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6.9.B. SR 05-16-2005 Item 6.9.B. MEMORANDUM TO: Mayor and City Council FROM: Catherine Mehelich, Director of Economic Developmen~ DATE: May 16, 2005 SUBJECT: Consider an Amendment to the Development Agreement with MetroPlains Development, LLC and Consider Bid Award for King Ave Parking Lot Improvement Project Attachments . Development Agreement between the City and MetroPlains Development, LLC dated December 6, 2004 . Memo from Mary Ippel, Briggs & Morgan re: MetroPlains Project . Memo from City Engineer, Terry Maurer re: King Ave Parking Lot Improvement Background The City entered into the attached Development Agreement with MetroPlains Development on December 6, 2004 in connection with the construction of the Jackson Block and Bluff Block project. Since that time staff has been working closely with MetroPlains to make progress on a number of activities leading up to the anticipated summer project construction. Issue Staff and MetroPlains wish to proceed with the construction of the King Ave Parking Lot and have identified a conflict in the terms of the Development Agreement regarding one of the contingencies to constructing the Parking Lot, the closing on the conveyance of the Jackson Block property and the commencement of construction of the Jackson Block project. Staff and MetroPlains have determined that it is appropriate to amend the Development Agreement. The Development Agreement requires MetroPlains to close on the construction financing for the Bluff Block project prior to the city's construction of the King Ave Parking Lot, the conveyance of the Jackson Block property and the construction of the Jackson Block project. MetroPlains indicates that their purchase agreement with US Bank allows for the property to be vacated by October 1, 2005, therefore MetroPlains is not able to close on construction financing for the Bluff Block project until they have clear title to ill of the Bluff Block property. MetroPlains currently has clear title to two of the three Bluff Block properties. Consider Amendment to Development Agreement and Bid Award for King Ave Parking Lot Improvement May 16, 200S City Council Meeting Page 2 of2 City Attorney for the project, Mary Ippel of Briggs & Morgan has prepared the attached memorandU!D. that describes MetroPlains' request. The city attorney and financial advisor recommend an amendment to the Development Agreement. conditions, as described in the attached memorandU!D.. The proposed conditions appear to provide the City adequate security that a MetroPlains has significant risk if they fail to construct the Bluff Block project. Recommendation Staff recommends that the City Council consider a motion to approve an amendment to the Development Agreement with MetroPlains Development, ILC as described in the attached memorandU!D. from Ms. Ippel. Following the Council's approval of the amendment, staff recommends that the Council pass a motion to award Schedule 1.0 of the King Avenue Parking Lot/Miscellaneous Park Paving Improvement Projects as described in the attached memorandU!D. from City Engineer Terry Maurer. BRIGGS AND :MORGAN 2200 FIRST NATIONAL BANK BUILDING 332 MINNESOTA STREET SAINT PAUL, MINNESOTA 55101 TELEPHONE (651) 808-6600 FACSIMILE (651) 808-6450 PROFESSIONAL ASSOCIATION WRITER'S DIRECT DIAL (651) 808-6620 WRITER'S E-MAIL mippel@briggs.com MEMORANDUM VIA E-MAIL TO: Cathy Mehelich FROM: Mary Ippel Sid Inman DATE: May 12, 2005 RE: MetroPlains Project MetroPlains has requested that the City initiate construction of the King Avenue parking lot, that the Jackson Block Property be sold to MetroPlains and that MetroPlains begins construction on the Jackson Block Proj ect prior to the construction financing closing on the Bluff Block Project. Briggs and Morgan and Ehlers & Associates recommends that the council approve this subject to the following conditions: 1. As a condition to closing on the Jackson Block Property, MetroPlains deposit $500,000 with the City of Elk River for the acquisition cost ofthe Jackson Block Property to be released when the closing ofthe construction financing for Bluff Block Project occurs. 2. If construction of the Bluff Block Project does not commence by December 31, 2005, MetroPlains will not receive any tax increment financing assistance with respect to either the Bluff Block Project or the Jackson Block Project. Provided that the foregoing is satisfactory to the City Council, an amendment to the Development Agreement will be prepared and executed by the parties thereto. tfy 1769445vl MlNNEAPOLIS OFFICE. IDS CENTER. WWW.BRlGGS.COM MEMBER - LEX MUNDI, A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS MEMORANDUM TO: Catherine Mehelich, Director of Economic Development FROM: Terry Maurer, City Engineer ~ DATE: May 16, 2005 SUBJECT: MetroPlains Downtown Development/King Avenue Parking Lot Improvement On Monday evening, the Gty Council will be discussing an amendment to the Development Agreement with MetroPlains Development, LLC It is my understanding that if the Council acts affirmatively to amend the Development Agreement, this will complete all necessary conditions placed on MetroPlains prior to the award of the King Avenue Parking Lot Improvements. If the City Council does act affirmatively on the amendment, it would then be appropriate for the Gty Council to pass a motion to award Schedule 1.0 of the King Avenue Parking Lot/Miscellaneous Park Paving Improvement Projects. As you are aware, Schedule 1.0 of this contract is the King Avenue Parking Lot Improvement portion that was not awarded when the City Council adopted the resolution to award the remainder of the contractor's bid. If you have any questions regarding this issue, please call or I will be in attendance at the May 16, 2005 City Council meeting. S:\EngineerImprovProj\2005 Improvement Projects\K.ing Ave patking lot\05 1605 cc memo.doc DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF ELK RIVER, lVIINNESOTA AND METROPLAlNS DEVELOPMENT, LLC December 6, 2004 I 674205v9 <:.. fj . ~ "',\ (~~ /) TABLE OF CONTENTS Page ARTICLE I DEFINITIONS ........... .......... ...................... ................... ......... ...... ....... ............. 3 Section 1.1 Definitions............... .............................................................................. 3 ARTICLE II REPRESENTATIONS AND WARRANTIES.............................................. 12 Section 2.1 Representations and Warranties of the City....................................... 12 Section 2.2 Representations and Warranties by the Developer ............................13 ARTICLE III CONVEYANCE OF Jackson Block Property............................................... 15 Section 3.1 Purchase and Sale of Jackson Block Property................................... 15 Section 3.2 As Is Conveyance ..............................................................................16 Section 3.3 Title Review Process.... ................................... ................................... 16 Section 3.4 Purchase Price ..... ........ ................... .......... ....... ............. ...... ................ 17 Section 3.5 Acquisition of the Bluff Block Property. ........................................... 17 Section 3.6 Contingencies to Closing on Jackson Block Property....................... 19 Section 3.7 Closing ......................... ...................................:.................. ........ ........ 20 Section 3.8 Closing 'Costs ..................:.................................................................. 22 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS .............................. 23 Section 4.1 Construction Plans. ................................. ........ ......... ...................,. ..... 23 SeC?tion 4.2 Construction of Minimum Improvements ......................:..................23 Section 4.3 Commencement and Completion of Construction............................. 24 Section 4.4 Effect of Delay ............ ........... ...... ................... ........ .......... ......... ........ 25 Section 4.5 Compliance with Environmental Requirements ................................ 25 Section 4.6 Additional Responsibilities of the Developer ....................................25 Section 4:7 Certificate of Completion .................................................................. 26 ARTICLE V TAX INCREMENT ASSISTANCE; DEVELOPER PAYMENTS.............. 27 Section 5.1 Creation of Tax Increment District and Amendment of Tax Increment Financing Plan ......... ..... ............... ......... ............. ......,......... 27 Section 5.2 Issuance of Tax Increment Revenue Note ......................................... 27. Section 5.3 Reduction of Assistance........ ...................... ............................ ........... 29 Section 5.4 Review of Taxes ............... ................ .............. ......... ............... ...... ..... 30 Section 5.5 Use ofTa.x Increment~ ....................................................................... 31 Section 5.6 Business Subsidy Act............,............................................................ 31 Section 5.7 Developer Payments and Reimbursement ......................................... 32 Section 5.8 Issuance ofTa.x Increment Revenue Refunding Bonds..................... 33 Section 5.9 Issuance of Parking Lot.Note......... ..........:......................................... 33 ARTICLE VI ,ENCUMBRANCE OF THE DEVELOPMENT PROPERTY ...................... 36 Section 6.1 Encumbrance ofthe Development Property...................................... 36 Section 6.2 Copy of Notice of Default to Mortgagee ........................................... 36 Section 6.3 Mortgagee's Option to Cure Events of Default.................................. 36 Section 6.4 Defaults Under Mortgage .................................................................. 36 Section 6.5 Subordination of Agreement....................:.............:........................... 36 I 674205v9 1 TABLE OF CONTENTS Pa2e ARTICLE VII DEVELOPER COVENANTS ....................................................................'... 37 Section 7.1 Irisurance ............................................................................................ 37 Section 7.2 Maintenance and Operation of the Development .............................. 37 ARTICLE VIII TRANSFER LIMITATIONS AND INDEJ\tINIFICATION.........;...........:.... 38 Section 8.1 Representation as to Development..................................................... 38 Section 8.2 Limitations on Transfer......... ..... ...... ..... ............... ................... ...... ..... 38 Section 8.3 Indemnification ........................ ....... ......... ........ ...... ......... ................... 39 Section 8.4 Limitation. ........... ........ ....... ........................................ ........ ................ 41 ARTICLE IX EVENTS OF DEFAULT AND DAMAGES ................................................42 Section 9.1 Events of Default Defined ................................................................. 42 Section 9.2 Developer Events ofDefault.............................................................. 42 Section 9.3 City Events of Default ..............~........................................................ 43 Section 9.4 City Remedies on Default.................................................................. 43 Section 9.5 Developer. Remedies on Default .........................................:.............. 44 Section 9.6 No Remedy Exclusive....... .............. .................;........... ................. ......44 Section 9.7 No Additional Waiver Implied by One Waiver................................. 44 ARTICLE X ADDITIONAL PROVISIONS ...................................................................... 45 Section 10.1 Conflicts of Interest............ ........................................................ ........ 45 Section 10.2 Titles of Articles and Sections ........................................................... 45 Section 10.3 Notices and Demands ......................................................................... 45 Section 10.4 Counterparts .............. .............. ................ ........... ........... ..... ................ 45 Section 10.5 Law Governing ......... ........ .......... ....... ...... .......... ....... ......................... 45 Section 10.6 Consents and Approvals ....................................................................46 Section 10.7 Representatives ............ ............... ............ .......... ..... ............................ 46 Section 10.8 Superseding Effect ............................ ................................. ................ 46 Section 10.9 Relationship of Parties ........ ........................ .... ................................... 46 Section 10.1 0 Term.................... ............................................................................... 46 Section 10.11 Venue.................... .................................................. ............... ............ 46 Section 10.12 Provisions Surviving Rescission .or Expiration.................................. 46 EXHIBIT A BLUFF BLOCK PROPERTY .............................................................................. A-I EXHIBIT B JACKSON BLOCK PROPERTY ......................................................................... B-1 EXHIBIT C QUIT CLAIM DEED ............................................................................................ C-l EXHIBIT D CERTIFICATE OF COMPLETION ............................................................:....... D-l EXHIBIT E FORM OF TA..:X INCREMENT REVENUE NOTE............................................. E-1 EXHIBIT F FORM OF PARKING LOT NOTE........................................................................F-l EXHIBIT G ELIGIBLE COSTS ................ ..............,................. ................ ... .... ........ ...... .......... G-.1 EXHIBIT H CONSTRUCTION SCHEDULE .......................................................................... B-1 1674205v9 11 TABLE OF CONTENTS Pa2e EXHIBIT I ESTIMATED SOURCES AND USES STATEMENT ...........................................1-1 EXHIBIT! UPDATED SOURCES AND USES STATEMENT ..................;........................... J-l EXHIBIT K FINAL SOURCES AND USES STATEMENT...................................................K-l EXHIBIT L FORM OF PROFIT STATEMENT ...................................................................... L-l EXHIBIT M FINAL PROFIT STATEMENT........................................................................... M-l EXHIBIT N FORM OF CASH FLOW STATEMENTS .......................................................... N-l EXHIBIT 0 FINAL CASH FLOW STATEMENTS ................................................................ 0-1 EXHIBIT P OWNER UPGRADE OPTIONS ............................................................................P-l I 67420Sv9 1ll DEVELOP~ffiNTAGREEMENT THIS DEVELOPMENT AGREE~ffiNT is made and entered into tIus 6th day of December, 2004, by and between the CITY OF ELK RIVER, MINNESOTA, a municipal corporation and political subdivision organized and existing under the laws of the State of Minnesota (the "City"), and METROPLAINS DEVELOPlVIENT, LLC, a Minnesota limited liability company (the "Developer"). RECITALS 'WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134, the City has formed Municipal Development District No.1 (the "Development District") and has adopted a development program therefor (the "Development Program") for the Development District which sets forth development objectives for the Development District. A major objective of the Development Program is to foster the development of owner occupied and rental housing facilities in the Development District; WHEREAS, the Developer has submitted a proposal to the City in connection with the construction in the Development District of a rental housing and owner occupied housing development and commercial redevelopment; WHEREAS, the Developer intends to acquire approximately one acre of real property located in the Development District (the "Development Property"), demolish and clear the existing structures and construct approximately 68 units of owner..;occupied housing and approximately 10,820 square feet of retail space, together with related parking facilities (the "Bluff Block Development") on the portion of the Development Property legally described in Exhibit A hereto (the "Bluff Block Property") and construct approximately 32 tmits of rental housing and approximately 13,000 square feet of retail space, together with related parking facilities, (the "Jackson . Block Development") on tile portion of the Development Property legally described in Exhibit B hereto (the "Jackson~Block Property") (the "Bluff Block Development" and the "Jackson Block Development" being collectively referred to herein as the ''Minimum Improvements"); WHEREAS, under Minnesota Statutes, Sections 469.174 through 469.1799, as amended (the "TIF Act"), the City is authorized to fmance certain public redevelopment costs of a' municipal development district with ta.."'{ increment revenues derived from a ta.."'{ increment financing district established within such redevelopment project; WlIEREAS, tile City has heretofore adopted a ta.."'{ increment fmancing plan and created and established the Downtown Phase' I Tax Increment Financing District No. 22 as a redevelopment ta"'{ increment district pursuant to the TIF Act (tile "Ta"'{ Increment District"); \VHEREAS, the City has agreed, on tile terms and conditions set forth in this Agreement to issue its Ta.."'{ Increment Revenue Note (as hereinafterdefmed) to reimburse tile Developer for certain Eligible Costs (as herein defined) of the Minimum Improvements and to issue its Parking Lot Note (as herein defined) to reimburse the Developer for the cost of constructing tile Parking Lot (as herein defin'ed); 1674205v9 \VHEREAS, th.e City believes that the development of the Development Property, as .more fully set forth in this Agreement, is in the best interests of the residents of the City and will 'facilitate the redevelopment of blighted areas in the City, and increase opportunities for owner occupied and rental housing, and will otherwise benefit the health, safety, morals and welfare of the residents of the City, in accordance with the public purpose and provisions of the applicable State and local laws and requirements under the Development Program; and 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: 1674205v9 2 ARTICLE I DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: "Acquisition Costs" means all of the costs incurred by the Developer in connection with the acquisition of the Development Property, including but not limited to, the purchase price paid to acquire the Development Property, broker fees, holding costs including interest on debt incurred to finance the acquisition, any taxes, assessments or utilities required to be provided or paid by the Developer as a result. of its acquisition of the Development Property, all costs for appraisers, title work, legal proceedings, and any federal, State or local relocation benefits. "Administrative Expenses" shall have the meaning given such term in the Tax Increment Act. "Affiliate" means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with a Person and any purchaser of all or substantially all of the assets of such Person. For this purpose, "control" means the power to direct management and policies, directly or indirectly, whether through ownership of voting securities, by contract or otherwis~, and the terms "controlling" and "controlled" have correlative meanings. "Agreement" means this Development Agreement as the same maybe from time to time modified, amended or supplemented. "Allowable Profit" means the Profit of the Developer in an amount equal to 1 0% of Total Development Costs with respect to the Bluff Block Housing Project and 10% of Total Development Costs with respect to the portion of the Bluff Block Commercial Project. "Available Ta.:'( Increment" means the Tax Increment received and retained by the City, less the amount of Tax Increment, if any, which the City must pay to the school district, the County and the State pursuant to Minnesota Statutes, Sections 469.177, subds. 9, 10, and 11; 469.176, subd. 4h; and 469.175, subd. la, as the same may be amended from time to time. "Bluff Block Commercial Project" means approximately 10,820 square feet of retail space, together with related parking facilities, to be constructed on the Bluff Block Property. "Bluff Block Development" means the demolition and clearance of the existing structures located on the Bluff Block Property and the construction of the Bluff Block Housing Project and the Bluff Block Commercial Project. "Bluff Block Housing Project" means approximately' 68 units of owner-occupied housing, together with related parking facilities, to be constructed on the Bluff Block Property. "Bluff Block Property" the real property legally described in Exhibit A hereto. 1674205v9 3 "Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on which ban.kin~ institutions in the City are authorized by law or executive order to close. "Cash Flow Determination Date" means the first day of the first month that is sixty (60) days after both the Bluff Block Development and the Jackson Block Development are 80% leased and/or sold or such earlier date as the City may require. "Cash Flow Statement'! means the cash flow statement provided by the Developer pursuant to Section 5.3 and to be attached as Exhibit 0 hereto in substantially the form and content as set forth in Exhibit N hereto, prepared by the Developer setting forth (with respect to units for which leases have been signed) or forecasting (with respect to units for which leases have not yet been signed; provided the Developer may assume up to 7% vacancy) the income, expenses and debt with respect to the Jackson Block Commercial Project and the Jackson Block Housing Project for the first fiscal year commencing on or after the Cash Flow Determination D~ - "Certificate of Completion" means the -certificate in substantially the form attached hereto as Exhibit D signed by the City Representative certifying completion of the Development. "City" means the City of Elk River, Minnesota, its successors and assigns. "City Acquisition Costs" means all costs, expenses, fees and charges incurred by the City associated with the acquisition. by the City of the Bluff Block Property including, but not limited to, payments for just compensation, court filing fees, court-appointed commissioners' fees, appraisal fees and expenses, consultant fees and expenses, attorneys' fees and costs,' Relocation Costs and Expenses fees for service of process and any other cost, expense, fee and/or charge associated with the acquisition of the Bluff Block Property. "City Council" means the City Council of the City. "City Documents" means the documents to be executed and/or delivered by the City at the Closing pursuant to Section 3.7(b) of this Agreement. "City Representative" means the Administrator of the City or his or her designee. "Closing" means the closing on the conveyance of the Jackson Block Property by the City to the Developer. "Closing Date" means the date on which the City conveys the Jackson Block Property to the Developer, which date shall be the date the Developer closes on the c.onstruction Loan, or such later date mutually agreed to by the Parties. "Completion Date" means the date the Certificate of Completion is executed by the City Representative or, with respect to each component or unit of the Minimum Improvements, the date that a comparable certificate of completion is executed with respect to such component or unit. 1674205v9 4 "Condominium Developer" means Bluff Block, LLC, an affiliate of the Developer, its successors and assigns. "Construction Costs" mepns the capital costs of the construction of the Minimum Improvements, including, but not limited to, the costs of labor and materials; construction management and supervision expenses; insurance and payment or performance bond premiums; architectural and engineering fees and expenses; usual and customary fees or costs payable to the City or any other public body with regulatory authority over construction of the Development (e.g. building permits and inspection fees); and all other costs chargeable to the capital account of the Development under generally accepted accounting principles, excluding Developer's Overhead Costs. "Construction Loan" means the construction loan or loans to be made by the Construction Lender to provide financing for the construction of Minimum Improvements. "Construction Lender" means a financial institution selected by the Developer. "Construction Plans" means the plans, specifications, drawings and related documents for the construction of the Minimum Improvements which shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the building inspector of the City. "County" means Sherburne County, Minnesota. "Debt Service Coverage Ratio" means the ratio determined by dividing the estimated annual amount of Pledged Tax Increment to be received in a calendar year by the maximum amount of principal and interest due in any calendar year. "Deed" means the quit claim deed executed by the City conveying the Jackson Block Property to the Developer, in the form attached hereto as Exhibit C. '-'Developer" means MetroPlains Development, LLC, a Minnesota. limited liability company, its successors or assigns. "Developer Event of Default" means the occurrence of an Event of Defa1.l1t set forth in Section 9.2 hereof. "Developer's Documents" means the documents to be delivered pursuant to Section 3.7(c) of this Agreement. "Developer's Overhead Costs" means an amount during the construction and marketing period of (i) the Jackson Block Housing Project units equal to $205,000; (ii) the Bluff Block Housing Project units equal to $336,000; provided that such amount does not include any amount paid to the Condominium Developer as the general contractor for the Bluff Block Housing Project; (iii) the Jackson Block Commercial Project units equal to $60,000; and (iv) the Bluff Block Commercial Project units equal to $70,000. 1674205v9 5 "Developer's Representative" means the President of the Developer, or his or her designee evidenced in writing to the City. "Development" means the Development Property and the Minimum Improvements. "Development Property" means the Bluff Block Property and the Jackson Block Property. "Eligible Costs" means the costs identified on Exhibit G attached hereto. "Event of Default" means any of the events described in Sections 9.2 or 9.3. "Excess Profit" means the total amount of Profit received by the Developer from Sale of . the units in' the portion of the Development in which units are sold and not leased in excess of Allowable Profit, as determined by the' Profit Statements submitted by the Developer and calculated as described in Section 5.3. "Excess Funding" means the total amount of Funding for the portion of the Development in which units are leased and not sold in excess of Total Development Costs of such portion of the Development, as determined by the Sources and Uses Statement submitted by the Developer and calculated as described in Section 5.3. "Fair Nlarket Value" means the estimated fair market value as determined by the "Three Appraiser Method," whereby the Developer and the City each select an appraiser who submits a sealed appraisal. Upon simultaneous opening of the two appraisals, Fair Market Value shall be defined as the arithmetic average between the two appraisals, unless the two appraisals shall be more than 5.0% apart in value. If the two appraisals are more then 5.0% apart, the two appraisers shall jointly select a third appraiser and the Fair Market Value shall be determined as the arithmetic average between the three appraisals. If the two appraisers cannot agree upon the selection of a third appraiser, either the Developer or the City ;may submit the selection to binding arbitration. "Final Payment Date" means Februaiy 1, 2032 or on such later date as the City receives available Tax mcrement as a result of the payment of real property taxes that were delinquent on February 1,2032. "Funding" means the portion of the Construction Loan, cash equity contributed by the Developer, the Ta.x Increment Revenue Note, any additional assistance provided by any other governmental entity and any other sources of funding for the MininllUTI Improvements as set forth in the Sources and Uses Statement. "Jackson Block Commercial Project" means approximately 13,000 square feet of retail space, together with related parking facilities, to be constructed on the Jackson Block Property. "Jackson Block Development" means the demolition and clearance of the existing structures located on the Jackson Block Property <)nd the construction of th.e Jackson Block Housing Project and the Jackson Block Commercial Project. I 674205v9 6 "Jacksoll Block Housing Project" means approximately 32 units of rental housing, together with related parking facilities, to be constructed on the Jackson Block Property. "Jackson Block Property" means the real property legally described in Exhibit B hereto. "Lender" means any financial institution to which the Developer assigns its rights to payments under the Tax Increment Revenue Note. "lVlarket Value" or "Market Valuation" means the market value of real property as determined by the assessor of the County in accordance with Minnesota Statutes, Section 273.11 (or as [mally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). "lVlinimum Improvements" means the Bluff Block Development and the Jackson Block Devel~pment. frOwner Upgrades" means any improvements or upgrades in materials used in the construction of a housing unit selected by the purchaser of such housing unit from the list attached hereto as Exhibit P. ' "Parking Lot" means the parking lot to be constructed by the City on King Avenue in connection with the construction of the Minimum Improvements. "Parking Lot Cost" means the cost of the Parking Lot as determined by the City based on the awarded construction contract, third party engineering fees, contingencies and other ordinary costs of constrUction. The amount of th'e Parking Lot Cost will not exceed $350,000 unless the City and the Developer have agreed in writing. "Parking Lot Note" means the tax increment revenue note, in substantially the form attached hereto as Exhibit F hereto to be issued by the City pursuant to the provisions of Section 5.9 hereof. "Parking Lot Pledged Ta.:'C Increment" means, as of any Payment Date, 6% of the lesser of the actual Available Tax Increment receiv.ed by the City since the last Payment Date based on the lesser of the current actual Market Value of the Minimum Improvements as determined by the County Assessor or the County Assessor's Market Value ofthe Minimum Improvements as of the January 2 immediately following the Completion Date. "Party" means the Developer or the City, as the context may require. "Parties" means the Developer atld the City. "Paym.ent Date" means each February 1 and August 1, commencing with the first February 1 or August 1 occurring after the date of issuance ,of a certificate of completion for the shell of the Bluff Block Development; provided, that if any such Payment Date should not be a Business Day, the Payment Date shall be the next succeeding Business Day. 1 674205v9 7 "Persoll" means imy individual, corporation, partnership, joint venture, limited liability company or partnership, association, trust, unincorporated organization, or government, or any agency or political subdivision thereof. "Placement Agent" means any underwriter or placement agent, cooperatively selected by the City and the Developer, which assists the Developer in placing the Ta.."'( Increment Revenue Note with a Lender. "Pledged Ta.x Increment" means, as of any Payment Date, 89% of the actual Available Ta.."'( Increment received by the City since the last PaYment Date based on the lesser of the current actual Market Value of the Minimum Improvements as determined by the County Assessor or the County Assessor's Market Value of the Minimum Impcovements as of the January 2 immediately following the Completion Date. "Profit" means the amount by which Sales Proceeds exceed Total Development Costs of the portion of the Development in which units are sold and not leased; provided that if the Profit Determination Date is prior to the date of the Sale of the last unit to be sold the Developer shall forecast Profit with respect to units which have not yet been sold based on projected Sales prices of remaining units and in forecasting such Profits. "Profit Determination Date" means the first day of the first month that is sixty (60) days after both the Bluff Block Development and the Jackson Block Development are 80% leased and/or sold or such earlier date as the City may require. "Profit Statement" means the. profit analysis provided by the Developer pursuant to Section 5.3 and to be attached as Exhibit M hereto in substantially the form and content as set forth in Exhibit L hereto, prepared by a firm of certified public accountants reasonably accep~able to the City calculating the Profit, which shall detail all actual sources and uses of funds associated with the portion of the Development in which units are sold and not leased and which shall specifically include a schedule showing any return of equity and distribution of Profit to the Developer. "Rate of Return" means (i) the annual "Cash Flow after Financing" for the first fiscal. year commencing on or after the Cash Flow Determination Date as set forth in the Cash Flow. Statement divided by (ii) the "Developer Equity" as set forth in the Sources and Uses Statement with respect to the Jackson Block Commercial Project to the extent leased and not sold. "Refunding Bonds" means any tax increment revenue bonds issued by the City pursuant to Section 5.8 hereof. "Reimbursement Amount" means the Reimbursement Amount as defined in Section 5.2(a). "Relocation Costs and Expenses" means any and all relocation assistance, services, benefits or payments made under 42 U.S.c. 9 4601, et. seq., 49 C.F.R. S 24.1 et. seq, and Minnesota Statutes. Chapter 117. 1674205v9 8 "SA C and H''A C' means the sewer- access charges and water access charges with respect- to the Development Property in connection with the Minimum hnprovements. "Sale" means any sale, direct or indirect, conveyance, assignment, transfer, exchange or other disposition of all or a part of the Developer's interest in the units of the Bluff Block Development, to any Person other than an Affiliate. "Sale Proceeds!' means any and all consideration of any kind whatsoever, whether direct - or indirect, that is received by the Developer (or any other party that is an Affiliate of the Developer other than broker's commissions and marketing fees in the aggregate amount of 6% of the Sale price for each unit of the Bluff Block Housing Project paid to the Condominium Developer or an owner or member of the Condominium Developer) for, or in connection with, the Sale of the units in the portion of 41e Development in which units are sold and not leased, excluding any amounts paid with respect to Owner Upgrades and including without limitation, the stated purchase prices, cash, notes, and any indebtedness assumed and/or to which the units in such portion of the Development are then subject, reimbursement of prepaid expenses, contracts for the Developer's service and the service of an Affiliate of the Developer and noncustomary net prorations in favor of the Developer. Notwithstanding the foregoing, if the sale of a unit in such portion of the Development is other than an arms-lengths sale to a third party, at the option of the City, Sale Proceeds with respect to such sale shall mean the Fair Market Value of the transferred property less all disposition expenses reasonably approved by the City. "Sources- and Uses Statement" means the statement provided by the Developer pursuant to Section 5.3 and to be attached as Exhibit K hereto in substantially the form and content as set forth in Exhibit I hereto, prepared by a firm of certified public accountants reasonably acceptable to the City calculating the Total Development Costs and determining the final sources of Funding, which shall detail all actual sources and uses of funds associated with each portion of the Minimum hnprovements and calculate the amount of any Excess Funding. "State" means the State of Minnesota. "Targeted Return" means the Rate of Return of the Developer equal to 12% with respect to the Jackson Block Commercial Project to the extent leased and not sold. "Ta.;y; Increment" means that portion of the real property ta,-xes generated by the Development Property and the Minimum hnprovements which is actually remitted and retained by the City as tax increment under the TIP Act. "Tax Increment District" means the tax increment district commonly referred to as the Downtown Phase I Tax Increment Financing District No. 22, as the same is amended from time to time. "Ta.;y; Increment Revenue Note" or "Note" means the tax increment revenue note, in substantially the form attached hereto as Exhibit E hereto to be issued by the City pursuant to the provisions of Section 5.2 hereof. I 674205v9 9 "TfLY; Increment Plan" means that certain Tax Increment Financing Plan, as ame:t;lded, for the Ta.."'{ Increment District approved by the City Council. 'TfLY; 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. "TIF Act" means Minnesota Statutes, Sections 469.174-469.1799, as amended, or any successor statutes. "Title Company" means a title company mutually acceptable to the City and the Developer. "Total Developllunt Costs" means the sum of the following costs set forth on Exhibits I, J and K, and specifically excludes the Parking Lot Cost (as defined in Section 5.9): (i) Construction Costs, excluding any costs attributable to Owner Upgrades; (ii) Acquisition Costs; (iii) Architectural, engineering, legal, accounting and other professional services fees, including but not limited to those for surveying, appraisal, financial advisory, market feasibility, environmental and geotechnical testing and correction, title, marketing, management services costs, registered land survey costs and any other soft costs of construction (but excluding any Developer's Overhead Costs); (iv) Marketing costs, reasonable broker's commissions and ~arketing fees in an aggregate amount up to 6% of Sale Proceeds, to the extent actually paid to a Person or entity other than the Developer or an Affiliate of the Developer, usual and customary closing costs and credits, including, but not limited to title charges, survey costs, escrow charges, recording fees, transfer ta..xes and reasonable attorneys' fees, special assessments required to be paid as a condition of Sale, and reasonable prorations in favor of the purchasers for real estate taxes not ret due and payable, if any, and other soft costs of Sales, excluding any costs attributable to Owner Upgrades; (v) Developer's Overhead Costs and soft costs of operations; (vi) Construction Loan interest; (vii) Title and Construction Loan closing costs; (viii) Construction supervision by third parties, provided that if performed by the Developer or an Affiliate the amount thereof considered a Total Development Cost shall not exceed (i) 10% of Total Development Costs with respect to the Bluff Block Housing Project; (ii) 10% of Total Development Costs with respect to the BlutT Block Commercial ProJect; (iii) 10% of Total Development Costs with respect to the Jackson Block Housing Project and (iv) 10% of Total Development Costs with respect to the Jackson Block Commercial Project; I 674205v9 10 (ix) Payments to the Developer for the following: development fee not to exceed the sum of (a) 5% of Total Development Costs with respect to the leased portion of the Jackson Block Commercial Project, (b) 12% of development costs approved by the Minnesota Housing Finance Agency with respect to the Jackson Block Housing Project, market rate leasing commissions on the Jackson Block Housing Project and the Jackson Block CommerCial Project and other similar fees, all of which shall be of a nature and amount which is standard in the industry; (x) Governmental fees, including park dedication, permit, license and utility hook-up charges, SAC and WAC, to the extent not reduced or reimbursed; (6) Ta..'{es and insurance premiums during the construction period, including special assessments; (7) Financing fees and financing interest during the construction period; (8) .Amounts paid or payable to equity providers, other than Affiliates, regardless of whether paid as interest, profit participation, preferred return, loan guaranty fees or otherwise. "Unavoidable'Delays" means 4elays, outside the control of the party claiming its occurrence, which delay the activities contemplated by this Agreement, and which are the direct result of (a) unusually severe or prolonged bad weather, (b) acts of God, fire or other casualty to the Minimum Improvements, (c) litigation commenced by third parties which, by injunction or. other similar judicial action, directly results in delays, (d) acts of any federal, State or local governmental unit which directly result in delays, (e) strikes, or other labor trouble, (f) delays in delivery of materials for the Minimum hnprovements, (g) soil conditions of the Development Property or (h) acts of war or terrorism, not eXIsting on the d~te hereof. "U.S. Bank Parcel' means that portion of the Bluff Block Property to be acquired by the Developer from U.S. Bank, National Association, which property is located at 632 Main Street, Elk River, Sherburne County, Minnesota. 1 674205v9 11 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and \Varranties of the City. The City makes th~ followmg representations and warranties: (a) The City is a municipal corporation and political subdivision organized and existing under the laws of the State of Minnesota with the authority to enter into this Agreement and carry out Its obligations hereunder. . (b) The City has taken all action necessary to create the Development District and the Tax Increment District, to adopt and approve the Development Program and Tax Increment Plan, to approve this Agreement, and to authorize the execution and delivery of this Agreement, and any other documents or instruments required to be executed and delivered by the City pursuant to this Agreement. (c) The City has elected in the Tax Increment Plan to retain 100% qf the captured net tax capacity of the Development Property to fmance permissible expenditures under the. Tax. Increment Act, and has elected that the duration of the Tax Increment District will be the maximum duration permitted by the Tax Increment Act. (d) The execution, delivery and performance of this Agreement, and any other documents or instruments required pursuant to this Agreement by the City does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not, conflict with or constitute on the part of the City a breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the City is a party or by which the. City or any of its property is or may be bound, or (ii) legislative act, constitution or other proceeding establishing or relating to the establishment of the City or its officers or its resolutions. ( e) There is not pending, nor to the best of the CitYs knowledge is there threatened, any suit, action or proceeding against the City before any court, arbitrator, adrriinistrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the City to perform its obligationS hereunder, or as contemplated hereby or thereby, or the validity or enforceability of tIris Agreement. (f) No member of the City Council of the City or officer of the City, has either a direct or indirect interest in tpis Agreement within the meaning of Minnesota Statutes, Sections 412.311, as amended, or any successor statute. (g) . There are no purchase agreements or leases affecting the Jackson Block Property, other than leases which shall be terminated prior to the conveyance of the Jackson Block Property to the Developer, with any person other than the Developer, and the City will not enter into any such agreements. '1674205v9 12 (h) The City will cooperate fully with the Developer with respect to any litigation commenced by third parties with respect to the activities contemplated by this Agreement. Section 2.2 Representations and Warranties bv the Developer. The Develop~r represents. and warrants that: (a) The D.eveloper is a limited liability company organized and in good standing under the laws of the State, is not in violation of any provisions of its organizational documents or to the best of the Developer's knowledge the laws of said State, has the power and authority to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its members. (b) The Developer will construct the Minimum Improvements in accordance with the terms of this Agreement, the Development Program and all local, State and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations), except for variances necessary to construct the Minimum Improvements contemplated in the Construction Plans approved by the City. . ( c) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (d) The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillinent of the terms and conditions hereof do not and will not conflict with or result in a breach of any of the terms or conditions of the Developer's organizational doc:uments, any restriction or any agreement or instrument to which the Developer is now a party or by which it is bound or to which any property of the Developer is subject, and do not and Will not constitute a default under any of the foregoing. To the best of the Developer's knowledge, the execution and delivery of this Agreement, the consummation of the transactions' contemplated thereby, and the fulfillment of the terms and conditions thereof do not and will not result in a violation of any order, decree, statute, rule or regulation of any court or of any state or federal regulatory body having jurisdiction over Developer or its properties, including its interest in the Development, and do not and will not result in the creation or imposition of any lien, charge or encumbrance. of any nature upon any of the property or assets of Developer contrary to the terms of any instrument or agreement to which Developer is a party or by which it is .bound. ( e) The execution and delivery of this Agreement will not create a conflict of interest 'prohibited by Minnesota Statutes, Section 412.311, as amended, or any successor statUte. (f) The Developer would not construct the Minin1um Improvements but for the execution of tIns ~greement and the ta.'<. increment financing assistance made available hereunder. (g) The Developer willfully cooperate with the City with respect to any litigation commenced by third parties with respect to the activities contemplated by this Agreement. 1674205v9 13 (h) There are no pending or threatened legal proceedings, of which the Developer has notice, contemplating the liquidation or dissolution of the Developer or threatening its existence, or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning the authority of the Developer to execute and deliver this Agreement or the validity of this Agreement. . (i) The Developer has not received any notice from any local, State or federal official that the activities of the Developer or the City with respect to the Development Property mayor will be in violation of any environmental law or regulation. The Developer is not aware of any State or federal claim filed or planned to be filed by any party relating to any violation of any local, State or federal environmental law, regulation or review procedure, and the Developer is not aware of any violation of any local, State or federal law, regulation or review procedure which would give any person a valid claim under any state or federal environmental statute. G) The Developer reasonably expects on the date of execution ofthis Agreement that it will be able to obtain financing commitments to fmance construction of the Minimum Improvements which, together with financing provided by the City pursuant to this Agreement, will be sufficient to enable the Developer to successfully complete the Minimum Improvements in conformance with the Constmction Plans. (k) The Developer will cooperate fully with the City in the resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Minimum Improvements. .(1) The Developer expects that, barring Unavoidable Delays, the Minimum Improvements will begin and be substantially completed on the dates set forth on Exhibit H to this Agreement. . (m) The Developer agrees to provide the City with copies of all purchase agreements, cancelled checks, appraisals and any other information requested by the City relating to the acquisition of the Development Property. (n) The Developer represents that the estimated Market Values, Constmction Costs, Acquisition Costs, projected Sales prices, Sales Proceeds, Development Costs and other information set forth in the attached Exhibits I, L and N reflect the reasonable expectations of the Developer. (0) The Developer represents that it would not have been feasible to redevelop the Bluff Block Property and construct the Bluff Block De.velopment if the Jackson Block Development had not been part of the same redevelopment project. (P) The Developer has made its own projections of Tax Increment to be generated from the Development and the Developer. has not relied on any assumptions, calculations, determinations or conclusions made by the City, its governing body members, officers or agents, including the independent contractors, consultants and legal counsel, servants and employees thereof, with respect to the foregoing. 1674205v9 14 ARTICLE ITI CONVEYANCE OF JACKSON BLOCK pROPERTY Section 3.1 Purchase and Sale of Jackson Block Property. (a) The City shall endeavor to obtain clear, marketable title to the Jackson Block Property by: (i) Obtaining quit claim deeds from any individuals or other entities having an interest in the Jackson Block Property; and (ii) Vacating, . pursuant to the procedures set forth in Minnesota law, any public interest or other rights in the Jackson Block Property.' (b). To the extent the City is unable to obtain clear title to all of the Jackson Block Property through negotiation with interested parties of record within 90 days of the date of this Agreement, the City agrees to endeavor to acquire clear title to the Jackson Block Property through the exercise of its powers of eminent domain, including the use of quick take, pursuant to Minnesota law. (c) The Developer acknowledges that the City does not warrant the successful conclusion of any eminent domain action or vacation procedures or the accomplishment of any particular result or timetable because of the many variables inherent in any litigation or legal proceeding. The City shall not be liable to any party for any consequential or other damages that may arise out of any delays due to eminent domain actions, vacation procedures, environmental conditions, court challenges or elements outside the control of the City. (d) If the City is not successful in acquiring clear title to the Jackson Block Pr,operty through eminent domain and vacation proceedings,. the Developer may elect to terminate this Agreement in its entirety or only as it relates to the Jackson Block Property. If the Developer elects to terminate this Agreement as it relates only to the Jackson Block Property, the Developer and City will proceed with the transactions contemplated by this Agreement related to the Bluff Block Property and all costs incurred by the Developer related to the development ofthe Jackson Block Property will be included in Total Development Costs for purposes of the analysis required by Section 5.3. ( e) If the City is successful in acquiring clear title to the Jackson Block Property, the City shall (i) promptly vacate any public interests and rights in the Jackson Block Property pursuant to the procedures set forth in Minnesota law and (ii) notify the Developer of the date it has acquired clear title to, and completed the vacation of any public rights or interest in, 'all of the Jackson Block Property (the "Effective Date"). Subject to'the terms of this Agreement, the City agrees to sell to the Developer, and beveloper agrees to buy from the City, the Jackson Block Property. The City and the Developer agree that the Closing on the purchase and' sale of the Jackson Block Property shall occur on the Closing Date in accordance with the further provisions of this Article III. 1674205v9 15 Section 3.2 As Is Convevance. In recognition of the significant economic 'Contributions which the City will make to redevelop the Jackson Block Property, the Developer shall take the conveyance of the Jackson Block Property on an "AS IS" "WHERE IS" basis, with all faults and defects, without any warranties, express or implied, including as to title, and the Developer waives any claims .against the City and 'its respective members and officers, for indemnification, contriblltion, reimbursement or other payments arising under federal and state law and the common law relating to environmental or any other condition of the r ackson Block Property: The City has no obligation to provide evidence of title except as set forth in Section 3.3; provided, however, upon request the City will deliver to the Developer a copy of any title commitment and related documentsit,has obtained with respect to the Jackson Block Property. Without any investigation or review, the City has no knowledge qf any use of the Jackson Block Property for hazardous waste purposes, of any hazardous wastes on the Jackson Block Property or of any underground storage tanks. Section 3.3 Title Review Process. (a) The Developer will direct a title insurance company of its choice (the "Title . Company") to prepare and deliver to the Developer within a reasonable time after the Effective Date the following items (collectively the "Title Documents"): (i) a commitment for title insurance ("Title Commitment") that sets forth the state of the title of the J ackso:q. Block Property, and (ii) legible copies of all exceptions to title disclosed in the Title Commitment. The , Title Commitment should be dated to b'e effective no earlier than the Effective Date, issued in favor of Developer and .set forth the state of title to the Jackson Block Property and all exceptions to coverage that would appear in an ALTA Form 1970 owner's policy of title insurance. The Developer will also cause the Title Company to issue an updated title commitment dated not more than five (5) days before a Closing on the Jackson Block Property ("Updated Title Commitment"). (b) Before the Closing Date, the'Developer will provide written notice to the City of ,any exception to title or other matter shown on the Title Commitment or Updated Title Commitment to which the Developer objects (the "Objections"). The exceptions to title or other matters shown on the Title Commitrrient or Updated Title Commitment that are not Objections, together with general real estate taxes for the year of Closing and subsequent years that are not yet due and payable, are referred to as "Permitted Exceptions." The Developer may not object to matters contained in the Updated Title Commitment that were previously accepted in the Title Commitment. If the Developer fails to notify the City in writing of the Objections prior to the Closing Date, title will be qeemed accepted subject to the conditions set forth in the last issued . Title Commitment or Updated Title Commitment (as the case may be), but not subject to any Objections previously m,ade. (c) The City will have a period of fifteen (15) days after receipt of written notice from the Developer (or'within five (5) days with respect to the Updated Title Commitment) (the "Cure Period") to provide a cure (or arrange a cure) that is reasonably acceptable to the Developer for the Objections. The City and the Developer agree that if the expiration of the Cure Period occurs after a scheduled Closing Date, a Closing will automatically be extended until two (2) days after the expiration of the Cure Period. The City covenants and agrees that prior to or at Closing it will discharge all liens, mortgages, contraCt for deeds, other l674205v9 16 encumbrances against the Jackson Block Property that secure any obligation of the City and any claims filed by contractors, suppliers or workers for' work performed by such claimants at the request of or through the City (it being understood that these matters are automatically Objections, even if the Developer has not made a specific written Objection). If the City is unable or unwilling to .provide a cure (or arrange a cure) that is reasonably acceptable to the Developer for any Objection within the Cure Period, the Developer may, within ten (10) days after the expiration of the Cure Period, either: (i) terminate this Agreement; (ii) maintain this Agreement in effect and proceed to cure the Objections and the cost bf curing the Objections will be considered Total Development Costs; or (iii) maintain this Agreement in effect without acquiring the Jackson Block Property. If the Developer fails to notify the City of such election within the prescribed 10 day period, titie will be deemed accepted subj ect to the conditions set forth in the last issued Title Commitment or Updated Title Commitment (as the case may be), including conditions to which Objections were previously made, and the City and the Developer shall proceed to a Closing on the purchase and sale of the Jackson Block Property in accordance with the further provisi9ns of this Article m. (d) If1h.e City proceeds to acquire the Bluff Block Property as provided.in Section 3.5 of this Agreement, review of title to the Bluff Block Property will be undertaken through the same process as set forth in this Section 3.3. Section 3.4 Purchase Price. The purchase price to b~ paid by Developer to the City for the Jackson Block Property shall be an amount equal to $1.00. Its fair market value is $500,000; provided that if the fair market value ofllie Jackson Block Property as determined by the independent appraiser selected by the Construction Lender is an amount other than $500,000, the Parties agree the fair market value shall be the value determined by such appraiser. The purchase price shall be paid in cash on the Closing Date. The Developer shall assume or pay all ta."{es, special assessments and similar governmental impacts due and payable in the year of Closing.and all future years. Section 3.5 Acquisition of the Bluff Block Property. (a) As set forth in Section 3.6, the City's obligation to close on the sale of the Jackson Block Property is conditioned, among other things, upon Developer having fee title to all of the Bluff Block Property. If the Developer shall have delivered to the City evidence acceptable to the City that the Developer has fee title to two of the three parcels which comprise the Bluff Block Property, and that the Developer has exhausted all reasonable. efforts to negotiate the purchase of the final parcel of the Bluff Block Property, including good faith efforts to reach an. agreement regarding the purchase with the assistance of a neutral third party mediator, the City agrees to. consider in its discretion the acquisition of the Bluff B.lock Property through the exercise of its powers of eminent domain, including the use of quick take, pursuant to Minnesota law. The Developer agrees to pay or reimburse the City for all. City Acquisition Costs and Relocation Costs and Expenses in connection with the acquisition of the Bluff Block Property. The City will not commence eminent domain proceedings until the City has received the following: (i) a $50,000 cash deposit from the Developer (the "Initial Deposit"); . . 1674205v9 17 (ii) a pro forma budget for the Minimum Improvements showing all sources and uses of funds and a timetable, acceptable to the City, for the construction of the Minimum Improvements; (iii) letters of intent, commitment proposals or other evidence reasonably satisfactory to the City, from financi~l institutions, subject to customary contingencies, to provide financing for the Minimum Improvements. (b) Within 30 days after the City receives the items required~in paragraph (a) above, the City may 'in its discretion file condetnnation proceedings for the final parcel of the Bluff Block Property with the District Cout!:o The Developer acknowledges and agrees that the City will not proceed with the eminent domain proceedings past the point at which the City is pe:rInitted to deposit the appraised value of the final parcel of the Bluff Block Property with, the court unless the City has received from the Developer cash in an amount equal to the City's estimate of the total acquisition costs of the final parcel of the Bluff Block Property less the amount of the Initial Deposit (the "Developer's Deposit"). (c) The Developer acknowledges that the City does not warrant the successful conclusion of any eminent domain action or quick take procedures or the accomplishment of any particular result or timetable because of the many variables inherent in any litigation or legal proceeding. The City shall not be liable to any party for any consequential or other damages that may arise out of any delays due to eminent domain proceedings, vacation proceedings, environmental conditions, court challenges or elements outside the control of the City. (d) If the City elects to exercise its power of eminent domain and is not successful in acquiring title to the fmal parcel of the Bluff Block Property through eminent domain proceedings, this Agreement shall terminate and the City shall deduct from the Devdoper's Deposit all out-of-pocket costs and City Acq~isition Costs and Relocation Costs and Expenses incurred by the City in connection with the eminent domain proceedings, including reasonable attorneys' fees, and the balance of the Developer's Deposit shall be returned to the Developer; provided that if the eminent domain proceedings are concluded unsuccessfully prior to the Developer's Deposit being made, and the out-of-pocket costs and reasonable attorneys' fees and City Acquisition Costs and'Relocation Costs and Expenses incurred by the City in connection with the attempted acquisition of the fmal parceL of the Bluff Block Property exceed the Initial Deposit, the Developer shall pay the City the difference between the Initial Deposit and the costs incurred by the City. If the out-of-pocket costs and City Acquisition Costs and Relocation Costs and Expenses incurred by the City in connection with the attempted acquisition of the fmal parcel of the Bluff Block Property are less than the Initial Deposit, the City shall refund the, balance of the Initial Deposit to the Developer. (e) lithe City is successful in acquiring fee title to the fmal parcel of the Bluff Block Property, the City shall notify the Developer of the date it has acquired fee title to the final parcel oftheBluff Block Property (the ','Effective Date"). Subject to the terms of this Agreement, the' City agrees to sell to the Developer, and Developer agrees to buy from the <;:'ity, the final parcel of the Bluff Block Property. The purchase price for the Bluff Block Property shall be equal to the City Acquisition Costs anp: the Relocation Costs and Expenses. The City and the Developer agree that the closing on the purchase and sale of the final parcel of the Bluff Block Property I 674205v9 18 shall occur simultaneously with the Closing on the Jackson Block Property in accordance with the further provisions of this Article ill or, if this Agreement has been terminated as it relates to the Jackson Block Property as provided in Section 3.1 (d), upon satisfaction of the conditions to conveyance of the Bluff Block Property only. (f) The City shall have the sole and exclusive discretion to settle or not settle any condemnation proceeding including, but not limited to, the payment for City Acquisition Costs and Relocation Costs and Expenses; provided, that the City will cons,ult with the Developer before entering into any settlement agreement related to the acquisition of the Bluff Block Property. Section 3.6 Continl!encies to Closinl! on Jackson Block PropertY. (a) Developer's Contingencies. Developer's obligation to close on the purchase of the Jackson Block Property is expressly conditioned upon the City having performed all of the obligations required to be performed by the City under this Agreement as of the Closing Date, including but not limited to, delivery of all of the City's Documents described.in Section 3.7(b) hereof. In addition, the Developer~s' obligation to close on the purchase of the Jackson Block Property is conditioned on the satisfaction, or V{aiver by the Developer, of all of the following conditions precedent: (i) The Developer shall have reviewed and approved. title to' the Jackson Block Property as 4escribed in. Section 3.3; (ii) The Developer shall have secured finanCing acceptable to the Developer for the acquisition and construction of the Minimum Improvements; (iii) The Developer shall have satisfied itself that the environmental and soils conditions on the Development Property are acceptable to the Developer for its intended p~o~;~ . . (iv) The Developer shall have obtained all governmental and other approvals that must be obtained to authorize the construction and operation of the Minimum Improvements. (b) City's Contingencies. The City's obligation to close on the sale of the Jackson Block Property is expressly conditioned upon each of the followmg contingencies being satisfied or waived; (i) The Developer shall have delivered to the City a pro forma budget for the Minimum Improvements showing all sources and uses of funds and a timetable, acceptable to the City for the construction ofthe Minimum Improvements; (ii) The Developer shall have satisfied any contingencies of the Construction Lender to providing the ConstrUction Loan for the Minimum Improvements; (iii) The Developer shall have delivered to the City evidence acceptable to the City that the Developer and/or the City has fee title to all of the Bluff Block Property; 1674205v9 19 (iv) In accordance with Section 4.1, the Developer shall have submitted the Construction Plans for the Minimum Improvements to the City, and the City shall have approved the same. (v) Developer shall have performed all of the obligations required. to be performed by Developer under this. Agreement as of the Closing Date. (vi) The Developer shall have delivered to the City evidence of presales of the - units of the Bluff Block Housing Project in the amount required by the Construction Lender. . (vii) The Developer shall have delivered to the City all of the Developer's Documents described in Section 3.7(c). (viii) The Developer shall have paid the Parking Lot Cost to the City or deposited the Parking Lot Cost into escrow pursuant to an escrow agreement executed by the City, the Developer and an escrow agent providing the terms of disbursement of the escrowed funds to pay the costs of constructing the Parking Lot and related costs; provid.ed, the Developer shall pay any costs of establishing the escrow account and any escrow fees; and (ix) The Parking Lot shall have been substantially completed and be available for use as a parking facility.. ( c) City's and Deveioper's Options. In the event that any of the foregoing continge~cies. fail to be satisfied on or before the Closing Date, the Developer or the City, as the case may be, may: (i) terminate this Agreement; or (ii) .waive such failure and proceed to close. Section 3.7 Closin2'._ (a). Time and Place. Subject to the terms and conditions of this Agreement, the Closing. on the purchase and sale of the Jackson Block Property shall take place on the Closing Date and shall. take place at such place which is mutually acceptable to the Parties. The City shall deliver possession of the Jackson Block Property on the Closing Date. - (b) City's Documents. At the Closing, the City shall execute, where appropriate, aI?-d deliver all of the following City's Documents: . (i) The Deed properly executed on behalf of the City and in recordable form .conveying the Jackson Block Property to the Developer free and clear of all .encumbrances except those accepted by the Developer. (ii) The most current abstracts of title, if any; in the City's possessio~ to any portion of the Jackson Block Property which are abstract property, and any oWIier's 1 674205v9 20 duplicate certificate of title in the City's possession to any portion thereof which is registered property. (iii) A non-foreign affidavit prope~ly containing such information as is required by Internal Revenue Code Section 1445(b)(2) and the regulations promulgated pursuant thereto. (iv) An affidavit of the City-indicating on the Closing Date that there are no outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving the City or the Jackson Block Property; that there has been no skill, labor or material furnished to . the Jackson Block Property for which payment has not been made or for which. mechani~'s liens could be filed; and that there are no other unrecorded interests in the Jackson Block Property. (v) S.uch affidavits or other documents as may be reasonably required by the Developer's title insurance company in order to record the Deed and to issue a title insurance policy acceptable to the Developer as provided in Section 3.3. (c) Developer's Documents. At the Closing, the Developer shall execute, where appropriate, and deliver all of the foll~wing Developer's Documents: (i) The Developer shall have delivered to the City any Phase I environmental report for the. Development Property required by the Construction Lender. (ii). The City shall be satisfied that the Developer has obtained the Construction Loan for the Minimum Improvements in an amount sufficient, together with eq~ty commitments, to complete the Minimum Improvements in conformance with the Construction Plans. (iii) Proof of insuranc.e required pursuant to this Agreement. (iv) To the extent required and obtainable as of the Closing Date, environmental clearances, subdivision approvals, permits, . and. any other required governmental approvals for the Minimum Improvements. (v) An affidavit of Developer indicating on the Closing Date that there are no outstanding, unsatisfied judgments, ta'{ liens or bankruptcies against or involving the Developer or the Bluff Block Property; that there has been no skill, labor or material furnished to the Bluff Block Property for which payment has not been made or for which mechanic's liens could be filed; and that there are no other unrecorded interests in the Bluff Block Property. (vi) Funds sufficient for payment by the Developer at Closing of the recording charges or fees for all documents which are to be placed on record, the fee or charge imposed by any closing agent" designated by the Title Company, and any other incidental or related closing costs. 1674205v9 21 (vii) A certificate ef geed standing fer Develeper frem the Secretary ef State ef the State. Section 3.8 Closin~ Costs. To. the extent not already paid. the Develeper shall, en the Clesing Date, pay. ameng ether things specified to. be paid in this Agreement, all fees and expenses ef third parties related to. the Closing. including any and all taxes and filing fee's, title issu.aD.ce cemmitments and all eut efpecket fees and expenses efthe Cityin'cennectien with the preparatien of this Agreement and any purchase agreements with respect to. the Jackson Bleck. . Preperty, the establishment efthe Tax Increment District and any ether eut ofpecket cests efthe . City, including related engineering cests. The Develeper shall net be ebligated to. pay fer City . administrative er staff cests. 1 674205v9 22 ARTICLE IV CONSTRUCTION OF lVllNIMUM IMPROVRMENTS Section 4.1 Construction Plans. (a) Prior to the comniencement of construction of the Minimum Improvements, the Developer will deliver to the City CoUncil the Construction Plans, a parking plan for the construction staging period and the post construction period (the "Parking Plans") and a sworn construction ~ost statement certified by the Developer and the general contractor (the. ';Sworn Construction Cost Statement"). The Construction Plans and the Sworn Construction Cost Statementwi~l exclude matters relating to the build out of individual commercial space and the build out of indiVidual for sale units in the Bluff Block Housing Project. Within thirty (30) days after . receipt of the Construction Pl~, the Parking Plans and the Sworn Construction Cost Statement the City Council shall review the Construction Plans and the Parking Plans and deliver to the Developer a written statement approving the Construction Plans and the Parking Plans .or a written. statement rejecting the Construction Plans and specifying th.e deficiencies in. the Construction . Plans and the Parking Plans. The City Council shall. approve the Construction Plans if: (i) the Construction PI~s substantially conform to the terms and conditions of this Agreement; (ii) the Construction Plans are consistent with the goals and objectives of the Developmerit Program; and (iii) the Construction Plans do not violate any applicable federal, State or local Jaws, ordinances, rules or regulations except as set forth in approved variances (provided; however, that a finding of no such violations does not necessarily constitute a finding that the 'Construction Plans meet all requirements of such federal, State or local laws, orginances, rules or regulations). lfthe Construction Plans and/or the Parking Plans are not approved by the City Council, then the Developer shall make such changes as the City Council may reasonably require and resubmit the Construction Plans and/or the Parking Plans to the City Council for approval. . . (b) The approval of Construction Plans, or any proposed amendment to the Construction Plans, by the City Council for purposes of this Agreement does not constitute a C representation or warranty by the City that any of the Construction Plans or the Minimum Improvements .comply with any applicable building code, health or safety regulation, zoning regulation, environmental law or other law or regulation, or that the Minimum Improvements will meet the qualifications for issuance of a certificate of occupancy, or that the Minimum Improvements will meet the requirements of the Developer or any other users of the Minimum Improvements. Approval of the Constructi~nPlans, or any proposed amendment to any offue Construction Plans, by the City.will not constitute a waiver of an Event of Default. Nothing in this Development Agreement shall be construed to relieve the Developer of its obligations to recei"e approval of the Construction Plans from any City department. Section 4.2 Construction of Minimum Improvements. Subject to the terms and conditions of this Agreement, the Developer agrees to construct the Minimum Improvements on the Development Property in substantial conformance with the approved Construction Plans for the Minimum Improvements. No changes sliall be made to the Construction Plans for any of the 1674205v9 23 Minimum Improvements without the City's prior written approval unless such changes do not alter the total amount set forth in the Sworn Construction Cost Statement for such Phase delivered pursuant to Section 4.1 hereof by a decrease of more than five (5) percent. In no event may any changes affect the quality, exterior design or materials included in the Construction Plans unless such changes are approvecJ. by City. The. City agrees that its approval will not be unreasonably withheld or delayed. Section 4.3 Commencement and Completion of Construction. (a) Subject to the terms and conditions of this Agreement and to Unavoidable Delays, the Developer will cQrnmence construction of each project ofthe Minimum lmprovements by the dates set forth on Exhibit H and will cause each project of the Minimum Improvements to be substantially completed not later than the dates set forth on Exhibit H. (b) Prior to .commencement of construction of the Jackson Block Development: (i) the Developer shall have delivered to the City evidence acceptable to the City that the Developer has fee title to all of the Bluff Block Property; (ii) the Developer shall have entered into a demolition contract for all existing improvements on the Bluff Block Property and, other than the building on the U.S. Bank Parcel, will have demolished any existing improvements and completed any necessary environmental remediation with respect to such improvements; (iii) the Developer shall have closed on the Construction Loan for the Bluff Block Development; (iv) the Developer shall have entered into a construction contract for construction of the Bluff Block Development; (v) the Developer shall have paid the Parking Lot Cost to the City or deposited the Parking Lot Costinto escrow pursuant to an escrow agreement executed by the City; the Developer and an escrow agent providing the terms of disbursement of the escrowed funds to pay the costs of constructing. the Parking Lot and related costs; provided, the Developer shall pay any costs of est~blishing the escrow account and any escrow fees; and (vi) tile Parking Lot shall have been substantially completed and be available' for use as a parking facility: (c). The Developer shall demolish the building on the U.S. Bank Parcel and commence construction of the Bluff Block Development within 60 days of U.S. Bank, National Association vacating the U.S. Bank Parcel. (d) The Minimum Improvements will be constructed by the Developer on the Development Property in substantial conformity with the Construction Plans approved by the City. Prior to delivery of the Certificate of Completion referred to in Section 4.7 hereof, upon the. request of the City, the Developer will provide the City reasortable access to the 1674205v9 24 Development Property. "Reason,able access" means at least one site inspection per week during regular business hours. During construction, marketing, leasing and sales of the Minimum hnprovements, the Developer will deliver quarterly progress reports to the City. (e) If the Parking Lot Cost is deposited with the City, the City shall provide an accounting of the Parking Lot Cost and return any amount deposited by the Developer in excess ofthe a~tual Parking Lot Cost within 60 days of payment of the Parking Lot Cost. Section 4.4 Effect of Delav. The Developer acknowledges that if construction of any of the Minimum hnprovements is delayed or 110t completed, the effect of such delay or failure to complete maybe to reduce amount of Pledged Tax Increment, and there will be no compensation by the City to Developer or any other party for any reduction in.the amount available to pay the Tax Increment Revenue Note. Section 4.5 Compliance with Environmental Requirements. The. Developer shall comply with all applicable local, State, and federal environmental laws and regulations, and will obtain, and maintain compliance under, any and all necessary environmental permits, licenses, approvals or reviews.. As of the date of this Agreement, the Developer has received no notice or communication from any local, State, or federal official that the activities of the Developer or the City under this Agreement may be or will be in violation of any environmental law or regulation. Section 4.6 Additional Responsibilities of the Developer. (a) The Developer will construct and, until the responsibility is assumed by a condominium association. pursuant to the Minnesota Common Interest Own,ership Act with respect to the Bluff Block Development, operate and maintain, or cause to be operated and maintained, the Minimum hnprovements substantially in accordance with the terms of this Agreement, the Development Program and all local, State, and Federal laws and regulations (including, but not limited to zoning, building code, public health laws and regulations, except for variances. necessary to construct the Minimum hnprovements contemplated in the Construction Plans approved by the City.. . (b) The Developer will obtain, in a timely manner, all required permits, licenses, and approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and federal laws and regulations which must be obtained or met before the Minimum hnprovements may be lawfully constructed. The City makes no representations or warranties that all permitl? or licenses that may he required by state and federal entities, ather than the City, have been or will be approved. (c) The Developer will not construct any building or other. structures on, over, or within the boundary lines of any"public utility easement unless such construction is provided for in such easement or has been approved by the utility involved. (d) The Developer, at its own expense, will replace any public facilities and public utilities damaged during the conStruction of the Minimum hnprovements, in accordance with the tedmical specifications, standards and practices of the owner thereof. 1674205v9 25 (e) The Developer will comply with all applicable local, state and federal environmental laws and regulations, as they relate to the Minimum Improvements. Section 4.7 Certificate of Completion. The Developer shall notify the City when the construction of all of the Minimum Improvements has been completed. The City shall, within 14 days after such notification, inspect the Minimum Improvements in order to determine whether the Minimum Improvements have been constructed in. substantial conformity with the corresponding approved Construct~on Plans. . If the City determines that the Minimum Improvements have not been constructed in substantial conformity wIth the approved Construction Plans, the City shall, within. 28 days after the Developer's notification of completion of construction, deliver a written statement to the Developer indicating in adequate detail the specific respects in which the Minimum Improvements have not been constructed in substantial conformity with the approved Construction Plans and the Developer shall promptly . remedy such deficiencies. If the City determines that the Minimum Improvements have been constructed in substantial conformity with the applicable approved Construction Plans, the City shall furnish to the Developer a Certificate of Completion in the form attached hereto as Exhibit D certifying the completion of the Minimum Improvements. .The Certificate of Completion issued. for the Minimum Improvements shall conclusively satisfy and terminate the agreements and' covenants of the Developer in the Deed to construct the Minimum. Improvements. The Developer may cause .the Certificate of Completion to be recorded in the proper office for recordation of deeds and other instruments pertaining to' the Development Property. , If requested by the Developer, 'the City will issue Certificates of Completion for each separate component or phase of the Minimum Improvements upon completion of such co~ponent or phase. Also, the City will issue a Certificate of Completion and, if necessary in connection with any mortgage financing, a letter to the applicable mortgage lender regarding the applicability of the terms of this Agreement, for each unit of the Bluff Block Housing Project at the time of closing on the sale of such unit to an individual purchaser of the unit. The issuance of a Certificate of Completion shall not be construed to relieve the Developer of any approval required by any City department in connection with the construction, completion or occupancy of any of the Minimum Improvements. 1674205v9 26 ARTICLE V T A.,X INCREMENT ASSISTANCE; DEVELOPER P A ~1VIENTS Section 5.1 Creation of Tax Increment District and Amendment . of Tax Increment Financine Plan. The City has taken all. necessary actions to create and establish the Tax Increment District. The Developer shall pay to the City, upon execution of this Agreement, all out of pocket costs and expenses of the City, including fees of Briggs and Morgan, Professional Association and Ehlers & Associates, incurred in connection with this Agre~ment and the creation of ' the Ta'\. Increment District to the extent those' fees exceed the payments previously made by the Develo.per. Section 5.2 Issuance of Tax Increment Revenue Note. (a) . The City shall reimburse the Developer for the Eligible Costs actually incurred 'and paid by the Developer in an amount up to the Reimbursement AmoUnt. (as defined below) through the issuanceofthe City's Ta'\. Increment Revenue Note in substantially.the form a~ached to this Agreement as Exhibit E, 'subject to the following conditions: . (i) The Note shall be dated, issued and delivered when requested by the Developer but not prior to the Closing on the Jackson Block Property and the closing on the Construction Loan for the Bluff Block Development. The principal amount is currently estimated .tobe $3,093,563, but the actual principal amount of the Tax Increment Revenue Note shall be determined at the time the Tax Increment Revenue' Note is issued b~ed on the gap in Funding determined acco'rding to - the updated estimated sources and uses statement delivered by.the Developer at the time issuance of the Tax Increment Revenue Note is requested and to be attached as Exhibit J hereto (the "Reimbursement Amount"). The principal amount may be reduced as provided in Section 5.3. The City makes no assurances that the Pledged Tax Increment will be sufficient to pay the entire principal of and interest on the Tax Increment Revenue Note. (ii) No interest shall accrue on the principal amount of the Tax Increment Revenue Note prior to the date the Developer has proved to the City that it has incurred and paid Eligible Costs in an amount equal to the Reimbursement Amount. The unpaid principal amount of the Tax Increment Revenue Note shall bear simple non~ compounding interest from the date the Developer has proved to the City that it has _ incurred and paid Eligible Costs in an amount equal to the Reimbursement Amount,. at 6.50% per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 3D-day months. (iii) The,prii1cipal amount of the Note and the interest thereon shall be payable solely from the Pledged Tax Increment which is hereby pledged to the payment of the Tax Increment Revenue Note. (iv) On each Payment Date and subject to the provisions of the Tax Increment Revenue Note, the City shall pay, agamst the principal and interest outstanding on the 16742Q5v9 27 Tax Increment Revenue Note, the amount of the Pledged Tax !J:lcrement received by the City during the preceding 6 months. All such payments shall be applied first to accrued interest and then to reduce the principal of the Note.. (v) The Tax Increment Revenue Note shall be aspecial and limited obligation of the City and not a general obligation of the City, and only Pledged Ta'( Increment shall be used to pay the principal and interest on the Tax Increment Revenue Note. If, on any Payment Date, the Pledged Ta'( Increment fQr the payment of the accrued and unpaid interest on the Ta'( Increment Revenue Note is insufficient for such purposes, the difference shall be carried forward, without interest accruing thereon, and shall be paid if . and to the extent that on a future Payment Date there is Pl'edged Tax Increment in excess . . . of the amounts needed to pay the accrued interest then due on the Tax Increment Revenue Note. . (vi) The City's obligation to make payments on the Tax Increment Revenue Note on any Payment Date' or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be an Event of Default that has occurred and is continuing under this .Agreement and (B) this Agreement shall not have been rescinded pursuant to Section 9 A( c). (vii) The Tax Increment Revenue Note shall be governed by arid payable pursuant to the additional terms thereof, as set forth in Exhibit E. In the event of any conflict between the terms of the Tax Increment Revenue Note and the terms of this Agreement, the terms of this Agreement shall govern. The issuance of the Tax Increment Revenue Note pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for the Tax Increment Revenue Note may require in connection therewith, are hereby authorized and approved by the City. . (b) The Developeruilderstands that the Ta'( Increment Revenue Note will not be registered or otherwise qualified for'sale under the securities laws and regulations of the State or under the Fed€ral securities laws or regulations, the Tax Increment Revenue Note will not be listed on any stock or other securities exchange, and the TaX Increment Revenue Note will not carry a rating from any rating service. (c) Any assignment by the Developer of the Tax Increment Revenue Note must be to a single entityan.d must be approved in writing by the City. The City acknowledges that the Developer may, after the Profit Determination Date and the Cash Flow Determination Date, assign -the Tax'Increment Revenue Note to a Lender, or a Placement Agent, acting as the. servicer of any Lender, or assign participations in the Tax Increment Revenue Note to multiple parties (the "Participants") with one primary Noteholder and the Developer acknowledges that the City will require, as a condition of its consent to the assignment to any Lender, Placement Agent or Participant, that such Lender and each Participant be a "qualified financial institution" within the - meaning of the regulations promulgated under the Securities Act of 1933, as amended, and deliver a letter of investment intent in a form satisfactory to the City or that such Placement Agent represent that it will not sell or grant participation in the Tax Increment Revenue Note in amounts less than .$100,000 or to anY' entity that is not a "qualified financial institution" or without obtaining a letter of investment intent in a form satisfactory to the: Ci_ty. Any offering 1 674205v9 28 material prepared by the Developer or any Placement .Agr~ement in connection with the Developer's assignment of the Tax Increment Revenue Note to any Lender must be reviewed and approved by the City; provided that the_ City will-make no representations or warranties with respect to the information contained in any such offering material. (d) If <md to the extent Available Tax Increments collected in any year are in exceSs of the Pledged Tax Increment and the Parking Lot Pledged Tax Increment, the excess shall be retained by the City. Section 5.3 Reduction of Assistance. (a) The Developer shall maintain books and records relating to the financing, construction, leasing and sales of the Minim~ Improvements in accordance with generally accepted accounting principles consi5tently applied. - - (b) - On or before the later of the Cash Flow Determination Date or the Profit Determination Date, the Developer shall, at its sole expense but as a Total Development Cost, cause a certified public accountant acceptable to the City to have prepared and deliv~red to the _City a Sources and Uses Statement, a Profit - Statement with respect to the Bluff Block Development and a Cash Flow Statement with respect to the Jackson Block Development. The Developer shall also -furnish such additional documentation as the City may reasonably request. Within thirty (30) days of receipt, the City shall notify the Developer of any necessary adjustments. Within thirty (30) days after the Developer provides a revised Sources and Uses Statement, Profit Statement and/or Cash Flow Statement(s) to the satisfaction of the City, or within thirty (30) days of the original receipt thereof if the City requires no adjustments, the City - shall notify the Developer in writing whether the Sources and Uses Statement, Profit Statement and Cash Flow Statements are determined by it to be acceptable. . (c)' Within thirty (30) days of the acceptance of the Sources and Uses Statement, Profit Statement and Cash Flow Statement by the City, if the Rate of Return for the Jackson Block Commercial Project is at or above the Targeted Return and the Developer has received a development fee at.least equal to 12% of development costs approved by the Minnesota Housing Finance Agency with respect to the Jac"kson Block Housing Project, the Developer shall pay to the City the lesser of (i) the sum of the Excess _ Funding and the Excess Profit, if any, and (ii) the amount of SAC and WAC reimbursed to the Developer pursuant to Section 5.7(a) plus the difference between the fair market value of the Jackson Block Property as set forth in Section 3.4 and the purchase price of the Jackson Block Property paid by the Developer. To the extent the Developer fails to pay such amount to the City, the City may apply Available Tax Increments to reimburse itself for such an:lount and no amount shall be payable under the Tax Increment Revenue Note until the City has been fully reimbursed. Such amounts paid to the City shall be credited against the payments otherwise due under the Tax -Increment Revenue Note. (d) To the- extent the sum of the Excess Funding and the Excess Profit exceeds the amount paid by the Developer to the City pursuant to Section 5.3( c), the Reinlbursement ~ount, and correspondingly the principal amount of the Tax Increment Revenue Note, shall be reduced by the difference between (i) the sum of the Excess Funding and the Excess Profit and (ii) the amount paid by the Developer to the City pursuant to Section 5.3(c) and within thirty (30) 1674205v9 29 days of the payment made by the Developer pursuant to Section 5.3(c), the City shall notify the Developer of any reduction in the Reimbursement Amount. ' (e) To the extent. the Sources and Uses Stafement indicates the gap in Funding with respect to any of the Minimum hnprovements is greater than estimated at the time of the issuance of the Ta."'{ Increment Revenue Note, the difference between the estimated gap and the actual gap shall offset any Excess Profit or Excess Funding with respect to any qther portion of the Minimum ImprovemelJ.ts. (f) The City shall execute and deliver to the Developer an amendment to the Ta."'{ Increment Revenue Note indicating any adjustment to the Reimbursement Amount. , Section 5.4 Review of Taxes. The Developer acknowledges that the sole source of money to make the payments on the Ta."'{ mcrement Revenue Note is Available Tax Increment derived from the Development Property and Minimum Improvements and pledged by the City to the payment thereof; The Developer further acknowledges that any of the following actions taken by the Developer or a purchaser of a housing unit could reduce the Available Tax mcrement below the amount necessary to pay a portion or all of the payment due on the Tax mcrement Revenue Note. (a) illitiation of administrative or judicial review ofthe applicabitity of ally tax statute determined by any Tax Official to be applicable to the Development Property or the Minimum hnprovements. ,(b) illitiation of administrative or judicial review of the constitutionality of any ta."'{ statute determined by any Tax Official to be applicable to the Development Property or the Minimumhnprovements. (c) A reduction in the real property 'taxes-paid with respect to the Development Property and the Minimum Improvements through intentional actions such as terminating the busine1i.s activity cQnducted on the Development Property, demolishing' a portion or all of the Minim~ Improvements, seeking a reduction in the assessed Market Value bf the Minimum hnprovements through any request, petition, claim, Of other proceeding to or before' the City, assessor, the County assessor, the board ofequalizatiorr of the City, CoUnty, or State, the Commissioner of Revenue of the State, any district court of the State, the Tax Court of the State, , or any federal district court. (d) Any application for an abatement or deferral of real property ta."'{es under any applicable statute of the State. ' " ' (e) ,Other actions or events outside the control of the Developer or outside the control of the City, including a reduction in 'the Market Value of the Development Prop~rtyand the Minimum Improvements that are made without a request or petition of the Developer, a reduction in the tax classification 'of the Development Property and the Minimunl Improvements under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local t~'{ rates applicable to the Development Property and the Minimum hnprovements, or any change to the method of ta."'{ing real property that has the effect of reducing the revenues derived from such ta."'{es. 1 674205v9 30 (f) Failure of the Developer to commence and complete all of the Minimum Improvements. Section 5.5 Use of Tax Increments. The City shall be free to use the Tax Increment, other than the Pledged Tax Increment and the Parking Lot Pledged Tax Increment herein pledged to the payment of the Tax Increment Revenue Note, the Parking Lot Note and any Refunding Bonds, for any other purpose for which the Tax Increment may lawfully be. used pursuant to applicable provisions of the Minnesota law. Section 5.6 Business Subsidy Act. (a) 22% of the principal amount of the Tax Increment Revenue Note and $190,400 of the reduction of SAC and WAC is applicable to the Bluff Block Housing Project (the "Bluff Block Housing Subsidy") and 3% of the principal amount of the Ta-x Increment Revenue Note and $89,600 o(the reduction of SAC and WAC plus 40% of the reduction below fair market value of the purchase price of the' Jackson Block Property is applicable to the Jackson Block Housing Project (the "Jackson Block Housing Subsidy"). The Bluff Block Housing Subsidy and the Jackson Block Housing Subsidy granted to the Developer pursuant to .this Agreement is assistance for housing and therefore the provisions of Minnesota Statutes, Section 116J.993 to 116J.995 (the "Business Subsidy Law") do not apply. (b) The County assessor estimates the current year fair market value of the Bluff Block Property to be Six Hundred Seventy-One Thousand Four Hundred Dollars ($671,400): The Developer represents that the cost of site development for the Bluff Block Property will be not less' than Two Hundred Thousand Dollars ($200,000.00). The purchase price for the Bluff Block Property is not expected to be less than One Million Nine Hundred Twelve Thousand Seven Hundred Fifty Dollars ($1,912,750). 70% of the principal amount of the Tax Increment Revenue Note and $12~623 of the reduction of SAC and WAC is applicable to the Bluff Block Commercial Project (the "Bluff Block Commercial Subsidy"). Based upon these estimates and representations, the Developer represents that because the purchase price and cost of site development for the Bluff Block Property will equal seventy percent (70%) or more oftlie assessor's current year's, estimated fair market value of the Bluff Block Property and the Bluff Block Commercial, Subsidy does n9t constitute a "business subsidy" and thereforethe provisions of the Business Subsidy Law do not apply. (c) 5% of the principal amount of the Tax Increment Revenue Note and $15,167 of the reduction of SAC and WAC plus 60% of the reduction below fair market value of ,the purchase price of the Jackson Block Property is applicable to the Jackson Block Coriunercial Project (the "Jackson Block Commercial Subsidy"). The Jackson Block Commercial Subsidy granted to the Developer pursuant to this Agreement is a subsidy subject to the provisions ofthe Business Subsidy Law. (d) The Tax Increment District is a redevelopment district and the public pUrpose of the Jackson Block Commercial Subsidy is to encourage the redevelopment of an area of the City which is already built up, to help prevent the emergence of blight, to provide employment opportunities to improve the tax base and to encourage tJ.le construction of adjacent housing facilities in the City. Afl;er holding a public hearing November 1,2004, the City has determined 1674205v9 31 that creation and retention of jobs is not a goal of the Jackson Block Commercial Subsidy for this project and consequently has set the wage andjob goals (the "Goals") hereunder at zero. (e) Because the, Goals are set at zero, the Developer is not subject to the prepayment provisions of the Business Subsidy Law. '(f) To the extent required by the Minnesota Department of Employment and Economic Development, the Developer agrees to (i) report its progress on achieving the Goals to the City until the later of the date. the Goals 9Ie met or two years from the date which is the earlier of the Completion Date or the date the Developer occupies' the Jackson Block Commercial Project (the "Benefit Date"), or, if the Goals are not met, until the date the Jackson Block Commercial Subsidy is repaid, . (ii) include in the report the information required in Minn,esota Statutes, Section 116J:994, Subdivision 7 on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the City. The Developer agrees, to PIe these reports no later than March 1 of each year commencing March 1, 2005, and within 30 days after the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail the Developer a warning within one week of the required filing date. Ifwithin 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay tt) the City a penalty of $1 00 for each subsequent day until the report is filed up to a maximum 'of$l,OOO. (g) The Developer agrees to continue operations of the Jackson Block Commercial Project within the City,for at least five (5) years after the Benefit Date. (h) In addition to the subsidies provided herein, the Developer or an affiliate has received a IQan from the City of a' Community Development Block Grant from the Minnesota Department of Employment & Economic Development, a loan from the Minnesota Housing Finance Agency and a loan from the Greater Minnesota Housing Fund in connection with the construction of the MiIiimurn Improvements which the Parties anticipate will be applied to the Jackson Block Housing Project. . (i) MetroPlains Properties, Inc. is the parent corporation of the Developer. Section 5.7 Developer Payments and Reimbursement. (a) The Developer agrees to pay the City governmental fees, including park dedication, permit, license and utility hook-up charges and SAC and WAC when ,due; provided that the City shall credit'$175,880 towards the SAC and $131,910 towards the WAC payable by the Developer. Any SAC and WAC charged with respect" to the Bluff Block Commercial Project or the Jackson Block Commercial Project based 011 the anticipated use thereof shall be paid by . the Developer when determined by the City and made due and payable. (b) The Developer agrees to pay the City Acquisition Costs and Relocation Costs and' Expenses when required by this Agreement or pursuant to State or Federal law, and, to the extent the City is obligated to make any such payment, the Developer agrees to reimburse the City. 1674205v9 32 Section 5.8 Issuance of Tax Increment Revenue Refundin2: Bonds. (a) The Parties understand and agree that the Develeper's willingness to' undertake its activities under this Agreement was predicated en the understanding that the Develeper weuld achieve the Allewable Prefit and receive the develeper fees and the Targeted Rate ef Return centemplated by this Agreement. The Parties alsO' understeed at the time ef executien ef this Agreement that in erder to' achieve such Allewable Profit and receive such develeper fees and such Targeted Rate ef Return it might be necessary fer the City to' issue tax increment bends to' refund the Ta..-x Increm~nt Revenue Nete (the "Refunding Bends") and that if such bends are issued after the Completien Date cests 'Of financing could be reduced, thereby enhancing the fmancial feasibility ef the Develepment. Therefere, the City agrees, to the extent permitted by law that, at the prior written request ef the Develeper, but nO' earlier than the Pre fit Determinatien Date, to' use its best 'efforts to issue Refunding Bends subject to' the fellowing cenditiens: . (i) . The principal ameunt ef the Refunding Bends shall be based en a Debt Service Ceverage RatiO' as is necessary to' sell the Refunding Bends at par. The principal ameunt ef the Refunding Bends will net exceed the le~ser ef (i) t~e ameunt that can be _ amertized using the Pledged Ta..-x Increment generated by the Minimum Imprevements and (ii) the ameunt necessary after reasenable trl3?sactien cests, reserves and capitalized interest to' create net preceeds equal to'. the eutstanding principal balance ~f the Tax Increment Revenue Note sO' leng as the tetal aggregate debt service payable with respect to' the Refunding Bends dees net exceed the tetal aggregate debt service that weuld have been payable ever the term efthe Ta..-xIncrement Revenue Nete; (ii) The legal autherity ef the City to' issue such Refunding Bends and pledge the Available Tax Increment at the time efthe Develeper's request; and (iii) The ability ef any Placement Agent to' market the Refunding Bends. (b) The Develeper acknewledges that the maximum ameunt the City will pledge to' repay the Tax Increment Refunding Bends is the Pledged Tax Increment generated by the Minimum Imprevements, and that the CitY will determine, in its sele discretien, the principal ameun:t ef the Refunding Bends to' be issued. In determining the principal ameunt of the Refunding Bends to' be issued, the City will censider, ameng ether thiIigs, the Market Values of the cempleted Minimum Improvements. In additien and if feasible, the City will issue separate . Refunding Bends for each'efthe cempenents efthe Develepment. ( c) The terms and cenditiens ef the Refunding Bends will be set ferth in a reselutien to b~ adepted by the City Ceuncil ef the City (the "Bend Reselutien"). In the event ef a conflict between the terms and cenditiens 'hereef and the terms and cenditiens ef the Bend Resolutien, theterrns and ~enditions efthe Bend Reselutien shall prevail. ~ Section 5.9 Issuance of Parking Lot Note. (a). When requested by the Develeper, but net prier to' the Clesing en the Jacksen Bleck Property and tlw clesing on the Censtructien Loan fer the Bluff Bleck Develepment, the City shall commence censtruction efthe King Avenue parking let previded that:. 1674205v9 33 (i) A contract for the construction of Parking Lot has been awarded and the Parking Lot Cost has been determined; and (ii) The Developer has deposited cash with the City in the amount of the Parking Lot Cost. (b) The City shall reimburse the Developer for the Parking Lot Cost actually paid by the Developer as further provided in Section 5.9(c). (c) The City shall reimburse for the 'costs identified in Section 5.9(b) through the issuance of the City's Parking Lot Note in substantially the form attached to tins Agreement as Exhibit F, subject to the following conditions: ' (i) The Note shall be dated, issued and delivered when the conditions set forth in Section 5.9(a) have been satisfied. The principal amount is not subject to reduction pursuant to Section 5.3. (ii) The unpaid principal amount of the Parking Lot Note sh~ll bear simple non-compounding mterest the date of issuance of the Note at 6.50% per annum. Interest shall, be computed on the basis of a 360 day year consisting of twelve (l2),30-day months. ' (iii) The principal amount of the Note and the interest thereon shall be payable, solely from the Parking Lot Pledged Tax Increment which is hereby pledged to the payment of the Parking Lot Note. (iv) On each Payment Date and subject to the provisions of the Parking Lot Note, the City shall pay, against the principal and interest outstanding on the Parking Lot Note, the amount of the Parking Lot Pledged Tax Increment received by the City during the preceding 6 months. All such payments shall be applied first to accrued interest and then to reduce the prinCipal of the Note. (v) The Parking Lot Note shall be a special and limited obligation of the City and not a general obligation of the City, and only Parking Lot Pledged T~'{ Increment shall be used to pay the principal and interest on the Parking Lot Note. If, on any Payrilent Date, the Parking Lot Pledged Tax Increment for the payment of the accrued and unpaid interest on the Parking Lot Note is insufficient for such' purposes, the difference sh~l be carried forward, without interest accruing thereon, and shall be paid if and to the extent that on a future Payment Date there is Parking Lot Pledged Tax Increment in, excess of the amounts needed to pay the accrued interest then due on the Parking Lot Note. ' (vi), The City's obligation to make payments on the Parking Lot Note on any Payment Date or any date thereafter shall be conditioned upon tile req1,lirement that (A) there shall nbt at that time bean Event of Default that has occurred and is continuing under this Agreement and '(B) tllls Agreement shall not have been rescinded pursuant to Section 9.4(c)., 1674205v9 34 (vii) The Parking Lot Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit F. In the event of any conflict between the terms of the Parking Lot Note and the terms of this Agreement, the terms of this Agreement shall govern. The issuance of the Parking Lot Note pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for the Parking Lot Note may require in connection therewith, are hereby authorized and approved by the City. (d) The Dev~loper understands that tlie Parking Lot Note wiIlnot be registered or otllerwise qualified for sale under the securities .laws and regulations of the State or under the Federal securities laws or regulations, tlleParking Lot Note will not be listed on any stock or otller securities exchange, and the- Parking Lot Note will not- carry a rating from any rating service. (e) -. Any assignment by the Developer of the Tax Increment Revenue Note must be to a single entity and must be approved in writing .by the City. The City acknowledges that the Developer may, after the Profit Determination Date and the Cash Flow Determination Date, assign the Parking Lot Note to a tender, or a Placement Agent, acting as the serVicer of any Lender, or assign participations in the- Tax Increment Revenue Note to multiple parties (the "Participants") with one primary Noteholder arid the Developer acknowledges that the City will . require, as a condition of its consent to the assignment to any. Lender, Placement Agent or Participant, that such Lender and any Participant be a "qualified fll1ancial institution" within the meaning of the regulations promulgated under the Securities Act of 1933, as amended, and deliver a letter of investment intent in a form satisfactory to the City or that such Placement Agent represent that it will not sell or grant participation in the Parking Lot Note in amounts less than $1 OD,OOO or to any entity that is not a "qualified financial institution" or without obtaining a . .letter of investment intent in a form. satisfactory to the City. Any offering material prepared by the peveloper or any Placement Agreement in connection with the Developer's assignment of the Parking Lot Note to any Lender. must be reviewed and approved by the City; provided tllat the City will make no representations or warranties with respect to the information contained in any such offering material. (f) If and to the extent Available Tax Increments collected in any year are in excess of the Parking Lot Pledged Ta.'{ Increment, the excess shall be retained by the City. '-. 1674205v9 35 ARTICLE VI EN CUMrn RAN CE OF THE DEVELOPMENT PROPERTY Section 6.1 Encumbrance of the Development P'ropertv. Neither the Developer nor any successor in interest to the Developer (other than purch~ers of the units in the Bluff Block Housmg Project) will engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Deyelopment Property, or portion thereof, whether by , , express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Development Property except' only for the purpose of obtaining funds to the extent , necessary for financmg the costs of the Minimum Improvements (including, but not limited to, land and building acquisition, labor and materials, professional fees, real estate taxes, construction interest, organization and other indirect 008.ts of development, costs of constructing the Minimum Improvements, and an allowance for contingencies). The restriction on financing and other transactions contained in this section shall terminate on the Completion Date. Section 6.2 Copv of Notice of Default to Mortea2:ee. If the City delivers any notice or demand to the Developer with respect to any Event of Default under this Agreement, the City will also' deliver a copy of such. notice or demand to the 'mortgagee of any mortgage on the . DevelopmentProperty (a "Mortgage") at the address of such mortgagee provided to the City in a " written notice from the Developer or the mortgagee; Section 6.3 ' Mortl!a2:ee's Option to Cure Events of Default. Upon the occurrence of an Event of Default, the mortgagee under any Mortgage will have the right, at its option, to cure or remedy such Event of Default. ' Section 6.4 Defaults Under Mort2:aee. The Developer, will use its best effoI1s to , obtain an agreement from any mortgagee under a Mortgage that, in the event the Developer is in default under any Mortgage, the mortgagee, within ten (10) days after it becomes aware of any default and prior to exercising any remedy available to it due to such default, will notify the City in writing of (i) the fact of default; (ii) the elements of default; and (iii) the actions required to cure the default. If, within the time period required by the 'Mortgage, the City cures any default under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based on such default. - Section 6.5 Subordination of Aereement.. In order to facilitate the obtaining of financing for the construction of the MinimUm Improvements, the City agrees to execute a subordination agreement in form and substance acceptable to the City'to subordinate the provisions of this Development Agreement 'and the Deed to the documents' executed in connection with the Construction Loan. 1674205v9 36, ARTICLE VII DEVELOPER COVENANTS Section 7.1 Insurance. The Developer will provide and'maintain or cause to be maintained at all times 'and, from time to time at the request of the City,. furnish the City with proof of payinent of premiums on insurance of amounts and coverages normally held by businesses engaged in .activities similar to those of the Developer. Section 7.2 Maintenance and Operation of the Development. The Developer will at all times during the term of this Agreement operate and maintain the Development in a safe and secure way and in compliance with. this Agreeri1en~ and all federal, State and local laws, regulati6ns,.ruling~ and ordinances applicable thereto. Developer shall pay all of the reasonable and necessl;1I)' expenses of the operation and maintenance of the Development, including all premiums for insurance insuring against loss or damage thereto and adequate insurance against liability for injury to persons or property arising from the Development as required pursuant to this Agreement. Developer shall not knowingly cause any person working in or attending the Development for any purpose; or any owner of a housing unit, to be exposed to any hazardous or unsafe condition; provided that Developer shall not be in def?-ult hereunder if it has required the contractors. employed by Developer to perform work on the Development to take such precautions as may be available to protect the persons in and around the Development from 'hazards arising from the work, and has further' required each such contractor to obtain and maintairi liability insurance protecting against liability to persons for injury arising from the work. The expenses of operation and maintenance of the Development shall be borne solely by Developer. The foregoing 'provisions shall apply to ~e Developer for only so long as the Developer or an Affiliate is the owner of the Development and only as to such portions of the Development which the Developer or an Affiliate owns. 1674205v9 37 ARTICLE VIII TRANSFER LIMITATIONS AND INDElVINIFICATION Section 8.1 Representation as to Development. The Developer represents to the City. that its purchase of the Development Property, and its other undertakings under this Agreement, are for the purpose of developing owner occupied and rental housing and commercial facilities, and not for the purpose of speculation in land holding. The Developer acknowledges that, in view of the importance of the development of the Development Property to the general welfare of the City, and the substantial financing and other public aids that have been made available by the City for the purpose of making such development possible, the qualifications and identity o(the Developer are of particular concern to the City. The Developer further acknowledges that the City is willing to enter into this Agreement with the Developer because of the qualifications and identity of the Developer. Section 8.2 Limitations on Transfer. (a) The Developer may, without prior written notice to the City; sell, assign, convey or transfer in any other mode. or manner, all or a portion of this Agreement, the Development Property, or the Minimuin Improvements to the Construction Lender providing the Construction : Loan for the Minimum Improvements. The Developer also may,.in the regular course of business and without prior written notice to the City, sell, assign, convey, lease or transfer in any other mode or manner the following: (i) to an individual unit purchaser, a unit of the Bluff Block Housing Project or the Bluff Block Commercial Project. for which a certificate of occupancy has been issued; (ii) to a tenant, a unit of the Jackson Block Housing Project or Jackson Block Commercial Proj ect if a certificate of occupancy has been issued for such proj ect; (iii) all or any part of the Development Property and/or all or part of the Minimum Improvements,. where such action is necessary to .secure easements or other encumbrances necessary for the Minimum Improvements.. Except as specifically allowed under this Section and Article VI, the Developer will not sell, assign, convey, lease or transfer in any other mode or manner this Agreement,. the. Development Property or the Minimum Improvements, or any interest therein, without the express written approval of the City. Notwithstanding the foregoing, so long as the Developer remains liable for the performance of the Developer under tins Agreement, the Developer may transfer. such portions of the Development .Property as are necessary to allow the following ~ parties. to develop the following components of the Development: 167420Sv9 38 Proiect Transferee Bluff Block Housing Project Bluff Block, LLC Jackson Block Housing Proj ect MDI Limited Partnership #70 Bluff Block Commercial Project Bluff Block, LLC (b) Except as provided in Subsection (a) of tlns Section, the City shall be entitled to require, as conditions to any approval of any sale, assignment, conveyance, use or transfer requiring City approval under this Section that: . . (i) Any proposed transferee shall have the qualifications and financial responsibility, as determined by the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer; (ii) . Any proposed transferee, ,by instrument in writing satisfactory to the City and the City and in, form recordable among the land records shall, for itself and its successors aIid assigns, and expressly for the benefit of the City have. expressly assumed all of the 9bligations of the Developer under this Agreement and agreed to be subject to. all the conditions and restrictions to which the Developer is subject: . (iii) There shall be submitted to the City for review all instruments and other legal documents involved in effecting transfer, and if approved by City, its approval shall be indicated to the Developer in writing; (iv) The Developer and its transferee shall comply with such other conditions . as the City may find deSIrable in order to achieve and safegUard the purposes of the TIP Act and this Agreement; 'and . . (v) In the absence of spedfic written agreement by the City to the contrary, no such transfer or approval by the City thereof shall be deemed to relieve the Developer or any other party bound in any 'o/ay by this Agreement or otherwise with respect to the construction of the Minimum hnprovements, from any- of its obligations with respect thereto. ( c) All restrictio~s on transfer of tlle Development, or any portion thereof, shall terminate at tlle time that the City has issued a Certificate of Completion for the Development. Section 8.3 Indemnification. (a) The Developer releases from and covenants and agrees that the City, its governing body members, officers, agents, including the independent contr~ctors, consultants anq. legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the. "IndemnifiedParties") shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or deatllofany 'person occurring at or about or resulting from any defect in the Development to the extent not' attributable to the gross negligence or intentional misconduct of the Indemnified Parties. 1674205v9 39 (b) Except far grass negligence ar intentianal miscanduct af the Indemnified Parties, the Develaper agrees to. indemnify the Indempified.Parties, naw and farever, and further agrees to. hald the afaresaid harmless fram any claims, demands, suits, casts, e.,"'{penses (including reasanable attarneys' fees) actians ar ather praceedings whatsaever by any persan arentity whatsaever arising ar purpartedly arising fram the actians ar inactians af the Develaper (ar if qtherpersans acting an its behalf ar under its directian ar cantral) under this Agreement, ar the transactians cantemplated hereby ar the acquisitian, canstructian, installatian, awnership, and aperatian af the Develapment; Including,. withaut limitatian; :any clain;J. by a land awner ar tenant lacated ,an the Develapment Praperty to. be entitled to. Relacatian Casts and Expenses; provided, that this indemnificatian shall nat apply to. the warranties made ar abligatiansundertaken by the City in this Agreement. (c) . Except as set farth in Sectian 3.2, the City makes no. warranties ar representatians regarding, nar daes it indemnify the Develaper with respect to., the existence ar na'nexistence an ar in the vicinity af the Develapment Praperty ar anywhere within the Tax Increment District af . any toxic ar hazardaus substances ar wastes, pallutants ar cantaminants (including, withaut limitatian" asbestas, urea farmaldehyde" the graup af arganic compaunds knawn as palychlorinated biphenyls, petraleum. praducts including gasoline, fuel ail, crude ail and variaus canstituents 'of such products, ar any hazardaus substance as defined in the Camprehensive Enviranmental Respanse, Campensatian and Liability A~t af 1980 ("CERCLA"), 42 D.S.C. ~~ 961-9657, as amended) (callectively, the "Hazardaus Substances"). The faregaing disclaimer relates to. any HazardaUs Substance allegedly generated,. treated, stared, released ar disposed af, ar atherwise placed, depasited in ar lacated an ar in 'the vicinity afthe.Develapment Property ar within the Tax Increment District, as well as any activity Claimed to. have been undertaken an ar in the vicinity af the Develapment Praperty that wauld cause ar cantribute to. qausing (1) the Develapment Praperty to. became - a treatment, starage ar qispasal facility within .the meaning af, ar otherwise bring the Develapment Property within the ambit af, the Resaurce Canservatian and Recavery Act of 1976 ("RCRA"), 42 D.S.C. S 691 et seq., ar any similar state law ar lacal ardinance, (2) a releasear threatened release af taxic ar hazardaus wastes. ar substances, pallutants or cantaminants, fram the Develapment Praperty within the meaning af, ar atherwise bring the Develapment Praperty within the ambit af, CERCLA, ar any similar state raw ar lacal ardinance, ar (3) the discharge. af pallutants ar effluents into. any water saurce ar system, the dredging ar filling of any waters or the discharge into. the air af any emissians, that wauld require a permit under the FederalWater Pallutian Cantral Act, 33 D.S.C. S 1251 et seq., ar any similar state law ar lacal ardinance. Further, the City makes no. warranties ar representatians regarding, nar does the City indemnify the Develaper with respect to., the eXIstence or nanexistence an ar in the vicinity af the Develapment Property ar anywhere within the Tax Increment District af any substances ar conditions in or an the D~velaprrient Property that may suppart a claim ar cause of actian under RCRA, CERCLA ar any ather federal, state ar lacal. environmental statutes, regulatians, ardinances ar other enviranmental regulatary requirements, including withaut limitatian, the Minnesota Environmental Respanse and Liability Act, Minnesata Statutes, Chapter lI5C. The City makes no. representatians ar warranties regarding the existence af any abave graund ar undergraund tanks-in ar about the Develapment Property, or whether any above ar undergraund tanks have been located under, in ar about the Develapment Property and have subsequently been removed ar filled. 1674205v9 40 (d) The Developer waives any claims against the City, and its Council members and . officers, for indemnification, contribution, reimbursement or other payments arising under federal and state law and the corn:mon law or relating to the environmental condition of the land c'omprising the Development Property. Section 8.4 Limitation: All covenants, stipulations, promises, agreements and obligations of the City or the Developer contained in tins Agreement shall be deemed t'o be the covenants, stipulations, promises, agreements and obligations of the City. or the Developer, respectively, and not of any governing body member, officer, agent, servant or employee of the City or the Developer in the individual capacity thereof. I 674205v9 41 ARTICLE IX EVENTS OF DEFAULT AND DMIAGES Section 9.1 Events of Default Defined. Subject to applicable cure periods, the following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement anyone or more of the following events: .Section 9.2' Developer Events of Default. The following shall be Developer Events I of Default: (a) subject to Unavoidable Delays, the Developer shall fail to begin construction of the Minimum Improvements and to proceed with due diligen,ce to satisfactorily. complete each of the Minimum Improvements as provided in Section 4.3 and by the date set forth on Exhibit H attached hereto, and such failure to begin, or proceed with due diligence to complete, the construction' of the Minimum Improvements shall not be cured within 30 days after written notice to do so. Notwithstanding the -foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default. is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuousiy prosecuted to completion and is completed within a reasonable period of .time, and provided that Developer keeps the City well ,informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall,such additional cure period extend beyond 180 days; (b) subject to Unavoidable Delays, the Developer shall default in or violate its, obligations with respect to the construction of the Minimum Improvements (including the nature and the date for the completion thereof), or shall.abandon or substantially suspend construction work, and any such default, violation, abandonment o:r suspension is not cured, ended' or remedied within 30 days after written demand by the City so to do. Notwithstanding the , foregoing, if the default reasonably_requires'more than thirtY (30) days to'cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of ~e default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the City well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days;, (c) there is, in violation of Article vrn of tins Agreement, any conveyance or otIler transfer of the Development Property or any part thereof, and such violation is not cured within 30 days after written demand by the City to the'Developer; . (d) subject to Unavoidable Delays, failure by Developer to observe or .perform any other covenant, condition, obligation or agreement on .its part to be observed or performed under this Agreement, and the continuation of such failure for a period of thirty (30) days after written notice of such failure from the City. Notwithstanding,the foregoing, if the default reasonably requires' more than thirty (30) days to cure, such default shall not constitute 'an Event of Default, I 674205v9 42 provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the City well informed at all times of its progress in curing the default; provided in no. event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days; or (e) the Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar. Federal or State law; or (ii) make an assignment for the benefit of its <?reditors; or (ii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudic~tion of Developer,.as a baDkrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law .shall be. filed ip. any court and such petition or answer shall not be discharged or denie~ within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of Developer, or of the Development, or part thereof, shall be appointed in any proceeding brought against Developer, . and shall not be discharged within ninety (90) days after such appointed, or if Developer shall consent to ,or acquiesce in such appointment. " (f) the Developer shall fail to pay any of the costs described in Article ill of this Agreement. Section 9.3, City Events of Default. Subject to Unavoidable Delays, the failure of the, City to observe or perform any covenant, condition, obligation or agreement on its part to be' observed or perforriled under this Agreement, and the continuation of such failure for a period of thirty (30) days after written notice,of such failure from any party hereto shall 'be an, Event of. Default for the City. Notwithstanding the foregoing, ifth~ default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the City of thencitice of the default, and with due diligence is thereafter continuously pros'ecuted' to completion and is completed within a reasonable period of time, and provided that the City keeps the Developer / well informed at all times of its progress in curing the default; provided'in no event, other than as a result of Una voidable Delays, shall ,such additional cure period extend beyond 180 days. Se<;tion 9.4 City Remedies on Default. Whenever. any Developer Event of Default occurs, the City may take anyone or more of the following actions: (a) . SusJ?end performance under this Agreement until it receives assUr.ances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this AgreelI!:ent. (b) Withhold the Certificate of Completion for the Minimum hnprovements. (c) The City may' cancel911d terminate the Agreement. (d) Take whatever action at law or in equity may appear necessary or desirable to the City to collect any payments due under tIus Agreement, or to enforce performance and observance of any obligation, agreement, or covenant oithe Developer under this Agreement. 1674205v9 43 Section 9.5 Developer Remedies on Default. Whenever any Event of Default occurs by the City, the Developer may suspend its performance imder this Agreement and/or take w}J.atever action at law or in equity may appear necessary or desirable to the Developer to enforc~ performance and observance of any obligation, agreement, or covenant of the City under this Agreement. . Nothing in this Agreement shall entitle the Developer to make any claim against the City " for any damages whatsoever and the Developer's remedies are strictly limited to the foregoing. Section 9.6 No Remedv Exclusive. No remedy herein conferred 1,I.pon or reserved to the City or the "Developer is intended to be exclusive of any other available remedy or remedies. unless otherwise expressly stated, 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 existm.g at law or in equity or by statUte. No delay or omission to exercise any righter 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 City or the Developer, 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 X. Section 9.7 No Additional 'Vaiver Implied bv. One \Vaiver. If any "agreement eontained in this Agreement should be breached by dther Party and thereafter waived by the other Party, such. waiver shall be limited t6 the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. . " 1674205v9 44 ARTICLE X ADDITIONAL PROVISIONS. Section 10.~ Conflicts of Interest. No member of the City Councilor other official of the City shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Minimum Improvements, or -any contract, agreement or other transaction contemplated to occur or be undertaken thereunder- or with respect thereto, nor shall any such member of the governing body or other official participate in any decision. relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City iIi the event of 8.?y default or breach by Developer or successor or on any obligations under the terms of this Agreement. , Section 10.2 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 disregarded in constniing or interpreting any of its provision~. Section 10.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, 'demand, or other communication under,this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by-registered or certified mail, postage prep~id, return receipt requested, or delivered personally, and , , (a) , in the case of Developer, is addressed to or delivered personally to Developer at in the caSeofthe Developer is addressed to or delivered personally to: MetroPlains . Development, LLC 1600 University, Avenue, Suite 212 St.Paul, MN 55104-3825 ,Attn: President (b) in the case of the City is addressed to or delivered personally to the City at: City of Elk River, Minnesota Elk River City Hall 13065 Orono Parkway Elk River, MN 55330-5600 Attn: Ad.miIiistrator or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section lOA Counterparts. This Agreement 'may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.5 Law Governing:. This Agreement will be govern~d and construed in accordance with the laws of the State of Minnesota. 1674205v9 45 Section 10.6 Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld.: All consents or approvals shall be in writing in order to be effective. Section 10.7 Representatives.' Except as otherwise provided herein, all approvals and other actio.ns required of or taken by the City shall be effective upon action by the City Representative: All actions required of or taken by Developer shall be effective upon action by the Developer Representative. Section 10.8 Superseding Effect, This Agreement reflects tJ1e entire agre'ement of the 'Parties with respect to the matters covered herein, and supersedes in all respects all prior agreements of the .Parties, whether written or otherwise, with respect to such matters. Section 10.9 Relationship of Parties. Nothii::1.g in'this Agreeme4t is intended, or shalI" be construed, to create a partnership or joint venture among or between .the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. Section 10.10 Term. The term of this Agreement shall be effective from the day and year first above written until the earlier of (a) the date this Agreement is terminated pursuant to Section 9.4(c) payment in full of the Tax Increment Revenue Note or any Refunding Bonds, or (c) the date that the City is no longer receiving Available Tax Increment with respect to . termination of the Tax lncrement District. Section 10.11 Venue: All matters, whether sounding in tori or in contract, relating to the validity, construction, performance, or enforcement of this Agreementshall be controlled by and determined in accordance with the laws of the State of Minnesota, and the Developer agrees that all legal actions initiated by the Developer or City with .respect to or arising from any provision contained in' this Agreement shall be initiated, filed' and venued exclusively in the State of Minnesot~ Sherburne County, bistrict Court and shall not be removed therefrom to any other federal or state court. . Section 10.12 Provisions Surviving Rescission or Expiration. Section 8.3 shall survive any rescis~ion, terminajion or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. 1674205v9 46 IN WITNESS WHEREOF, the City and Developer have caused this Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written, STATE OF MINNESOTA ). ) ss COUNTYOF SHERBURNE) . CITY OF ELK RIVER, l\'llNNESOT A - B~~ ~~.t?,(;t~ B~ Administrator The foregoing ~trument was acknowledged before me this 1Jo~ day of De'c.~, 2004, by ~pha~ ,,\\"'it~ ' the Mayor and \>~ ~tAf.~.j , the Administrator of the City of Elk River, Minneso~ muni~iPal co ratIon and olit s bdivislOn orgamzed and existing under the Constitution and laws of the te ofM' on ehalf of said City. ~ . - -, ~ Notary Public. 167420Sv9 nNA M. AU.ARD NOTARY PUBLIC . MlNNSSOTA My CommIsllIon ExpIres Jan. 31.2Illl$ S-1 I 674205v9 METROPLAlNS DEVELOPMENT, LLC, A Minnesota limited liability company ~ h~.//LH~ ~ ~ Its ~r' . TINA M. ALLARD . NOTARY PUBUC ~ MINNESOTA My ConunIllsIon Explres Jan. 31, 2OD5 S-2 EXHIBIT A BLUFF BLOCK PROPERTY Legal Description: Lot 3, Block 4, in the Village of Elk River, ALSO, all that part of Lot 14 of Auditor's Subdivision No.4 that lies South of said Lot 3, Block 4 of said Village of Elk River, and between the same and the Mississippi River, and of the same width of said Lot 3" and being part of GoveI11IIient Lot 2, Section 34, Township 33, Range 26, according to' the plat 'and survey thereof on file and of record in the office of the. County Recorder in and for Sherburne County, Minnesota. AND Lot 4, Block 4, Village of Elk River, accordirig to the plat 'thereof and of record in the 'office of the County Recorder ill and for Sherburne County, Minnesota. AND That part of Lot 5, Block 4, Village of Elk River, described as follows: . Beginning at the northwest comer of said Lot 5; thence East along the North line thereof, 32 feet . to the street leading from Main Street to the Mississippi River, being the West line of the property described in that certain deed to 'the Village of Elk River, dated April 17, 1907, filed July 26, 1907, in Book 31 of Deeds, page 568, Sherburne County Records, thence southerly . along the West line of said street to ~e South line of said Lot 5; thence westerly along the South line of said Lot 5, to the southwest comer thereof; thence northerIy along the West line of said Lot 5, to the point of beginning. AND The East 56 Y2 feet oiLot 2,. Block 4, Village of Elk River, said plat being part of Government Lots 1,2, and 3 in Section 34, Township 33, Range 26, Sherburne County, Minnesota. AND . All that part of Lot 14, of Auditor's Subdivision No.4, that lies South ~f Lots 4 and 5, Block 4, the Village of Elk River, that lies westerly of the westerly right of way line of the street leading from Main Street to' the Mississippi RiYer as above described and that lies easterly of the southerly extension of the West line of Lot 4, Block 4, Village of Elk River to the Mississippi River. . . Excepting from the above described property, however, the following described parcel: All that part of Lots 4 and 5, Block 4, Village of Elk River, lying northeasterly of the following described line: Beginning at a point <?n the North line of Lot 4, a distance of 34 feet west of the northeast comer of Lot 4; thence southeasterly to intersect the South line of Lot 5, Block 4, Village of Elk I 674205v9 A-I River, at a point of the intersection of the South line of said Lot 5, with the West line of the Street leading from Main Street to the Mississippi River, as more fully described above. AND That part of Lot 14, Auditor's Subdivision No.4, according to the recorded plat. thereof, Sherburne County, Minnesota, lying westerly of the southerly extension of the East line of Lot 2, Block 4, Village .of Elk River, according to the recorded plat thereof, and lying easterly of the southerly extension of the West line ofthe East 56.50 feet of said Lot 2. 1674205v9 A-2 EXHIBIT B JACKSON BLOCK PROPERTY A parcel of land lying in the North Half of the Southwest Quarter of Section 34, Township 33, . Range 26, Sherburne County, Minnesota, described as follows: - Beginning at the. southwest comer of Lot 1, Block 3; of the Village of Elk River, according to said plat on file and of record in the office of the Register of Deeds, Sherburne CoUnty, Minnesota; thence North 11 degrees 06 minutes 40 seconds East, an assumed bearing, along the West linf? of said Lot 1, a distance of 179.00 feet to the Northwest comer of said Lot 1, being a point on the southerly line of the state highway right of way of Trunk Highway No. 10; thence North 64 degrees 17 minutes 53 seconds West a distance of 121.42 feet along said southerly right of way line to a line drawn parallel with and distant 80.00 feet East of the East line of Block . 2 of -said. plat; thence South 11 degrees 06 minutes 40 seconds West along said parallel line a distance of 210.28 feet to .the northerly line of right of way of Main Street as dedicated in said plat; thence South 79 degrees 13 "minutes 30 seconds East along said northerly right of way of Main Street a distance of 117.50 feet to the point ofbegirining. I 674205v9 B-1 EXHIBIT C QillT CLAIM DEED Corporation Partnership or Limited Liability Company to Corporation, Partnership or Limited Liability Company No delinquent ta.,'Xes and transfer entered; Certificate of Real Estate Value ( ) filed ( ) not required . Certificate of Real Estate Value No. County Auditor by Deputy STATE DEED TAX DUE HEREON: $ . Date: ,2004 (Reserved for recording data) together with all hereditaments' and appurtenances belonging thereto. Grantor's delivery of this Deed and conveyance of title, and, Grantee's acceptance of tins Deed and title to the Property, are expressly subJect to: (1) th~ ternis and conditions and the rights of the Grantor and the obligations of the Grantee under that certain D.evelopment Agreement by and between Grantor and Grantee dated December _, 2004 (the "Development Agreement"), (2) : minerals and mineral rights reserved by the State of Minnesota; and (3) real estate taxes and special assessments due and payable in 2004 and subsequent years, and (4) applicable zoning laws, ordinances and all other local, state, regional and federal laws and regulations. The Grantor does not know of any wells located on the described real property. 1 674205v9 C-I CITY OF ELK RIVER, MINNESOTA By Mayor By Administrator STATEOFMINNESOTA ) ) ss COUNTY OF SHERBURNE) The foregoing instrument was acknowledged. before me this ~ day of , 2004, by' , the Mayor aild , the Administrator of the City of Elk River, Minnesota, a municipal' corporation and politic subdivision -organized and existing under the COJ:7.Stitution and laws of the State of Minnesota, on behalf of said City. . NOr ARIAL STAMP OR SEAL (OR OTHER SIGNATURE OF PERSON TAKING TITLE OR RANK) AC:EtNOWLEDGMENT Tax statements for the real property described in this.instrument should be sent to (inc1uq.e name and address' of Grantee) THIS INSTRUMENT WAS DRAFTE;D BY: BRIGGS AND MORGAN Professional Association 2200 FirSt National Bank Building . St. Paul, Minnesota 551O( . .' 1674205\>9 C-2 EXHIBIT D CERTIFICATE OF COlVlPLETION _ WHEREAS, the City o(E1k River, Minnesota (the "Grantor"), a municipal corporation and politic subdivision of the State of Minnesota, by a Deed recorded in the Office of the County Recorder or the Registrar of Titles in and for the County of Sherburne and State of Minnesota, as Deed Document Number , has conveyed to MetroPlains Development, LLC, a Minnesota limited liability company (the "Grantee") in the County of Sherburne and State of Minnesota, the following legally described property to wit: ' See Attached Exhibit A and WHEREAS, said Deed incorporated and contained certain covenants and restrictions set' forth in an Development Agreement dated December _, 2004 executed by and between the Grantor and the Grantee (the "Development Agreement"); and 'VHEREAS, . the . Grantee has to the present date performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Gremtor to permit the execution and recording of this certification; , NOW, THEREFORE, this is to.certify that construction of the Minimum Improvements specified tb be done and made by the 'Grantee have been completed and the above covenants of the Grantee and .conditions in said Development Agreement with .respect to the construction of the Minimum Improvements have been performed by the Grantee, and the County Recorder or the Registrar of Titles in and for the County of Sherbume and State of ,Minnesota is hereby authorized to' accept for recording and to record the filing of this instruni.ent, to be a conclusive determination of the satisfaction of the obligations of the Grantee with respect to the construction of the Minimum Improvements. Any remaining obligations under the Development Agreement shall be s~lely contractual obligations of the Grantee, its successors and assigns under the Development Agreement, shall not run with nor be alien against the Property and no owner of a housing unit shall be obligated under the Develop~ent Agreement. I 674205v9 D-l IN WITNESS WHEREOF, the City has caused this Certificate of Completion to be executed with by its duly authorized officer as of the _ day of 20 . CITY OF ELK RIVER, MINNESOTA By Mayor. By Administrator STATE OF MINNESOTA ) ) ss COUNTY OF SHERBURNE) The foregoing instrument was acknowledged before me this _ day of 20_, by . .' the Mayor and . . , the Administrator of the City of Elk River, Minnesota, a muni9ipal corporation and politic subdivision organized and existing under the Co~titution and laws of the State of Minnesota, on behalf of said City. Notary Public 1674205v9 D-2 EXHIBIT E' FORM OF TAX INCRElVIENT REVENUE NOTE No. R-1 $ UNITED STATES.QF ANIERICA STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RNER, MINNESOTA' TAX INCREMENT REVENUE NOTE, SERIES 200_ (METROPLAINS DEVELOPMENT, LLC PROJECT) The City of Elk River, Minnesota (the "City"), hereby acknowledges itse1fto be indebted and, for value rec~ived, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to MetroPlains Development, LLC, a Minnesota limited liability company or its registered assigns (the "Registered Owner"), the principal of Dollars ($ ), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated abovy, as reduced to the extent that such principal shall have been paid in whole or in part pursuant to ,the terms hereof. This Note is issued pursuant to that certain Development Agreement, dated as of December " 2004~ as the same may be amended from time to time (the "Development Agreement"), by and between the City and MetroPlains Development, LLC, a Minnesota limited liability company (the "Company'!). The unpaid principal amount hereof shall bear simple non-compounding interest from the date the Developer has proved to the City that iLhas incurred arid paid Eligible Costs (as defined in the Development Agreement) in an amount equal to the principal 'amount of tins Note at the rate of six and fifty hundredths percent (6.50%) per annum. Interest shall be computed on the basis of a 360-day year of twelve (12) 30- day months. ' The amounts due under this Note shall be payable on each February 1 and August 1, commencing with the first February'l or August 1 occurring after the date of issuance of this Note or, if the first should not bea Business Day (as defined in the Development Agreement) the next succeeding Business Day (each, a "Payment Date"). On each Payment Date, the City shall pay by check or draft mailed to the person that was the Registered. Owner of this Note at tile close .ofthe last business day preceding such Payment Date an.amount equal to the Pledged Ta.'1{ Increment (as hereinafter defined) received by the City during the six month period preceding such Payment Date. All payments made by the City under this Note shall first be applied to accrued interest and then to principal. If Pledged Tax Increments are insufficient to pay any accrued interest due, such unpaid interest shall be carried forward without interest. The Payment Amounts due hereon shall be payable solely from 89% of the actual Available Tax Increment received by'the City siij.ce the last Payment Date b~ed on the lesser of the c~ent actual Market Value of the Minimum hnprovements (as defmed in the Development I 674205v9 E-1 Agreement) as determined by the County Assessor or the County Assessor's Market Value ofthe Minimunl Improvements as of the January 2 immediately following the Completion Date (the "Pledged Tax Increment"). "Available Ta'{ Increment" means the portion of the real property taxes generated by the Development Pr.operty (as such term is defined in the Development Agreement) which Development Property ~s located within the Downtown Phase I Tax Increment Financing District No. 22 which is actually remitted and retained by the City as tax increment PlJTsuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799, as the same may be amended or supplemented from time to time (the "Ta'{ Increment Act"). This Note shall terminate-and be of no further force ahd effect following February 1, 2032 or such later date as the 'City receives Available Tax -Increment as a result of the payment of real property taxes' that were delinquent on February, 2032 (the "Final Payment Date") or any date upon which the City shall have terminated the Development Agreement under Section 9.4(c) thereof, or on the date that all principal and interest payable hereunder shall have been paid in full; whichever occurs earliest. . This Note may be prepaid in whole or in part at any time without penalty. The City m~es no representation or covenant, express or implied; that the Pledged Ta'{ Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The City's payment obligations hereunder shall be further conditioned on the fact_that no - D~veloper's Event of Default under Section 9.2 of the Development Agre~ment shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been cured; - and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall h;ive no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, for a fuller statement of the rights and obligations of the City to pay the principal of this Note and the interest thereon, and said provisions are hereby incorporated into this Note as though set out in full herein. THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION OF THE CITY AND IS PAYABLE BY THE CITY ONLY FROlVI THE SOURCES AND SUBJECT TO THE QUAL1FICATIONS STATED OR REFERENCED HEREIN. THIS NOTE IS NOT A GENERAL OBLIGATION OF THE CITY OF ELK RIYER,lVlINNESOTA, AND . - . NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING PO"VERS OF THE -CITY ARE PLEDGED TO THEPAYlVIENT OF TH;E PRINCIPAL OF OR INTERE_ST ON TIDS NOTE AND NO PROPERTY OR OTHER ASSET OF THE CITY, SAVE AND EXCEPT THE ABOVE-REFERENCED TAX INCRE.MENTS, IS OR SHALL BE A SOURCE OF PAYMENT OF THE CITY'S OBLIGATIONS HEREUNDER. The Registered Owner shall never have or be deemed to have the right to-compel any exercise of any taxing power of the City or of any other public body, and neither the City nor any person executing or registermg this Note shall be liable personally hereon by reason of the issuance or registration thereof or otherwise. l674205v9 E~2 This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note maybe assigned only with the prior written consent of the City. In order to assign the Note, the assignee 'shallsurrender the same to the City either in eXGhange for.a new fully registered note or for transfer of this Note on the registration records for'theNote maintained by the City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisionS state4 or referenced herein. IT IS ~REBY CERTIFIED AND RECITED that all acts, conditions, !illd 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 b~ll performed in regular and. due form, time, and manner as required by law; and that this Note, together with all other indebtedness of fue City outstanding on the date hereof and on the date of its actual issuance and delivery,. does not cause the indebtedness of the City to exceed any constitutional or statutory limitation thereon. 167420Sv.9 E-3 IN WITNESS WHEREOF, the City of Elk River, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and AdminIstrator and has caused this Note to be issued on and dated , 200_" I 674205v9 E-4 CITY OF ELK RIVER, MINNESOTA By Its Mayor By Its Admiriistrator CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note, as originally issued on , 200_, was on said date registered in the name of MetroPlains Development, LLC, a Minnesota limited liability company, and that, at the request of the Registered Owner of this . Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blaIik below, on the books kept by the UD,dersignedforsuch purposes. NAME AND ADDRESS OF REGISTERED OWNER DATE OF REGISTRATION SIGNATIJRE OF ADMINISTRATOR MetroPlains Development; LLC 1600 University Avenue, Suite 212 , 209_ St Paul, MN 55104-3825 1 674205v9 E-5 EXHIBIT F FORM OF PARKING LOT NOTE No. R-l $ UNITEDSTATESOFAMEIDCA STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER, MINNESOTA TAX INCREMENT REVENUE NOTE, SEIDES 200_ (METROPLAINS DEVELOPMENT, LLC PARKING LOT PROJECT) The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the ai:nounts hereinafter described (the "Payment Amounts") to MetroPlains Development, LLC, a Minnesota limited liability company or its . registered assigris (the "Registered Owner"), the principal of - - Dollars ($ ), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal shall have been paid in whole or in part pursuant to the terms hereof. This Note is issued pursuant to that certain Development Agreement, dated a& of December _, 2004, as the same may be amended from time to time (the "Development Agreement"),-by and between the City and MetroPlains Development, LLC, a ~esota limited liability company (the "Company"). The unpaid principal amount hereof shall bear simple non-compounding interest from the date of this Note at the rate of six and fifty hundredths percent (6.50%) per annum. Interest shall be computed on the basis of a 360-day year of twelve (12) 30-daymonths. The amounts due under this Note shall be payable on each February 1 and August 1, commencing with the first February 1 or August.1 occ~g after the date of issuange of this Note or, if the first should not be a Business Day (as defined in the Development Agreement) the next succeeding Business Day (each, a "Payment Date"). On each Payment Date, the City shall pay by check or draft mailed to the person that was the Registered Owner of this Note at the close of the last business day preceding such Payment Date an amount equal to the Parking Lot, Pledged Ta..x -Increment (as heremafter defined) received by the City during the six month period preceding ,such Payment Date. All payments made ,by the City under this Note shall first be applied to accrued interest anq. then to principal. If Pledged Ta..x Increments are insufficient to pay any accrued interest due, such unpaid interest, shall be carried forward without interest. The Payment Amounts due hereon shall be payable solely from 6% of the actual Available Tax Increment received by the City since the last Payment Date based on the lesser of the current actual Market Value of the Minimum Improvements (as defined in the Development Agreement) as determined by the County Assessor or the County Assessor's, ,Market Value of the Minimum Improvements as of the January 2 immediately following the Completion Date (the 16742D5v9 F-l "Pledged Tax Increment"). "Available Tax Increment" means the portion of the real property taxes generated by the Development Property (as such term is defined 'in the Development Agreem~nt) which Development Property is located within the Downtown Phase I Ta."{ Increment Financing District, No. 22 which is actually remitted and retained by the City as tax increment pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). This Note shall terminate and be of no further force and effect following February 1, 2032 or such later date as the City receives Available Tax Increment as a result of the payment of real property ta.'<.es that were delinquent on February, 2032 (the "Final Payment Date") or any date upon which the City shall have terminated the Development Agreement under Section 9.4( c) thereof, or on ~he date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. This Note may be prepaid in whole 'or in part at any time without penalty. The City makes no representation or covenant, express or implied, that the Pledged Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The City's payment obligations hereunder shall be further conditioned on the fact that no Developer's Event of Default under Section 9.2 of the Development Agreement shall have occurred and be continuing. at the time payment is otherwise due hereunder,. but such unpaid amounts shall become payable, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an, Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, , for a fuller. statement of the rights and obligations of the City to pay the principal of this Note and the interest thereon, and said provisions are hereby incorporated into this Note as though set out in full herein. THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION OF TilE CITY AND IS PAYABLE BY THE CITY ONLY FROM THE SOURCES AND SUBJECT TO THE QUALIFICATIONS STATED OR REFERENCED HEREIN. THIS NOTE IS NOT. A GENERAL OBLIGATION OF THE CITY OF ELK RIVER, lVIINNESOTA, AND , .. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE CITY ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THIS NOTE AND ,NO PROPERTY 'OR OTHER ASSET OF THE CITY, SAVE AND EXCEPT THE ABOVE-REFERENCED T;LX INCREMENTS, IS OR SHALL BE A SOURCE OF PAYMENT OF THE CITY'S OBLIGATIONS HEREUNDER. ' The Registered Owner shall never have or be deemed to have the right to compel any exercise of any ta.'<.ing power of the City or of any other public body, and neither the City nOr any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration thereof or otherwise. 167420Sv9 F-2 This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitutlon and laws of the State of Minnesota, including the Tax Increment Act. This Note maybe assigned only with the prior ~tten consent of the City. In order . tQ._ assign the Note, the assignee shall surrender the same to the City 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 City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to allprovlsions stated or referenced herein. 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 dl~,e form, time, and manner as required by law; and that this Note, together with all other indebtedne.ss of the City outstanding on the date hereof and on the date' of its .actual issuance and delivery, does not cause the. indebtedness of the City to exceed any constitutional or statUtory limitation thereon. 167420Sv9 F-3 IN WITNESS WHEREOF, the City of Elk River, Minnesota, by its City Council, has caused tins Note to be executed by the manual signatures of its Mayor and Administrator and has caused this Note to be issued on and dated ,200_, I 674205v9 CITY OF ELK RNER, MINNESOTA . By Its Mayor By Its Administrator F-4 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note, as originally issued on 200_, was on said-date registered in the name of MetroPlains Development, LLC, a Minnesota limited'liability company, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered 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. NAME AND ADDRESS OF , REGISTERED OWNER DATE OF " SIGNATURE OF REGISTRATION ADMINISTRATOR MetroPlains Development, .LLC ,200_ 1600 University Avenue, Suite 212 S1. Paul, MN 55104-3825 1674205v9 F-5 1674205v9 EXHIBIT G ELIGIBLE COSTS Acquisition Costs of the Bluff Block Property Relocation Costs and Expenses Demolition Site Improvements G-I EXHIBIT H CONSTRUCTION SCHEDULE Commencement of Substantial Construction . Completion of Construction Bluff Block Housing Project Within 60 days Within 425 days after after the U.S. Bank Commencement of parcel is vacated Construction Bluff Block Commerc~al Project Within 60 days Within 425 days after after the U.S. Bank Commencement of parcel is vacated Construction Jackson Block Housing Project Within 45 days Within 425 days after after Closing on Commencemen~ of Jackson Block Construction r Property Jackson Block Commercial Project Within 45 days Within 425 days aft~r after Closing on Commencement of Jackson BloGl,( Construction Property 1 674205v9 H-l 1674205v9 EXHIBIT I ESTIMATED SOURCES AND USES STATEMENT ~;iir;'S'OU'RCES-A\Ni[)~ ltJSESANJJiI?ROFrr. STAtEMENT ,Bluff Block Commercial and Condos .,.;%;';:'7,;,:;CostSummary, "',. ::-Arnount c,)'i:.PE!fCent . Land Acquisition Site Work-Environmental, and Improvements $ Total Acquisition $ 1,912,750 200,000 2,112,750 ,~e.habn~~onlN~w, ~~n.~t!Y~~r1 ," . .d',d "d, ___,_ ,~,59,2,6~ ; ~~:.~i~1~~i5;g~dgo~~~~~~r~i1i~~!~l~~~if(~1,~t~r;ll~.~~~,@4~~p~r~p~t. Commercia] Co'nstritction anc{Tenant 1m proven-' '.' , {69{630 Contin en 426,159 Architectural and Engineering Total ArchitecturaVEngineering Sale Fees and Marketin Total marketing Interim Costs Financing Fees'and Expenses Total Carrying Costs Environmental Consultants' Total Special Consultants Related Costs Total Financin Costs Condo Documents-Attorney and Survey Total Title and Recordin Total Other Soft Costs Total Project Cost 'i~""\i,;,.~,..,1;"r;;;)fE>f;,:~;r":nl!;o'me Sl.,urrma Total Sale Price of Units Commercial Sale $ 355,000 355,000 '853,758 853,758 $ $ 836,888 71,800 908;688 ' $ $ $ 109,000 109,000 $ 119,000 119,000 $ $ 406,000 16,077,237 12.444,000 1,785,300 Equity Gap Total Proceeds $ Project Cost $ Allowable Profit $ 1,049,915 ;p.~rcei:\:e.ofe6~'l~tIMrn'~'ij%~t;~~~:;?;,iC'P;!~j,~#;'\~!~4\)'~~'~'\\r!' ~:;:~;re','53~/o;' I-I 11,90% 1.24% 13.14% 53.45% 2.18% 10..52% 2,65% 0.00% 0.00% 0.95% 69.74% 2.21% 2.21% 5.31 % 5.31% 5.21 % 0.45% 5.65% 0,00% 0.00% 0.68% ,0.68% 0.74% 0.74% 2,53% 2.53% 100.00% I 674205v9 EXHIBIT J UPDATED SOURCES AND USES STATElVIENT [To be provided prior to issuance of Tax. Increment Revenue Note] J-1 EXHIBIT K FINAL SOURCES AND USES STATElVIENT [To be provided on Profit Determination Date] 1674205v9 K-l 1 674205v9 ~. EXHIBIT L FORM OF PROFIT STATEMENT f\~l!'SOURC'ES; AND;tJ'S:ESAMEl' f?ROFlrr:."SJAr1rEME~lr .~i Bluff Block Commercial and Condos ,.<';;! ,. ,:>V{;tfr",.€:pstsum ritary:'~,~;"?'f.';:,;'#><~flj::\';i.,; i'Atil'ount " ,',::,!i;cPercent Land Acquisition Site Work-Environmental, and Improvements $ Total Acquisition $ 1,912,750 200,000 2,112,750 Rehabilitation/New Construction 8,592,638 i~Ii}~~l~!~s[~~~~ml'I_llIt!r~1itaE~i"~w~1i~J~A~P~ Commercial Construction and Tenant Improverr 1,691,630 Contin ency 426,159 Architectural and Engineering Total ArchitecturaVEngineering . $ 355,000 355,OOQ Sale Fees and Marketing Total marketing $ 853,758 853,758 Interim Costs Financing Fees and Expenses Total Carrying Costs $ $ $ 836,888 71 ,800 908,688 Environmental Consultants Total Special Consultants Related Costs Total Financing Costs 109,000 109;000 $ Condo Documents-Attorney and Survey Total Title and Recording $ 119,000 119,000 ~~e~~~tS;~ql'ffie;rdl1l~~~~;[;~j'~~(~~~'ftl~l~~~~~~tr"~:tf~~r?0~$t.PDQ] Total Other Soft Costs $ 406,000 Total Project cost $ 16,077,237 *":""'.)~*\;Z;~i;~.;i;i~';;"i'\;;;i::IR:COlr.re.Sum ma Total Sale Price of Units Commercial Sale 12,444,000 1,785,300 '7,~ Equity Gap 815,143 Total Proceeds $ 17,127,152 Project Cost $ 16,077,237 Allowable Profit $ 1,049,915 :percentFof'CaSt'1'''':t;IMIt.''ifjo~,,:,g:i:f,~j\!:;~(~i~~~';rS~~~'!ft~i!'~r~i~9'"6153PAW L-I 11.90% 1.24% 13.14% 53.45% 2.18% 10.52% 2.65% 0.00% 0.00% 0.95% 69.74% 2.21% 2.21% 5.31% 5.31% 5.21% 0.45% 5.65% 0.00% 0.00% 0.68% 0.68% 0.74% 0.74% 2.53% 2.53% 100.00% EXHIBIT IVl FINAL PROFIT STATEIVlENT [To be provided on Profit Determination Date] 1674205v9 M-l 167420Sv9 EXHIBIT N FORlVl OF CASH FLOW STATEMENTS :,m:~~lli~~l~~~H!.fSQ~;~T:e.~~M~~~~~~!{~~l~~ Jackson Block - Commercial ;SOUR.c.ESi DEVELOPER FINANCING DEVELOPER EQUITY AMOUNT FINANCED % OF TOTAL 71.61% 23.87% 95A8% % OF FINANCE 71.61% 23.870/0 % OF TOTAL SUBTOTAL Demolition 0.00 0.00% 0 Relocation 0.00 Cl.OO% 0 CONSTRUCTlON COSTS 1,014,000 Shops Shell 78.00 66.46% 1,014,000 TENANT IMPROVEMENTS 0 SOFT COSTS PRED~LOPMENT COSTS 62,000 Architect & Civil 4.06% 62,000 CONSTRUCTION. COSTS 0 INTEREST EXPENSE 0 GOVERNMENTAL FEES 2,385 Park Dedication 0.16% 2385 LEGAL - Borrower 0 0 REAL ESTATE TAXES 0 0 FINANCING 147,603 Interim Costs 4.48% 68,378 Financing fees and expenses 2.720/0 41.425 Related Costs 1.49% 22,800 Syndication Costs 0.98% 15,000 LEASING $0.00 0 0 PROMOTION COSTS 0 0 7.83% 3.08% 119,395 46,996 119,395 46,996 Total Soft Costs 511,695 TOTAL USES 100.00% 1,525,695 N-l i~},;:';:!~~~~t.E.F-f;a~L~It\I~~1.,iil~:i~i~} Jackson Bleck - Commercial PROJECT RSlENUEASSUMPl;IONS; RENT PER TOTAL SQ. FT. SQ. FT. 13.00 13,000 13,000 TYPE Retail Total Rental Income Total Other Income 13,000 ANNUAL REVENUE 169,000 169,000 o o 169,000 ~f?,~OJECT.DEBTASSIj:MFJ:lONS;; Private Debt: Amount of Bond-Loan Term Of Bond-Loan Rate of Bond-Loan Monthly Payment Annual Payment JNFLAt.IO~ ASSUMPTIONS YEAR Rental Revenue' Other Income Expenses . Vacan MONTHS OPERATIN 2006 0.00% 0.00% 0.00% 7.00% 12 ~ 0.00% 0.00% 0.00% 7.00% 2008 0.00% 0.00% 0.00% 7.00% 1,092,525 20 6.75% 8,307 99,686 ~ 0.00% '0.00% 0.00% 7.00% WQ 0.00% 0.00% Q.OO% 7.00% Retail Total Rental Gross Revenue Vacancies Effective Income ). .,' RERAT.INGS CAM Capital Exp/Reserve MISC TOTAL EXPENSES NET OPERATING INCOME ABATEMENT PAYMENTS CASH FLOW AVAIL FOR DEBT SERVICE DEBT SERVICE (-) - Private. DEBT SERVICE (-) - City CASH FLOW AFTER FINANCING BEThIRNi aN"N~ESM\NN\dAb:;:: Wmitf12%"; " RETURN ON INVES.-AVERAGE 91,000 6,500 5,000 102,500 145,670 o 145,670 99,686 o 45,984 '~:f'f'2!S3.t._, 12.63% I 674205v9 91,000 6,500 5,000 102.500 145,670 o 145,670 99,686 o 45.984 'i",~+, ,i <\',;"1~j630~h 12. 63% N-2 91, 000 6,500. 5,000 102,500 145,670 o 145,670 99,686 o 45,984 " < .0"":1:2.'68% , , 12.63% 91,000 6,500 5,000 102,500 145,670 o 145,670 99,686 o 45,984 ."-",:,;,;' 1*,63J>A,\. 12.63% . 91,000 6,500 5,000 102,500 145,670 o 145,670 99,686 o 45,984 ,!..'~~,iif!'Z;f$3<%i . 12.63% ;SOURCES~ t:;lji;;::;;;~,fhS{S.~,t.F.~~~~',~l~!~MJ~~I;;:;';;;~:;~,~ Jackson Block Rental Housing % OF TOTAL TOTALS First Mortgage-LMIR 19.94% 1,073,025 DEED Funds 7.43% 400,000 Greater Minnesota Funds 3.72% 200,000 i~~~J~~ei~ffi~mtl~k~;~:'~?:!!':::;\~;:'~M:i~.iJi~~1i:i~l~~U~J~.~j;!1.i:~Ji~~r:llil;1j~ij~llii:{'~1~t~~: Limited Partner Investment 63.37% 3,409,835 Equity Gap 0.87% 46,716 TOTAL SOURCES 100.00% 5,380,577 J Per Unit % OF TOTAL SUBTOTAL TOTALS DEMO- SITE PREP 0.00 CONSTRUCTION COSTS 118,429 BUILDINGIlAND IMPROVEMENTS Contingency SOFT COSTS PROFESSIONAL SERVICES Architectural, Engineering & Professional Fees APPRAISALS INSURANCE ACCOUNTING CITY FEES Park Dedication REAL ESTATE TAXES COST OF ISSUANCE Interim Costs Financing fees and expenses Related Costs Syndication Costs PERMANENT LOAN ACCRUED EXPENSES LETTERS OF CREDIT CLOSING COSTS . PROJECT MANAGEMENT CASH ACCOUNTS 2.85%. Total Soft Costs 1,440,2:51 TOTAL USES 100.00% 5,380,577 1674205v9 N-3- EXHIBIT 0 FINAL CASH FLO"V STATKMENTS [To be provided on Cash Flow Determination Date] 1674205v9 0-1 I 674205v9 EXHIBIT P OWNER UPGRADE OPTIONS [To be provided upon submission of Construction Plans pursuant to Section 4.1] P-1