by the EDA. Since the council is the entity selling the bonds, there needs to be some surety that the EDA agrees it will allow tax increments to be used to repay a portion of these bonds. Recommendation Staff recommends approval of Resolution 99- approving and authorizing a tax increment pledge agreement. 7. Consider Approval of Contract for Private Development Regarding TIF District No. 19 Issue The issue to be considered by the EDA at this meeting is to approve the attached Contract for Private Redevelopment by and between the Economic Development Authority in and for the City of Elk River and Associated Investors of Elk River,Inc., Fischer Sand and Aggregate, LLP, and Elk River Business Park, LLC. Background City staff and City Attorney Peter Beck have been working with the commercial and industrial developers for approximately the past six months to bring this redevelopment contract to the EDA for its consideration. The enclosed contract is not in execution form and will likely require additional minor modifications prior to execution by all parties. Staff is recommending the EDA authorize execution of this contract for private redevelopment, understanding that such language modifications may be required prior to execution. • EDA Agenda Memo July 12, 1999,Meeting Page 4 • Article 3 of the enclosed Contract for Private Redevelopment describes the business aspects of the agreement. A summary of such business aspects of this agreement is as follows: • Total tax increment incentive to developer - $2.811 million. • A maximum of$300,000 to be provided as an up front incentive at the time of issuance of the building permits far the initial improvements, which include construction of the first big box retail unit and a 50,000 square foot industrial building. • Approximately $2 million of tax increment will be used to reimburse the city for various public improvement costs incurred within the TIF District, i.e., construction of lift station, utility improvements, internal loans the city has taken in order to finance the $300,000 up front payment to developer, and that portion of the street project that lies within the TIF District boundaries. • An additional approximately $4 million will be used to pay interest on the debt necessary to fund these land acquisition and public improvement costs. • • Approximately$1 million will be used (no more than 10% of the total TIF generated) for costs incurred by the city outside the TIF District including costs to acquire the Brown/Kirkeide land and pay assessments on the Brown land. • Payment of tax increment to the developer is conditioned upon the developer meeting certain goals of development of the business park property to the south of TIF District No. 19 including: — completion of a total of 50,000 square feet by December 31, 2000. - completion of a total of 75,000 square feet of industrial space by December 31, 2002. - completion of a total of 1250,000 square feet of industrial space by December 31, 2004. — completion of a total of 175,000 square feet of industrial space by December 31, 2006. - completion of a total of 200,000 square feet of industrial space by December 31, 2008. • Full build out of the business park is closer to 300,000 square feet, and the developer will be required to provide a concept III plan showing total build out of expansion space over and above what the EDA is requiring in each of the given years. • The penalty to the developer for not having met goals of development of the business park is that 50 percent of the EDA Agenda Memo July 12, 1999,Meeting Page 5 • tax increment owed to the developer in any given year will be withheld until business park goals are met. • No payment will be made to the redeveloper unless there is "available tax increment "-with which to make the payment available tax increment is tax increment received by the city that remains available after the city and EDA have made payment of the following priority items. - administrative expenses. - state auditor's deduction. - scheduled payments on the bond requirements issued by the city or planned to be issued by the city in the principal amount of approximately $1.4 million. - scheduled payments on all internal loans entered into to finance portions of the public improvement costs - funding of the debt service reserve account. • The above listed payment of priority items are on an annual basis, not in aggregate, so the developer will potentially receive some annual tax increment after the city and EDA have paid their annual debt service on the priority items. The most likely scenario for construction will be that the first big box 1110 retail and the 50,000 square foot industrial building will begin in the spring of 2000. This start date is driven in part by the city's schedule for completion of the street project adjacent to the Commercial and Business Park land. The street is estimated to be completed to a point of providing access to these projects by late summer or early fall. The developers have indicated they will plan their projects so that completion does not occur prior to having full access on the road servicing their project. Recommendation Staff recommends the EDA approve the Contract for Private Redevelopment by and between the EDA and developers allowing for staff and the city attorney to make final language modifications and authorizing execution of the Contract. Extract of Minutes of Meeting 111 of the Board of Commissioners of the Elk River Economic Development Authority Pursuant to due call and notice thereof a regular or special meeting of the Board of Commissioners of the Elk River Economic Development Authority was held at the Elk River City Hall on July 12, 1999, commencing at P.M. , C.T. The following Commissioners were present : and the following were absent: *** *** *** 110 The following Resolution was presented by Commissioner , who moved its adoption: RESOLUTION NO. RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT RESPECTING PAYMENT OF A SPECIFIED PORTION OF THE $5, 725, 000 GENERAL OBLIGATION BONDS, SERIES 1999A OF THE CITY OF ELK RIVER, MINNESOTA WHEREAS, the City of Elk River, Minnesota (the "City") , has awarded or is expected to award the sale of its $5, 725, 000 General Obligation Bonds, Series 1999A, dated July 1, 1999 (the "Bonds") , $630, 000 of the principal amount of which are to finance certain expenditures and public development costs undertaken within Development District No. 1 which is now under the governance and control of the Elk River Economic Development Authority (the "EDA") . NOW, THEREFORE, IT IS HEREBY RESOLVED by the Board of Commissioners of the EDA as follows : 111 1059219.1 1. The Tax Increment Pledge Agreement attached hereto and 111 made a part hereof is hereby approved, and the officers of the EDA are hereby authorized and directed to take such steps as may be necessary to execute said Agreement, in substantially the form as attached, upon approval and execution thereof by the City, and to carry out and fulfill the provisions and requirements thereof. 2 . The EDA hereby makes formal request to the Elk River City Council to issue the Bonds to assist the EDA in financing the subject public development costs. Adopted by the Board of Commissioners of the Elk River EDA this 12th day of July, 1999. The motion for the adoption of the foregoing Resolution was duly seconded by Commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said Resolution was declared duly passed and adopted. • 111 1059219.1 • TAX INCREMENT PLEDGE AGREEMENT This Tax Increment Pledge Agreement (the "Agreement") is dated as of July 1, 1999; is by and between the City of Elk River, Minnesota (the "City") , and the Elk River Economic Development Authority (the "EDA") ; and provides as follows : WHEREAS, at the request of the EDA, the City Council has adopted or is expected to adopt a resolution (the "Bond Resolution") awarding the sale of the City's $5, 725, 000 General Obligation Bonds, Series 1999A, dated July 1, 1999 (the "Bonds") , $630, 000 of the principal amount of which (as defined in the Bond Resolution, the "TIF Bonds") are to assist in financing certain public development costs within Development District No. 1 (the "Project") of the EDA; and WHEREAS, to provide funds sufficient for the timely payment of the debt service on the TIF Bonds, it is necessary for the EDA and the City to enter into this Agreement; and WHEREAS, each capitalized term which is used but not otherwise defined in this Agreement shall have the meaning given to that term in the Bond Resolution: NOW, THEREFORE, in consideration of the covenants and • agreements hereof between the City and the EDA, and pursuant to Minnesota Statutes, Section 469 . 178, Subdivision 2, the City and the EDA hereby agree as follows : 1. In order to pay the principal of and interest on the TIF Bonds, when due, the EDA hereby pledges to the City, for deposit in the Debt Service Account established by the Bond Resolution for the payment of the TIF Bonds, and the EDA shall pay to the City, Available Tax Increments (hereinafter defined) ; provided that the amounts thereof payable hereunder shall not in any year exceed amounts necessary, together with other funds available for such purposes in said Debt Service Account, to pay the principal of and interest on the TIF Bonds, when due. As used in this Agreement, "Available Tax Increments" means tax increments that are derived by the EDA from Tax Increment Financing District No. 19 within the Project . The foregoing pledges and descriptions of Available Tax Increments are further made subject and junior in lien to all unpaid pledges or other outstanding commitments heretofore made for such tax increments. In discharging its obligations under this Agreement, the EDA expressly reserves the rights (1) to pledge or otherwise dedicate the Available Tax Increments to purposes other than the discharge of the obligations described above upon a finding by the EDA that the estimated Available Tax • Increments then remaining will be sufficient from year to year 1059219:1 for such purposes, and (2) to satisfy its obligations hereunder • from year to year from such eligible other revenues as the EDA may deem in its discretion to be appropriate, desirable or necessary, as may be permitted by law. 2 . An executed copy of this Agreement shall be filed with the County Auditor of Sherburne County, Minnesota, as required by Minnesota Statutes, Section 469 .178, Subdivision 2 . 3 . This Agreement shall become effective upon the actual issuance and delivery of the Bonds. IN WITNESS WHEREOF, the City and the EDA have caused this Agreement to be duly approved and executed as of the day and year first above written. CITY OF ELK RIVER, MINNESOTA By Its Mayor By (SEAL) Its City Administrator ELK RIVER ECONOMIC DEVELOPMENT • AUTHORITY By Its President By Its Secretary 1059219.1 . . SECRETARY'S CERTIFICATE • I, the undersigned, being the duly qualified and acting Secretary of the Elk River EDA, do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a special or regular meeting of the Board of Commissioners thereof, duly called and regularly held on the date therein indicated with the original thereof on file in my office and I further certify the same is a full, true, and correct copy thereof, insofar as the same relates to the approval of a certain Tax Increment Pledge Agreement respecting a portion of the $5, 725, 000 General Obligation Bonds, Series 1999A, of the City of Elk River, Minnesota. WITNESS my hand as such Secretary of the EDA this day • of July, 1999 . Secretary, Elk River EDA 1059219.1 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:29/ST. 9:28/NO, 4261218754 P 2 Tax Increment Financing District No. 19 • (Elk River Crossing/Elk River Business Park Mixed Use Development) CONTRACT FOR PRIVATE REDEVELOPMENT By and Between THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER and Associated Investors of Elk River,Inc., • Fischer Sand &t Aggregate,LLP, and Elk River Business Park,LLC Dated: This document was drafted by: CITY OF ELK RIVER 13065 Orono Parkway Elk River,MN 55330 Telephone: (612)441-7420 With final review by: GRAY, PLANT,MOOTY,MOOTY&BENNETT,P.A. 3400 City Center 33 South Sixth Street Minneapolis, MN 55402 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:29/ST. 9:28/NO. 4261218754 P 3 TABLE OF CONTENTS • rug Preamble l ARTICLE I. Definitions 2 Section 1.1 Definitions 2 ARTICLE II. Representations 6 Section 2.1 Representations by the Authority 6 Section 2.2 Representations by the Redeveloper 7 ARTICLE III. The Development Property;The Development; Land Acquisition; Reimbursement 8 Section 3.1 The Development Property 8 Section 3.2 The Development 9 Section 3.3 Land Acquisition and Costs. 12 • Section 3.4 Payment of Reimbursable Redevelopment Costs 13 Section 3.5 Payment on Note 14 Section 3.6 Payment of Public Improvement Costs 16 • Section 3.7 Reserve Requirements 16 Section 3.8 Limitations 17 Section 3.9 Priority Items 17 ARTICLE IV. Construction of Minimum Improvements 18 Section 4.1 Construction of Minimum Improvements. 18 Section 4.2 Commencement and Completion of Construction 18 Section 4.3 Certificate of Completion 18 Section 4.4 Failure to Complete Minimum Improvements 19 ARTICLE V. Tax Increment 19 Section 5.1 Tax Increment 19 ARTICLE VI. Mortgage Financing 20 Section 6.1 Mortgage Financing 20 Section 6.2 Limitation Upon Encumbrance of Property 20 ARTICLE VII. Prohibitions Against Assignment and Transfer,Indemnification 20 Section 7.1 Prohibition Against Transfer of Property and Assignment of Agreement 20 S Section 7.2 Approvals 21 Section 7.3 Release and Indemnification Covenants 22 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:30/ST. 9:28/NO. 4261218754 P 4 ARTICLE VIII. Events of Default 22 110 Section 8.1 Events of Default Defined 22 Section 8.2 Authority's Remedies on Default 23 Section 8.3 No Remedy Exclusive 23 Section 8.4 No Additional Waiver Implied by One Waiver 24 ARTICLE IX. Additional Provisions 24 Section 9.1 Rcprcscntatives Not Individually Liable 24 Section 9.2 Equal Employment Opportunity 24 Section 9.3 Restrictions on Use 24 Section 9.4 Titles of Articles and Sections 24 Section 9.5 Notices and Demands 24 Section 9.6 No Third-Party Beneficiaries 25 Section 9.7 Entire Agreement 25 Section 9.8 Modifications 25 Section 9.9 Counterparts 25 Section 9.10 Judicial Interpretation 25 Section 9.11 Law of Governing Period 25 Section 9.12 Time of the Essence 25 • ARTICLE X. Termination of Agreement; Expiration 25 40 Section 10.1 Termination 25 Section 10.2 Sections to Survive Termination 26 Exhibit A Description of Redevelopment Property A-1 Exhibit B Note R-1 Exhibit C Certificate of Completion C-1 Exhibit D Job Performance Agreement D-1 Exhibit E Description of Uses by Tenant E-1 Exhibit F Priority Items F-1 i -2- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:30/ST. 9:28/NO. 4261218754 P 5 CONTRACT FOR PRIVATE REDEVELOPMENT • THIS AGREEMENT, made on or as of the day of , 1999 by and between the Economic Development Authority in and for the City of Elk River, a public body corporate and politic (hereinafter referred to as the "Authority"), established pursuant to Minnesota Statutes, Sections 469.090 to 469.108; and Associated Investors of Elk River, Inc., a Minnesota corporation, Fischer Sand & Aggregate, LLP, a Minnesota limited liability partnership, and Elk River Business Park, LLC, a Minnesota limited liability corporation (collectively hereinafter referred to as the"Redeveloper"). WITNESSETH: WHEREAS, the Authority was created and authorized to transact business and exercise its powers by Resolution No. 87-63 of the City Council of the City of Elk River; and WHEREAS, in furtherance of the objectives of Resolution No. 87-63, the City has undertaken a program to finance public improvements and facilities and other appropriate costs to aid in the clearance and reconstruction or rehabilitation of blighted, deteriorated, deteriorating, vacant, unused, under used or inappropriately used areas of the City, and in this connection is engaged in carrying out a development program and a redevelopment project (hereinafter referred to as the "Project") within Development District No. 1 of the City of Elk River (hereinafter referred to as the"Project Area"); and 11111 WHEREAS, as of the date of this Agreement there has been prepared and approved by the Authority and the City Council of the City a development program and redevelopment plan for the Project(which is hereinafter referred to as the"Development Program"); and WHEREAS, the Authority has created within the Project Area its Redevelopment Tax Increment Financing District No. 19 (the "Tax Increment District") pursuant to Minnesota Statutes, Sections 469.174 to 469.179, in order to create a funding source to finance the public redevelopment costs of the Project; and WHEREAS, the Redeveloper has presented to the Authority a proposal for the redevelopment of the Redevelopment Property through the construction of a shopping center, which proposal involves the Authority's use of tax increment pursuant to this Agreement to reimburse the Redeveloper for certain costs of acquiring and preparing the Redevelopment Property for redevelopment; and WHEREAS, the Authority believes that redevelopment of the Redevelopment Property pursuant to the Redeveloper's proposal, and the fulfillment generally of this Agreement, arc in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is, therefor,willing to provide the financial assistance outlined herein. FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:30/ST. 9:28/NO. 4261218754 P 6 NOW,THEREFORE,in consideration of the premises and the mutual obligations of the • parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I. Definitions Section 1.1 Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Administrative Expenses" means "administrative expenses" as defined in Section 469.174, subdivision 14 of the TIF Act at any time actually incurred by the Authority or the City with respect to the TIF district subject to the tcn percent (10%) statutory maximum provided in Section 469.176,subdivision 3 of the TIF Act. "Agreement" means this Contract for Private Redevelopment as the same may be from time to time modified, amended, or supplemented. "Associated Investors" means Associated Investors of Elk River, Inc., a Minnesota corporation. "Authority" means the Economic Development Authority In and For the City of Elk River,or any successor or assign. S "Available Tax Increments" means that Tax Increment received by Authority which remains available after City and Authority have made payment of all Priority Items, including scheduled payments on all Bonds,Internal Loans or other obligations issued by City or Authority to finance City Public Improvement Costs and qualified redevelopment costs incurred by City and Authority, and have funded the Reserve Requirements for future Bond and Internal Loan payments as provided by this Agreement. "Bonds" means the general obligation bonds to be issued in one or more series by the City to finance the public improvements, including bonds issued to refund bonds, providing that such refunding bonds do not extend maturity of the bonds and that in each year the debt service due on the refunding bonds does not exceed the undefeased debt service on the Bonds. "Building Permit" means a building permit issued pursuant to the requirements of City Code and the Uniform Building Code. "Business Park Developer Agreement" means that certain development agreement between the City and Fischer Sand & Aggregate, LLP, and Elk River Business Park, LLC, providing for the installation of and payment for public improvements on the Business Park Property, and related matters with respect to the Business Park Project. "Business Park Project" means the development of approximately 200,000 square feet, • and the provision for development of an additional 100,000 square feet, of light industrial building space on the Business Park Property, together with all of the roadways, parking -2- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:31/ST. 9:28/NO. 4261218754 P 7 facilities,walks, landscaping,utility and other onsitc improvements necessary in connection with • and in order to facilitate development of the Business Park Property. "Business Park Property" means the real property described in Exhibit A to this Agreement, on which Redeveloper will develop the Business Park Project. "Certificate of Completion" means a certificate substantially in the form attached as Exhibit C to be executed by the Authority upon completion of the Initial Improvements. "City"means the City of Elk River. "County"means the County of Sherburne. "Development" means the mixed use development consisting of the Shopping Center Project and the Business Park Project. "Development District"means Development District No. 1 for the City of Elk River. "Development Program" means the City's Development Program for the Project, as amended as of the date of this Agreement. "Development Property" means the Shopping Center Property and the Business Park Property. • "Development Schedule" means the schedule for completion of the Minimum Improvements set forth in Section 3.2(i)of this Agreement. "Elk River Business Park" means Elk River Business Park, LLC, a Minnesota limited liability corporation. "Event of Default"means any event of default described in Article IX of this Agreement. "Fischer Sand& Aggregate"means Fischer Sand&Aggregate, LLP,a Minnesota limited liability partnership. "Holder"means the owner of a Mortgage. "Improvements"means the Business Park Project and the Shopping Center Project. "Initial Improvements" means construction by Redeveloper of a minimum of 140,000 square feet of building space for retail/commercial purposes on the Shopping Center Property, and 50,000 square feet of building space for light industrial purposes on the Business Park Property, together with all roadways, parking facilities, walks, landscaping, utility and other onsite improvements necessary in connection with and in order to facilitate this development, in accordance with the Construction Plans. S -3- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7, 9' 99 9:31/ST. 9:28/NO, 4261218754 P 8 "Initial Payment" means the initial reimbursement payment to be made to Redeveloper • upon completion of the Initial Improvements. "Internal Loan" shall mean internal transfers of funds within and between City and Authority to fund Public Improvement Costs. "Job Performance Agreement" means the agreement in the form of Exhibit D attached hereto to be entered into between the Authority and the Redeveloper pursuant to Section 4.1(b) of this Agreement. "Maturity Date" means the date on which the Authority's payment obligations under the Note terminate. "Minimum Improvements" means the construction by Redeveloper of the Initial Improvements and completion of the Business Park Project in accordance with the definitions, Development Schedule and other requirements set forth in this Agreement. "Mortgage"means any mortgage obtained by the Redeveloper which is secured, in whole or in part,by the Redevelopment Property,and which is a permitted encumbrance pursuant to the provisions of Article VII of this Agreement. "Note" means the Authority's limited revenue tax increment note to be issued by the Authority to the Redeveloper pursuant to Article III of this Agreement to reimburse the • Redeveloper for its payment of Reimbursable Redevelopment Costs. "Parties"means all of the parties to this Agreement,as set forth herein. "Party"means any of the Parties. "Priority Items" means those obligations of the Authority and City which take priority over Note payments, as provided by this Agreement. "Project" means the activities of the Authority within the Project Area within Development District No. 1. "Project Area" means the real property located within the boundaries of Development District No. 1. "Public Improvement Costs" means the costs to be incurred by the City for public improvements necessary within and for the benefit of the TIF District. "Redeveloper"means Associated Investors of Elk River, Inc., Fischer Sand &Aggregate, LLP, and Elk River Business Park, LLC, collectively, or their successors, executors, representatives or assigns, or any future owners of all or any portion of the Development. "Redevelopment Property" means the real property described on Exhibit A to this • Agreement,on which Redeveloper will construct the Shopping Center Project. -4- FROM GRAY PLANT MOOTY MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:32/ST. 9:28/NO, 4261218754 P 9 "Reimbursable Redevelopment Costs" means the costs to be paid by the Authority, • through the issuance of the Note,pursuant to Article 111 of this Agreement. "Reimbursements" means the Initial Payment and subsequent payments made under the Note to reimburse Redeveloper for Reimbursable Redevelopment Costs as provided in Article III of this Agreement. "Reserve Requirements" means, as of any payment date, the amount of regularly scheduled debt service due on the Bonds and the Internal Loans in that year. "Shopping Center Developer Agreement" means that certain development agreement between the City and Associated Investors providing for the installation of and payment for public improvements on the Shopping Center Property, and related matters with respect to the Shopping Center Project. "Shopping Center PUD Agreement" means that certain Planned Unit Development Agreement between the City and Associated Investors respecting development of the Shopping Center Project. "Shopping Center Project" means the development of approximately 250,000 square feet of commercial/retail building space on the Shopping Center Property, together with all of the roadway,parking facilities, walks, landscaping,utilities and other onsite improvements necessary in connection with and in order to facilitate development of the Shopping Center Property. "Shopping Center Property" means the real property described on Exhibit A to this Agreement,on which Redeveloper will develop the Shopping Center Project. "Special Assessments" means the special assessments to be levied pursuant to the Business Park Developer Agreement and the Shopping Center Developer Agreement. "State"means the State of Minnesota. "Tax Increment" means those tax increments from the Redevelopment Property which the authority shall be entitled to receive and retain, and which the authority shall have actually received, from Sherburne County from the TIF District pursuant to the TIF Act with respect to the property taxes payable in the years 2002 through 2027 inclusive, minus all Administrative Expenses; as required by Minnesota Statutes, Section 469.174, subdivision 25(4). Tax increments(including increments held as part of the Reserve Requirements) shall also include all interest and investment earnings thereon. "Tax Increment Act" means Minnesota Statutes, Sections 469.174 to 469.179, as the same may be amended from time to time. "Tax Increment District"means the Authority's Tax Increment District No. 19 within the Project. • -5- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:32/ST. 9:28/NO, 4261218754 P 10 "Tax Official"means any City or County assessor, County auditor, City, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court,the tax court of the State,or the State Supreme Court. "Term" means the period beginning on the date of this Agreement and ending on the termination date described in Article XI of this Agreement. "Unavoidable Delays"means delays which are the result of acts of God, adverse weather conditions, strikes, other labor troubles, delays in obtaining construction materials, machinery and/or equipment, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, results in delays, or acts of any federal, state or local governmental unit (other than the Authority in enforcing its rights under this Agreement) which result in delays. Delays in obtaining financing and delays caused by general market conditions shall not constitute Unavoidable Delays. Upon the occurrence of an Unavoidable Delay,the party seeking to be excused as a result thereof shall be excused for the period of the delay if such party gives the other party written notice of the cause of the delay or interruption within thirty (30)days after its occurrence. ARTICLE II. Representations Section 2.1 Represent ations by the Authority. The Authority makes the following • representations as the basis for the undertaking on its part herein contained: (a) The Authority is au economic development authority organized and existing under the laws of Minnesota. Under the laws of the State, the Authority has thc power to enter into this Agreement and to perform its obligations hereunder. (b) The Project is a"Development District"and was created,adopted and approved in accordance with the laws of the State. (c) The Redevelopment Property is in a redevelopment "tax increment financing district",which was created, adopted, certified and approved pursuant to the Tax Increment Act. (d) The Authority will, at no cost to the Authority, cooperate with the Redeveloper with respect to any litigation commenced with respect to the Development Program, Project, or Initial Improvements. (e) The Authority has received no notice or communication from any local, state or federal official that the activities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any environmental law or regulation or any other local, state or federal laws or regulations. The Authority is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law,regulation or review procedure. • -6- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:33/ST. 9:28/Na 4261218754 P 11 • (f) The City and the Authority make no representation, guarantee or warranty, either expressed or implied, and hereby assume no responsibility or liability as to the Redevelopment Property or its condition (whether regarding soils, pollutants, hazardous wastes or materials or otherwise) or that the Redevelopment Property will be suitable for the purposes or needs of the Redeveloper. Section 2.2 Representations by the Redeveloper. The Redeveloper represents that: (a) The Rcdcvcloper consists of the following three related entities, which have the legal capacity to enter into this Agreement and perform the obligations set forth herein: (i) Associated Investors of Elk River, Inc., which is the owner of the Shopping Center Property and the prospective developer of the Shopping Center Project; (ii) Fischer Sand & Aggregate, LLP, which is the owner of the Business Park Property and a prospective partner in the development of the Business Park Project; and (iii) Elk River Business Park, LLC, which is the prospective developer of the Business Park Project. (b) All three Rcdcvcloper entities are duly organized, existing, and in good standing under the laws of the State of Minnesota. The Redeveloper has full power and authority to enter into this Agreement and to perform its obligations hereunder and has taken or caused to be taken • all actions necessary to make the Agreement, when executed and delivered by the Parties, the valid and binding agreement and obligation of the Redeveloper, enforceable in accordance with its terms, except to the extent such enforceability may be limited by equitable principles and by laws affecting remedies and by bankruptcy moratorium and insolvency Iaws and laws affecting creditors,rights, heretofore or hereinafter enacted. (c) The Redeveloper will construct the Minimum Improvements in accordance with the terms of this Agreement and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations), except for variances necessary to construct the Improvements contemplated in the Construction Plans approved by the Authority. (d) The Redeveloper has received no notice or communication from any local, state or federal official that the activities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any environmental law or regulation. The Redeveloper, to the best of its knowledge,is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law,regulation or review procedure. (e) The Redeveloper agrees and covenants that it will use its best efforts to obtain or cause to be obtained, in a timely manner, all required permits, authorizations, Iicenses and approvals, including environmental and zoning approvals necessary for development of the Improvements, and that the Redeveloper will meet and abide by, in a timely manner, all • requirements and conditions of all such permits, authorizations, Iicenses, and approvals and of all -7- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:33/ST. 9:28/NO, 4261218754 P 12 • applicable local,state,and federal laws and regulations which must be obtained or mct before the Improvements may be lawfully undertaken, completed and operated. (f) Neither the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, is prevented or limited by or in conflict with or will result in a breach of the terms, conditions or provisions of the Redeveloper's organizational documents or of any evidence of indebtedness, agreement, or instrument of whatever nature to which the Redeveloper is now a party or by which it or its property is bound or will constitute a default under any of the foregoing. (g) The Redeveloper represents that it would not be able to induce redevelopment of the Redevelopment Property in the reasonably foreseeable future without the assistance to be provided by the Authority and the City under this Agreement. (h) The Redeveloper will, at no cost to Redeveloper, cooperate with the Authority with respect to any litigation commenced with respect to the Development Program, Project, or Minimum Improvements. (i) Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, and the Authority prevails in such action or effort, the • Redeveloper agrees that it shall, within thirty (30) days of written demand by the Authority pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. ARTICLE III. The Development Property; The Development; Land Acquisition; Reimbursement Section 3.1 The Development Property. (a) The Development Property includes the Business Park Property and the Shopping Center Property. (b) The Business Park Property is owned by Fischer Sand & Aggregate, which acquired the Business Park Property for the proposed Development of the Business Park Project. (c) The Shopping Center Property is the Redevelopment Property. The Redevelopment Property consists of the following parcels, all of which are necessary for Development of the Shopping Center Project: (i) The Hohlen property (P1D No. 75-002-2200), formerly a mobile home park, is currently owned by Associated Investors,which has closed the mobile home park • and is in the process of clearing the property. -8- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:34/ST. 9:28/NO. 4261218754 P 13 (ii) The Ebner property (PID No. 75-135-3420), formerly a single family • home site, was acquired by Associated Investors and is currently owned by the City. (iii) The Warden property (PID No. 75-135-3315), is currently a single family home site owned by Delton and Joan Warden. (iv) The Mevisson property (PID No. 75-135-3310), is currently a single family home site owned by James Mevisson. (v) The Swanberg property (PID No. 75-002-2205) is currently a vacant parcel. (d) The Redeveloper and Authority have entered into this Agreement in order to assist Redeveloper in acquiring the Redevelopment Property by reimbursing Redeveloper for a portion of Redeveloper's costs of acquiring the Redevelopment Property for Development of the Shopping Center Project. Section 3.2 The Development. (a) The Development is a mixed use development consisting of two elements: (i) Redevelopment of approximately 95 acres of underutilized and blighted land consisting of a mobile home park and adjacent single family residential properties (the Redevelopment Property)into the Shopping Center Project; and (ii) Development of approximately 40 acres of farmland adjacent to the Shopping Center Project(the Business Park Property)into the Business Park Project. (b) Authority and City have determined: (i) That generating commercial and industrial development and redevelopment within the eastern area of the City is vitally important to the City's goals of increasing employment and tax base within the City; (ii) That the mixed use Development proposed on the Property is vitally important to generating additional development in the East Elk River area; (iii) That it would not be possible to proceed with the mixed use Development, nor to attract additional industrial development to the eastern area of the City,without the Shopping Center Project,which will attract people and business, including light industrial businesses, to the East Elk River area; and (iv) That development of the Shopping Center Project is not feasible and will not proceed without public assistance with the costs of land acquisition and Public Improvements. • (c) The Development will require substantial public infrastructure, including: -9- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:34/ST. 9:28/NO. 4261218754 P 14 (i) Extension of trunk water and sewer facilities to serve the Project; (ii) Construction of a new road(Tyler Street) and substantial improvements to existing roads to provide adequate access to the Development; (iii) Installation of substantial storm water management facilities to serve the Development; and (iv) Other related Public Improvement Costs including sidewalks, landscaping, etc. (d) The Shopping Center Project is located in the Authority's TIF District No. 19, as amended, a redevelopment TIF District approved by the Authority on July 13, 1998. (e) Because development of the Shopping Center Project is not feasible without some financial assistance with the costs of land acquisition and public improvements, Authority has determined to use Tax Increment from TIF District No. 19 to assist in the redevelopment of land within TIF District No. 19 into the Shopping Center Project, by funding a portion of: (i) Redeveloper's cost to acquire land within TIF District No. 19 for the Shopping Center Project; and (ii) City's qualifying Public Improvement Costs necessary for redevelopment • of the land within TIF District No. 19 into the Shopping Center Project. (t) The total amount of Tax Increment to be used for land acquisition and Public Improvement Costs to assist the Shopping Center Project shall be as follows: (i) $2,811,000 to reimburse Associated Investors for a portion of the cost of land acquisition for the Shopping Center Project(Reimbursable Redevelopment Costs); (ii) Approximately $1,955,000 to reimburse City for public improvement and land acquisition costs incurred within TIP District No. 19 (Public Improvement Costs); (iii) Approximately $4,000,000 in interest costs on the debt necessary to fund land acquisition and Public Improvement Costs;and (iv) Approximately $1,000,000 (and no more than ten percent (10%) of the total tax increment generated by TIF District No. 19) for public costs incurred by City and/or Authority outside the TIF District, including costs for the acquisition of additional land in the East Elk River area for business/industrial park development and storm sewer improvements. (g) Authority has determined that one of the primary benefits of the Shopping Center Project, and one of the reasons for providing tax increment assistance so that the Shopping • Center Project can proceed, is that the Shopping Center Project will generate additional development in the East Elk River area, including light industrial development. To insure that -10- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:35/ST. 9:28/NO, 4261218754 P 15 this goal is met, reimbursement by Authority of the Reimbursable Redevelopment Costs will be • dependent on development of the Business Park Project,as provided in this Agreement. (h) In addition to this Agreement: (i) Associated Investors has entered into the Shopping Center PUD Agreement with the City governing development of the Shopping Center Project; (ii) Associated Investors has entered into the Shopping Center Developer Agreement with the City providing for the installation of and payment for public improvements necessary for development of the Shopping Center Project; and (iii) Fischer Sand & Aggregate and Elk River Business Park have entered into the Business Park Developer Agreement with the City providing for the installation of and payment for public improvements necessary for development of the Business Park Project. (i) Development Schedule. It is imperative to Authority that the entire Development be developed in a timely manner as a condition precedent to reimbursement by Authority to Associated Investors for Reimbursable Redevelopment Costs for the Shopping Center Project. The turning requirements shall be as follows: (1) Initial Improvements - Development of the Initial Improvements shall • proceed immediately,and a Certificate of Occupancy for all Initial Improvements shall be obtained by Redeveloper no later than December 31,2000. (2) Minimum Improvements - Development of the balance of the Minimum Improvements, as defined by this Agreement, shall proceed according to the following schedule: • Certificates of occupancy for a total of at least 75,000 square feet of building space in the Business Park Project shall be issued by December 31,2002. • Certificates of occupancy for a total of at least 125,000 square feet of building space in the Business Park Project shall be issued by December 31,2004. • Certificates of occupancy for a total of at least 175,000 square feet of building space in the Business Park Project shall be issued by December 31,2006. • Certificates of occupancy for a total of at least 200,000 square feet of building space in the Business Park Project shall be issued by December 31,2008. • -11- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:35/ST, 9:28/NO, 4261218754 P 16 • Section 3.3 Land Acquisition and Costs. Development of the Shopping Center Project requires the acquisition of land from four property owners,which shall be acquired as follows: (a) The Hohlen Property. Associated Investors has acquired and is the fee owner of the Hohien Property subject to a mortgage held by the Seller. Authority agrees that it will reimburse Associated Investors for a portion of Associated Investors' costs for acquisition of the Hohlen Property, all of which is located within TIF District No. 19. Reimbursement shall be in the principal amount of up to $2,811,000, pursuant to the terms of this Agreement and the Note, which shall be in the form attached hereto as Exhibit B. Before any payment is made pursuant to the Note or this Agreement, Associated Investors shall provide evidence satisfactory to Authority that Associated Investors has made payments for the I•lohlen property in an amount equal to or greater than the cumulative amount of all payments made on the Note, including the payment then due. There shall be no reimbursement for any land acquisition costs until such evidence is submitted and approved by Authority. (b) The Ebner Property. Associated Investors has acquired and transferred to City the Ebner Property. Most of the Ebner Property will be necessary for right-of-way purposes for new Tyler Street, which will serve the Development. Any portion of the Ebner Property located westerly of the right-of-way for new Tyler Street which is unnecessary for right-of-way purposes shall be returned by City to Associated Investors, upon Associates Investors payment of all costs related to City's ownership and transfer of the Ebner Property. • (c) The Warden and Mevisson Properties. (i) These properties, located south of County Road 12, are necessary for development of the Shopping Center Project. Associated Investors has been unable to acquire the Warden and Mevisson Properties by negotiation, and has requested Authority's assistance in acquiring these properties. (ii) Authority has adopted Resolution No.99 authorizing City staff to assist in the acquisition of the Mevisson and Warden parcels and, if necessary, to commence eminent domain proceedings to acquire these properties. Authority has completed an appraisal of each property,has made an offer to each of the property owners and, having had no response from the property owners,has commenced eminent domain proceedings against these properties. (iii) Associated Investors hereby agrees to reimburse Authority for all of Authority's costs related to the acquisition of the Mevisson and Warden parcels including land costs, relocation costs, appraisal fees, legal fees, staff time and all other costs related to these acquisitions, whether or not title to these parcels ever vests in Authority. Authority shall invoice Associated .Investors on a monthly basis for such costs, and Associated Investors shall reimburse Authority within twenty (20)days of receipt of such invoice. Failure to do so shall be a default under the terms of this Agreement. (iv) If Authority is required in the eminent domain proceedings to pay its estimated value of one or both of the properties into Court or to the owner, Associated -12- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:36/ST. 9:28/NO. 4261218754 P 17 Investors shall provide Authority with funds sufficient to do so upon five (5) days written • notice from Authority. (v) If Authority does acquire title to one or both of these parcels, Authority shall advise Associated Investors of the amount necessary to cover all of Authority's costs for acquiring the parcel, Associated Investors shall tender said amount to Authority within twenty (20) days, and Authority shall, upon receipt of said payment, transfer title to the parcel to Associated Investors. (vi) Failure of Associated Investors to accept title to the Mevisson or Warden parcel, and/or to reimburse Authority for all of its costs related to acquisition of the Mevisson and Warden parcels, shall be a default under the terms of this Redevelopment Agreement. (vii) Associated Investors further agrees to continue pursuing acquisition of these parcels throughout the eminent domain process. Section 3.4 Payment of Reimbursable Redevelopment Costs. Authority's Reimbursement of Redeveloper's Reimbursable Redevelopment Costs shall be by payment of an Initial Payment and issuance of the Note. (a) Initial Payment. The Initial Payment shall be in the amount of no more than $300,000, and shall be made within thirty (30) days of the date on which a Building Permit has • been issued for the Initial Improvements,provided: (i) No Event of Default shall have occurred and be continuing under this Agreement;and (ii) Redeveloper shall have provided to Authority evidence that it has paid land acquisition costs in an amount equal to or greater than the Initial Payment sought. (b) Issuance of Note. The Note shall be in an amount of no more than $2,511,000, and shall be in the form of Note attached to this Agreement as Exhibit B,with all blanks properly filled in and with the payment schedule attached thereto adjusted to take into account the actual date of issuance. The Note shall be issued within twenty (20) days after satisfaction of the following conditions precedent to issuance of the Note: (1) No Event of Default shall have occurred and be continuing under this Agreement; (ii) Redeveloper shall have provided to Authority evidence that it has paid land acquisition costs as described in Section 3.3(a)of this Agreement; (iii) Redeveloper shall have obtained all governmental approvals that must he obtained in order to permit construction and operation of the Initial Improvements; and S -13- FROM GRAY PLANT MOOT? MOOTY & BENNETT (#3) (FRI) 7, 9' 99 9:36/ST. 9:28/NO. 4261218754 P 18 (iv) Redeveloper shall have received Building Permits for the Initial Improvements and shall have commenced construction pursuant to those permits on all buildings included in the Initial Improvements. (c) Type of Note. The Note shall be a special and limited revenue obligation of thc Authority and not a general obligation of Authority, and only Available Tax Increments as provided by this Agreement shall be used to pay the principal and interest on thc Note. The Note shall not be any obligation whatsoever of the City. (d) Governance of Note. The Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B. In the event of any conflict between the terms of the Note and the terms of this Agreement,the terms of the Note shall govern. (e) Termination of Note. Following termination of this Agreement, no further or unpaid amounts of the Note shall then or thereafter be due and payable by Authority under this Agreement or the Note,but shall thereupon be extinguished. Section 3.5 Payment on Note. (a) Conditions Precedent to Payment on Note. Authority's obligation to make payments on the Note shall be subject to the following conditions precedent: (i) No Event of Default shall have occurred and be continuing under this 110 Agreement; (ii) Redeveloper shall have provided to Authority evidence that it has made payments for land acquisition costs in an amount equal to or greater than the cumulative amount of all payments made on the Note, including the payment then due, as provided in Section 3.3(a)of this Agreement; 1. If all or a portion of a scheduled payment is not made because Redeveloper has not provided satisfactory evidence of actual payment of Reimbursable land acquisition costs, the scheduled payment, or balance thereof, shall be made within 10 days of receipt of such evidence from Redeveloper. No interest will accrue on payments deferred for failure to provide satisfactory evidence of actual payment of Reimbursable land acquisition costs. (iii) Redeveloper shall have been issued a Certificate of Occupancy for all Minimum Improvements required by the Development Schedule in Section 3.2(i) of this Agreement to be completed at the time of the payment. 1. No payments will be made until a Certificate of Completion has been issued for the Initial Improvements. 2. Tf, following completion of the Initial Improvements, Certificates • of Occupancy for subsequent phases of the Minimum Improvements have not -14- FROM GRAY PLANT MOOT? MOOTY & BENNETT (#31 (FRI) 7. 9' 99 9:36/ST. 9:28/NO. 4261218754 P 19 been obtained when required by the Development Schedule in Section 3.2(i) of • this Agreement,then fifty percent(50%) of every subsequent payment to be made under the Note shall be withheld until a Certificate of Occupancy for the Minimum Improvements required to be completed by the Development Schedule in Section 3.2(i) is obtained. No interest will accrue on payments deferred for failure to meet the Development Schedule. (iv) There shall be Available Tax Increment with which to make the payment, following payment of Priority Items and funding of Reserve Requirements as provided by this Agreement. (b) Interest. (i) The Note will bear simple interest at the rate of eight percent (8%), which will begin accruing on the date on which the Note is issued pursuant to Section 3.4(b) of this Agreement; (ii) Interest will accrue or not accrue as provided by the terms of this Agreement, and will not accrue on any payments deferred due to a default by Redeveloper; (iii) Interest on the Note will accrue only on the amount which Redeveloper has actually paid for Reimbursable land acquisition costs, not including any interest paid 4111 by Redeveloper on seller financing of the land acquisition; (iv) Redeveloper will provide Authority with a schedule of payments made for land acquisition costs, which shall identify principal and interest amounts, and shall update the schedule as future payments are made; (v) Authority shall calculate the interest due on the Note on each payment date by reference to the principal paid by Redeveloper for land acquisition up to that date as shown on the schedule provided by Redeveloper. (c) Payments. Payments on the Note will be made twice per year,as follows: (i) The first payment will be made on July 15, or ten (10) days after the City has received its tax distribution from the County and the Authority has received evidence of payment of Reimbursable land acquisition costs and compliance with the Development Schedule, whichever is later; and (ii) The second payment will be made on December 15, or ten (10) days after the City has received its second tax distribution from the County and the Authority has received evidence of payment of Reimbursable land acquisition costs and compliance with the Development Schedule,whichever is later. • -15- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:37/ST. 9:28/NO. 4261218754 P 20 • (iii) No TIF payments will be made until the second calendar year after the year in which a Certificate of Completion has been issued for all of the Initial Improvements. (iv) Each payment shall be in the amount due pursuant to the payment schedule attached to the Note, or in the amount of Available Tax Increment at the time the payment is due, or in the amount which will make Authority's total Reimbursements to Redeveloper equal to Redeveloper's actual payments of Reimbursable land acquisition costs, whichever is less. If a partial payment is made because Available Tax Increment is insufficient to make the scheduled payment the balance of the scheduled payment shall be paid,with interest,as soon as Available Tax Increment is sufficient to make the payment. (d) Prepayment. Authority shall have the right to prepay all or any portion of the principal amount of the Note at any time, except that Authority shall not at any time have paid to Redeveloper an amount in excess of Redeveloper's Reimbursable land acquisition costs actually paid as of that time. (e) Payment in Full. TIF payments shall be made to the Redeveloper until the Note is paid in full, except that no payments will be made following termination of this Agreement or expiration or decertification of the TIF District. Section 3.6 Payment of Public Improvement Costs. In addition to the Reimbursable • Redevelopment Costs to be paid by Authority, City will incur approximately $1,955,000 of Public Improvement Costs for public infrastructure and land acquisition within the TIF District to serve the Shopping Center Project, including costs for trunk water and sewer facilities, roads, storm water facilities and related public infrastructure. The Public Improvement Costs will be funded by the issuance of public improvement bonds (the Bonds) and Internal Loans, both of which will he repaid with Tax Increment generated by TIF District No. 19. Other portions of the Public Improvement Costs will be specially assessed to the Development Property pursuant to the Shopping Center Developer Agreement and the Business Park Developer Agreement. Section 3.7 Reserve Requirements. The Parties covenant and agrcc that payment of and security for the Bonds and the Internal Loans is paramount and prior to the reimbursement of any Reimbursable Redevelopment Costs to Redeveloper and, accordingly, the Parties hereby agree as follows: (a) Authority shall establish a Reserve for Bond and Internal Loan payments in an amount equal to the total annual debt service due on the Bonds and the Internal Loans. The Reserve shall be used to make Bond and Internal Loan payments in any year that Tax Increments received are not sufficient to do so. If Bond or Internal Loan Payments are made from the Reserve Requirement,the Reserve shall be re-established as provided in Section 3.7(b). (b) The Reserve Requirement shall be established as follows: -16- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:37/ST. 9:28/NO. 4261218754 P 21 (i) In the first year that Tax Increment is available, no payments shall be • made to Redeveloper under the Note until 50% of the Reserve Requirement is funded from Tax Increment available after payment of all other priority items; (ii) In the second and future years that Tax Increment is available, no payments shall be made to Redeveloper under the Note until 100% of the Reserve Requirement is funded from Tax Increment available after the payment of all other priority items. (c) In its sole discretion, with the consent of City, Authority may, but shall not be obligated to, use monies held as part of this Reserve Requirement to make Reimbursements (or reduce the Reserve Requirement or the funding formula applicable thereto). It is expected that any such decision, if made, would be based upon Authority's determination in its discretion that payment of the Bonds and Internal Loans is reasonably assured due to substantial development, prepayment of Special Assessments, likelihood of payment of unpaid Special Assessments and property taxes, and/or such other factors as Authority may deem appropriate. No such decision in any one year shall obligate Authority to make a similar decision in any future year. (d) This rolling security reserve for the Bonds is hereinafter referred to as the "Reserve Requirement," which is further defined in Section 1.1. Monies held as part of the Reserve Requirement will be used to pay debt service on the Bonds and/or the Internal Loans, when due, to the extent that available Special Assessments and Bond Tax Increments are • insufficient for such purposes. Upon payment of the Bonds and the Internal Loans (or security therefor acceptable to the Authority, as described above), monies released from the Reserve Requirement would then be available to make eligible Reimbursements. Section 3.8 Limitations. The parties to this Agreement acknowledge and agree that the expenditure of the Tax Increment is and shall be governed by the TIF Act. Section 3.9 Priority Items. (a) No payment will be made to Redeveloper unless there is Available Tax Increment with which to make the payment. Available Tax Increment is that Tax Increment received by the City which remains available after City and Authority have made payment of the Priority Items identified on Exhibit F to this Agreement,including: Priority#1: Administrative expenses Priority 42: State Auditor's deduction Priority#3: 1999$630,000 Improvement Bond Priority#4: estimated$775,000 Improvement Bond Priority#5: estimated $250,000 Public Improvement Internal loan • Priority#6: maximum $300,000 Land Write-down Internal loan -17- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:38/ST. 9:28/NO, 4261218754 P 22 Priority#7: Dcbt Service Reserve Requirement • (b) Redeveloper shall be paid pursuant to the Note following payment of the above identified Priority Items. (c) Any Tax Increment remaining following payment of the Priority Items and payment to the Redeveloper under this note shall be applied to such qualified public improvement costs as Authority shall determine. ARTICLE IV. Construction of Minimum Improvements Section 4.1 Construction of Minimum Improvements. (a) The Redeveloper agrees that it will construct the Minimum Improvements on the Redevelopment Property and the Business Park Property and will maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. (b) At the time of execution of this Agreement Redeveloper and Authority have entered into a Job Performance Agreement with respect to the Shopping Center Project, as required pursuant to Minnesota Statutes, Section 1161991, the terms of which are incorporated herein and made a part hereof by reference. Section 4.2 Commencement and Completion of Construction_ Subject to Unavoidable Delays, Redeveloper shall commence construction of the Initial Improvements within thirty (30) days after approval of a building permit by the City. Subject to Unavoidable Delays, Redeveloper shall complete the construction of the Initial Improvements by December 31,2000. Redeveloper agrees for itself,its successors and assigns, and every successor in interest to the Redevelopment Property and the Business Park Property, or any part thereof, that Redeveloper, and its successors and assigns, shall promptly begin and diligently prosecute to completion the development of thc Redevelopment Property and the Business Park Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Agreement, subject to Unavoidable Delays and/or mutual agreement of the parties hereto. Section 4.3 Certificate of Completion. (a) Promptly after completion of the Initial Improvements in accordance with the provisions of this Agreement, and upon written request made to Authority, Authority will execute the Certificate of Completion in the form attached hereto as Exhibit C, which shall then be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the completion of the Initial Improvements. The following shall • be conditions precedent to the Authority's obligation to execute the Certificate of Completion: -18- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:38/ST. 9:28/NO. 4261218754 P 23 • (i) There shall exist no Event of Default hereunder, and the Initial Improvements shall have been completed in substantial conformity to the terms of this Agreement; and (ii) The City shall have issued a Certificate of Occupancy for the Initial Improvements. (b) If Authority determines that it cannot execute the Certificate of Completion it shall, within twenty (20) days after written request therefor, provide a written statement indicating in adequate detail why it cannot do so and also indicating what measures or acts will be necessary to be taken or performed in order to permit execution of the Certificate of Completion. Section 4.4 Failure to Complete Minimum Improvements. (a) Failure to Complete Initial Improvements - If Redeveloper fails to complete the Initial Improvements as required by this Agreement, Redeveloper shall be entitled to no further Reimbursements from Authority and Authority shall be entitled to return of the initial payment and to all remedies provided by this Agreement for Redeveloper's default. (b) Failure to Complete Balance of Minimum Improvements - If Redeveloper completes the Initial Improvements and receives the Initial Payment and at least one payment • under the Note, but fails to complete the Minimum Improvements required by this Agreement prior to the termination of this Agreement or the TIF District, then Authority shall have the right to acquire all undeveloped portions of the Business Park Property. To exercise this right Authority shall tender to Redeveloper all unpaid principal and interest due on the Note, and Redeveloper shall provide Authority with a warranty deed evidencing clear and unencumbered ownership, to all undeveloped land within the Business Park Property. Authority's exercise of its option to acquire the balance of Business Park Property shall be in its sole discretion and Authority shall have no obligation to Redeveloper to do so. ARTICLE V. Tax Increment Section 5.1 lax Increment. Subject to the limitations contained in the Note, the Authority hereby pledges to the payment of the Note a portion of the Tax Increment generated from the Redevelopment Property and the completed Improvements on the Redevelopment Property. The Redeveloper acknowledges that the Authority has made no warranties or representations to the Redeveloper as to the amounts of Tax Increment that will be generated, or that the "Available Tax Increment" as defined in the Note will be sufficient to pay the Note in whole or in part. Nor is the Authority warranting that it will have throughout the term of this Agreement and the Note the continuing legal ability under State law to apply Tax Increment to the payment of the Note,which continued legal ability is a condition precedent to the Authority's • obligations under the Note. To the extent that in any year or years the Authority receives Tax Increment in excess of the amounts necessary to pay amounts due under the Note, the Authority -19- FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:39/ST. 9:28/N0. 4261218754 P 24 shall be free to use such excess Tax Increment for any purpose for which such Tax Increment • may used under the Tax Increment Act. Likewise, amounts deducted from Tax Increment in determining"Available Tax Increment"under the Note shall be the Authority's property, and the Authority shall be free to use such funds for any purpose it determines. ARTICLE V I. Mortgage Financing Section 6.1 Mortgage Financing. Before the Redeveloper commences construction of the Initial Improvements, the Redeveloper shall submit to the Authority evidence of a commitment for financing sufficient for construction of the Initial Improvements. If the Authority finds that the financing is sufficiently committed,adequate in an amount to provide for the construction of the Initial Improvements, and subject only to such conditions as the Authority approves, then the Authority shall notify the Redeveloper in writing of its approval. Such approval shall not be unreasonably withheld, and either approval or rejection shall be given within ten (10) days from the date when the Authority is provided the evidence of financing, or the financing shall be deemed approved. If the Authority rejects the evidence of financing as inadequate, it shall do so in writing, specifying the basis for the rejection. In any event the Redeveloper shall submit adequate evidence of financing within thirty (30) days after such rejection. Section 6.2 Limitation Upon Encumbrance of Property. Prior to the completion of the . Initial Improvements, as certified by the Authority, neither the Redeveloper nor any successor in interest to the Redevelopment Property, or any part thereof, shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Redevelopment Property, whether by express agreement or operation of law, or suffer any encumbrances or lien to be made on or attach to the Redevelopment Property, except: (a) for the purposes of obtaining funds only to the extent necessary for constructing the Improvements (including, but not limited to, land and building acquisition, including the purchase price paid, labor and materials, professional fecs, real estate taxes, construction interest, organizational and other indirect costs of development, costs of constructing the Improvements, and an allowance for contingencies); and (b) only upon the prior written approval of the Authority, which approval shall not be unreasonably withheld or delayed. For the purposes of such mortgage financing as may be made pursuant to the Agreement, the Redevelopment Property may, at the option of the Redeveloper(or successor in interest),be divided into several parts or parcels, provided that such subdivision, in the reasonable opinion of the Authority, is not inconsistent with the purposes of this Agreement and is approved in writing by the Authority. ARTICLE VII. Prohibitions Against Assignment and Transfer,Indemnification Section 7.1 Prohibition Against Transfer of Property and Assignment of Agreement. The Redeveloper represents and agrees that,prior to the Maturity Date: • -20- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:39/ST. 9:28/NO, 4261218754 P 25 Except by way of security for the purpose of obtaining financing necessary to enable the • Redeveloper, or any successor in interest to the Redevelopment Property or any part thereof, to perform its obligations with respect to making the Improvements under the Agreement, and any other purpose authorized by the Agreement, the Redeveloper (except as so authorized) has not made or created, and will not make or create, or suffer to be made or created, any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Redevelopment Property, or any part thereof or any interest herein or therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority, which approval shall not be unreasonably withheld or delayed. The Redeveloper shall, however, be entitled to transfer the Redevelopment Property and assign its rights and obligations under this Agreement and/or the Note to a third party or entity affiliated with the Redeveloper, if such third party or entity assumes the obligations of the Redeveloper and the Job Performance Agreement under transfer documents reasonably acceptable to the Authority, and if the proposed use of the Redevelopment Property and employment levels to be maintained are substantially similar to those contemplated with respect to the Redeveloper's use of the Redevelopment Property. For purposes of this Agreement, a party or entity shall be deemed affiliated with the Redeveloper if such party or entity is owned or controlled by the Redeveloper. In no event shall a transfer occur that results in the Note being owned by an entity • unrelated to the owner of the Redevelopment Property without the Authority's prior written approval. Without limiting the Authority's right to disapprove a transfer of the Note, no transfer shall be permitted unless the Redeveloper provides to the Authority evidence, satisfactory to the Authority, that all security registration laws have been complied with in connection with such transfer. No such transfer, or approval by the Authority thereof, shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of its obligations with respect thereto, nor shall Redeveloper or any other party bound by this Agreement be released from any obligations hereunder without the written release by the Authority. Notwithstanding the foregoing, the Authority's participation in the Shopping Center Project is predicated upon the new employment that the Shopping Center Project and the Business Park Project will make possible, and Authority's understanding that the Minimum Improvements will he occupied for a term of not less than the term of this Agreement. Section 7.2 Approvals. (a) Any approval required to be given by Authority under this Article VIII of this Agreement may be denied only in the event that Authority reasonably determines that the ability of Redeveloper to perform its obligations under this Agreement will be materially impaired by the action for which approval is sought. -21- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9.40/ST. 9:28/NO. 4261218754 P 26 Section 7.3 Release and Indemnification Covenants. • (a) Except for any willful misrepresentation, any willful or wanton misconduct, or any negligent actions of the following named parties, the Redeveloper agrees to protect and defend the Authority and the governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby, or the acquisition,construction,installation, ownership,and operation of the Minimum Improvements. (b) The Authority, and the governing body members, officers, agents, servants and employees thereof, shall not be liable for any damage or injury to the persons or property of the Redeveloper,or its officers, agents, servants or employees, or any other person who may be on or about the Redevelopment Property or Minimum Improvements due to any act of negligence of any person other than the Authority or its governing body members, officers, agents, servants and employees. (c) All covenants, stipulations,promises,agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority, and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. • (d) This Agreement shall not create and shall not construed to create any partnership, joint venture,agency or employment relationship between the Authority and the Redeveloper. ARTICLE VIII. Events of Default Section 8.1 Events of Default Defined. The term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), subject to Unavoidable Delays, any failure by Redeveloper to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement and the Shopping Center PUD Agreement, the Shopping Center Developer Agreement, the Business Park Developer Agreement or the Job Performance Agreement, including,but not limited to the following: (a) Failure to commence and complete construction of the Initial Improvements and the Minimum Improvements pursuant to the terms, conditions and limitations of this Agreement, including the Development Schedule set forth in Section 3.2(i)of this Agreement. (b) Failure in the timely payment of any real property taxes or special assessments assessed against or with respect to the Shopping Center Property or the Business Park Property. The remedies for failure to pay real property taxes and special assessments shall be limited to • those remedies set forth in Section 8.2(a)and (b)of this Agreement. -22- FROM GRAY PLANT MOOTY MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:41/ST. 9:28/NO, 4261218754 P 27 (c) Failure to reimburse Authority for land acquisition costs as required by • Section 3.3 of this Agreement. (d) An Event of Default or material breach by or attributable to a Redeveloper occurs under any agreement or instrument executed by any Redeveloper: (i) which relates to the Shopping Center Property,the Business Park Property, the Improvements or any portion thereof; and (ii) which adversely affects the Authority's interest in the Improvements as set out in this Agreement or which would impair the ability of the Authority or the Redeveloper to perform any covenant, obligation or condition of this Agreement. (e) The holder of any security interest in any part of the Redevelopment Property takes action to enforce the same for satisfaction. (f) A petition in bankruptcy is filed naming any Redeveloper as debtor, and such petition is not dismissed within ninety(90)days of the date of filing thereof. An Event of Default shall also include any occurrence which would with the passage of time or giving of notice become an Event of Default as defined herein above. The enumeration of Events of Default by the Redeveloper is not intended and shall not be construed to exclude or limit any remedy, whether legal or equitable, available to Redeveloper upon breach by the Authority or the City of their respective obligations hereunder. • Section 8.2 Authority's Remedies on Default. Whenever any Event of Default by Redeveloper referred to in Section 9.1 of this Agreement occurs, the Authority may suspend its performance under the Agreement and the Note until it receives assurances from the Redeveloper, deemed reasonably adequate by the Authority, that the Redeveloper will cure its default and continue its performance under the Agreement, and may take any one or more of the following actions after providing thirty (30) days written notice to the Redeveloper of the Event of Default, but only if the Event of Default has not been cured within said thirty (30) days or Authority has not received assurances from Redeveloper that the default will be cured within an additional 30 days. (a) Terminate the Agreement and/or the Note. (b) Suspend payments on the Note. (c) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to the Authority to collect any payments due under this Agreement, the Shopping Center PUL) Agreement, the Business Park Developer Agreement, the Shopping Center Developer Agreement, or the Job Performance Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Redeveloper under said Agreements. Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or Redeveloper is intended to be exclusive of any other available remedy or -23- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7, 9. 99 9:41/ST. 9:28/NO. 4261218754 P 28 • remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Redeveloper to exercise any remedy reserved to it, it shall not be necessary to give notice,other than such notice as may be required in this Article VMI. Section 8.4 No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent,previous or subsequent breach hereunder. ARTICLE IX. Additional Provisions Section 9.1 Representatives Not Individually Liable. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach, or for any amount which may become due to the Redeveloper or successor on account of any obligations under the terms of the Agreement. Section 9.2 Equal Employment Opportunity. The Redeveloper, for itself and its • successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 9.3 Restrictions on Use. The Redeveloper agrees, for itself and its successors and assigns, and every successor in interest to the Redevelopment Property or any part thereof, that the Redeveloper, and such successors and assigns, shall, until the Maturity Date, devote the Redevelopment Property to,and only to and in accordance with, the uses specified in the Planned Unit Development Agreement and this Agreement. Section 9.4 Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 9.5 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid,return receipt requested, or delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper at Associated Investors of Elk River, Inc. c/o Fischer Sand & Aggregate, Apple Valley, MN 55124, Attention: Mathias Fischer; and to Anthony Gleekcl, 1300 Washington • Square, 100 Washington Avenue South,Minneapolis,MN 55401; and -24- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:42/ST. 9:28/Na 4261218754 P 29 S (b) in the case of the Authority, is addressed to or delivered personally to the Authority at 13065 Orono Parkway, Elk River, Minnesota 55330, or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 9.6 No Third-Party Beneficiaries. There shall, as against the Authority, be no third-party beneficiaries to this Agreement More specifically, the Authority enters into this Agreement, and intends that the consummation of the Authority obligations contemplated hereby shall be, for the sole and exclusive benefit of the Redeveloper, and not withstanding the fact that any other "persons" may ultimately participate in or have an interest in the Shopping Center Property or the Business Park Property, or any portion thereof,the Authority does not intend that any party other than the Redeveloper shall have, as alleged third party beneficiary or otherwise, any rights or interest hereunder as against the Authority, and no such other party shall have standing to complain of the Authority's exercise of, or alleged failure to exercise, its rights and obligations,or of the Authority's performance or alleged lack thereof, under this Agreement. Section 9.7 Entire Agreement. This Agreement, the Shopping Center PUD Agreement, the Business Park Developer Agreement and the Shopping Center Developer Agreement represent the entire Agreement among the various respective parties thereof as to the subject matter thereof,and supersede all prior understandings and agreements, whether written or oral,as to that subject matter. • Section 9.8 Modifications. This Agreement may be modified solely through written amendments hereto executed by the Redeveloper and the Authority. Section 9.9 Counterparts. This Agreement may be executed in any number of counterparts,each of which shall constitute one and the same instrument. Section 9.10 Judicial Interpretation. Should any provision of this Agreement require judicial interpretation,the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agent or attorney prepared the same, it being agreed that the agents and attorneys of both parties have participated in the preparation hereof. Section 9.11 Law of Governing Period. The Parties agree that this Agreement shall be governed and construed in accordance of the laws of the State of Minnesota. Section 9.12 Time of the Essence. Time should be of the essence in the Agreement. ARTICLE X Termination of Agreement; Expiration Section 10.1 Termination. The Authority may terminate this Agreement as provided • herein, and otherwise this Agreement shall terminate upon the expiration or decertification of the -25- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:42/8L 9:28/Na 4261218754 P 30 TIF District or on such earlier date upon which all payments on the Note in accordance with its • terms shall have been made and all of the Parties' other respective obligations hereunder shall have been discharged, but no such termination shall terminate any indemnification rights hereunder or any other rights or remedies arising hereunder due to an Event of Default which occurred prior to such termination. Section 10.2 Sections to Survive Termination. Section 7.3 shall in addition to the other surviving provisions referenced in Section 10.1, survive the expiration or termination of this Agreement. IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf, and the Redeveloper has caused this Agreement to be duly executed in its name and behalf, on or as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER By: President Its: • By: Vice President REDEVELOPER ASSOCIATED INVESTORS OF ELK RIVER,INC. By: Its: FISCHER SAND& AGGREGATE, LLP By: Its: S -26- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:42/ST. 9:28/NO. 4261218754 P 31 ELK RIVER BUSINESS PARK,LLC • By: Its: • -27- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:43/ST. 9:28/NO, 4261218754 P 32 • STATE OF MINNESOTA ) ) SS. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of , 1999, by and ,the ,and of the Economic Development Authority In and For the City of Elk River, a public body politic and corporate under the laws of the state of Minnesota. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 1999, by , the of Associated Investors of Elk River, Inc., a Minnesota corporation,on behalf of the corporation. • Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 1999, by , the of Fischer Sand & Aggregate, LLP, a Minnesota limited liability partnership, on behalf of the limited liability partnership. Notary Public 110 -28- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:43/ST. 9: 28/NO. 4261218754 P 33 STATE OF MINNESOTA • ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 1999, by ,the of Elk River Business Park, LLC, a Minnesota limited liability corporation, on behalf of the limited liability corporation. Notary Public GP:606417 v2 • • • -29- FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:43/ST. 9:28/NO, 4261218754 P 34 EXHIBIT A • Description of Development Property Redevelopment Property The Redevelopment Property consists of the following described properties, all located in the City of Elk River, Sherburne County,Minnesota: Business Park Property The Business Park Property consists of the following described properties, all located in the City of Elk River, Sherburne County,Minnesota: • . A-1 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:43/ST. 9:28/NO. 4261218754 P 35 • EXHIBIT B UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF SHERBURNE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER LIMITED REVENUE TAX INCREMENT NOTE The Economic Development Authority In and For the City of Elk River, Minnesota (the "Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Associated Investors of Elk River, Inc., a Minnesota corporation, or their permitted assigns (collectively, the "Owner"), solely from the source, to the extent and in the manner hereinafter provided, the principal amount of this Note,being no more than Two Million Five Hundred Eleven Thousand and no/100 Dollars ($2,511,000.00) (the "Principal Amount") together with simple, non-compounded interest from the date of issuance of this Note at the rate of eight percent (8%) per annum, on the dates (the "Scheduled Payment Dates") and in the amounts (the "Scheduled Payment") set forth as "Developer Payment" on the payment schedule attached hereto as Exhibit B. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall • be made by check or draft made payable to the Owner and mailed to the Owner at its postal address within the United States which shall be designated from time to time by the Owner. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Section 469.178, subdivision 4, to aid in financing a "project", as therein defined, of the Authority consisting generally of defraying certain redevelopment costs incurred and to be incurred within and for the benefit of Authority's Development District No. 1 (the"Project"). This Note is the "Note" described and defined in that certain Contract for Private Redevelopment dated as of , as the same may be amended from time to time, (the "Redevelopment Agreement"), between the Authority and Associated Investors of Elk River, Inc., Fischer Sand & Aggregate, LLP, and Elk River Business Park, LLC, as the Redeveloper under the Redevelopment Agreement. Each capitalized term which is used but not otherwise defined in this Note shall have the meaning given to that term in the Redevelopment Agreement. THIS NOTE 1S NOT A DEBT OF THE CITY OF ELK RIVER OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE CITY, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES B-1 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:44/ST. 9:28/NO. 4261218754 P 36 OTHER THAN AVAILABLE TAX INCREMENT, AS DEFINED IN THE • REDEVELOPMENT AGREEMENT. The Scheduled Payment of this Note due on any Scheduled Payment Date is payable solely from and only to the extent that the Authority shall have received prior to such Scheduled Payment Date "Available Tax Increment". For purposes of this Note, Available Tax Increment with respect to any Scheduled Payment Date is as defined in the Redevelopment Agreement. This Note shall terminate and be of no further force and effect on the date upon which the Authority shall have terminated the Redevelopment Agreement, on the date upon which TIF District No. 19 shall terminate, on the final payment date, or on the date that all payments payable hereunder shall have been paid in full, whichever occurs earliest. All payments made on this Note shall first be applied to accrued and unpaid interest and second, to reduction of the Principal Amount. Authority shall pay to the Owner on each Scheduled Payment Date the lesser of(i) the amount of the Scheduled Payment due on the Scheduled Payment Date; or (ii) the amount due pursuant to the terms and requirements of the Redevelopment Agreement. The Authority's obligations herein are subject to the terms and conditions of the Redevelopment Agreement and specifically to Section 3 of the Redevelopment Agreement. Subject to Section 8.2 of the Redevelopment Agreement, the Authority's payment obligations hereunder shall be suspended and this Note may be terminated by the Authority upon the • occurrence of an Event of Default as provided in Section 8.1 of the Redevelopment Agreement, which Redevelopment Agreement is incorporated herein and made a part hereof by reference. Upon such termination, the Authority's obligations to make further payments hereunder shall be discharged. Such termination may be accomplished by the Authority's giving of written notice to the then registered owner of this Note, as shown on the books of the Authority. The Authority makes no representation or covenant, expressed or implied, that the revenues described or referenced herein will be sufficient to pay,in whole or in part,the amounts which are or may otherwise become due and payable hereunder. Any amounts which remain unpaid on this Note following the final payment date shall no longer be a debt or obligation of the Authority whatsoever. This Note shall not be payable from or constitute a charge upon any funds of the Authority, and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except Available Tax Increment, and then only to the extent and in the manner specified herein and in the Redevelopment Agreement. The Owner shall never have or be deemed to have the right to compel any exercise of any taxing power of the Authority or of any other public body, and neither the Authority nor any director, commissioner, council member, board member, officer, employee or agent of the Authority, nor any person executing or registering this Note shall be liable personally hereon by 4111 reason of the issuance or registration hereof or otherwise. B-2 FROM GRAY PLANT MOOTY MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:45/ST. 9:28/NO. 4261218754 P 37 • This Note may be assigned as provided in Article VII of the Redevelopment Agreement, but upon such assignment the assignor shall promptly notify the Authority thereof in writing, and the assignee shall surrender this Note to the Authority either in exchange for a new fully registered note or for transfer of this Note on the registration records for the note maintained by the Authority. Each such assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein and in the Redevelopment Agreement. The Authority is issuing this Note as a taxable and not as a tax-exempt obligation and the Authority makes no representation, expressed or implied, and intends to convey no expectation that the interest on this Note is or ever shall be exempt from federal, or state income taxation or other taxation. This Note is issued pursuant to Resolution of the Authority and is entitled to the benefits thereof,which resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State.of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional or statutory limitation thereon. • IN WITNESS WHEREOF, the Economic Development Authority In and For the City of Elk River, by its Commissioners, has caused this Note to be executed by the manual signatures of the President and the Vice President of the Authority and has caused this Note to he dated and issued President Vice President • B-3 FROM GRAY PLANT MOOTY MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:45/ST. 9:28/NO. 4261218754 P 38 110 EXHIBIT A TO NOTE Description of Redevelopment Property • • B-4 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FBI) 7. 9. 99 9:45/ST. 9:28/NO. 4261218754 P 39 • CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note was as of the latest date listed below registered in the name of the last Registered Owner noted below, and that ` at the request of said Registered Owner of this Note,the undersigned has as of said applicable date registered this Note as to principal and interest on the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. DATE OF SIGNATURE OF AUTHORITY NAME OF REGISTERED OWNER REGISTRATION SECRETARY Associated investors of Elk River,Inc. , • • B-5 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:45/ST. 9:28/NO, 4261218754 P 40 • EXHIBIT B TO NOTE Payment Schedule • 411/ B-6 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:46/ST. 9 :28/NO. 4261218754 P 41 EXHIBIT C CERTIFICATE OF COMPLETION WHEREAS, the Economic Development Authority in and for the City of Elk River (the "Authority") and Associated Investors of Elk River, Inc., Fischer Sand & Aggregate, LLP, and Elk River Business Park, LLC, (the "Redeveloper"), have executed a Contract for Private Redevelopment, dated as of 1999 (the "Redevelopment Agreement"), with respect to the completion by the Redeveloper of certain improvements (the "Initial Improvements"), described in the Redevelopment Agreement;and WHEREAS, said Redeveloper has to the present date substantially performed its undertakings under the Redevelopment Agreement in a manner deemed sufficient by the Authority to permit the execution of this certificate pursuant to Section 4.4 of the Redevelopment Agreement: NOW, THEREFORE,this is to certify that the Initial Improvements have been completed on the Development Property in substantial conformance with the terms of the Redevelopment Agreement. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER • By Its Dated: • C-1 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:46/ST. 9:28/NO. 4261218754 P 42 EXHIBIT D 110 JOB PERFORMANCE AGREEMENT By and Between THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER and • Dated: This document was drafted by: CITY OF ELK RIVER 13065 Orono Parkway Elk River,MN 55330 Telephone: (612)441-7420 • With final review by: CRAY,PLANT,MOOTY,MOOTY& BENNETT,P.A. 3400 City Center 33 South Sixth Street Minneapolis,MN 55402 • Telephone: (612) 343-2800 D-1 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9. 99 9:46/ST. 9:28/NO. 4261218754 P 43 JOB PERFORMANCE AGREEMENT • THIS AGREEMENT, made on or as of the day of_ 199_, by and between the Economic Development Authority In and For the City of Elk River, a public body corporate and politic (hereinafter referred to as the "Authority"), established pursuant to Minnesota Statutes, Sections 469.090 to 469.108, and having its principal office at 13065 Orono Parkway, Elk River, Minnesota 55330, and (hereinafter collectively referred to as the "Redeveloper"), having its principal office at WITNESSETH: WHEREAS,the Redeveloper and the Authority have entered into a Contract for Private Redevelopment dated as of_ (the "Contract") pursuant to which the Redeveloper has agreed to construct within the City of Elk River,Minnesota; and WHEREAS, in order to induce the Redeveloper to undertake such redevelopment, the Authority has agreed in the Contract to provide certain financial assistance to the Redeveloper through its payment of certain costs of site redevelopment and preparation of the property on which the redevelopment will occur; and WHEREAS, Minnesota Statutes, Section 116J.991, provides that a government agency that provides financial assistance for economic development job growth purposes must establish • job and wage goals to be met by the businesses receiving the assistance; and WHEREAS, the Authority and the Redeveloper agreed in the Contract that they would enter into a Job Performance Agreement to document their understandings as to the job and wage goals to be met by the Redeveloper with respect to its development;and WHEREAS, the Authority, and the Redeveloper desire that this Agreement serve as the agreement referenced in the Contract. NOW,THEREFORE,in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I Definitions Section 1.1. Definitions. in this Agreement, unless a different meaning clearly appears from the context: "Act"means Minnesota Statutes, Section 1161991. "Agreement" means this Agreement, as the same may be from time to time modified, • amended,or supplemented, D-2 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9. 99 9:47/ST. 9:28/NO. 4261218754 P 44 "Authority" means the Economic Development Authority In and For the City of Elk • River,or any successor or assign. "City"means the City of Elk River. "Contract" means the Contract for Private Redevelopment between the Authority and the Redeveloper dated as of, 199_. "Improvements" means the construction by the Redeveloper of pursuant to the Contract. "Permanent Full-Time Employment Position" means the employment of a person who is eligible to receive any health, pension or other benefits provided according to the personnel or employment policies of the his/her employer, or through a collective bargaining agreement with the Redeveloper or its tenants, and whose wages as the term is defined are based upon the employee working approximately thirty(30)hours a week. "Redeveloper" means, collectively, , or its successors, executors or assigns, or any future owners of the Redevelopment Property. "Redevelopment Property"means the real property described as such in the Contract. "State"means the State of Minnesota. • ARTICLE II Job and Wage Goals Section 2.1. Employment Requirements. The Redeveloper agrees that it will employ at least persons in Permanent Full-Time Employment Positions in the Improvements, and that it will cause to be created by itself or its tenants with respect to the Redevelopment Property and the Improvements at least Permanent Full-Time Employment Positions. Such new positions shall be created, through the actual employment of individuals, no later than two (2) years after the substantial completion of the Improvements pursuant to the terms of the Contract. Section 2.2. Wage Requirements. The new Permanent Full-Time Employment Positions required to be created pursuant to Section 2.1 shall be paid an average wage of no less than $ per hour. Section 2.3. Monitoring. The Redeveloper agrees that it will provide, upon request by the Authority, documentation reasonably required by the Authority to document Redeveloper's compliance with the provisions of this Agreement. Section 2.4. Continuing Obligation. The Redeveloper's obligations under this Agreement shall be continuing,and the Redeveloper shall cause the employment and wage levels • to be maintained for a period of at least one (1) year from the date that the Redeveloper is first obligated to achieve the employment and wage levels. D-3 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:47/ST. 9:28/NO, 4261218754 P 45 • ARTICLE III Default Section 3.1. Defaults Defined. It shall be a default under this Agreement if the Redeveloper fails to comply with any term or provision of this Agreement, and fails to cure such failure within sixty (60) days of written notice to the Redeveloper of the default, but only if the default has not been cured within said sixty (60)days, or the Redeveloper does not provide to the Authority assurances, satisfactory to the Authority in its reasonable discretion, that the default will he cured and will be cured as soon as reasonably possible. Section 3.2. Remedies in Default. Upon the occurrence of a default under this Agreement the Authority may declare immediately due and payable the entire amount of principal and interest paid by the Authority under the Note, as defined in the Contract, together with interest on such amount at the rate of eight and one-half percent (8.5%) from the date that the Authority makes such declaration. Within ten (10) days after the date that the Authority makes such declaration, the Redeveloper shall be liable for and shall repay the amount of the assistance plus interest. Section 3.3. Costs of Enforcement. Whenever any default occurs under this Agreement and the Authority shall employ attorneys or incur other expenses for the collection of payments due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, the Redeveloper shall be liable to the Authority • for the reasonable fees of such attorneys and such other expenses so incurred by the Authority; provided that the Redeveloper shall only be.obligated to make such reimbursement if Authority prevails in such collection or enforcement action. Section 3.4. Force Majeure. In the event that the Redeveloper's compliance with the terms of this Agreement is delayed or interrupted due to strikes, acts of God or acts of any federal, state of local governmental unit, the Redeveloper's non-compliance shall be excused for the period of delay or interruption if the Redeveloper gives the Authority written notice of the cause of the delay or interruption within thirty (30) days after its occurrence. General economic or market conditions shall not constitute cause for excusing Redeveloper's performance. ARTICLE IV Miscellaneous Section 4.1. Provisions of Agreement Not Affected. With the exception of the provisions of the Contract relative to the Redeveloper's employment and wage requirements,this Agreement is not intended to modify or limit in any way the terms of the Contract. Section 4.2. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be 411 disregarded in construing or interpreting any of its provisions. D-4 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:48/ST. 9:28/NO. 4261218754 P 46 Section 4.3. Modification. This Agreement may be modified solely through written • amendments hereto executed by the Redeveloper and the Authority. Section 4.4. Counterparts. This Agreement may be executed in any number of counterparts,each of which shall Constitute one and the same instrument. Section 4.5. Judicial Interpretation. Should any provision of this Agreement require judicial interpretation,the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to he construed more strictly against the party who itself or through its agent or attorney prepared the same, it being agreed that the agents and attorneys of both parties have participated in the preparation hereof. IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf, and the Redeveloper has caused this Agreement to be duly executed in its name and behalf, on or as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER By: President Its: By: Vice President REDEVELOPER By: Its: • D-5 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:48/ST. 9:28/NO, 4261218754 P 47 S STATE OF MINNESOTA ) SS COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of 1999, by and ,the and of the Economic Development Authority In and For the City of Elk River, a public body politic and corporate under the laws of the state of Minnesota. Notary Public STATE OF MINNESOTA ) ) SS_ COUNTY OF ) The foregoing instrument was acknowledged before me this day o , 1999, by • Notary Public • D-6 FROM GRAY PLANT MOOT? MOOT? & BENNETT (#3) (FRI) 7. 9' 99 9:48/ST. 9:28/NO. 4261218754 P 48 • EXIiiBIT E Description of Uses by Tenant • • E-1 FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (FRI) 7. 9' 99 9:48/ST. 9 :28/NO. 4261218754 P 49 • EXHIBIT F Priority items • • F-1