8.2. SR 01-19-2021
Request for Action
To Item Number
Mayor and City Council 8.2
Agenda Section Meeting Date Prepared by
General Business January 19, 2021 Colleen Eddy, Economic Development Specialist
Item Description Reviewed by
Tax Increment Financing District #25 Note Cal Portner, City Administrator
Transfer
Reviewed by
Action Requested
Adopt, by motion, a resolution approving Assignment and Assumption of Tax Increment Finance (TIF)
Development Assistance Agreement for Jackson Hills Residential Suites and authorize an execution of
consent.
Background/Discussion
At the April 16, 2018, City Council meeting, the Council approved TIF District #25.
The developer has agreed to sell the property and assign its rights and obligations under the contract, the
declaration, and the TIF note to GCRE-Jackson Hills LLC, a Delaware limited liability company.
Section 5.3 of the Development Agreement allows the property and the TIF Note to be transferred to a new
owner subject to certain conditions, including approval by the City Council. Because the city created a Housing
TIF District in connection with the project, the new owner will need to comply with the existing affordability
covenants on the property during the life of the TIF District.
As such, the city needs an Assignment and Assumption Agreement between the current owner and new owner
whereby the new owner agrees to comply with all the requirements of the existing agreement and the
Declaration of Restrictive Covenants (affordability requirements) for the project.
Financial Impact
The Taxable Tax Increment Revenue Note (Jackson Hills Residential Suites, LLC Project), a pay-as-you
go tax increment revenue note in the original principal amount of $463,297.
Mission/Policy/Goal
The city is empowered to utilize TIF by the Minnesota Tax Increment Financing Act, as amended in Minnesota
Statutes 469-174 through 469-1794.
Attachments
Resolution
Assignment and Assumption of Development Agreement
Jackson Hills Declaration of Restricted Covenants
Jackson Hills Receipt of Note
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
CITY OF ELK RIVER
RESOLUTION NO. _____
RESOLUTION APPROVING ASSIGNMENT AND
ASSUMPTION OF TIF DEVELOPMENT ASSISTANCE
AGREEMENT IN CONNECTION WITH JACKSON HILLS
RESIDENTIAL SUITES; AUTHORIZING EXECUTION OF
CONSENT TO SUCH ASSIGNMENT
WHEREAS, the City of Elk River, Minnesota (the "City") executed and entered into that
certain TIF Development Assistance Agreement, dated June 4, 2018 (the “Contract”), with Jackson
Hills Residential Suites, LLC, a Minnesota limited liability company (the “Developer”), for the
construction of an approximately 40-unit multifamily affordable rental housing development and all
related amenities and improvements within the City (the “Facility”); and
WHEREAS, pursuant to the Contract, the City will issue its Taxable Tax Increment
Revenue Note (Jackson Hills Residential Suites, LLC Project) in the original principal amount of
$463,297 (the “TIF Note”); and
WHEREAS, pursuant to a Declaration of Restrictive Covenants, dated June 4, 2018 (the
“Declaration”), between the City and the Developer, the Developer agreed to comply with certain
occupancy restrictions for the Facility; and
WHEREAS, the Developer desires to convey the Facility and assign its rights and
obligations under the Contract, the Declaration, and the TIF Note to GCRE – Jackson Hills, LLC, a
Delaware limited liability company (“New Owner”), pursuant to an Assignment and Assumption of
TIF Assistance Development Agreement between the Developer and New Owner (the “TIF
Assignment”) and has requested that the City approve the form of the TIF Assignment and execute
a consent to the TIF Assignment (the “Consent”); and
WHEREAS, the forms of the TIF Assignment and Consent are on file with the City
Administrator.
NOW, THEREFORE, be it resolved by the City Council (the “Council”) of the City of Elk
River as follows:
1. The Council hereby approves transfer of the Facility to the New Owner and
approves the TIF Assignment in substantially the form delivered to the City and on file with the
City Administrator and all other documents referenced in or attached to such agreements
(collectively, the “Assignment Documents”) and the Mayor and the City Clerk are hereby
authorized and directed to execute the Assignment Documents on behalf of the City and to carry
out, on behalf of the City, the City’s obligations thereunder.
2. City staff and officials are authorized to take all actions necessary to perform the
City obligations under the Assignment Documents as a whole, including without limitation
execution of any documents or certifications to which the City is a party referenced in or
attached to the Assignment Documents.
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3. The approval hereby given to the Assignment Documents includes approval of
such additional details, modifications thereof, deletions therefrom and additions thereto as may
be necessary and appropriate and approved by legal counsel to the City and by the officers
authorized herein to execute said documents prior to their execution; and said officers are hereby
authorized to approve said changes on behalf of the City. The execution of any instrument by
the appropriate officers of the City herein authorized shall be conclusive evidence of the
approval of such document in accordance with the terms hereof. In the event of absence or
disability of either of such officers, any of the documents authorized by this resolution to be
executed may be executed without further act or authorization of the Council by any duly
designated acting official, or by such other officer or officers of the Council as, in the opinion of
the City Attorney, may act on his or her behalf.
4. The City Finance Director is hereby authorized to execute and deliver to New
Owner a TIF Note registration page, evidencing the New Owner as holder of the TIF Note.
Adopted by the City of Elk River this 19th day of January, 2021.
Mayor
ATTEST:
City Clerk
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EL185\\49\\695384.v1
ASSIGNMENT AND ASSUMPTION OF
TIF DEVELOPMENT ASSISTANCE AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF TIF DEVELOPMENT ASSISTANCE
AGREEMENT (this “Assignment”), made as of this ___ day of _________, 202__, by and
between Jackson Hills Residential Suites, LLC, a Minnesota limited liability company
(“Assignor”), and GCRE – Jackson Hills, LLC, a Delaware limited liability company
(“Assignee”).
WITNESSETH:
A. The City of Elk River, Minnesota (the “City”) and Assignor entered into that certain TIF
Development Assistance Agreement (the “TIF Agreement”) providing, among other
things, for the construction of an approximately 40-unit multifamily affordable rental
housing development and all related amenities and improvements (the “Minimum
Improvements”) on the property legally described within the Agreement (the
“Development Property”) within the City.
B. Assignor wishes to assign its rights and obligations under the TIF Agreement to
Assignee, and to assign to Assignee its right to the Taxable Tax Increment Revenue Note
(Jackson Hills Residential Suites, LLC Project) to be issued pursuant to the TIF
Agreement (the “Note”), and Assignee wishes to purchase the Development Property and
the Minimum Improvements and assume such rights and obligations under the TIF
Agreement and accept the assignment of Assignor’s interest in the Note.
C. The City and Assignor entered into that certain Declaration of Restrictive Covenants
dated June 4, 2018, recorded on October 29, 2020, as Document No. 904036, in the
office of the County Recorder in and for Sherburne County, Minnesota (the
“Declaration”) establishing certain restrictive covenants concerning the Development
Property.
D. Assignor wishes to assign its rights and obligations under the Declaration, and Assignee,
in purchasing the Development Property, agrees to assume such rights and obligations
under the Declaration.
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518093v1 MNI MN190-95
E. Pursuant to the TIF Agreement and the Declaration, the Assignor may not assign its
rights under the TIF Agreement, the Note, or the Declaration without the consent of the
City.
F. The defined terms in the TIF Agreement and the Declaration shall have the same
meaning hereunder.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Assignor does hereby grant, transfer, and assign to Assignee all of its rights,
obligations and interests in, to and under the TIF Agreement, all of its right, title
and interest in, to and under the Note, and all rights and obligations in, to and
under the Declaration.
2. Assignee hereby accepts this Assignment and assumes and agrees to faithfully
abide by, perform, and discharge each and every term, covenant, and condition of
the TIF Agreement and the Declaration and the exhibits thereto applicable to the
“Developer” first arising from and after the date of this Assignment and to be
fully bound by all of the foregoing,. Assignee, for value received, further accepts
all right, title and interest of Assignor in, to and under the Note and does hereby
assume and agree to be bound by and to perform all the covenants, agreements
and obligations of Assignor in, to and under the Note, the TIF Agreement, and the
Declaration arising from and after the date of this Assignment. Assignee hereby
agrees to indemnify and hold Assignor harmless from and against any and all
claims, expenses, costs, obligations, or other liabilities with respect to the TIF
Agreement, the Note, and the Declaration arising or incurred from and after the
date hereof.
3. Assignor hereby warrants and represents to Assignee as follows:
a. The TIF Agreement and the Declaration have not been modified or
amended and are full force and effect as of the date hereof; and
b. To Assignor's knowledge, there is no Event of Default in existence
under the TIF Agreement or the Declaration, nor is there in existence
any state of facts or circumstances which, with the giving of notice or
lapse of time or both, would constitute an Event of Default under the
TIF Agreement or the Declaration.
4. Assignor and Assignee agree that this Assignment shall not be amended or
changed in any way without prior written approval of the City.
5. This Assignment and Assumption shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto and shall further be for the
benefit and reliance of the City.
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518093v1 MNI MN190-95
6. This Assignment shall be governed by and construed in accordance with the laws
of the State of Minnesota.
7. This Assignment may be executed in counterparts, which counterparts when
considered together shall constitute a single, binding, valid and enforceable
agreement.
8. The Assignee expressly represents, for the benefit of the City, that it is a limited
liability company duly organized and in good standing under the laws of the State
of Delaware, is not in violation of any provisions of its organizational documents
or (to the best of its knowledge) the laws of the State of Minnesota, is duly
authorized to transact business within the State of Minnesota, has power to enter
into this Agreement and has duly authorized the execution, delivery and
performance of this Agreement by proper action of its governing body.
9. The Assignor hereby irrevocably authorizes and directs the City to pay
exclusively to the Assignee, from and after the date hereof, all sums due under the
TIF Agreement and the Note, subject to the terms thereof; and to the extent such
sums are paid to or at the direction of the Assignee, the Assignor acknowledges
and agrees that the City shall have no further liability to the Assignor for the
same.
IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption
Agreement as of the date first indicated above.
ASSIGNOR:
JACKSON HILLS RESIDENTIAL SUITES, INC.
By: ______________________________________
Its: _____________________________________
STATE OF MINNESOTA )
) SS.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ___ day of __________, 202__,
by ____________________, the _________________ of Jackson Hills Residential Suites, Inc., a
Minnesota corporation, on behalf of the corporation.
______________________________
Notary Public
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518093v1 MNI MN190-95
ASSIGNEE:
GCRE – JACKSON HILLS, LLC
By: _______________________________________
Its: __________________________________
STATE OF MINNESOTA )
) SS.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this __ day of _____________,
202__, by __________________, President of GCRE – Jackson Hills, LLC, a Delaware limited
liability company, on behalf of the company.
______________________________
Notary Public
This document was drafted by:
Claudia M. Revermann, #0317664
Revermann Law, P.A.
1623 Division Street
Waite Park, MN 56387
(320) 258-9383
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518093v1 MNI MN190-95
CONSENT OF CITY OF ELK RIVER
The City hereby consents to the foregoing Assignment and Assumption of the TIF Development
Assistance Agreement and Declaration of Restrictive Covenants and acknowledges and agrees that
Assignor is hereby released from all covenants and obligations under the TIF Agreement, the
Note, and the Declaration accruing after the date hereof.
CITY OF ELK RIVER
By________________________________
Its Mayor
By________________________________
Its Clerk
STATE OF MINNESOTA )
) SS.
COUNTY OF SHERBURNE )
The foregoing instrument was acknowledged before me this ___ day of _____________,
20__ by ____________________, the Mayor of the City of Elk River, Minnesota, a municipal
corporation and political subdivision organized and existing under the Constitution of the laws of
the State of Minnesota, on behalf of the City.
______________________________
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF SHERBURNE )
The foregoing instrument was acknowledged before me this ___ day of _____________,
20__ by ____________________, the City Clerk of the City of Elk River, Minnesota, a municipal
corporation and political subdivision organized and existing under the Constitution of the laws of
the State of Minnesota, on behalf of the City.
______________________________
Notary Public
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518093v1 MNI MN190-95
Office of the County Recorder
Sherburne County, MN
Doc. No. 904036
Certified, filed, and or recorded on
October 29, 2020 12:50 PM
Michelle Ashe, County Recorder
By SD Deputy
Fees: $46.00
1111111111111111111111111111
904036
DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated June 4, 2018 (the
"Declaration"), by JACKSON HILLS RESIDENTIAL SUITES, LLC, a Minnesota limited liability
company (the "Developer"), is given for the benefit of the CITY OF ELK RIVER, MINNESOTA, a
municipal corporation and political subdivision organized and existing under the Constitution
and laws of the State of Minnesota (the "City").
RECITALS
WHEREAS, the City and the Developer entered into that certain TIF Development
Assistance Agreement, dated June 4, 2018, (the "Contract"); and
WHEREAS, pursuant to the Contract, the Developer is obligated to cause construction of 40
housing units of multifamily rental housing (the "Project") on the property described in EXHIBIT A
hereto (the "Property"), and to cause compliance with certain affordability covenants described in
Section 3.3 of the Contract; and
WHEREAS, Section 3.3 of the Contract requires that the Developer cause to be executed an
instrument in recordable form substantially reflecting the covenants set forth in Section 3.3 of the
Contract; and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants
set forth herein will be and are covenants running with the Property for the term described herein
and binding upon all subsequent owners of the Property for the term described herein, and are not
merely personal covenants of the Developer; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract
unless otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Developer agrees as follows:
Term of Restrictions.
(a) Occupancy and Rental Restrictions. The term of the Occupancy Restrictions set
forth in Section 3 of this Declaration will commence on the date a certificate of occupancy is
received from the City for all rental units on the Property and continue through the Termination
Date defined below (the "Qualified Project Period").
(b) Termination of Declaration. This Declaration will terminate on the earlier of
December 31, 2046 or the date on which the TIF District is terminated in accordance with the TIF
Act (the "Termination Date").
(c) Removal from Real Estate Records. After the Termination Date of this Declaration,
the City will, upon request by the Developer or its assigns, file any document appropriate to remove
this Declaration from the real estate records of Sherburne County, Minnesota.
2. Project Restrictions.
(a) the Developer represents, warrants, and covenants that:
(i) All leases of units to Qualifying Tenants (as defined in Section 3(a)(i)
hereof) will contain clauses, among others, wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed will
be deemed substantial and material obligation of the lessee's tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Developer or the City, and that
the lessee's failure or refusal to comply with a request for information with respect
thereto will be deemed a violation of a substantial obligation of the lessee's tenancy.
(ii) the Developer will permit any duly authorized representative of the City to
inspect the books and records of the Developer pertaining to the income of Qualifying
Tenants residing in the Project.
3. Occupancy Restrictions. The Developer represents, warrants, and covenants that:
(a) Qualif3drig Tenants. Throughout the Qualified Project Period, at least 20%
(approximately 8) of the Rental Housing Units will be occupied (or treated as occupied as provided
herein) or held vacant and available for occupancy by Qualifying Tenants. Qualifying Tenants
means those persons and families who are determined from time to time by the Developer to have
combined adjusted income that does not exceed 50% of the Minneapolis -St. Paul metropolitan
statistical area (the "Metro Area") median income for the applicable calendar year. For purposes of
this definition, the occupants of a residential unit will not be deemed to be Qualifying Tenants if all
the occupants of such residential unit at any time are "students," as defined in Section 152(f)(2) of
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the Internal Revenue Code of 1986, as amended (the "Code"), not entitled to an exemption under
the Code. The determination of whether an individual or family is of low or moderate income will
be made at the time the tenancy commences and on an ongoing basis thereafter, determined at least
annually. If during their tenancy a Qualifying Tenant's income exceeds 140% of the maximum
income qualifying as low or moderate income for a family of its size, the next available unit
(determined in accordance with the Code and applicable regulations) (the "Next Available Unit
Rule") must be leased to a Qualifying Tenant or held vacant and available for occupancy by a
Qualifying Tenant. If the Next Available Unit Rule is violated, the Unit will not continue to be
treated as a Qualifying Unit.
(b) Certification of Tenant Eli ig bility. As a condition to initial and continuing
occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign
and deliver to the Developer a Certification of Tenant Eligibility substantially in the form attached
as EXHIBIT B hereto, or in any other form as may be approved by the City (the "Eligibility
Certification"), in which the prospective Qualifying Tenant certifies as to qualifying as low or
moderate income. In addition, the person will be required to provide whatever other information,
documents, or certifications are deemed necessary by the City to substantiate the Eligibility
Certification, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying
Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on
file by the Developer with respect to each Qualifying Tenant who resides in a Project unit or resided
therein during the immediately preceding calendar year.
(c) Lease. The form of lease to be utilized by the Developer in renting any units in the
Project to any person who is intended to be a Qualifying Tenant will provide for termination of the
lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant
as a result of any material misrepresentation made by the person with respect to the Eligibility
Certification.
(d) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the City on or before January 31 of each year, a certificate
substantially in the form of EXHIBIT C hereto, executed by the Developer, (a) identifying the
tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project,
including the percentage of the dwelling units of the Project which were occupied by Qualifying
Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times during the
year preceding the date of the certificate; (b) describing all transfers or other changes in ownership
of the Project or any interest therein; and (c) stating, that to the best knowledge of the person
executing the certificate after due inquiry, all the units were rented or available for rental on a
continuous basis during the year to members of the general public and that the Developer was not
otherwise in default under this Declaration during the year.
(e) Notice of Non -Compliance. The Developer will immediately notify the City if at
any time during the term of this Declaration fewer than 20% (approximately 8) of the dwelling units
in the Project are occupied or available for occupancy as required by the terms of this Declaration.
4. Transfer Restrictions. The Developer covenants and agrees that the Developer will
cause or require as a condition precedent to any conveyance, transfer, assignment, or any other
disposition of the Project prior to the termination of the Occupancy Restrictions provided herein (the
"Transfer") that the transferee of the Project pursuant to the Transfer assume in writing, in a form
acceptable to the City, all duties and obligations of the Developer under this Declaration, including
this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the
Rental Restrictions and Occupancy Restrictions provided herein (the "Assumption Agreement").
The Developer will deliver the Assumption Agreement to the City prior to the Transfer.
Enforcement.
(a) The Developer will permit, during normal business hours and upon reasonable
notice, any duly authorized representative of the City to inspect any books and records of the
Developer regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Developer will submit any other information, documents or certifications
requested by the City which the City deems reasonably necessary to substantial the Developer's
continuing compliance with the provisions specified in this Declaration.
(c) The Developer acknowledges that the primary purpose for requiring compliance by
the Developer with the restrictions provided in this Declaration is to ensure compliance of the
property with the housing affordability covenants set forth in Section 3.3 of the Contract, and by
reason thereof, the Developer, in consideration for assistance provided by the City under the
Contract that makes possible the construction of the Project (as defined in the Contract) on the
Property, hereby agrees and consents that the City will be entitled, for any breach of the provisions
of this Declaration, and in addition to all other remedies provided by law or in equity, to enforce
specific performance by the Developer of its obligations under this Declaration in a state court of
competent jurisdiction. The Developer hereby further specifically acknowledges that the City
cannot be adequately compensated by monetary damages in the event of any default hereunder.
(d) The Developer understands and acknowledges that, in addition to any remedy set
forth herein for failure to comply with the restrictions set forth in this Declaration, the City may
exercise any remedy available to it under Article N of the Contract.
6. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless, the City from and against all liabilities, losses, damages, costs, expenses (including
attorneys' fees and expenses), causes of action, suits, allegations, claims, demands, and judgments
of any nature arising from the consequences of a legal or administrative proceeding or action
brought against them, or any of them, on account of any failure by the Developer to comply with the
terms of this Declaration, or on account of any representation or warranty of the Developer
contained herein being untrue.
7. Agent of the City. The City will have the right to appoint an agent to carry out any
of its duties and obligations hereunder, and will inform the Developer of any agency appointment
by written notice.
8. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
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9. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
designate in writing. The Developer and the City may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the City: City of Elk River, Minnesota
13065 Orono Parkway
Elk River, Minnesota 55330
Attn: City Administrator
To the Developer: Jackson Hills Residential Suites, LLC
633 Upland Ave NW
Elk River, Minnesota 55330
Attn: Client Relations
10. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
11. Attorneys' Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the
Developer agrees to pay the reasonable attorneys' fees and other reasonable expenses paid or
incurred by the City in connection with the action.
12. Declaration Binding. This Declaration and the covenants contained herein will run
with the real property comprising the Project and will bind the Developer and its successors and
assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to
the City and its successors and assigns until the Termination Date of this Declaration as provided in
Section 1(b) hereof.
IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
JACKSON HILLS RESIDENTIAL SUITES, LLC
--
STATE OF MINNESOTA )
) SS.
COUNTY OF �P&bcxn2 )
The foregoing instrument was acknowledged before me this 3 , 2018, by
_P - the Chieie & "'— of , the general partner of
Jackson Hills R sidential Suites, LLC, a Minnesota limited liability company, on behalf of the
company.
ALYSSA MARIE JOHNSON
NOTARY PUBLIC Not ub 1
MINNESOTA
My Canmie M Expires 01131r=
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
F-6
5193948 JSB EL185-49
This Declaration is acknowledged and consented to by:
CITY OF ELK RIVER, MINNESOTA
By
Its
LM
Its City Clerk
STATE OF MINNESOTA )
) SS.
COUNTY OF SHERBURNE )
mc
The foregoing instrument was acknowledged before me this=� °20 8 by
J06 ri ,� Ne f 'F-- , the Mayor of the City of Elk River, Minnesota, a municipal
corporation and political subdivision organized and existing under the Constitution and laws of
the State of Minnesota, on behalf of the City.
9 :NOTARY
NNIFER OLA GREEN
PUBLIC - MINNESOTAommission Expires Jan. 31, 2020, public
STATE OF MINNESOTA
SS.
COUNTY OF SHERBURNE)
The foregoing .nstrument was acknowledged before me this � � ��; 0� 18, by
7rojaa wa4d' , the City Clerk of the City of Elk River, Minnesota, a municipal
corporation and political subdivision organized and existing under the Constitution and laws of
the State of Minnesota, on behalf of the City.
JENNIFER OLA GREEN/4
NOTARY PUBLIC - MINNESOTA otary Public
My Commission Expires Jan. 31, 2020
F-7
5193940 JSB ELI85-49
EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS
Legal Description
PARCEL ID #75-134-2303
SEC34, T33N, R26W
PARCEL D-S. THAT PT OF THE FOLLOWING DESC PARCEL D LYING S OF WLY
EXTENSION OF CTRLINE OF 6TH ST (FORMERLY PLATTED AS 8TH ST) AS
DEDICATED IN THE PLAT OF BURRELL'S ADDITION. SUBJ TO EASEMENTS OF
RECORDYARCEL D:THAT PT OF SW 1-4 OF NW 1-4 DESC AS COMM AT THE POINT
OF INTERSECTION OF CTRLINE OF JACKSON AVE (FORMERLY KNOW AS STATE
TRUNK HWY NO.201 & "OLD HWY NO.169" WITH S LINE OF SAID SW 1-4 OF NW 1-
4;THENCE W ALONG SAID S LINE FOR 200.00 FT;THENCE N PARA WITH SAID
CTRLINE FOR 285.70 FT TO POINT TO BE HEREAFTER KNOWN AS POINT "A" FOR
THE PURP OF THIS DESQTHENCE E WITH SAID S LINE OF SW 1-4 OF NW 1-4 FOR
150.00 FT TO INTERSECT WITH W LINE OF R-O-W OF SAID JACKSON AVE BEING A
LINE 50.00 FT, AS MEASURED AT RT ANGLES, W OF & PARA WITH SAID CTRLINE
SAID POINT OF INTERSECTION ALSO BEING THE ACTUAL POB OF THE LAND TO
BE HEREBY DESC; THENCE RETURN W PARA WITH SAID S LINE OF SW 1-4 OF NW
1-4 FOR 150.00FT TO SAID POINT "A"; THENCE N PARA WITH SAID CTRLINE FOR
14.30 FT MORE OR LESS TO INTERSECT THE N LINE OF S 300.00 FT, AS MEASURED
AT RT ANGLES, OF SAID SW 1-4 OF NW 1-4;THENCE W ALONG SAID N LINE OF S
300.00 FT FOR 200.01 FT MORE OR LESS TO INTERSECT A LINE 400.00 FT W OF, AS
MEASURED AT RT ANGLES TO, SAID CTRLINE OF JASKSON AVE; THENCE N PARA
WITH SAID CTRLINE FOR 1039.77 FT MORE OF LESS TO INTERSECT N LINE OF SAID
SW 1-4 OF NW 1-4;THENCE E ALONG SAID N LINE FOR 350.03 FT MORE OR LESS TO
INTERSECT SAID W LINE OF THE R-O-W OF JACKSON AVE;THENCE S ALONG SAID
W LINE OF THE R-O-W FOR 1056.71 FT MORE OR LESS TO POB.
5193948 JSB EL185-49
EXHIBIT B TO DECLARATION OF RESTRICTIVE COVENANTS
Certification of Tenant Eligibility
(INCOME COMPUTATION AND CERTIFICATION)
Project: [Address]
Owner:
Unit Type: 1 BR
2 BR 3 BR
1. I/We, the undersigned, being first duly sworn, state that Uwe have read and
answered fully, frankly and personally each of the following questions for all persons (including
minors) who are to occupy the unit in the above apartment development for which application is
made, all of whom are listed below:
Name of Relationship
Members of the To Head of Place of
Household Household Age Employment
Income Computation
2. The anticipated income of all the above persons during the 12-month period
beginning this date,
(a) including all wages and salaries, overtime pay, commissions, fees, tips and
bonuses before payroll deductions; net income from the operation of a business or
profession or from the rental of real or personal property (without deducting expenditures
for business expansion or amortization of capital indebtedness); interest and dividends; the
full amount of periodic payments received from social security, annuities, insurance
policies, retirement funds, pensions, disability or death benefits and other similar types of
periodic receipts; payments in lieu of earnings, such as unemployment and disability
compensation, worker's compensation and severance pay; the maximum amount of public
assistance available to the above persons; periodic and determinable allowances, such as
alimony and child support payments and regular contributions and gifts received from
persons not residing in the dwelling; and all regular pay, special pay and allowances of a
member of the Armed Forces (whether or not living in the dwelling) who is the head of the
household or spouse; but
(b) excluding casual, sporadic or irregular gifts; amounts which are specifically
for or in reimbursement of medical expenses; lump sum additions to family assets, such as
inheritances, insurance payments (including payments under health and accident insurance
and workmen's compensation), capital gains and settlement for personal or property losses;
amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of
tuition, fees, books and equipment, but in either case only to the extent used for these types
of purposes; special pay to a serviceman head of a family who is away from home and
exposed to hostile fire; relocation payments under Title II of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970; foster child care payments;
the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of
1964 which is in excess of the amount actually charged for the allotments; and payments
received pursuant to participation in ACTION volunteer programs, is as follows:
3. If any of the persons described above (or whose income or contributions was
included in item 2) has any savings, bonds, equity in real property or other form of capital
investment, provide:
(a) the total value of all such assets owned by all such persons: $ ;
(b) the amount of income expected to be derived from such assets in the 12
month period commencing this date: $ ; and
(c) the amount of such income which is included in income listed in item 2:
F,
4. (a) Will all of the persons listed in item 1 above be or have they been full-time
students during five calendar months of this calendar year at an educational institution (other
than a correspondence school) with regular faculty and students?
Yes No
(b) Is any such person (other than nonresident aliens) married and eligible to file
a joint federal income tax return?
Yes No
THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH
ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE
LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE
CANCELLED UPON 10 DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION
ABOVE IS NOT TRUE AND CORRECT.
Head of Household
Spouse
FOR COMPLETION BY OWNER
(OR ITS MANAGER) ONLY
1. Calculation of Eligible Tenant Income:
(a) Enter amount entered for entire household in 2 above: $
(b) If the amount entered in 3(a) above is greater than $5,000, enter the greater
of (i) the amount entered in 3(b) less the amount entered in 3(c) or (ii) 10% of the amount
entered in 3(a): $
(c) TOTAL ELIGIBLE INCOME (Line 1(a) plus Line 1(b)): $.
2. The amount entered in 1(c) is less than or equal to 50% of median income for the
area in which the Project is located, as defined in the Declaration. 50% is necessary for status as a
"Qualifying Tenant" under Section 3(a) of the Declaration.
3. Number of apartment unit assigned:
4. This apartment unit was was not last occupied for a period of at least
31 consecutive days by persons whose aggregate anticipated annual income as certified in the above
manner upon their initial occupancy of the apartment unit was less than or equal to 50% of Median
Income in the area.
5. Check as applicable: Applicant qualifies as a Qualifying Tenant (tenants of
at least _ units must meet), or Applicant otherwise qualifies to rent a unit.
THE UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE HAS NO KNOWLEDGE OF
ANY FACTS WHICH WOULD CAUSE HIM/HER TO BELIEVE THAT ANY OF THE
INFORMATION PROVIDED BY THE TENANT MAY BE UNTRUE OR INCORRECT.
JACKSON HILLS RESIDENTIAL SUITES,
LLC
By:
Its:
EXHIBIT C TO DECLARATION OF RESTRICTIVE COVENANTS
Certificate of
Continuing Program Compliance
Date:
The following information with respect to the Project located at , Elk
River, Minnesota (the "Project"), is being provided by Jackson Hills Residential Suites, LLC (the
"Owner") to the City of Elk River, Minnesota (the "City"), pursuant to that certain Declaration of
Restrictive Covenants, dated , 2018 (the "Declaration"), with respect to the
Project:
(A) The total number of residential units which are available for occupancy is 60.
The total number of these units occupied is
(B) The following residential units (identified by unit number) are currently
occupied by "Qualifying Tenants," as the term is defined in the Declaration (for a total of
units):
1 BR Units:
2 BR Units:
3 BR Units:
(C) The following residential units which are included in (B) above, have been
re -designated as units for Qualifying Tenants since , 20___, the date on
which the last "Certificate of Continuing Program Compliance" was filed with the Authority
by the Owner:
Unit Previous Designation Replacing
Number of Unit (if any) Unit Number
C-1
(D) The following residential units are considered to be occupied by Qualifying
Tenants based on the information set forth below:
Unit
Number
Name of Tenant
Number of
Persons
Residing in
the Unit
Number of
Bedrooms
Total Adjusted
Gross Income
Date of Initial
Occupancy
Rent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(E) The Owner has obtained a "Certification of Tenant Eligibility," in the form
provided as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent "Certification of Tenant Eligibility" for each Tenant
named in (D) above who signed such a Certification since , 20_, the date
on which the last "Certificate of Continuing Program Compliance" was filed with the
Authority by the Owner.
C-2
M
M
(F) In renting the residential units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants); and none of the units listed in (D) above have been rented for
occupancy entirely by students, no one of which is entitled to file a joint return for federal
income tax purposes. All of the residential units in the Project have been rented pursuant to
a written lease, and the term of each lease is at least twelve (12) months.
(G) The information provided in this "Certificate of Continuing Program
Compliance" is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
"Certification of Tenant Eligibility" obtained from the Tenants named herein, is inaccurate
or incomplete in any respect.
(H) The Project is in continuing compliance with the Declaration.
(1) The Owner certifies that as of the date hereof _% of the residential
dwelling units in the Project are occupied or held open for occupancy by Qualifying
Tenants, as defined and provided in the Declaration.
Q) The rental levels for each Qualifying Tenant comply with the maximum
permitted under the Declaration.
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner,
on , 2018.
527718v1JSB EL185-49
JACKSON HILLS RESIDENTIAL SUITES, LLC
By:
Its:
C-3
ACKNOWLEDGMENT AND RECEIPT FOR NOTE
2020
The undersigned, GCRE — Jackson Hills, LLC, a Delaware limited liability company
("Note Holder"), hereby certifies and acknowledges that:
A. On the date hereof the Note Holder has acquired the Taxable Tax Increment
Revenue Note (Jackson Hills Residential Suites, LLC Project), a pay-as-you-go tax increment
revenue note in the original principal amount of $463,297 dated , 2020, of the City of
Elk River, Minnesota (the "City"), a copy of which is attached hereto ("Note").
B. The Note Holder has had the opportunity to ask questions of and receive from the
Jackson Hills Residential Suites, LLC, a Minnesota limited liability company (the "Developer")
all information and documents concerning the Note as it requested, and has had access to any
additional information the Note Holder thought necessary to verify the accuracy of the information
received. In determining to acquire the Note, the Note Holder has made its own determinations
and has not relied on the City or information provided by the City.
C. The Note Holder represents and warrants that:
1. The Note Holder is acquiring the Note for investment and for its own
account, and without any view to resale or other distribution.
2. The Note Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of acquiring the Note.
3. The Note Holder understands that the Note is a security which has not been
registered under the Securities Act of 1933, as amended, or any state securities law, and
must be held until its sale is registered or an exemption from registration becomes
available.
4. The Note Holder is aware of the limited payment source for the Note and
interest thereon and risks associated with the sufficiency of that limited payment source.
5. The Note Holder is the owner of the property from which the tax increments
which are pledged to the Note are generated.
D. The Note Holder understands that the Note is payable solely from certain tax
increments derived from certain properties located in a tax increment financing district, if and as
received by the City. The Note Holder acknowledges that the City has made no representation or
covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to pay,
in whole or in part, the principal and interest due on the Note. Any amounts which have not been
paid on the Note on or before the final maturity date of the Note shall no longer be payable, as if
1
the Note had ceased to be an obligation of the City. The Note Holder understands that the Note
will never represent or constitute a general obligation, debt or bonded indebtedness of the City,
the State of Minnesota, or any political subdivision thereof and that no right will exist to have taxes
levied by the City, the State of Minnesota or any political subdivision thereof for the payment of
principal and interest on the Note.
E. The Note Holder understands that the Note is payable solely from certain tax
increments, which are taxes received on improvements made to certain property (the "Project") in
a tax increment financing district from the increased taxable value of the property over its base
value at the time that the tax increment financing district was created, which base value is called
"original net tax capacity". There are risk factors in relying on tax increments to be received,
which include, but are not limited to, the following:
1. Value of Project. If the contemplated Project constructed in the tax
increment financing district are completed at a lesser level of value than originally
contemplated, they will generate fewer taxes and fewer tax increments than originally
contemplated.
2. Damage or Destruction. If the Project is damaged or destroyed after
completion, their value will be reduced, and taxes and tax increments will be reduced.
Repair, restoration or replacement of the Project may not occur, may occur after only a
substantial time delay, or may involve property with a lower value than the Project, all of
which would reduce taxes and tax increments.
3. Change in Use to Tax -Exempt. The Project could be acquired by a party
that devotes them to a use which causes the property to be exempt from real property
taxation. Taxes and tax increments would then cease.
4. Depreciation. The Project could decline in value due to changes in the
market for such property or due to the decline in the physical condition of the property.
Lower market valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes,
either in whole or in part, the lack of taxes received will cause a lack of tax increments.
The Minnesota system of collecting delinquent property taxes is a lengthy one that could
result in substantial delays in the receipt of taxes and tax increments, and there is no
assurance that the full amount of delinquent taxes would be collected. Amounts distributed
to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax
increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to decreased
municipal levies, taxes and tax increments will be reduced. Reasons for such reduction
could include lower local expenditures or changes in state aids to municipalities. For
instance, in 2001 the Minnesota Legislature enacted an education funding reform that
involved the state increasing school aid in lieu of the local general education levy (a
component of school district tax levies).
W
7. Reductions in Tax Capacity Rates. The taxable value of real property is
determined by multiplying the market value of the property by a tax capacity rate. Tax
capacity rates vary by certain categories of property; for example, the tax capacity rates for
residential homesteads are currently less than the tax capacity rates for commercial and
industrial property. In 2001 the Minnesota Legislature enacted property tax reform that
lowered various tax capacity rates to "compress" the difference between the tax capacity
rates applicable to residential homestead properties and commercial and industrial
properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax
increment financing district is the lower of the current local tax rate or the original local
tax rate for the tax increment financing district. In the event that the Current Local Tax
Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes
about after applying the lower Original Local Tax Rate instead of the Current Local Tax
Rate is considered "excess" tax increment and is distributed by Sherburne County to the
other taxing jurisdictions and such amount is not available to the City as tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws
affecting real property taxes, particularly as they relate to tax capacity rates and the overall
level of taxes as affected by state aid to municipalities.
10. Affordable Housing Declaration. The TIF District will cease to qualify as
a housing tax increment financing district and the TIF Note will terminate if the Project
ceases to be operated in accordance with the Declaration required by and defined in the
Development Agreement defined below.
F. The Note Holder acknowledges that the Note was issued as part of a TIF
Development Assistance Agreement between the City and the Developer dated June 4, 2018
("Development Agreement"), and that the City has the right to suspend payments under this Note
and/or terminate the Note upon an Event of Default under the Development Agreement.
G. The Note Holder acknowledges that the City makes no representation about the tax
treatment of, or tax consequences from, the Note Holder's acquisition of the Note.
Dated as of the date first written above..
Note Holder:
GCRE — JACKSON HILLS, LL
By:
1 41e�-
Its:
3