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5.1. SR 10-17-2005 Item # 5.1. MEMORANDUM TO: Mayor and City Council FROM: Scott Clark, Community Development Director DATE: October 17,2005 SUBJECT: Draft MetroPlains Agreement Attached is a revised draft agreement between the City of Elk River and MetroPlains, some modifications may be made and will be presented to the Council at the October 17th meeting. S:\PLANNING\Case Files\2004\P 04-20 Bluff Block\lO 17 05 cc memo agmt.doc MEMORANDUM TO: Mayor and City Council Housing and Redevelopment Authority ~ Scott Clark, Community Development Director~ FROM: DATE: October 17, 2005 SUBJECT: MetroPlains Agreement Revisions Action for Consideration The City Council is being asked to consider modifications to the Development Agreement by and between the City of Elk River and Metro Plains Development, LLC. The Housing and Redevelopment Authority will be reviewing this agreement at a special 5:30 p.m. meeting prior to the Council meeting and will be in attendance to give their advisory recommendation. In addition, attached to this memorandum is a generalized concept diagram illustrating the general principles as to how the tax increment streams are being separated and what they are reimbursing relevant to redevelopment costs. Backaround Before detailing what changes are being made to the development agreement, it is important to note that the over riding principles of the terms to date are not being amended. All of the following agreement principles remain: When the projects are built, a "permanent" value will be established that all future tax levies will be measured against, with 95 percent of this pool of increment will be used by the developer to pay specific obligations. All project value that is a result of inflation or appreciation (or put another way, an increase to the "permanent value) will be retained by the City to pay for specific obligations. The Agreement maintains assurances must be in place that the Bluffs of Elk River will be constructed first and that the Jackson Place would not be able to be constructed without the former mentioned project being in place. MetroPlains Agreement Revisions October 17, 2005 Page 2 Look back provisions which limit the internal rate of returns on the projects remain in place. Development Aareement Modifications In order for the tax increment placing agent to make the tax increment note more marketable they have asked for the following two considerations: Collapsing the Parking Lot Note into the Development Cost Note. The original agreement had the developer's total 95% distribution being divided with 89% going to the Development Cost Note and 6% going to the Parking Lot Note. Having one note does not give the developer any additional increment but makes it simpler in marketing and financing (see pages 28, 35, 36 and 37). Placing an Assessment Agreement on the Bluff residential property that will last until the earlier date of December 31, 2010 or the date of issuance of any Refunding Bond. The same concept is proposed for the Jackson Place residential and the commercial space for both Jackson Place and Bluff but with a termination date of December 31, 2015. This provides a "floor" of value for the refunding and establishment of a minimum value (see pages 10,38-40 and Exhibit P). Attached is MSA 469.177 Subd. 8 which gives the City the authority to enter into an Assessment Agreement. The agreement also is changed as follows: Establishes the sale price for Jackson Square at $130,000 ($5.63 per square foot). The value was established pursuant to the past agreement provision of a third party appraisal, which was conducted through the Minnesota Housing Finance Agency (MHF A) (see page 18, Section 3.4). Allowance that a commitment letter from the MHF A and closing on interim financing is sufficient (in addition to the Agreement's other contingencies) to close on Jackson Place (see page 20/21). Additional language bolstering the requirement that the Bluff Block Development can be commenced or completed without the construction of Jackson Place (see page 25). After issuance of a refunding bond, the developer is allowed to collect an amount over the principle and interest of the bond, up to the allowable 95% and can not exceed the $3.3 million development cost outlined in Section 5.2. This amount will be memorialized in a "B" note. The reality is that after the refunding bond is sized the principle will be significantly less than the $3.3 million and any residual value will be negligible. The developer securing increment over the refunding bond principle amount still meets the intent of the original agreement, as the guiding principle was to have 95% of the "non- inflationary" increment being distributed for eligible development costs (see page 34 and 35). S: \PLANNING \Scott Clark \2005 CC memos \ 10-17-05 Metro Plains Agreement.doc MetroPlains Agreement Revisions October 17, 2005 Page 3 Staff is also working on some default language issues that will be presented at the meeting. Recommendation Staff recommends approval of the changes as presented. NOTE: Some language changes are anticipated to this draft and will be distributed at the meeting. S: \PLANNING \Scott Clark \2005 CC memos \ 10-17-05 Metro Plains Agreement.doc Tax Increment Distribution "Non-Inflationary" Distribution - 95% Payment of Development Cost (Section 5.2.) to developer - 5% City Administration "Asset/Inflationary" Distribution 100% to City . Payment of SAC/WAC . Land Note Payment . Residual Increment for Pooling S: \PLANNING\Scott Clark\200S HRA memos \ Tax Increment Distribution.doc Minnesota Statutes Display Document 2 of 6 Page 1 of2 Minnesota Statutes 2004 Display Document 2 of 6 Section: 469.177 continued... The county auditor shall increase the original net tax capacity of the district by the net tax capacity of each improvement for which a building permit was issued. Subd. 5. Tax increment account. The tax increment received with respect to any district shall be segregated by the authority in a special account or accounts on its official books and records or as otherwise established by resolution of the authority to be held by a trustee or trustees for the benefit of holders of the bonds. Subd. 6. Request for certification of new tax increment financing district. A request for certification of a new tax increment financing district pursuant to subdivision 1 or of a modification to an existing tax increment financing district pursuant to section 469.175, subdivision 4, received by the county auditor on or before June 30 of the calendar year shall be recognized by the county auditor in determining local tax rates for the current and subsequent levy years. Requests received by the county auditor after June 30 of the calendar year shall not be recognized by the county auditor in determining local tax rates for the current levy year but shall be recognized by the county auditor in determining local tax rates for subsequent levy years. Subd. 7. Property classification changes. When any law governing the classification of real property and determining the percentage of market value to be assessed for ad valorem taxation purposes is amended, the increase or decrease in net tax capacity resulting therefrom shall be applied proportionately to original net tax capacity and captured net tax capacity of any tax increment financing district in each year thereafter. This subdivision applies to tax increment districts created pursuant to sections 469.174 to 469.178 or any prior increment law. http://ww2.revisor.leg.state.mn.us: 8181/SEARCHIBASIS/mnstat/public/www/DDW?W... 10/14/2005 Subd. 8. A sessment. .agreements.. An authority may enter lnto a written .assessmen~ .agreemen~ with any person establishing a minimum market value of land, existing improvements, or improvements to be constructed in a district, if the property is owned or will be owned by the person. The minimum market value established by an .assessmen~ .agreemen~ may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July 1 of an assessment year, the market value as Minnesota Statutes Display Document 2 of 6 Page 1 of2 Minnesota Statutes 2004 Display Document 2 of 6 Section: 469.177 continued... The assessor shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the Bassessment. Bagreementli appears, in the judgment of the assessor, to be a reasonable estimate, shall execute the following certification upon the agreement: The undersigned assessor, being legally responsible for the assessment of the above described property, certifies that the market values assigned to the land and improvements are reasonable. The Bassessmentli Bagreementli shall be filed for record and recorded in the office of the county recorder or the registrar of titles of each county where the real estate or any part thereof is situated. After the agreement becomes effective for assessment purposes, the assessor shall value the property under section 273.11, except that the market value assigned shall not be less than the minimum market value established by the Bassessmentli Bagreementli. The assessor may assign a market value to the property in excess of the minimum market value established by the Bassessmentli Bagreementli. The owner of the property may seek, through the exercise of administrative and legal remedies, a reduction in market value for property tax purposes, but no city assessor, county assessor, county auditor, board of review, board of equalization, commissioner of revenue, or court of this state shall grant a reduction of the market value below the minimum market value established by the Bassessmentli Bagreement. during the term of the agreement filed of record regardless of actual market values which may result from incomplete construction of improvements, destruction, or diminution by any cause, insured or uninsured, except in the case of acquisition or reacquisition of the property by a public entity. Recording an Bassessmentli Bagreementli constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the Bassessmentli Bagreementli, and the agreement is binding upon them. http://WW2.revisor.leg.state.mn.us:8181/SEARCH/BASIS/mnstat/public/wwwIDDW?W. " 10/14/2005 An Bassessmentli Bagreementli may be modified or terminated by mutual consent of the current parties to the agreement. Modification or termination of an Bassessmentli Bagreementli must be approved by the governing body of the municipality. If the estimated market value for the property for the most recently Minnesota Statutes Display Document 2 of 6 Page 2 of2 available assessment is less than the minimum market value established by the massessmencll magreemencll for that or any later year and if bond counsel does not conclude that termination of the agreement is necessary to preserve the tax exempt status of outstanding bonds or refunding bonds to be issued, the modification or termination of the massessmencll magreemencll also must be approved by the governing bodies of the county and the school district. A document modifying or terminating an agreement, including records of the municipality, county, and school district approval, must be filed for record. The assessor's review and certification is not required if the document terminates an agreement. A change to an agreement not fully executed before July 1 of an assessment year is not effective for assessment purposes for that assessment year. If an massessmencll magreemencll has been modified or prematurely terminated, a person may seek a reduction in market value or tax through the exercise of any administrative or legal remedy. The remedy may not provide for reduction of the market value below the minimum provided under a modified massessmencll magreement that remains in effect. In no event may a reduction be sought for a year other than the current taxes payable year. Subd. 9. Distributions of excess taxes on ca tured net tax capacity. (a) If the amount of tax paid on aptured net tax capacity exceeds the amount of tax incre nt, the county auditor shall distribute the excess to the nicipality, county, and school district as follows: each gov nmental unit's share of the excess equals (1) the total amount of the financing district, multiplied by (2) a fraction, the numerator f which is the current local tax rate of the governmental un' less the governmental unit's local tax rate for the year th original local tax rate for the district was certified (in n case may this amount be less than zero) and the denominator 0 which is the sum of the numerators for the municipality, coun y, and school district. If the entire increase ' local tax rate is attributable to a taxing district, oth r than the municipality, county, or school district, the the excess must be distributed to the municipality, count , and school district in proportion to their respective local t x rates. distributed shall be deducted in computing the taxing district for the succeeding (b) The amou the levy limit taxable year. http://ww2.revisor.leg.state.mn.us: 8181/SEARCH/BASIS/mnstat/public/www/DDW?W... 10/14/2005 .. .More . 1824344vRED V2 to VI; 10/12/05 AMENDED AND RESTATED DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF ELK RIVER, MINNESOTA AND METROPLAINS DEVELOPMENT, LLC Deeember fi, 2004 . 2005 TABLE OF CONTENTS Pa2e 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 Section 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 Issuance of Tax Increment Revenue Note .........................................27 Reduction of Assistance...... ........ ............. ..... ............ ............. ............ 29 Review of Taxes .... .... ........ .... ....... ........ ... ...... ......... .... ... ... .............. ... 30 Use of Tax Increments ..... ........;... ..... ......... ......... ... ...... ..... ................. 31 Business Subsidy Act...... ............. ............. ...... ...... ..... ............. ........... 31 Developer Payments and Reimbursement ......................................... 32 Issuance of Tax Increment Revenue Refunding Bonds..................... 33 Issuance of Parking Lot Note................ ............... ............. ....... .......... 33 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 ARTICLE VI ENCUMBRANCE OF THE DEVELOPMENT PROPERTy.................. %3..5 Section 6.1 Encumbrance of the Development Property.................................. %3..5 Section 6.2 Copy of Notice of Default to Mortgagee ....................................... %3..5 Section 6.3 Mortgagee's Option to Cure Events of Default.............................. %3..5 Section 6.4 Defaults Under Mortgage .............................................................. %3..5 Section 6.5 Subordination of Agreement.......................................................... %3..5 I824344vRED V2 to VI; 10/12/05 1 TABLE OF CONTENTS Pa2;e Section 6.6 Execution of Assessment A!!reements ............................................ 35 ARTICLE VII DEVELOPER COVENANTS ................................................................... ~3.8 Section 7.1 Insurance........................................................................................ ~3.8 Section 7.2 Maintenance and Operation ofthe Development .......................... ~3.8 ARTICLE VIII TRANSFER LIMITATIONS AND INDEMNIFICATION ...................... :3-812 Section 8.1 Representation as to Development................................................. :3-812 Section 8.2 Limitations on Transfer.... .................... ...... .................. .......... ........ :3-812 Section 8.3 Indemnification... ........ ........... ......... ............. .................. ...... .......... :394......0. Section 8.4 Limitation............ ..... ...... ...... ........ ..... ..... ...... ................ .... .............. 4+42 ARTICLE IX EVENTS OF DEFAULT AND DAMAGES ............................................~~ Section 9.1 Events of Default Defined........,.................................................... ~~ Section 9.2 Developer Events of Default.......................................................... ~~ Section 9.3 City Events of Default ................................................................... 4.3-.44 Section 9.4 City Remedies on Default.............................................................. 1344 Section 9.5 Developer Remedies on Default .................................................... 44~ Section 9.6 No Remedy Exclusive....................................................................11~ Section 9.7 No Additional Waiver Implied by One Waiver ............................. 44~ ARTICLE X ADDITIONAL PROVISIONS .................................................................. #46 Section 10.1 Conflicts of Interest........................................................................ #46 Section 10.2 Titles of Articles and Sections ....................................................... #46 Section 10.3 Notices and Demands .................................................................... #46 Section 10.4 Counterparts.. ................ ........ .... ....... ..... ........ ....... ........ ...... ............ #46 Section 10.5 Law Governing .............................................................................. #46 Section 10.6 Consents and Approvals ................................................................ 4647 Section 10.7 Representatives. ...................... ......... ............. ............... ....... ...... ..... 4647 Section 10.8 Superseding Effect... ..... ............................................... .................. 46.41 Section 10.9 Relationship of Parties ....... ............................... ........................ ..... 4647 Section 10.10 Term .................... ............. .... .................. ........... ............ ............ ..... 46.41 Section 10.11 Venue............................................................................................. 4647 Section 10.12 Provisions Surviving Rescission or Expiration.............................. 46.41 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 TAX INCREMENT REVENUE NOTE ................................... E-l EXHIBIT F FORM OF P/\RKING LOT NOTE....................................................F lEXHIBIT G ELIGIBLE ( EXHIBIT H-.G.. CONSTRUCTION SCHEDULE... .............. ........ ........... ............... .... ............ HG-l 1824344vRED V2 to VI; 10/12/05 11 TABLE OF CONTENTS Pae:e EXHIBIT I-H ESTIMATED SOURCES AND USES STATEMENT ................................... !H-1 - - EXHIBIT J-LUPDATED SOURCES AND USES STATEMENT...........................................JI-1 EXHIBIT :K-slFINAL SOURCES AND USES STATEMENT.................................................J:.l EXHIBIT K FO RM OF PRO FIT ST A TEMENT ........................................................ K-1 EXHIBIT L FORM OF FINAL PROFIT STATEMENT......................................................... L-1 EXHIBIT M FINAL PROFIT ST.^~ TEMENT FORM OF CASH FLOW STATEMENTS .. ......... '" ...... ..... ..... ............ ....... ..................... ................... M-1 EXHIBIT N FORM OF FINAL CASH FLOW STATEMENTS.............................................N-1 EXHIBIT 0 FIN,,\L C'\SH FLO\V STATEMENTS.............................................O 1 EXHIBIT P OWNER UI EXHIBIT P BLUFF BLOCK ASSESSMENT AGREEMENT .................................. P-l EXHIBIT 0 .JACKSON BLOCK ASSESSMENT AGREEMENT ............................0-1 I824344vRED V2 to VI; 10/12/05 III DEVELOPMENT AGREEMENT THIS AMENDED AND RESTATED DEVELOPMENT AGREEMENT is made and entered into this 6th day of December, 2001, .2005. 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 DEVELOPMENT, 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 units of rental housing and approximately 13,000 square feet of retail space, together with related parking facilities, (the "Jackson Block Development") on the portion of the Development Property legally described in Exhibit B hereto (the "Jackson Block Property") (the .::~Bluff Block Development:Z~ and the .::~Jackson Block Development:Z~ being collectively referred to herein as the .::~Minimum Improvements:Z~); WHEREAS, under Minnesota Statutes, Sections 469.174 through 469.1799, as amended (the "TIF Act"), the City is authorized to finance certain public redevelopment costs of a municipal development district with tax increment revenues derived from a tax increment financing district established within such redevelopment project; WHEREAS, the City has heretofore adopted a tax increment financing plan and created and established the Downtown Phase I Tax Increment Financing District No. 22 as a redevelopment tax increment district pursuant to the TIF Act (the "Tax Increment District"); WHEREAS, the City and the Develooer have heretofore entered into a Develooment Af!reement dated December 6. 2004. as amended bv the First Amendment to Develooment Af!reement. dated Mav . 2005 (the "Prior Af!reement"): WHEREAS. in order to modify certain terms of the Prior Af!reement and to further describe the manner in which the City's financial assistance will be made available to the 1824344vRED V2 to VI; 10/12/05 Develoner. the City and Develoner have a!!reed to enter into this A!!reement to amend and restate the Prior A!!reement in its entirety. WHEREAS. the City has agreed, on the terms and conditions set forth in this Agreement to issue its Tax Increment Revenue Note (as hereinafter defined) to reimburse the Developer for certain Eligible Costs (as herein defined) of the Minimum Improvements and--te issue its Parking Lot Note (as herein defined) to reimburse the Developer for the cost of constructing the Parking Lot (as herein defined); WHEREAS, the 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 ofthe parties hereto, each of them does hereby covenant and agree with the other as follows: I 824344vRED V2 to VI; 10/12/05 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: '~cquisition 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 otherwise, and the terms "controlling" and "controlled" have correlative meanings. "Agreement" means this Amended and Restated Development Agreement as the same may be from time to time modified, amended or supplemented. "Allowable Profit" means the Profit of the Developer in an amount equal to 10% 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. "Assessment A!!reements" means the Bluff Block Assessment AQ:reement and the Jackson Block Assessment AQ:reement. "Available Tax 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 Assessment A!!reement" means the aQ:reement. in the form of the aQ:reement contained in Exhibit P attached hereto and made a Dart of this AQ:reement. between the Develoner and the City and includinQ: the attached certification bv the Assessor for the County. entered into nursuant to Section 6.6 of this AQ:reement: "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. 1824344vRED V2 to VI; 10/12/05 3 "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. "Bluff Block Minimum Market Value" means the al!reed minimum market value of the Develooment Prooertv and the Proiect for calculation of real orooertv taxes as determined bv the assessor for the Countv of not less than $ as of Januarv 2.200 "Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on which banking 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 GN hereto in substantially the form and content as set forth in Exhibit NM 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 Date. "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. 1824344vRED V2 to VI; 10/12/05 4 "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 Construction 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. "Condominium Developer" means Bluff Block, LLC, an affiliate of the Developer, its successors and assigns. "Construction Costs" means 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 Default set forth in Section 9.2 hereof. 1824344vRED V2 to VI; 10/12/05 5 "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. "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 GJI attached hereto. "Event of Default" means any ofthe 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 Market 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 February 1,2032 or on 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 1,2032. "Funding" means the portion of the Construction Loan, cash equity contributed by the Developer, the Tax Increment Revenue Note, any additional assistance provided by any other I 824344vRED V2 to VI; 10/12/05 6 governmental entity and any other sources of funding for the Minimum Improvements as set forth in the Sources and Uses Statement. "Jackson Block Assessment A!!reement" means the a!!reement. in the form of the a!!reement contained in Exhibit 0 attached hereto and made a Dart of this A!!reement. between the DeveloDer and the Citv and includin!! the attached certification bv the Assessor for the Countv. entered into Dursuant to Section 6.6 of this A!!reement: "Jackson Block Minimum Market Value" means the a!!reed minimum market value of the DeveloDment ProDertv and the Proiect for calculation of real DrODertv taxes as det~rmined bv the assessor for the Countv of not less than $ as of .Januarv 2. 200 "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 and the construction of the Jackson Block Housing Project and the Jackson Block Commercial Project. "Jackson 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. "Market 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 finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). "Minimum Impr.ovements" means the Bluff Block Development and the Jackson Block Development. "Owner 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 PO. "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 the Parking Lot Cost vfill not exceed $350,000 unless the City and the Developer have agreed in \witing.is $237.000. 1824344vRED V2 to VI; 10/12/05 7 "PHF/dug Lot }\ll:Jte" 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. "PHF/dug Ll:Jt Pledged TtlX !ncrement" means, as of any Payment Date, 6% of the lesser of the actual.L^..vailable 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 determined by the County .^..ssessor or the County Assessor's Market Value of the 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 and the City. "Payment 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. "Person" means any 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 Tax Increment Revenue Note with a Lender. "Pledged Tax Increment" means, as of any Payment Date, -89.2.5% 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 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. "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 ML hereto in substantially the form and content as set forth in Exhibit -bK hereto, prepared by a firm of certified public accountants reasonably acceptable 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 I 824344vRED V2 to VI; 10/12/05 8 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. S 4601, et. seq., 49 C.F.R. S 24.1 et. seq, and Minnesota Statutes. Chapter 117. "SAC and WAC" means the sewer access charges and water access charges with respect to the Development Property in connection with the Minimum Improvements. "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 the 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 KoJ: hereto in substantially the form and content as set forth in Exhibit IH 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 Improvements and calculate the amount of any Excess Funding. 1824344vRED V2 to VI; 10/12/05 9 "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. "Tax Increment" means that portion of the real property taxes generated by the Development Property and the Minimum Improvements which is actually remitted and retained by the City as tax increment under the TIF 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. "Tax 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. "Tax Increment Plan" means that certain Tax Increment Financing Plan, as amended, for the Tax Increment District approved by the City Council. "Tax Official" means any City or County assessor; County auditor; City, County, or State board of equalization; the Commissioner of Revenue of the State; or any State or Federal district court, the Tax Court of the State, or the State Supreme Court. "Termination Date" means the Termination Date for the Assessment A!!reements which is the earlier of December 31. 2007 or the date of issuance of any Refundin!! Bonds. "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 Development 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)H. I and J: (i) Construction Costs, excluding any costs attributable to Owner Upgrades; (ii) Acquisition Costs; Hm Parkin!! Lot Cost: @ tffit-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); 1824344vRED V2 to VI; 10/12/05 10 (xl fW}Marketing costs, reasonable broker's commissions and marketing 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 taxes 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 yet due and payable, if any, and other soft costs of Sales, excluding any costs attributable to Owner Upgrades; !W fvt-Developer's Overhead Costs and soft costs of operations; ttID fvitConstruction Loan interest; mID ~ Title and Construction Loan closing costs; fix) ~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 Bluff 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; 00 fi*t-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; Ull f*t-Governmental fees, including park dedication, permit, license and utility hook-up charges, SAC and WAC, to the extent not reduced or reimbursed; (6) Taxes 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 delays, 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 1824344vRED V2 to VI; 10/12/05 11 delivery of materials for the Minimum Improvements, (g) soil conditions of the Development Property or (h) acts of war or terrorism, not existing on the date 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. I 824344vRED V2 to VI; 10/12/05 12 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following 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% of the captured net tax capacity of the Development Property to finance 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 City's knowledge is there threatened, any suit, action or proceeding against the City before any court, arbitrator, administrative 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 this Agreement. (f) No member of the City Council of the City or officer of the City, has either a direct or indirect interest in this 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. 1824344vRED V2 to VI; 10/12/05 13 (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 Developer represents and warrants that: (a) The Developer 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 fulfillment 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 documents, 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 Minimum Improvements but for the execution of this Agreement and the tax increment financing assistance made available hereunder. (g) The Developer will fully cooperate with the City with respect to any litigation commenced by third parties with respect to the activities contemplated by this Agreement. 1824344vRED V2 to VI; 10/12/05 14 (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 finance 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 Construction 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 HG 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, Construction Costs, Acquisition Costs, projected Sales prices, Sales Proceeds, Development Costs and other information set forth in the attached Exhibits lB, bK and NM 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 Development 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. I 824344vRED V2 to VI; 10/12/05 15 ARTICLE III 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 Property 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 Developer 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. 1 824344vRED V2 to VI; 10/12/05 16 Section 3.2 As Is Conveyance. 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, contribution, reimbursement or other payments arising under federal and state law and the common law relating to environmental or any other condition of the Jackson 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 documents it has obtained with respect to the Jackson Block Property. Without any investigation or review, the City has no knowledge of 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 Jackson Block Property, and (ii) legible copies of all exceptions to title disclosed in the Title Commitment. The Title Commitment should be dated to be 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 Commitment 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 deemed 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 made. (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 I 824344vRED V2 to VI; 10/12/05 17 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 of 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, title will be deemed accepted subject 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 provisions of this Article III. (d) If the 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 be 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; pro'/ided that if the fair market 'Ialue of the Jackson Block Property130.000 as determined by thean 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 taxes, special assessments and similar governmental impacts due and payable in the year of Closing and all future years. Section 3.5 Acauisition of the Bluff Block Property. (a) As set forth in Section 3.6, the City's obligation to close on the sale ofthe 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 Block Property through the exercise of its powers of eminent domain, including the use of quick take, pursuant to Minnesota law. The Developer agrees to payor 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"); 1824344vRED V2 to VI; 10/12/05 18 (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 financial 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 condemnation proceedings for the final parcel of the Bluff Block Property with the District Court. The Developer acknowledges and agrees that the City will not proceed with the eminent domain proceedings past the point at which the City is permitted 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 final parcel of the Bluff Block Property through eminent domain proceedings, this Agreement shall terminate and the City shall deduct from the Developer's Deposit all out-of-pocket costs and City Acquisition 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 final 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 final 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) If the City is successful in acquiring fee title to the final parcel of the Bluff Block Property, the City shall notify the Developer of the date it has acquired fee title to the final parcel of the Bluff 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 City, the final parcel of the Bluff Block Property. The purchase price for the Bluff Block Property shall be equal to the City Acquisition Costs and 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 I824344vRED V2 to VI; 10/12/05 19 shall occur simultaneously with the Closing on the Jackson Block Property in accordance with the further provisions of this Article III 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 consult with the Developer before entering into any settlement agreement related to the acquisition of the Bluff Block Property. Section 3.6 Contine:encies to Closine: on Jackson Block Prooertv. (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 waiver 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 described 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 purposes; and (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 following 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 of the Minimum Improvements; (ii) The Developer shall have satisfied any contingencies of the Construction Lender to providing the Construction Loan for the Minimum Improvements and shall have closed on the Construction Loan for the Minimum Imorovements: orovided. however. if all other contini!encies under this Section 3.6(b) have been satisfied. the City ai!rees that a letter of commitment from the Minnesota Housini! Finance 1824344vRED V2 to VI; 10/12/05 20 A!!encv and c1osin!! on interim construction financin!! for the Jackson Block Develonment shall be sufficient to satisfy this clause (ii) with resnect to the Jackson Block Develonment; (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 ofthe Bluff Block Property; (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; provided, 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 Developer's Options. In the event that any of the foregoing contingencies 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 ClosiD1!:. (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 ofthe Jackson Block Property on the Closing Date. (b) City's Documents. At the Closing, the City shall execute, where appropriate, and deliver all of the following City's Documents: I 824344vRED V2 to VI; 10/12/05 21 (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 possession to any portion of the Jackson Block Property which are abstract property, and any owner's duplicate certificate of title in the City's possession to any portion thereof which is registered property. (iii) A non-foreign affidavit properly contmmng 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 mechanic's liens could be filed; and that there are no other unrecorded interests in the Jackson Block Property. (v) Such 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 following 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 obtaincdclosed on the Construction Loan for the Minimum Improvements in an amount sufficient, together with equity commitments, to complete the Minimum Improvements in conformance with the Construction Plans. (iii) Proof of insurance 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, tax 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. 1824344vRED V2 to VI; 10/12/05 22 (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. (vii) A certificate of good standing for Developer from the Secretary of State of the State. Section 3.8 ClosiB1! Costs. To the extent not already paid, the Developer shall, on the Closing Date, pay, among other things specified to be paid in this Agreement, all fees and expenses of third parties related to the Closing, including any and all taxes and filing fees, title issuance commitments and all out of pocket fees and expenses of the City in connection with the preparation of this Agreement and any purchase agreements with respect to the Jackson Block Property, the establishment of the Tax Increment District and any other out of pocket costs of the City, including related engineering costs. The Developer shall not be obligated to pay for City administrative or staff costs. 1824344vRED V2 to VI; 10/12/05 23 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1 Construction Plans. (a) Prior to the commencement 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 cost statement certified by the Developer and the general contractor (the "Sworn Construction Cost Statement"). The Construction Plans and the Sworn Construction Cost Statement will 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 Plans, 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 the deficiencies in the Construction Plans and the Parking Plans. The City Council shall approve the Construction Plans if: (i) the Construction Plans substantially conform to the terms and conditions of this Agreement; (ii) the Construction Plans are consistent with the goals and objectives of the Development Program; and (iii) the Construction Plans do not violate any applicable federal, State or local laws, 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, ordinances, rules or regulations). If the 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 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 Construction Plans, or any proposed amendment to any of the 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 receive approval of the Construction Plans from any City department. I 824344vRED V2 to VI; 10/12/05 24 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 shall be made to the Construction Plans for any of the 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 approved 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 commence construction of each project ofthe Minimum Improvements by the dates set forth on Exhibit H.G and will cause each project of the Minimum Improvements to be substantially completed not later than the dates set forth on Exhibit HG. Nothin!! in this A!!reement shall nrevent the Develoner from commencin!! and/or comnletin!! construction of the Bluff Block Develonment nrior to commencin!! and/or comnletin!! construction of the Jackson Block Develonment. (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 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; provided, the Developer shall pay any costs of establishing the escrow account and any escrow fees; and (vi) the 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. I824344vRED V2 to VI; 10/12/05 25 (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 reasonable access to the Development Property. "Reasonable access" means at least one site inspection per week during regular business hours. During construction, marketing, leasing and sales of the Minimum Improvements, 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 of the actual 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 Improvements is delayed or not completed, the effect of such delay or failure to complete may be 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 Comoliance 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 Resoonsibilities of the Develooer. ( a) The Developer will construct and, until the responsibility is assumed by a condominium association pursuant to the Minnesota Common Interest Ownership Act with respect to the Bluff Block Development, operate and maintain, or cause to be operated and maintained, the Minimum Improvements 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 Improvements 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 Improvements may be lawfully constructed. The City makes no representations or warranties that all permits or licenses that may be required by state and federal entities, other 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. 1824344vRED V2 to VI; 10/12/05 26 (d) The Developer, at its own expense, will replace any public facilities and public utilities damaged during the construction of the Minimum Improvements, in accordance with the technical specifications, standards and practices of the owner thereof. (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 Construction 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 component 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. I 824344vRED V2 to VI; 10/12/05 27 ARTICLE V TAX INCREMENT ASSISTANCE; DEVELOPER PAYMENTS Section 5.1 Creation of Tax Increment District and Amendment of Tax Increment Financin2 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 Agreement and the creation of the Tax Increment District to the extent those fees exceed the payments previously made by the Developer. Section 5.2 Issuance of Tax Increment Revenue Note. (a) The City shall reimburse the Developer for the Eligible Costs and the Parkin!! Lot Costs actually incurred and paid by the Developer in an amount up to the Reimbursement Amount (as defined below) through the issuance of the City's Tax Increment Revenue Note in substantially the form attached 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 {iLClosing on the Jackson Block Property---aB:d: (in the closing on the Construction Loan for the Bluff Block Development: (jiB contract for the construction of the Parkin!! Lot bein!! awarded and the Parkin!! Lot Cost bein!! determined: and (iv) Develooer deoositin!! cash with the City in the amount of the Parkin!! Lot Cost. The principal amount is currently estimated to be $3,093,563,r$3.330.5631. but the actual principal amount of the Tax Increment Revenue Note shall be determined at the time the Tax Increment Revenue Note is issued based on the gap in Funding determined according 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 JI 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) 30-day months. 1824344vRED V2 to VI; 10/12/05 28 (iii) The principal 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, against the principal and interest outstanding on the Tax Increment Revenue Note, the amount of the 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 ofthe Note. (v) The Tax Increment Revenue Note shall be a special and limited obligation ofthe City and not a general obligation ofthe City, and only Pledged Tax Increment shall be used to pay the principal and interest on the Tax Increment Revenue Note. If, on any Payment Date, the Pledged Tax Increment for the payment of the accrued and unpaid interest on the Tax 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 Pledged 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 9.4(c). (vii) The Tax Increment Revenue Note shall be governed by and 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 Developer understands that the Tax Increment Revenue Note will not be registered or otherwise qualified for sale under the securities laws and regulations of the State or under the Federal 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 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 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 I 824344vRED V2 to VI; 10/12/05 29 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 City. Any offering material prepared by the Developer or any Placement Agreement 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 and 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 Minimum Improvements in accordance with generally accepted accounting principles consistently 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 delivered 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 Jackson Block Housing Project, the Developer shall pay to the City the lesser of (i) the sum ofthe 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 amount 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. I 824344vRED V2 to VI; 10/12/05 30 (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 Reimbursement Amount, 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) 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 Statement indicates the gap in Funding with respect to any of the Minimum Improvements is greater than estimated at the time of the issuance of the Tax 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 other portion of the Minimum Improvements. (f) The City shall execute and deliver to the Developer an amendment to the Tax 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 Tax Increment 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 Increment below the amount necessary to pay a portion or all of the payment due on the Tax Increment Revenue Note. (a) Initiation of administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to the Development Property or the Minimum Improvements. (b) Initiation of administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to the Development Property or the Minimum Improvements. (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 business activity conducted on the Development Property, demolishing a portion or all of the Minimum Improvements, seeking a reduction in the assessed Market Value of the Minimum Improvements through any request, petition, claim, or other proceeding to or before the City assessor, the County assessor, the board of equalization 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 taxes 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 Property and the Minimum Improvements that are made without a request or petition of the Developer, a 1824344vRED V2 to VI; 10/12/05 31 reduction in the tax classification of the Development Property and the Minimum Improvements under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax rates applicable to the Development Property and the Minimum Improvements, or any change to the method of taxing real property that has the effect of reducing the revenues derived from such taxes. (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 Tax Increment Revenue Note and $89,600 of 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 of the assessor's current year's estimated fair market value of the Bluff Block Property and the Bluff Block Commercial Subsidy does not constitute a "business subsidy" and therefore the 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 Commercial 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 of the Business Subsidy Law. I 824344vRED V2 to VI; 10/12/05 32 (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 the construction of adjacent housing facilities in the City. After holding a public hearing November 1, 2004, the City has determined 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 and job 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 are 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 Minnesota 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 file 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. If within 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay to the City a penalty of $1 00 for each subsequent day until the report is filed up to a maximum of $1 ,000. (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 loan 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 Minimum 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 on the anticipated use thereof shall be paid by the Developer when determined by the City and made due and payable. 1824344vRED V2 to VI; 10/12/05 33 (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. Section 5.8 Issuance of Tax Increment Revenue Refundine: Bonds. (a) The Parties understand and agree that the Developer's willingness to undertake its activities under this Agreement was predicated on the understanding that the Developer would achieve the Allowable Profit and receive the developer fees and the Targeted Rate of Return contemplated by this Agreement. The Parties also understood at the time of execution of this Agreement that in order to achieve such Allowable Profit and receive such developer fees and such Targeted Rate of Return it might be necessary for the City to issue tax increment bonds to refund the Tax Increment Revenue Note (the "Refunding Bonds") and that if such bonds are issued after the Completion Date costs of financing could be reduced, thereby enhancing the financial feasibility of the Development. Therefore, the City agrees, to the extent permitted by law that, at the prior written request of the Developer, but no earlier than the Profit Determination Date, to use its best efforts to issue Refunding Bonds subject to the following conditions: (i) The principal amount of the Refunding Bonds shall be based on a Debt Service Coverage Ratio as is necessary to sell the Refunding Bonds at par. The principal amount of the Refunding Bonds will not exceed the lesser of (i) the amount that can be amortized using the Pledged Tax Increment generated by the Minimum Improvements and (ii) the amount necessary after reasonable transaction costs, reserves and capitalized interest to create net proceeds equal to the outstanding principal balance of the Tax Increment Revenue Note so long as the total aggregate debt service payable with respect to the Refunding Bonds does not exceed the total aggregate debt service that would have been payable over the term of the Tax Increment Revenue Note; (ii) The legal authority of the City to issue such Refunding Bonds and pledge the Available Tax Increment at the time ofthe Developer's request; and (iii) The ability of any Placement Agent to market the Refunding Bonds. (b) The Developer acknowledges that the maximum amount the City will pledge to repay the Tax Increment Refunding Bonds is the Pledged Tax Increment generated by the Minimum Improvements, and that the City will determine, in its sole discretion, the principal amount of the Refunding Bonds to be issued. In determining the principal amount of the Refunding Bonds to be issued, the City will consider, among other things, the Market Values of the completed Minimum Improvements. In addition and if feasible, the City will issue separate Refunding Bonds for each of the components of the Development. ~ If the City determines at the time of issuance of the Refundinf! Bonds that the nrincinal amount of the Refundinf! Bonds which can feasiblv be issued is less than the outstandinf! nrincinal balance of the Tax Increment Revenue Note as adiusted nursuant to Section 5.3 and subseouently determines at anv time and from time to time thereafter that Pledf!ed Tax Increment is in excess of amounts necessarY to nav the nrincinal of and 1824344vRED V2 to VI; 10/12/05 34 interest on the Refundinf! Bonds. the Citv will. to the extent authorized under the documents for the Refundinf! Bonds. nav such excess to the Develoner until the sum of such navments and the navments under the Refundinf! Bonds eaual the amount which would have been navable under the Tax Increment Revenue Note if it had not been refunded bv the Refundinf! Bonds. un fet- The terms and conditions of the Refunding Bonds will be set forth in a resolution to be adopted by the City Council of the City (the "Bond Resolution"). In the event of a conflict between the terms and conditions hereof and the terms and conditions of the Bond Resolution, the terms and conditions of the Bond Resolution shall prevail. SeetioB 5.9 IssaaBee of Parkin!! Lot Note. (a) '.\'hen 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 DC'/elopment, the City shall commence construction ofthe King /...yenue purking lot proyided that: (i) /.. contract for the construction of Purking Lot has been a\varded and the Purking Lot Cost has been determined; and (ii) The Developer has deposited cash '.vith the City in the amount of the Purking Lot Cost. (b) The City shall reimburse the Developer for the Purking Lot Cost actually paid by the Deyeloper as further proyided 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 this /.I.greement as Exhibit F, subject to the following conditions: (i) The Note shall be dated, issued and deli'/ered '.vhen the conditions set forth in Section 5.9(a) haye been satisfied. The principal amount is not subject to reduction pursuant to Section 5.3. (ii) The unpaid principal amount of the Purking Lot Note shall bear simple non compounding interest 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 nvelye (12) 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 '.vhich is hereby pledged to the payment ofthe Parking Lot Note. (iv) On each Payment Date and subject to the proyisions of the Parking Lot Note, the City shall pay, against the principal and interest outstanding on the Parking Lot Note, the amount of the Purking Lot Pledged Tax Increment received by the City during the preceding 6 months. ,^..ll such payments shall be applied first to accrued interest and then to reduce the principal of the Note. 1824344vRED V2 to VI; 10/12/05 35 ('/) 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 Tax Increment shall be used to pay the principal and interest on the Parking Lot Note. If, on any Payment 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 shall be carried fonyard, ';/ithout 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 the requirement that Vi.) there shall not at that time be an Event of Default that has occurred and is continuing under this .^...greement and (B) this .^...greement shall not have been rescinded pursuant to Section 9.1(c). (';ii) The Parking Lot Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit F. In the e';ent of any conflict bct'...,een the terms of the Parking Lot Note and the terms of this .^...greement, the terms of this .^...greement shall goyem. The issuance of the Parking Lot Note pursuant and subject to the terms of this .'\greement, and the taking by the City of such additional actions as bond counsel for the Parking Lot Note may require in connection there';;ith, are hereby authorized and approved by the City. (d) The De'/cloper understands that the Parking Lot Note v;ill not be registered or othef\vise qualified for sale under the securities lav;s and regulations of the State or under the Federal securities laws or regulations, the Parking Lot Note \vill not be listed on any stock or other securities exchange, and the Parking Lot Note '.vill not earry a rating from any rating Sef\'lce. (e) .^JlY assignment by the Developer of the Tax Increment Revenue Note must be to a single entity and must be appro'/ed in '.witing by the City. The City ackno';/ledges that the Deyeloper may, after the Profit Determination Date and the Cash Flow Determination Date, assign the Parking Lot Note to a Lender, or a Placement .^...gent, acting as the servicer of any Lender, or assign participations in the Tax Increment Reyenue Note to multiple parties (the "Participants") with one primary Noteholder and the De';eloper aeknov/ledges that the City v;ill require, as a condition of its consent to the assignment to any Lender, Plaeement .'\gent or Participant, that such Lender and any Participant be a "qualified financial institution" '.vithin the meaning of the regulations promulgated under the Securities .^...ct of 1933, as amended, and deliyer a letter of investment intent in a form satisfactory to the City or that such Placement .^...gent represent that it will not sell or grant participation in the Parking Lot Note in amounts less than $100,000 or to any entity that is not a "qualified financial institution" or without obtaining a letter of in'/cstment intent in a form satisfactory to the City. .^JlY offering material prepared by the Developer or any Placement .'\greement in connection '.vith the Developer's assignment of the Parking Lot Note to any Lender must be revie'Ned and approved by the City; proyided that the City 'Nill make no representations or 'Narranties \vith respect to the information contained in any such offering material. I824344vRED V2 to VI; 10/12/05 36 Cf) If and to the extent ,,\ vailable Tux Increments collected in any year are in excess ofthe Parking Lot Pledged Tux Increment, the excess shall be retained by the City. 1824344vRED V2 to VI; 10/12/05 37 ARTICLE VI ENCUMBRANCE OF THE DEVELOPMENT PROPERTY Section 6.1 Encumbrance of the Development Property. Neither the Developer nor any successor in interest to the Developer (other than purchasers of the units in the Bluff Block Housing Project) will engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Development 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 financing 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 costs 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 Mort2:a2: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 Development Property (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 Mort2: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:a2:e. The Developer will use its best efforts 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 A2:reement. 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. Section 6.6 Execution of Assessment Al!reements. uu The Develoner and the City shall execute an Assessment Al!reement relatinl! to the Bluff Block Pronertv nursuant to the nrovisions of Minnesota Statutes. Section 469.177. Subdivision 8. snecifvinl! the Bluff Block Minimum Market Value for the Bluff I824344vRED V2 to VI; 10/12/05 38 Block ProDertv for calculation of real DrODertv taxes. SDecificallv. the DeveloDer shall a!!ree to a market value for the Bluff Block ProDertv and the Bluff Block DeveloDment in an amount of $ as of Januarv 2. 200 !bJ The DeveloDer and the Citv shall execute an Assessment A!!reement relatin!! to the Jackson Block ProDertv Dursuant to the Drovisions of Minnesota Statutes. Section 469.177. Subdivision 8. sDecifvin!! the Jackson Block Minimum Market Value for the Jackson Block PrODertv for calculation of real DrODertv taxes. SDecificallv. the DeveloDer shall a!!ree to a market value for the Jackson Block ProDertv and the Jackson Block DeveloDment in an amount of $ as of Januarv 2. 200 ~ Nothin!! in the Assessment A!!reements or this A!!reement limits the discretion of the Countv Assessor to assi!!n a market value to the DrODertv in excess of either the Bluff Minimum Market Value or Jackson Block Minimum Market Value nor Drohibits the DeveloDer from seekin!!. throu!!h the exercise of le!!al or administrative remedies. a reduction in such market value for DrODertv tax DurDoses: Drovided however. the DeveloDer shall not seek a reduction of such market value below the Bluff Block Minimum Market Value for anv vear so Ion!! as the Bluff Block Assessment A!!reement remains in effect for that vear nor below the Jackson Block Minimum Market Value for anv vear so Ion!! as the Jackson Block Assessment A!!reement remains in effect for that ~ Ldl The Assessment A!!reements shall remain in effect until the Termination Date. ~ The Bluff Block Assessment A!!reement shall be certified bv the Countv Assessor as Drovided in Minnesota Statutes. Section 469.177. Subdivision 8. UDon a findin!! bv the Countv Assessor that the Bluff Block Minimum Market Value reD resents a reasonable estimate based UDon the Dlans and sDecifications for the Bluff Block DeveloDment to be constructed on the Bluff Block ProDertv and the market value Dreviouslv assi!!ned to the Bluff Block ProDertv. ill The Jackson Block Assessment A!!reement shall be certified bv the Countv Assessor as Drovided in Minnesota Statutes. Section 469.177. Subdivision 8. UDon a findin!! bv the Countv Assessor that the Jackson Block Minimum Market Value reD resents a reasonable estimate based UDon the Dlans and sDecifications for the Jackson Block DeveloDment to be constructed on the .Jackson Block ProDertv and the market value Dreviouslv assi!!ned to the Jackson Block ProDertv. !gl Pursuant to Minnesota Statutes. Section 469.177. Subdivision 8. the Bluff Block Assessment A!!reement relatin!! to the Bluff Block PrODertv shall be filed for record in the office of the countv recorder or re!!istrar of titles of the Countv. and such filin!! shall constitute notice to anv subseouent encumbrancer or Durchaser of the Bluff Block ProDertv. whether voluntarv or involuntarv. and such Bluff Block Assessment A!!reement relatin!! to the Bluff Block ProDertv shall be bindin!! and enforceable in its entiretv a!!ainst anv such subseouent Durchaser or encumbrancer. includin!! the Construction Lender and the holder of anv mort!!a!!e on the Bluff Block DeveloDment ProDertv. I 824344vRED V2 to VI; 10/12/05 39 au Pursuant to Minnesota Statutes. Section 469.177. Subdivision 8, the Jackson Block Assessment A!!reement relatin!! to the .Jackson Block Pronertv shall be filed for record in the office of the countv recorder or re!!istrar of titles of the Countv. and such filin!! shall constitute notice to anv subseouent encumbrancer or ourchaser of the Jackson Block Prooertv. whether voluntarv or involuntarv. and such Jackson Block Assessment A!!reement relatin!! to the Jackson Block Prooertv shall be bindin!! and enforceable in its entiretv a!!ainst anv such subseouent ourchaser or encumbrancer. includin!! the Construction Lender and the holder of anv mort!!a!!e on the Jackson Block Develooment Prooertv. ill The Develooer shall orovide. or cause Bluff Block. LLC to orovide. a coov of the Bluff Block Assessment A!!reement in its disclosure statement to the ourchaser of each owner-occuoied unit of the Bluff Block Housin!! Proiect orior to the sale of such unit bv the Develooer or Bluff Block. LLC. 1824344vRED V2 to VI; 10/12/05 40 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 payment 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 Agreement and all federal, State and local laws, regulations, rulings and ordinances applicable thereto. Developer shall pay all of the reasonable and necessary 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 default 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 maintain 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 the 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. 1824344vRED V2 to VI; 10/12/05 41 ARTICLE VIII TRANSFER LIMITATIONS AND INDEMNIFICATION 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 of 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 Minimum 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 Project if a certificate of occupancy has been issued for such project; (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 this 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: I 824344vRED V2 to VI; 10/12/05 42 Proiect Transferee Bluff Block Housing Project Bluff Block, LLC or CSS Builders. Inc. Jackson Block Housing Project MDI Limited Partnership #70 Bluff Block Commercial Project Bluff Block, LLC or CSS Builders. Inc. (b) Except as provided in Subsection (a) of this 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 and assigns, and expressly for the benefit of the City have expressly assumed all of the obligations 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 TIF Act and this Agreement; and (v) In the absence of specific 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 way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of its obligations with respect thereto. (c) All restrictions on transfer of the Development, or any portion thereof, shall terminate at the 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 contractors, consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the "Indemnified Parties") 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 death of any 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. I 824344vRED V2 to VI; 10/12/05 43 (b) Except for gross negligence or intentional misconduct of the Indemnified Parties, the Developer agrees to indemnify the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including reasonable attorneys' fees) actions or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Development; including, without limitation, any claim by a land owner or tenant located on the Development Property to be entitled to Relocation Costs and Expenses; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the City in this Agreement. (c) Except as set forth in Section 3.2, the City makes no warranties or representations regarding, nor does it indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the Tax Increment District of any toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 D.S.C. SS 961-9657, as amended) (collectively, the "Hazardous Substances"). The foregoing disclaimer relates to any Hazardous Substance allegedly generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on or in the vicinity of the Development Property or within the Tax Increment District, as well as any activity claimed to have been undertaken on or in the vicinity of the Development Property that would cause or contribute to causing (1) the Development Property to become a treatment, storage or disposal facility within the meaning of, or otherwise bring the Development Property within the ambit of, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 D.S.C. S 691 et seq., or any similar state law or local ordinance, (2) a release or threatened release of toxic or hazardous wastes or substances, pollutants or contaminants, from the Development Property within the meaning of, or otherwise bring the Development Property within the ambit of, CERCLA, or any similar state law or local ordinance, or (3) the discharge of pollutants or effluents into any water source or system, the dredging or filling of any waters or the discharge into the air of any emissions, that would require a permit under the Federal Water Pollution Control Act, 33 D.S.C. S 1251 et seq., or any similar state law or local ordinance. Further, the City makes no warranties or representations regarding, nor does the City indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the Tax Increment District of any substances or conditions in or on the Development Property that may support a claim or cause of action under RCRA, CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements, including without limitation, the Minnesota Environmental Response and Liability Act, Minnesota Statutes, Chapter 115C. The City makes no representations or warranties regarding the existence of any above ground or underground tanks in or about the Development Property, or whether any above or underground tanks have been located under, in or about the Development Property and have subsequently been removed or filled. 1824344vRED V2 to VI; 10/12/05 44 I 824344vRED V2 to VI; 10/12/05 45 (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 common law or relating to the environmental condition of the land comprising the Development Property. Section 8.4 Limitation. All covenants, stipulations, promises, agreements and obligations of the City or the Developer contained in this Agreement shall be deemed to 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. ARTICLE IX EVENTS OF DEFAULT AND DAMAGES 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 Develover Events of Default. The following shall be Developer Events of Default: 1824344vRED V2 to VI; 10/12/05 46 (a) subject to Unavoidable Delays, the Developer shall fail to begin construction of the Minimum Improvements and to proceed with due diligence to satisfactorily complete each of the Minimum Improvements as provided in Section 4.3 and by the date set forth on Exhibit HG 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 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; (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 or 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 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; (c) there is, in violation of Article VIII of this Agreement, any conveyance or other 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, 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 creditors; or (ii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudication of Developer, as a bankrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law shall be filed in any court and such petition or answer shall not be discharged or denied 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 III of this Agreement. Section 9.3 Citv 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 performed 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, ifthe 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 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 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 Unavoidable Delays, shall such additional cure period extend beyond 180 days. Section 9.4 Citv Remedies on Default. Whenever any Developer Event of Default occurs, the City may take anyone or more of the following actions: (a) Suspend performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (b) Withhold the Certificate of Completion for the Minimum Improvements. I 824344vRED V2 to VI; 10/12/05 47 (c) The City may cancel and 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 this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Notwithstandin!! the fore!!oin!!. the Citv a!!rees that if the Develoner shall fail to commence or comnlete construction of the Jackson Block Develonment. the Citv will not exercise the remedies set forth in this Section 9.4 so Ion!! as the Develoner has naid the Parkin!! Lot Cost and submits a revised Sources and Uses Statement and Profit Statement to!!ether with a revised list of Eligible Costs excludin!! anv costs incurred in connection with the .Jackson Block Develonment and the nrincinal amount of the Tax Increment Revenue Note will be adiusted based on the information the Develoner submits. Section 9.5 Develouer Remedies on Default. Whenever any Event of Default occurs by the City, the Developer may suspend its performance under this Agreement and/or take whatever action at law or in equity may appear necessary or desirable to the Developer to enforce 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 upon 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 existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the 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 Waiver Imulied bv One Waiver. If any agreement contained in this Agreement should be breached by either Party and thereafter waived by the other Party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 1824344vRED V2 to VI; 10/12/05 48 ARTICLE X ADDITIONAL PROVISIONS Section 10.1 Conflicts of Interest. No member ofthe 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 in the event of any 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 construing or interpreting any of its provisions. 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 prepaid, return receipt requested, or delivered personally, and I 824344vRED V2 to VI; 10/12/05 49 (a) in the case of Developer, is addressed to or delivered personally to Developer at in the case of the 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: Administrator 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 10.4 Counteroarts. This Agreement may be executed III any number of counterparts, each of which shall constitute one and the same instrument. Section 10.5 Law Governin!!. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 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 actions 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 Supersedin2 Effect. This Agreement reflects the entire agreement 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. Nothing in this Agreement is intended, or shall 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 Increment District. Section 10.11 Venue. All matters, whether sounding in tort or in contract, relating to the validity, construction, performance, or enforcement of this Agreement shall 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 Minnesota, Sherburne County, District Court and shall not be removed therefrom to any other federal or state court. Section 10.12 Provisions Survivin2 Rescission or Expiration. Section 8.3 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. I 824344vRED V2 to VI; 10/12/05 50 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. 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 ~~ by , the Mayor and , the Administrator of the City of Elk River, Minnesota, a municipal corporation and politic subdivision organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said City. Notary Public 1824344vRED V2 to VI; 10/12/05 S-l METROPLAINS DEVELOPMENT, LLC, A Minnesota limited liability company By Its STATE OF MINNESOTA ) ) ss COUNTY OF SHERBURNE) The foregoing instrument was acknowledged before me this _ day of , ~~ by , the of MetroPlains Development, LLC, a Minnesota limited liability company on behalf of said company. Notary Public I824344vRED V2 to VI; 10/12/05 S-2 I 824344vRED V2 to VI; ] 0/12/05 A-I 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 Auditor2.: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 Government 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, according to the plat thereof and of record in the office of the County Recorder in 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 the South line of said Lot 5; thence westerly along the South line of said Lot 5, to the southwest comer thereof; thence northerly along the West line of said Lot 5, to the point of beginning. AND The East 56 Y2 feet of Lot 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 Auditor2.:s Subdivision No.4, that lies South of 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 River 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 ofthe following described line: Beginning at a point on 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 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 ofthe West line of the East 56.50 feet of said Lot 2. I 824344vRED V2 to VI; 10/12/05 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 line 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 of beginning. 1824344vRED V2 to VI; 10/12/05 B-1 EXHIBIT C QUIT CLAIM DEED Corporation Partnership or Limited Liability Company to Corporation, Partnership or Limited Liability Company No delinquent taxes 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) FOR VALUABLE CONSIDERA nON, the City of Elk River, Minnesota, a municipal corporation and politic subdivision, (the "Grantor") hereby conveys and quitclaims to MetroPlains Development, LLC, a limited liability company organized under the laws of the State of Minnesota, the real property in Sherburne County, Minnesota, described as follows: See Attached Exhibit A together with all hereditaments and appurtenances belonging thereto. Grantor's delivery of this Deed and conveyance of title, and Grantee's acceptance of this Deed and title to the Property, are expressly subject to: (1) the terms and conditions and the rights of the Grantor and the obligations of the Grantee under that certain Development 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. 1824344vRED V2 to VI; 10/12/05 C-l 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 2004, by , the Mayor and , the Administrator of the City of Elk River, Minnesota, a municipal corporation and politic subdivision organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said City. NOTARIAL STAMP OR SEAL (OR OTHER SIGNATURE OF PERSON TAKING TITLE OR RANK) ACKNOWLEDGMENT Tax statements for the real property described in this instrument should be sent to (include name and address of Grantee) THIS INSTRUMENT WAS DRAFTED BY: BRIGGS AND MORGAN Professional Association 2200 First National Bank Building St. Paul, Minnesota 55101 I 824344vRED V2 to VI; 10/12/05 C-2 EXHIBIT D CERTIFICATE OF COMPLETION WHEREAS, the City of Elk 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 rAm ended and Restated1 Development Agreement dated December _, 2004 r .20051 executed by and between the Grantor and the Grantee (the "Development Agreement"); and WHEREAS, the Grantee has to the present date performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that construction of the Minimum Improvements specified to 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 Sherburne and State of Minnesota is hereby authorized to accept for recording and to record the filing of this instrument, to be a conclusive determination ofthe 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 solely contractual obligations of the Grantee, its successors and assigns under the Development Agreement, shall not run with nor be a lien against the Property and no owner of a housing unit shall be obligated under the Development Agreement. I 824344vRED V2 to VI; 10/12/05 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 municipal corporation and politic subdivision organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said City. Notary Public 1824344vRED V2 to VI; 10/12/05 D-2 No. R-l $ EXHIBIT E FORM OF TAX INCREMENT REVENUE NOTE UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER, MINNESOTA TAX INCREMENT REVENUE NOTE, SERIES 200_ (METROPLAINS DEVELOPMENT, LLC PROJECT) The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, 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 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 Amended and Restated Development Agreement, dated as of December , ~~ 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 it has incurred and paid Eligible Costs (as defined in the Development Agreement) in an amount equal to the principal amount of this Note at the rate of six and fifty hundredths percent (6.50%) per annum. Interest shall be computed on the basis ofa 360-day year of twelve (12) 3D-day months. 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 occurring after the date of issuance of this Note or, ifthe 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 Pledged Tax 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 -8925% 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 I 824344vRED V2 to VI; 10/12/05 E-l 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 "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 Agreement) which Development Property is located within the Downtown Phase I Tax 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 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 A( 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 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 THE 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, MINNESOTA, 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 TAX 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 taxing 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. 1824344vRED V2 to VI; 10/12/05 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 may be assigned only with the prior written consent of the City. In order to 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 all provisions 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 due form, time, and manner as required by law; and that this Note, together with all other indebtedness 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. I 824344vRED V2 to VI; 10/12/05 E-3 CITY OF ELK RIVER, MINNESOTA 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_" 1824344vRED V2 to VI; 10/12/05 By Its Mayor By Its Administrator E-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 REGISTRA nON SIGNATURE OF ADMINISTRATOR MetroPlains Development, LLC 1600 University Avenue, Suite 212 St. Paul, MN 55104-3825 ,200_ 1824344vRED V2 to VI; 10/12/05 E-5 I EXHIBIT F FORM: OF PAR..~NC LOT NOTE No.R 1 $ UNITED ST}...TES OF }lMERIC^... ST}... TE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER, MINNESOT,^... T,^...)( INCREMENT REYENUE NOTE, SERIES 200_ (METROPL^...INS DEVELOPMENT, LLC PARYJNG LOT PROJECT) The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value recei'/ed, hereby promises to pay the amounts hereinafter described (the "Payment }...mounts") to MetroPlains Development, LLC, a Minnesota limited liability company or its registered assigns (the "Registered O'.vner"), the principal of Dollars ($ ), but only in the manner, at the times, from the sources of reyenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated abo'.'e, as reduced to the extefl-t 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 DC'/elopment .^...greement, dated as of December _, 2001, as the same may be amended from time to time (the "Dcyclopment l\greemern"), by and between the City and MetroPlains Development, LLC, a Minnesota limited liability company (the "Company"). The unpaid principal amount hereof shall beur simple non compounding irnerest from the date of this Note at the rate of six and fifty hundredths percefl-t (6.50%) per annum. Interest shall be computed on the basis of a 360 day year oft'.velYe (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 1 or l\l:lgust 1 occurring after the date of issuance of this Note or, if the first should not be a Business Day (as defined in the Deyelopment .^...greement) 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 ';/as the Registered OVvTIer of this Note at the close of the last business day preceding such Payment Date an amount equal to the Parking Lot Pledged Tax Incremern (as hereinafter defined) received by the City during the six mornh period preceding such Payment Date. }JI paymefl-ts 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 f-onvard viithout interest. The Payment .^Jllounts due hereon shall be payable solely from 6% of the actual ,^...vailable Tax Incremern receh'ed by the City since the last Payment Date based on the lesser of the currern actual Market Value of the Minimum Impro'/ements (as defined in the Development .^...greement) as determined by the County ,^...ssessor or the County .\ssessor's Market Value of the Minimum Improvements as of the January 2 immediately following the Completion Date (the I 824344vRED V2 to VI; 10/12/05 F-1 "Pledged Tax Increment"). '?..vailuble Tux Increment" means the portion of the real property taxes generated by the De'/elopment Property (as such term is defined in the Development },.greement) which Development Property is located ',yithin the Do':mtovvTI Phase I Tux 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 169.171 through 169.1799, 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 follo\wng February 1, 2032 or such later date as the City receives Available Tax Increment as a result of the payment of real property tuxes that ',vere delinquent on February, 2032 (the "Final Payment Date") or any date upon which the City shall have terminated the Development Agreement under Section 9.1 (c) thereof, or on the date that all principal and interest payable hereunder shall haye been paid in full, '.vhiche'/er occurs earliest. This Note may be prepaid in '.",hole or in part at any time vv'ithout penalty. The City makes no representation or cO'v'enant, express or implied, that the Pledged Tux Increments '.vill be sufficient to pay, in whole or in part, the amounts which arc 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 .^...greement 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 haye been cured; and, further, if pursuant to the occurrence of an E'/ent of Default under the Dcvelopment .^...greement the City elects to cancel and rescind the Deyelopment .'\.greement, the City shall haye no further debt or obligation under this Note 'vVhatsoever. Reference is hereby made to all of the pro'v'isions of the Development .^...greement, for a fuller statement of the rights and obligations of the City to pay the principal of this Noto and the interest thereon, and said proyisions arc hereby incorporated into this Note as though set out in full herein. THIS NOTE IS.\ SPECIAL, LIMITED REVENUE OBLICf..TION OF THE CITY f..ND IS PAYf..BLE BY THE CITY ONLY FROM THE SOURCES }...ND SUBJECT TO THE QUALIFICATIONS STf..TED OR REFERENCED HEREIN. THIS NOTE IS NOT A CENERAL OBLICATION OF THE CITY OF ELK RIVER, MINNESOT.A.., f..ND NEITHER THE FULL Ff..ITH A.~D CREDIT NOR THE T.A""-L"XINC PO"'ERS OF THE CITY f..RE PLEDCED TO THE Pf..Y1\IIENT OF THE PRINCIP.A..L OF OR INTEREST ON THIS NOTE f..ND NO PROPERTY OR OTHER .\SSET OF THE CITY, SAVE A.~D EXCEPT THE f..BOYE REFERENCED T.A..X INCRE1\fENTS, IS OR SHALL BE f.. SOURCE OF P.A..Y1\fENT OF THE CITY'S OBLICf..TIONS HEREUNDER. The Registered O\.vner shall ne'/er ha'v'e or be deemed to haye the right to compel any exercise of any taxing power ofthe 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. I 824344vRED V2 to VI; 10/12/05 F-2 This Note is issued by the City in aid of financing a project pursuant to and in full conformity \vith the Constitution and la\','s of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only '.'lith the prior '",ritten consent of the City. In order to 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 all provisions stated or referenced herein. IT IS HEREBY CERTIFIED }...ND RECITED that all aets, eonditions, and things required by the Constitution and la'Ns of the State of Minnesota to be done, to ha'le happened, and to be performed precedent to and in the issuance of this Note oo'le been done, have happened, and have been performed in regular and due form, time, and manner as required by 1m\'; and that this Note, together '.'lith all other indebtedness 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. 1824344vRED V2 to VI; 10/12/05 F-3 IN WITNESS .WHEREOF, the City of Elk Riyer, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and .^...dministrator and has caused this Note to be issued on and dated , 200 . CITY OF ELK RIVER, MINNESOT.^.. By Its Mayor By Its .^...dministrator / 1824344vRED V2 to VI; 10/12/05 F-4 CERTIFICATION OF RECISTR}...TION It is hereby certified that the foregoing Note, as originally issued on 200_, vias on said date registered in the name of MetroPlains Deyelopment, 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. N}..ME AND ADDRESS OF D,'\ TE OF SIGN,^.. TURE OF REGISTERED O\VNER REGIST~^.. nON }..DMINIST~^.. TOR MetroPlains Development, LLC ,200 1600 University ,^..venue, Suite 212 St. Paul, MN 55101 3825 EXHIBIT C ELIGIBLE COSTS Acquisition Costs of the Bluff Block Property Relocation Costs and Expenses Demolition 1824344vRED V2 to VI; 10/12/05 F-5 Site Improvements 1824344vRED V2 to VI; 10/12/05 F-6 CONSTRUCTION SCHE Bluff Block Housing Project Bluff Block Commercial Project Jackson Block Housing Project Jackson Block Commercial Project I 824344vRED V2 to VI; 10/12/05 G-I DULE of Substantial Completion of Construction ys Within 425 days after Commencement of Construction ys Within 425 days after Commencement of Construction ys Within 425 days after on Commencement of ck Construction ys Within 425 days after on Commencement of ck Construction . EXHIBIT HG Commencement Construction Within 60 da after the U.S. Bank parcel is vacated Within 60 da after the U.S. Bank parcel is vacated Within 45 da after Closing Jackson Blo Property Within 45 da after Closing Jackson Blo Property EXHIBIT IH ESTIMATED SOURCES AND USES STATEMENT SOURCES AND USES AND PROFIT STATEMENT Bluff Block Commercial and Condos Land Acquisition 1,912,750 11.90% Site Work-Environmental, and 1m rovements $ 200,000 1.24% Total Acquisition $ 2,112,750 13.14% Rehabilitation/New Construction 53.45% 2.18% 10.52% 2.65% 0.00% 0.00% City Fees-Park Ded, 152,615 0.95% Total Construction costs $ 11,213,041 69.74% Architectural and Engineerin 355,000 2.21 % Total Architectural/Engineering $ 355,000 2.21% Sale Fees and Marketin 853,758 5.31 % Total marketing $ 853,758 5.31% Interim Costs 836,888 5.21 % Financing Fees and Expenses 71,800 0.45% Total Carryin Costs $ 908,688 5.65% Environmental Consultants $ 0.00% Total Special Consultants $ 0.00% Related Costs 109,000 0.68% Total Financing Costs $ 109,000 0.68% Condo Documents-Attorney and Survey 119,000 0.74% Total Title and Recordin $ 119,000 0.74% 406.000 2.53% Total Other Soft Costs 406,000 2.53% Total Project Cost $ 16,077,237 100.00% E uity Gap Total Proceeds Project Cost Allowable Profit $ $ $ 1824344vRED V2 to VI; 10/12/05 H-I EXHIBIT JI UPDATED SOURCES AND USES STATEMENT [To be provided prior to issuance of Tax Increment Revenue Note] 1824344vRED V2 to VI; 10/12/05 I-I I 824344vRED V2 to VI; 10/12/05 EXHIBIT KJ FINAL SOURCES AND USES STATEMENT [To be provided on Profit Determination Date] 1-1 EXHIBIT I-K FORM OF PROFIT STATEMENT SOURCES AND USES AND PROFIT STATEMENT Bluff Block Commercial and Condos Land Acquisition 1,912,750 11.90% Site Work-Environmental, and 1m rovements $ 200,000 1.24% Total Acquisition $ 2,112,750 13.14% Rehabilitation/New Construction 53.45% 2.18% 10.52% Contingency 2.65% 0.00% 0.00% City Fees-Park Oed, 152,615 0.95% Total Construction costs $ 11,213,041 69.74% Architectural and Engineerin 355,000 2.21% Total Architectural/Engineering $ 355,000 2.21% Sale Fees and Marketin 853,758 5.31% Total marketing $ 853,758 5.31% Interim Costs 836,888 5.21% Financing Fees and Expenses 71,800 0.45% Total Carrying Costs $ 908,688 5.65% Environmental Consultants $ 0.00% Total Special Consultants $ 0.00% Related Costs 109,000 0.68% Total Financin Costs $ 109,000 0.68% Condo Documents-Attorney and Survey 119,000 0.74% Total Title and Recordin $ 119,000 0.74% 2.53% Total Other Soft Costs 406,000 2.53% Total Project Cost $ 16,077,237 100.00% Equity Gap Total Proceeds Project Cost Allowable Profit I 824344vRED V2 to VI; 10/12/05 K-l I 824344vRED V2 to VI; 10/12/05 EXHIBIT ML FINAL PROFIT STATEMENT [To be provided on Profit Determination Date] L-l EXHIBIT NM FORM OF CASH FLOW STATEMENTS Jackson Block - Commercial % OF TOTAL 71.61% 23.87% 95.48% 4.52% 100.00% Demolition 0.00 0.00% 0 Relocation 0.00 0.00% 0 CONSTRUCTION COSTS 1,014,000 Shops Shell 78.00 66.46% 1,014,000 TENANT IMPROVEMENTS 0 SOFT COSTS PREDEVELOPMENT 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 2.72% 41,425 Related Costs 1 .49% 22,800 Syndication Costs 0.98% 15,000 LEASING $0.00 0 0 PROMOTION COSTS 0 0 Project Reserves, Leasing Commissions CONTINGENCY 7.83% 3.08% 119,395 46,996 119,395 46,996 Total Soft Costs 511,695 TOTAL USES 100.00% 1,525,695 1824344vRED V2 to VI; 10/12/05 M-l Jackson Block - Commercial TYPE RENT PER sa. FT. 13.00 TOTAL sa. FT. 13,000 13,000 ANNUAL REVENUE 169,000 169,000 o o 169,000 Retail Total Rental Income Total Other Income 13,000 Private Debt: Amount of Bond-Loan Term Of Bond-Loan Rate of Bond-Loan Monthly Payment Annual Payment 1,092,525 20 6.75% 8,307 99,686 YEAR 2006 2007 2008 2009 2010 Rental Revenue 0.00% 0.00% 0.00% 0.00% 0.00% Other Income 0.00% 0.00% 0.00% 0.00% 0.00% Expenses 0.00% 0.00% 0.00% 0.00% 0.00% Vacanc 7.00% 7.00% 7.00% 7.00% 7.00% MONTHS OPERATIN 12 Retail 169,000 169,000 169,000 169,000 169,000 Total Rental 91,000 91,000 91,000 91,000 91,000 Gross Revenue 260,000 260,000 260,000 260,000 260,000 Vacancies 11,830 11,830 11,830 11,830 11,830 Effective Income 248,170 248,170 248,170 248,170 248,170 CAM Capital Exp/Reserve MISC TOTAL EXPENSES NET OPERATING INCOME ABATEMENT PAYMENTS CASH FLOW AVAIL. FOR DEBT SERVIC( DEBT SERVICE (-) - Private DEBT SERVICE (-) - C' CASH FLOW AFTER FINANCING RETURN ON INVES.-AVERAGE 1824344vRED V2 to VI; 10/12/05 M-2 First Mortgage-LMIR DEED Funds Greater Minnesota Funds Local Donations % OF TOTAL 19.94% 7.43% 3.72% 0.02% Limited Partner Investment Equity Gap TOTAL SOURCES 63.37% 0.87% 100.00% 3,409,835 46,716 5,380,577 DEMO- SITE PREP 0.00 0.00% 0 CONSTRUCTION COSTS 118,429 BUilDING/LAND IMPROVEMENTS 70.43% 3,789,736 Contingency 150,589 SOFT COSTS PROFESSIONAL SERVICES Architectural, Engineering & Professional Fees 2.93% 157,500 APPRAISALS 0 INSURANCE 0 ACCOUNTING 0 CITY FEES 0 Park Dedication 70,400.00 REAL EST A TE TAXES 0 COST OF ISSUANCE Interim Costs 5.45% 293,046 Financing fees and expenses 2.37% 127,768 Related Costs 1.50% 80,469 Syndication Costs 15,000 15,000 PERMANENT LOAN 0 ACCRUED EXPENSES 0 LETTERS OF CREDIT 0 CLOSING COSTS 0 PROJECT MANAGEMENT CASH ACCOUNTS 2.85% 153,378 Total Soft Costs 1,440,251 TOTAL USES 100.00% 5,380,577 I 824344vRED V2 to VI; 10/12/05 M-3 I 824344vRED V2 to VI; 10/12/05 EXHIBIT GN FINAL CASH FLOW STATEMENTS [To be provided on Cash Flow Determination Date] N-l EXHIBIT PO OWNER UPGRADE OPTIONS [To be provided upon submission of Construction Plans pursuant to Section 4.1 ] I 824344vRED V2 to VI; 10/12/05 0-1 EXHIBIT P BLUFF BLOCK ASSESSMENT AGREEMENT THIS AGREEMENT. dated as of this davof the Citv of Elk River. Minnesota (the "Citv") and MetroPlains Minnesota limited liabilitv comnanv (the "Develoner"t . 2005. is between Develonment. LLC. a WITNESSETH WHEREAS. on or before the date hereof the Citv and Develoner have entered into an Amended and Restated Develonment A!!reement dated as of . 2005 (the "A!!reement") re!!ardin!! certain real nronertv located in the Citv (the "Bluff Block Pronertv"t WHEREAS. it is contemnlated that nursuant to said A!!reement. the Develoner will undertake the demolition and clearance of the existin!! structures located on the Bluff Block Pronertv and the construction of annroximatelv 10.820 souare feet of retail snace. to!!ether with related narkin!! facilities. the construction of annroximatelv 68 units of owner-occunied housin!!. to!!ether with related narkin!! facilities. to be constructed on the Bluff Block Pronertv (the "Proiect") in accordance with nlans and snecifications ann roved bv the Citv. WHEREAS. the Citv and Develoner desire to establish a minimum market value for the Bluff Block Pronertv and the imnrovements constructed or to be constructed thereon. nursuant to Minnesota Statutes. Section 469.177. WHEREAS. the Develoner has acouired the Bluff Block Pronertv consistin!! of land. the le!!al descrintion of which is attached hereto as Exhibit A. WHEREAS. the Citv and the Assessor have reviewed nlans and snecifications for the Proiect. NOW. THEREFORE. the narties to this A!!reement. in consideration of the nromises. covenants and a!!reements made bv each to the other. do herebv a!!ree as follows: 1... As of Januarv 2. 200 . the minimum market value. which shall be assessed for the Proiect. shall not be less than $ 2.. This A!!reement shall terminate on the earlier of (i) December 31. 2007. (in the date on which anv Refundin!! Bonds (as defined in the A!!reement) are issued. 3.... This A!!reement shall be recorded bv the Citv with the Countv Recorder of Sherburne Countv. Minnesota. The Develoner shall nav all costs of recordin!!. 4. Neither the nreambles nor nrovisions of this A!!reement are intended to. or shall thev be construed as. modifvin!! the terms of the A!!reement between the Citv and the Develoner. 1 824344vRED V2 to VI; 10/12/05 P-l 5.. This AQ"reement shall inure to the benefit of and be bindinQ" uoon the successors and assiQ"ns of the oarties. IN WITNESS WHEREOF. the Citv and the Develooer have caused this AQ"reement to be executed in their names and on their behalf all as of the date set forth above. CITY OF ELK RIVER. MINNESOTA (SEAL ) STATEOFMINNESOTA ) ): ss COUNTY OF SHERBURNE ) The foreQ"oinQ" instrument was aclrnowledQ"ed before me this . 2005. bv . the Mavor and Administrator of the Citv of Elk River on behalf of said Citv. dav of . the Notarv Public This Instrument Drafted Bv: BriQ"Q"s and MorQ"an. P.A. 2200 First National Bank BuildinQ" St. Paul. MN 55101 1 824344vRED V2 to VI; 10/12/05 P-2 METROPLAINS DEVELOPMENT. LLC STATE OF MINNESOTA ) ) ss. COUNTY OF ) The forel!oinl! instrument was acknowledl!ed before me this day of . 2005. bv . the of MetroPlains Develonment. LLC. a Minnesota limited liability comnanv on behalf of said comnanv. Notarv Public Sil!nature nal!e for Bluff Block Assessment Al!reement bv and between the City of Elk River and MetroPlains Develonment. LLC and the Sherburne County Assessor. 1824344vRED V2 to VI; 10/12/05 P-3 EXHIBIT A TO BLUFF BLOCK ASSESSMENT AGREEMENT Le!!al Description of Develooment Prooertv I 824344vRED V2 to VI; 10/12/05 P-4 CERTIFICATION BY COUNTY ASSESSOR The undershmed. havin!! reviewed the Bluff Block Assessment A!!reement dated as of . 2005 between the Citv of Elk River. Minnesota and MetroPlains Develonment. LLC. a Minnesota limited liabilitv comnanv: the nlans and snecifications for the Bluff Block Develonment. as defined in the Bluff Block Assessment A!!reement: and the market value currentlv assi!!ned to land un on which the imnrovements are to be constructed and bein!! of the oninion that the minimum market value of $ contained in the Bluff Block Assessment A!!reement annears reasonable, herebv certifies as follows: The undersi!!ned Assessor. bein!! le!!allv resnonsible for the assessment of the above described nronertv. herebv certifies that the minimum market value of $ assi!!ned to such land and imnrovements is reasonable. Countv Assessor for Sherburne Countv STATE OF MINNESOTA ) ) ss. COUNTY OF SHERBURNE ) This instrument was acknowled!!ed before me on . the Countv Assessor of Sherburne Countv. 2005. bv Notarv Public I 824344vRED V2 to VI; 10/12/05 P-5 CONSENT TO BLUFF BLOCK ASSESSMENT AGREEMENT The .~ (the "Bank"). does herebv consent to all terms. conditions and nrovisions of the fore~oin~ Bluff Block Assessment A~reement and a~rees that. in the event it nurchases the Bluff Block Pronertv at a foreclosure sale or acouires the Bluff Block Pronertv throu~h a deed in lieu of foreclosure or otherwise in satisfaction of the indebtedness owed bv the Develoner. it and its resnective successors and assi~ns. shall be bound bv all terms and conditions of the Bluff Block Assessment A~reement. includin~ but not limited to the nrovision which reouires that the minimum market value of the Develonment Pronertv shall be $ as of .Januarv 2. 200 and subseouent assessments throu~h the Termination Date. IN WITNESS WHEREOF. we have caused this Consent to Bluff Block Assessment A~reement to be executed in its name and on its behalf as of this dav of 2005. Bv Its STATE OF MINNESOTA) ) ss. COUNTY OF ) This instrument was acknowled~ed before me this 2005. bv . the of . on behalf of the dav of . a Notarv Public I 824344vRED V2 to VI; 10/12/05 P-6 EXHIBIT 0 JACKSON BLOCK ASSESSMENT AGREEMENT THIS AGREEMENT. dated as of this davof the Citv of Elk River. Minnesota (the "Citv") and MetroPlains Minnesota limited liabilitv comnanv (the "Develoner"). . 2005. is between Develonment. LLC. a WITNESSETH WHEREAS. on or before the date hereof the Citv and Develoner have entered into an Amended and Restated Develonment Af!reement dated as of . 2005 (the "Af!reement") ref!ardinf! certain real nronertv located in the Citv (the "Jackson Block Pronertv"). WHEREAS. it is contemnlated that nursuant to said Af!reement. the Develoner will undertake the demolition and clearance of the existinf! structures located on the .Jackson Block Pronertv and the construction of annroximately 13,000 souare feet of retail snace. tOf!ether with related narkinf! facilities and annroximatelv 32 units of rental housinf!. tOf!ether with related narkinf! facilities. to be constructed on the Jackson Block Pronertv (the "Proiect") in accordance with nlans and snecifications annroved bv the Citv. WHEREAS. the Citv and Develoner desire to establish a minimum market value for the Jackson Block Pronertv and the imnrovements constructed or to be constructed thereon. nursuant to Minnesota Statutes. Section 469.177. WHEREAS. the Develoner has acouired the Jackson Block Pronertv consistinf! of land. the lef!al descrintion of which is attached hereto as Exhibit A. WHEREAS. the Citv and the Assessor have reviewed plans and snecifications for the Proiect. NOW. THEREFORE. the narties to this Af!reement. in consideration of the nromises. covenants and af!reements made bv each to the other. do herebv af!ree as follows: L As of Januarv 2. 200 . the minimum market value. which shall be assessed for the Proiect. shall not be less than $ b This Af!reement shall terminate on the earlier of (i) December 31. 2007. (m the date on which anv Refundinf! Bonds (as defined in the Af!reement) are issued. 3... This Af!reement shall be recorded bv the Citv with the Countv Recorder of Sherburne Countv. Minnesota. The Develoner shall nav all costs of recordinf!. .4... Neither the nreambles nor nrovisions of this Af!reement are intended to. or shall thev be construed as. modifvinf! the terms of the Af!reement between the Citv and the Develoner. I 824344vRED V2 to VI; 10/12/05 Q-l 5. This A~reement shall inure to the benefit of and be bindin~ uoon the successors and assi~ns of the oarties. IN WITNESS WHEREOF. the Citv and the Develooer have caused this A~reement to be executed in their names and on their behalf all as of the date set forth above. (SEAL ) CITY OF ELK RIVER. MINNESOTA STATE OF MINNESOTA) ): ss COUNTY OF SHERBURNE ) The fore~oin~ instrument was acknowled~ed before me this . 2005. bv . the Mavor and Administrator of the Citv of Elk River on behalf of said Citv. dav of . the Notarv Public This Instrument Drafted Bv: Bri~~s and Mor~an. P.A. 2200 First National Bank Buildin~ St. Paul. MN 55101 I 824344vRED V2 to VI; 10/12/05 Q-2 METROPLAINS DEVELOPMENT. LLC STATE OF MINNESOTA ) ) ss. COUNTY OF ) The fore!!oin!! instrument was acknowled!!ed before me this dav of . 2005. bv . the of MetroPlains Develonment. LLC. a Minnesota limited liabilitv comnanv on behalf of said comnanv. Notarv Public Si!!nature na!!e for Jackson Block Assessment A!!reement bv and between the Citv of Elk River and MetroPlains Develonment. LLC and the Sherburne Countv Assessor. 1824344vRED V2 to VI; 10/12/05 Q-3 EXHIBIT A TO JACKSON BLOCK ASSESSMENT AGREEMENT Le!!al Descriotion of Develooment Prooertv 1824344vRED V2 to VI; 10/12/05 Q-4 CERTIFICATION BY COUNTY ASSESSOR The undersil!ned. havinl! reviewed the Jackson Block Assessment Al!reement dated as of . 2005 between the Citv of Elk River. Minnesota and MetroPlains Develonment. LLC. a Minnesota limited Iiabilitv comnanv: the nlans and snecifications for the Jackson Block Develonment. as defined in the Jackson Block Assessment Al!reement: and the market value currentlv assil!ned to land unon which the imnrovements are to be constructed and beinl! of the oninion that the minimum market value of $ contained in the Jackson Block Assessment Al!reement annears reasonable. herebv certifies as follows: The undersil!ned Assessor. beinl! lel!allv resnonsible for the assessment of the above described nronertv. herebv certifies that the minimum market value of $ assil!ned to such land and imnrovements is reasonable. Countv Assessor for Sherburne Countv STATE OF MINNESOTA) ) ss. COUNTY OF SHERBURNE ) This instrument was acknowledl!ed before me on . the Countv Assessor of Sherburne Countv. 2005. bv Notarv Public 1824344vRED V2 to VI; 10/12/05 Q-5 CONSENT TO JACKSON BLOCK ASSESSMENT AGREEMENT The . of (the "Bank"). does herebv consent to all terms. conditions and nrovisions of the fore!!oin!! Jackson Block Assessment A!!reement and a!!rees that. in the event it nurchases the Jackson Block Pronertv at a foreclosure sale or aCQuires the Jackson Block Pronertv throu!!h a deed in lieu of foreclosure or otherwise in satisfaction of the indebtedness owed bv the Develoner. it and its resnective successors and assi!!ns. shall be bound bv all terms and conditions of the .Jackson Block Assessment A!!reement. includin!! but not limited to the nrovision which reQuires that the minimum market value of the Develonment Pronertv shall be $ as of .Januarv 2. 200 and subseQuent assessments throu!!h the Termination Date. IN WITNESS WHEREOF. we have caused this Consent to .Jackson Block Assessment A!!reement to be executed in its name and on its behalf as of this dav of . 2005. Bv Its STATE OF MINNESOTA) ) ss. COUNTY OF ) This instrument was acknowled!!ed before me this 2005. bv . the of . on behalf of the dav of . a Notarv Public 1824344vRED V2 to VI; 10/12/05 Q-6