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Home My WebLink About2011-04-20 PACKET 08.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 4/20/11 PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD ***************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** COUNCIL ACTION REQUEST Consider adopting a resolution approving the actions of the EDA from their April 12, 2011 meeting regarding the Second Amended and Restated Contract for Private Development - PHS /Cottage Grove, Inc. (Presbyterian Homes /Norris Square Project) STAFF RECOMMENDATION Adopt the resolution approving the EDA action and authorizing issuance of the Limited Taxable Tax Increment Revenue Note in the amount of $2,229,292. BUDGET IMPLICATION BUDGETED AMOUNT ADVISORY COMMISSION ACTION DATE ❑ PLANNING ❑ PUBLIC SAFETY PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES /RIGHTS ❑ ECONOMIC DEV. AUTHORITY 4/12/11 El SUPPORTING DOCUMENTS ® MEMO /LETTER: Roland 4/14/11 ® RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS REVIEWED El Fj El Fj —W l� ate COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ El El El El ❑ ❑ ® ❑ ❑ ❑ H: \Council items \City Council Action Form.doc City of • •- Grove Finance Department TO: Honorable Mayor and City Council Ryan Schroeder, City Administrator FROM: Robin Roland, Finance Director DATE: April 14, 2011 SUBJECT: Presbyterian Homes Second Amended and Restated Contract for Private Development INTRODUCTION /DISCUSSION Presbyterian Homes (PHS /Cottage Grove, Inc.) had a development agreement with the City of Cottage Grove for their part in TIF district 1 -12. The 2006 agreement called for TIF payments to PHS for the reimbursement of qualified costs (Section 4.6(b)) as well as "additional payments" (Section 4.6(d)) totaling $433,000 across four years beginning in 2010. Payments on this agreement had not commenced in accordance with the schedule due to the City's contention (and developer agreement) that the project was in default. This default resulted from the lack of required retail /commercial development on parcels identified in the development agreement. The developer requested that the City consider the circumstances of the project and the part of the project which had been completed in addition to (or in spite of) the economic downturn which began in 2008. The EDA, at their December 2010 meeting, agreed that PHS should receive the scheduled 2010 additional payment of $205,000. Further, the EDA directed that a prorated portion of the TIF note be dispersed to the developer in accordance with the development agreement. Subsequent to the EDA'a approval in December, staff proposed changes to the agreement and after discussions with the developer arrived at the attached "Second Amended and Restated Contract for Private Development." Changes to the original agreement included the following: • Elimination of the default provision due to lack of commercial development. It is still to the developer's best interest to build the commercial portion because if they do they receive more tax increment. However, under the new agreement they are not required to build it to receive TIF payments. • TIF payments are therefore restricted to a prorated percentage of the available TIF. This prorated percentage uses the original tax capacity value base of $347,500 and the current tax capacity value of the designated properties. For example, total TCV for the properties for Taxes Payable 2011 is $219,495, so the proration percentage would be $219,495/$347,500 or 63 %. Honorable Mayor, City Council, and Ryan Schroeder Page 2 of 2 The principal amount of the Note is reduced from $2,400,000 to $2,229,292 because the amount of the Available Tax Increment in 2009 and 2010 was insufficient to meet the scheduled payments for those years. Each subsequent year stands alone and there's not recouping lost increment in future years even if there's extra increment. There is also no interest on the note. Despite the lack of commercial development on the site, the developers met the minimum value (and TCV) requirements and paid the taxes on those minimum values in both 2009 and 2010. As such, the assumptions of the TIF note payout were met for those two years. Minimum assessment agreements were subsequently adopted for pay 2011 and 2012. At their meeting on April 12, 2011, the EDA approved this agreement. PHS /Cottage- Grove, Inc. had signed the agreement in advance of the EDA meeting. REQUESTED ACTION Staff requests the City Council adopt the attached resolution approving the actions of the EDA regarding the attached agreement. The resolution further approves of the issuance of the Limited Taxable Tax Increment Revenue Note in the amount of $2,229,292. CITY OF COTTAGE GROVE RESOLUTION NO. 2011- RESOLUTION APPROVING CERTAIN ACTIONS BY THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY WHEREAS, the City of Cottage Grove ( "City") is a municipal corporation organized and operating under the laws of Minnesota; and WHEREAS, the City established the Cottage Grove Economic Development Authority (the "Authority") by Resolution No. 86 -227 approved December 17, 1986 (the "Enabling Resolution "), pursuant to Minnesota Statutes, Chapter 458C, now Minnesota Statutes, sections 469.090 to 469.1081 (the "EDA Act "); and WHEREAS, paragraph 2a of the Enabling Resolution, as amended, prohibits the Authority fiom exercising any powers under the EDA Act without the prior approval of the City; and WHEREAS, on April 12, 2011 the Authority adopted a resolution entitled Resolution Approving Second Amended and Restated Contract for Private Development and Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its $2,229,292 Limited Taxable Tax Increment Revenue Note, Series 2011A (the "EDA Authorizing Resolution "); and WHEREAS, the purpose of the EDA Authorizing Resolution was to conclude an agreement between the Authority and PHS /Cottage Grove, Inc. and PHS /CG Center, LLC (collectively, the "Developer ") regarding the Developer's Norris Square project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cottage Grove, Minnesota, as follows: I. The Second Amended and Restated Contract for Private Development by and among the Authority and the Developer is hereby approved. 2. The Authority is authorized to issue its Limited Taxable Tax Increment Revenue Note, Series 2011A in the principal amount of $2,229,292. 3. The Authority is further authorized to take all actions necessary or convenient to carry out the intent and purpose of this resolution. 384989 RHB CT165 -21 Adopted by the City Council of the City of Cottage Grove, Minnesota, this 20` day of April, 2011. Myron Bailey, Mayor FIX aII* A Caron Stransky, City Clerk 384989 R14B CT165 -21 SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE DEVELOPMENT By and Among COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /COTTAGE GROVE, INC. and PHS /CG CENTER, LLC This document drafted by: KENNEDY & GRAVEN, CHARTERED 470 US Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 382688 RHB CT165 -21 TABLE OF CONTENTS PAGE PREAMBLE..................................................................................................... ............................... 1 ARTICLE I Definitions; Exhibits; Previous Agreement Superseded SectionI.1. Definitions ................................................................................. ..............................2 Section1.2. Exhibits .................................................................................... ............................... 5 Section 1.3. Rules of Interpretation ............................................................. ............................... 5 Section 1.4. Previous Agreements Superseded ............................................ ............................... 6 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority ............................................. ............................... 6 Section 2.2. Representations and Warranties by the Developer ................... ............................... 6 ARTICLE III Acquisition of Development Property; Public and Streetscape Improvements Section 3.1. Acquisition of Development Property ...................................... ............................... 7 Section 3.2. No Representations Regarding Condition of Development Property ..................... 7 Section 3.3. Public and Streetscape Improvements ...................................... ............................... 8 Section 3.4. Subdivision and Land Use ........................................................ ............................... 8 ARTICLE IV Constriction of Minimum Improvements; Public Assistance Section 4.1. Preliminary and Construction Plans; Construction of Minimum Improvements.... 8 Section 4.2. Construction Plans .................................................................... ............................... 8 Section 4.3. Commencement and Completion of Construction ................... ............................... 9 Section 4.4. Certificate of Completion ....................................................... ............................... 10 Section 4.5. Reconstruction of Improvements ........................................... ............................... 10 Section 4.6. Financing of Minimum Improvements .................................. ............................... 10 Section4.7. Records ................................................................................... ............................... 13 Section 4.8. Investment Letter .................................................................... ............................... 13 Section 4.9. No Representation Regarding Available Tax Increment ......... .............................14 Section 4.10. Continued Use for Senior Housing; Local Priority .................. .............................14 ARTICLE V Business Subsidy Act Requirements Section 5.1. Application of Business Subsidy Act ..................................... ............................... 14 382688 RHB CT165 -21 i ARTICLE VI Insurance Section 6.1. Required Insurance ................................................................. ............................... 15 Section 6.2 Evidence of Insurance ............................................................ ............................... 16 ARTICLE VII Collection of Taxes; Assessment Agreements; Reimbursement of Increment Section7.1. Taxes... .................................................................................................................. 16 Section 7.2. Assessment Agreements ......................................................... ............................... 17 Section 7.3 Right to Collect Delinquent Taxes ......................................... ............................... 18 Section 7.4 Use of Tax Increments ........................................................... ............................... 18 ARTICLE VIII Prohibition Against Sale or Assisnment Section 8.1 Prohibition Against Sale or Assignment ............................... ............................... 18 ARTICLE IX Events of Default Section 9.1. Events of Default Defined ...................................................... ............................... 20 Section 9.2. Remedies on Default ................................................................ .............................21 23 Section 9.3. No Remedy Exclusive ............................................................ ............................... 21 Section 9.4. No Additional Waiver Implied by One Waiver ..................... ............................... 22 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Release and Indemnification .................. .............................22 Section 10.2. Equal Employment Opportunity ............................................ ............................... 23 Section 10.3. Restrictions on Use ................................................................. ............................... 23 Section 10.4. Notices and Demands ............................................................... .............................23 Section10.5. Counterparts ........................................................................... ............................... 23 Section 10.6. Disclaimer of Relationships ................................................... ............................... 23 TEsTIMONIUM............................................................................................ ............................... 24 SIGNATURES............................................................................................... ............................... 24 382688 RAB CT165 -21 ii EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY EXHIBIT B LIST OF CONSTRUCTION PLANS AND DRAFT PRELIMINARY IaNOa01Z4Z4i19luI a a0 EXHIBIT C FORM OF CERTIFICATE OF COMPLETION EXHIBIT D ASSESSMENT AGREEMENTS EXHIBIT E LIST OF QUALIFIED COSTS EXHIBIT F FORM OF AUTHORIZING RESOLUTION EXHIBIT G FORM OF INVESTMENT LETTER 382688 RHB CTI65 -21 lll SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE DEVELOPMENT This Second Amended and Restated Contract for Private Development (the "Second Amended Agreement' or the "Agreement'), made this day of 2011, by and among the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota, having its principal office at 7516 80 Street South, Cottage Grove, Minnesota 55016 -3195 (the " Authority"); PHS /Cottage Grove, Inc., formerly known as PHM /Cottage Grove, Inc., a Minnesota non -profit corporation, having its principal offices at 2845 Hamlin Avenue North, Suite 100, Roseville, Minnesota 55113 (the "Residential Developer "); and PHS /CG Center, LLC, a Minnesota limited liability company, having its principal offices at 2845 Hamline Avenue North, Suite 100, Roseville, Minnesota 55113 (the "Commercial Developer "). WITNESSETH: WHEREAS, in 1985 the Authority created Development District No. 1 (the "Development District ") and adopted a program (the "Program ") for it, which Program has been modified periodically thereafter and most recently on October 4, 2006, all in conformance with Minnesota Statutes sections 469.124 through 469.134, the City Development Districts Act (the "Act'); and WHEREAS, in 2001 the Authority established tax increment financing district No. 1 -12 ( "TIF District No. 1 -12 ") in the Development District and adopted a tax increment financing (the "TIF Plan ") related thereto, which TIF Plan was modified on October 4, 2006; and WHEREAS, in order to achieve the objectives of the Program and the TIF Plan, as modified, the Authority has offered certain assistance to the Residential Developer in order to bring about redevelopment of the Development Property, as hereinafter defined, in accordance with the Program, the TIF Plan and this Agreement; and WHEREAS, the Authority believes that the redevelopment of land within TIF District No. 1 -12 pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of Cottage Grove and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable state and local laws and requirements under which the Development District has been undertaken; and WHEREAS, the Authority and the Residential Developer on December 17, 2003, on November 22, 2004, and again on December 14, 2006, entered into agreements regarding a portion of the property which is the subject of this Agreement (the "Previous Agreements "), as hereinafter more specifically defined; and WHEREAS, on December 14, 2006 the Residential Developer transferred all of its light, title and interest in the non - residential portion of the Development Property to the Commercial Developer; and 1 382688 RHS CT165 -21 WHEREAS, the parties now wish to enter into this Second Amended Agreement as an amendment and restatement of the Previous Agreement dated December 14, 2006. NOW, THEREFORE, in consideration of the covenants and the mutual obligations contained herein, the Authority, the Residential Developer and the Commercial Developer hereby covenant and agree with each other as follows: ARTICLE I Definitions, Previous Agreement Suuereeded Section 1.1. Definitions In this Agreement the following terms shall have the meanings given unless a different meaning clearly appears from the context: "Act" means the City Development Districts Act, Minnesota Statutes sections 469.124 through 469.134, as amended. "Administrative Expenses" means all costs of the Authority other than the amounts paid as reimbursement of the Qualified Costs. Administrative Expenses includes out of pocket expenses and amounts paid by the Authority for legal counsel, financial consultants and for the services of Authority or City staff directly attributed to the Developer's project. The Authority intends to retain 10 percent of the Tax Increment to reimburse itself for the Administrative Expenses. "Agreement" means this Second Amended and Restated Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Assessment Agreement" means one or more of the three agreements attached hereto as Exhibit D, among the Authority, the Residential Developer or the Commercial Developer and the Assessor and entered into pursuant to Article VII of this Agreement, which establish Minimum Market Values for the Development Property and the Minimum hnprovements- Residential and the Minimum Improvements - Commercial, respectively. "Assessor" means the assessor for Washington County, Minnesota. "Authority" means the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota. "Authorizing Resolution" means the resolution of the Authority authorizing issuance of the Note in the form attached hereto as Exhibit F. "Available Tax Increment" means the Tax Increment paid within the previous six months to the Authority by the County after January 1, 2009, and before December 31, 2018, which remains after the Authority has (i) satisfied its administrative obligations under state law; and (ii) 2 382688 RHB Cr165 -21 retained the first 10 percent of the Tax Increment thereafter for reimbursement of the Administrative Expenses. `Business Subsidy Act' means Minnesota Statutes sections I I6J.993 through I I6J.995, as amended. "Certificate of Completion" means the certificate, in the form contained in Exhibit C attached hereto, which was provided to the Residential Developer upon completion of the Minimum Improvements - Residential and will be provided to the Commercial Developer upon completion of the Minimum Ilmprovements- Commercial "City" means the city of Cottage Grove, a municipal corporation under the laws of Minnesota. "Construction Plans" means the final plans for construction of the Minimum Improvements - Residential submitted by the Developer and approved by the Authority pursuant to section 4.2 of this Agreement and listed in Exhibit B attached hereto. "County" means Washington County, Minnesota. "Developer" means, collectively, the Residential Developer (PHS /Cottage Grove, Inc., a Minnesota non -profit corporation, formerly known as PHM /Cottage Grove, Inc.), its successors and assigns and the Commercial Developer (PHS /CG Center, LLC, a Minnesota limited liability company) and its successors and assigns. "Development Property" means the real property upon which the Minimum Improvements have been or will be constructed, which property is legally described in Exhibit A attached hereto. "EDA Act" or `Economic Development Authority Act" means Minnesota Statutes sections 469.090 through 469.108 1, as amended. "Event of Default" means an action by the Developer or the Authority listed in Article IX of this Agreement. "Indenture" means the Trust Indenture, dated on or after December 1, 2006, between the City and Wells Fargo Bank, National Association, executed in conjunction with the issuance of the Series 2006 Bonds. "Maximum Annual Debt Service" means the total of all principal and interest payments due on the Series 2006 Bonds, not including payments due in the year in which the Series 2006 Bonds mature, divided by the number of years the Series 2006 Bonds are outstanding. "Minimum Improvements" means, collectively, all of the improvements constructed on the Development Property in accordance with the Construction Plans submitted to and approved by the Authority. The Minimum Improvements include the Minimum Improvements- Residential 3 382688 RHB Cr165 -21 and may include the Minimum Improvements - Commercial. After completion of the Minimum Improvements, the term shall mean the Development Property as improved by the Minimum Improvements. "Minimum Market Value" means the minimum market values established for the Minimum Improvements- Residential and the Minimum Improvements- Commercial in the Assessment Agreements attached hereto as Exhibit D or such other minimum market values as may subsequently be agreed upon by the parties in one or more amended Assessment Agreements. "Net Revenues Available for Debt Service" has the same meaning of that term in the Indenture. "Note" means the Limited Taxable Tax Increment Revenue Note, Series 201 IA to be issued by the Authority, substantially in the form contained in the Authorizing Resolution. "Preliminary Plans" means the plans, drawings and specifications for the construction of the Minimum Improvements- Commercial, a draft of which have been submitted by the Developer and are listed on Exhibit B attached hereto. "Previous Agreements" means that certain Contract for Private Development by and between Cottage Grove Economic Development Authority and PHM Cottage Grove, Inc., dated December 17, 2003; that certain Contract for Private Development by and between Cottage Grove Economic Development Authority and PHM Cottage Grove, Inc. dated November 22, 2004, filed March 22, 2005, as Document No. 1155496; and that certain Amended and Restated Contract for Private Development by and between the Authority and PHS /Cottage Grove, Inc., formerly known as PHM /Cottage Grove, Inc. dated December 14, 2006 and filed December 21, 2006 as Document No. 1173364, all in the office the Registrar of Titles, Washington County, Minnesota. "Public Improvements" means those infrastructures and other improvements constructed by the City for the benefit of the Development Property and other land, as more fully specified in section 3.3 of this Agreement. "Qualified Costs" means those costs to be reimbursed to the Developer and listed on Exhibit E attached hereto. "Sale" means any sale, conveyance, lease, exchange, forfeiture or other transfer of the Developer's interest in the Minimum Improvements or the Development Property, whether voluntary or involuntary, as more fully described in section 8.1 of this Agreement. "Series 2006 Bonds" means, collectively, the City of Cottage Grove Senior Housing Revenue Bonds (PHS /Cottage Grove, Inc. Project), Series 2006A Bonds and the City of Cottage Grove Subordinate Senior Housing Revenue Bonds (PHS /Cottage Grove, Inc. Project), Series 2006B Bonds. 4 382688 RUB CT165 -21 "State" means the state of Minnesota. "Tax Increment" means that portion of the total tax increment actually paid by the County to the Authority prior to the Termination Date with respect to the Development Property and the Minimum Improvements- Residential and the Minimum Improvements - Commercial which is in excess of the tax increment paid on the first $4,025,000 in market value thereof. "Tax Increment Financing Act" or "TIF Act" means Minnesota Statutes sections 469.174 through 469.179, as amended. "Tax Increment Financing District" or "TIF District" means the Authority's TIF District No. 1 -12. "Tax hncrement Financing Plan" or "TIF Plan" means the tax increment plan for TIF District No. 1 -12, as amended. "Tax Official" means the Assessor, County auditor, 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 i) the date of the last Available Tax Increment payment to the Developer under this Agreement or the Note; ii) the date the TIF District terminates by law; or iii) the date the Authority has received sufficient Tax Increment with respect to the Minimum Improvements to reimburse itself for the Administrative Expenses and the cost of the Public Improvements, whichever occurs last. "Unavoidable Delays" means delays which are the direct result of unanticipated adverse weather conditions; strikes or other labor troubles; fire or other casualty to the Minimum Improvements; litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays; or, except those of the Authority reasonably contemplated by this Agreement, any acts or omissions of any federal, State or local governmental unit which directly result in delays in construction of the Minimum Improvements. Section 1.2. Exhibits The following exhibits are attached to and by reference made a part of this Agreement: Exhibit A. Legal description of the Development Property Exhibit B. List of Construction Plans and Draft Preliminary Plan Documents Exhibit C. Form of Certificate of Completion Exhibit D. Assessment Agreements Exhibit E. List of Qualified Costs Exhibit F. Form of Authorizing Resolution Exhibit G. Form of Investment Letter Section 1.3. Rules of Interpretation (a) This Agreement shall be interpreted in accordance with and governed by the laws of Minnesota. 5 382688 RH6 CT165 -21 (b) The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision, refer to this Agreement as a whole rather than any particular section or subdivision hereof. (c) References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. (d) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. Section 1.4. Previous Agreements Superseded. This Agreement supersedes and is substituted for the Previous Agreements, which shall have no further force and effect upon the execution and recording of this Agreement. m Representations and Warranties Section 2.1. Representations by the Authority The Authority makes the following representations as the basis for the undertakings on its part herein contained: (a) The Authority is a public body corporate and politic under the laws of Minnesota. The Authority has the authority to enter into this Agreement and carry out its obligations hereunder. (b) The persons executing this Agreement and related agreements and documents on behalf of the Authority have the authority to do so and to bind the Authority by their actions. (c) Development District No. 1 is a development district within the meaning of the Act and was created, adopted and approved in accordance with the terms of the Act. (d) TIF District No. 1 -12, as originally established and as expanded on October 4, 2006, is a redevelopment tax increment financing district within the meaning of the TIF Act. (e) The Authority has received no notice or communication from any local, State or federal official that the activities of the Developer or the Authority in the Development District may be or will be in violation of any environmental law or regulation. The Authority is aware of no facts the existence of which would cause it to be in violation of any local, State or federal environmental law, regulation or review procedure. Section 2.2. Representations and Warranties by the Developer The Developer makes the following representations as the basis for the undertakings on its part herein contained: 6 382688 RHn CT765 -21 (a) The Residential Developer is a Minnesota non -profit corporation, and the Commercial Developer is a Minnesota limited liability company, each of which is duly organized and in good standing under the laws of Minnesota. The Developer is not in violation of any provisions of its organizational documents and has the authority to enter into this Agreement and carry out its obligations hereunder. The persons executing this Agreement and related agreements and documents on behalf of the Developer have the authority to do so and to bind the Developer by their actions. (b) The Residential Developer has constructed and will maintain the Minimum Improvements - Residential on the Development Property in substantial accordance with the terms of this Agreement, the Program, the TIF Plan, the Construction Plans and all local, State and federal laws and regulations, including, but not limited to, environmental, zoning, building code and public health laws and regulations. (c) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions or any restriction or any evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (d) Due to the high cost of land acquisition, leasehold termination and demolition of existing structures in the Development District, the Developer would not have been willing to construct the Minimum hnprovements but for the commitment by the Authority to grant the financial and other assistance outlined in this Agreement. The Authority's use of Tax Increment for such assistance is essential to the Developer's ability to carry out its obligations under this Agreement. ARTICLE III Acquisition of Development Property' 'Public and Streetscape Improvements Section 3.1. Acquisition of Development Property The Developer has acquired all of the Development Property. Section 3.2. No Representations Regarding Conditions of Development Property In acquiring the Development Property, the Developer has conducted its due diligence with regard to the suitability of the Development Property for its intended purpose. The Authority has no knowledge of and has made no representations to the Developer regarding the soil conditions on the Development Property or the suitability of the Development Property for construction of the Minimum Improvements or for any other purpose intended by the 'Developer. Likewise, the Authority has no knowledge of and has made no representations to the Developer regarding the presence or absence of pollution, contamination or hazardous substances on the Development Property. The Authority shall have no obligation or liability to the Developer for any defect or 7 382688 RHB CT165 -21 unsuitability with respect to the soil conditions or the presence of any pollution, contamination or hazardous substances on the Development Property. Section 3.3. Public and Streetseape Improvements The City has constructed public infrastructure improvements (the "Public Improvements ") for the benefit of the Development Property and other land. The Public Improvements include certain infrastructure improvements, including but not limited to lighting, signage, banners, sidewalks and district storm water improvements. The Authority intends to use Tax Increment to reimburse the City for a portion of the cost of the Public Improvements. Section 3.4. Subdivision and Land Use The Developer requested and received approval from the City for a plat of the Development Property to accommodate separation of the residential and commercial portions of the Minimum Improvements. The City also approved the necessary change in the comprehensive plan designation and zoning of the Development Property to accommodate the Developer's intended uses. The Commercial Developer acknowledges that if it proceeds to construct the Minimum Improvements- Commercial, it will be required to enter into a subdivision or other agreements with the City regarding development of the Minimum Improvements - Commercial, which agreements will include, among other things, provisions related to on -site storm water management meeting current water quality and storm retention standards. The Commercial Developer will be responsible for applying for and obtaining the building permit and all other permits or approvals necessary to allow construction of the Minimum Improvements - Commercial. ARTICLE IV Construction of Minimum Improvements, Assistance Section 4.1. Preliminary and Construction Plans; Construction of Minimum Improvements The Authority has approved the Construction Plans for the Minimum Improvements - Residential. The Developer has submitted a draft of the Preliminary Plans to the Authority for the Minimum Improvements - Commercial. The draft of the Preliminary Plans include a site plan of the Development Property showing the footprint of the Minimum Improvements - Commercial. The draft Preliminary Plans and the Construction Plans are listed on Exhibit B attached hereto. Section 4.2. Construction Plans (a) The Residential Developer has completed construction of the Minimum ]improvements- Residential. (b) When ready to proceed with construction of the Minimum Improvements- Commercial, the Commercial Developer shall submit Construction Plans to the Authority for the Minimum Improvements- Commercial. The Construction Plans shall provide for the construction of the Minimum Improvements - Commercial and shall be in substantial conformity with the Preliminary Plans and this Agreement. The Authority will approve the Construction Plans if they (1) conform to the Preliminary Plans; (2) conform to all applicable federal, State and local laws, ordinances, rules and regulations, including the City's zoning ordinance and subdivision 8 382688 RHB CT165 -21 regulations; (3) are adequate to provide for the construction of the Minimum Improvements - Commercial; (4) are consistent with the City's architectural and design guidelines for the Gateway area; (5) conform to the State building code; (6) conform to any zoning, subdivision or other land use granted by the City concerning the Development Property; and (7) include an exterior entry area decorative fountain feature at a minimum cost of $50,000. No approval by the Authority shall relieve the Commercial Developer of the obligation to comply with the terms of this Agreement, or the terms of any applicable federal, State and local laws, ordinances, rules and regulations in the construction of the Minimum Improvements - Commercial. No approval by the Authority shall relieve the Commercial Developer of the obligation to apply for a building permit or other approvals concerning the Minimum Improvements - Commercial. No approval by the Authority shall constitute a waiver of an Event of Default. The Commercial Developer shall also submit the Construction Plans to the City for final planning and building review. After submission and approval of the Construction Plans, the Commercial Developer agrees that it will construct the Minimum Improvements - Commercial on the Development Property in accordance with the Construction Plans. (c) If the Commercial Developer desires to make any material change in the Construction Plans after their approval by the Authority, including any change to the design or materials of the Minimum Improvements- Commercial or any other change which would also require review or reapproval under any applicable code, ordinance or regulation, the Commercial Developer shall submit the proposed change to the Authority for its approval. If the proposed change conforms to the requirements of this section 4.2 with respect to the original Construction Plans or is otherwise acceptable to the Authority, the Authority shall approve the proposed change. Such change in the Construction Plans shall be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Commercial Developer, setting forth in detail the reasons therefor within 15 days after receipt of the written notice of such change from the Commercial Developer. (d) At all times prior to the Termination Date, the Residential Developer and the Commercial Developer will maintain, preserve and keep the Minimum Improvements- Residential and the Minimum Improvements - Commercial, if constructed, or cause the same to be maintained, preserved and kept in good repair and condition. The Developer recognizes that it is because the Developer has agreed to construct the Minimum Improvements that the Authority is willing to offer the assistance outlined in this Agreement. The Developer acknowledges that, in addition to the requirements of this Agreement, construction of the Minimum Improvements will necessitate compliance with other reviews and approvals by the City and possibly other governmental agencies and agrees to submit all applications for and pursue to their conclusion all other approvals needed prior to constructing the Minimum Improvements. Section 4.3. Commencement and Completion of Construction The Minimum Improvements - Residential have been completed by the Residential Developer. All work with respect to the Minimum Improvements - Commercial to be constructed or provided by the Commercial Developer on the Development Property shall be in conformity with the Construction Plans. The Commercial Developer shall make such reports to the Authority regarding construction of the Minimum Improvements - Commercial as the Authority deems necessary or helpful in order to monitor progress on construction of the Minimum 9 382688 RHB Crr 65 -21 Improvements - Commercial. The Commercial Developer shall pay all fees and charges due to the City associated with development of the Development Property and construction of the Minimum Improvements - Commercial, including but not Limited to storm water, sanitary sewer and water area charges, park dedication fees, sanitary sewer and water connection fees, MCES SAC charges, and building permit, plan check state surcharge and associated fees. Section 4.4. Certificate of Completion (a) The Authority has provided the Residential Developer with a Certificate of Completion regarding the Minimum Improvements- Residential. After substantial completion of the Minimum bnprovements— Commercial in accordance with the applicable Construction Plans and all terms of this Agreement, the Authority will furnish the Commercial Developer with a Certificate of Completion in the form of Exhibit C attached hereto. Such certification by the Authority shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligations of the Commercial Developer to construct the Minimum Improvements - Commercial. The Certificate of Completion shall only be issued after issuance of a certificate of occupancy by the City for the last building or element of the Minimum Improvements- Commercial. (b) The Certificate of Completion provided for in this section 4.4 shall be in such form as will enable it to be recorded in the proper County office for the recordation of deeds and other instruments pertaining to the Development Property. If the Authority shall refuse or fail to provide such certification in accordance with the provisions of this section 4.4, the Authority shall, within 30 days after written request by the Commercial Developer, provide the Commercial Developer with a written statement, indicating in adequate detail in what respects the Commercial Developer has failed to complete the Minimum Improvements - Commercial in accordance with the provisions of the Agreement, or is otherwise in default of a material term of this Agreement, and what measures or acts will be necessary, in the opinion of the Authority, for the Commercial Developer to take or perform in order to obtain such certification. Section 4.5. Reconstruction of Improvements If the Minimum Improvements - Residential or the Minimum hmprovements- Commercial are damaged or destroyed before or after completion thereof and issuance of a Certificate of Completion, but prior to the Termination Date, the Residential Developer agrees, for itself and its successors and assigns, to reconstruct the Minimum Improvements - Residential and the Commercial Developer agrees, for itself and its successors and assigns, to reconstruct the Minimum Improvements - Commercial to values at least equal to the Minimum Market Value established in the respective Assessment Agreements then in effect within one year of the date of the damage or destruction. No delay or failure by the Developer or any successor or assign to reconstruct the Minimum Improvements as required by this section 4.5 shall alter or limit the Developer's obligations under the Assessment Agreement, which shall remain in full force and effect until the Termination Date. The Minimum Improvements shall be reconstructed in accordance with the construction plans approved by the Authority in accordance with this Agreement. The Developer's obligation to reconstruct the Minimum Improvements pursuant to this section 4.5 shall end on the Termination Date. Section 4.6. hinancing of Minimum Improvements (a) In accordance with the terms and conditions of this Agreement, the Residential Developer has constructed the Minimum Improvements - Residential. In order to assist in making the redevelopment of the Minimum 10 382688 RHB CT165 -21 Improvements - Residential feasible, the Authority will, subject to the terms and conditions of this Agreement and the Authorizing Resolution, reimburse the Residential Developer for up to $2,229,292 plus an additional $433,000 of the Qualified Costs associated with the construction of the Minimum Improvements - Residential. The Authority will have no obligations with respect to the Minimum Improvements- Residential except to reimburse the Residential Developer for these Qualified Costs in accordance with this section 4.6 and the Authorizing Resolution. (b) To finance reimbursement of a portion of the Qualified Costs, the Authority will issue the Note in the principal amount of $2,229,292 in substantially the form set forth in the Authorizing Resolution attached hereto as Exhibit F. The Note will be dated as of the date of delivery and will have a final maturity no later than the Termination Date. No interest will be paid on the Note. The Residential Developer's consideration in exchange for the Authority's issuance of the Note will be the incurring by the Residential Developer of the Qualified Costs in an amount at least equal to the principal amount of the Note. The Residential Developer expressly accepts all terms of the Authorizing Resolution, which are incorporated herein by reference. The Note may be sold or transferred only with the prior written authorization of the Authority, which authorization shall not be unreasonably withheld. (c) The Note will be issued within 30 days after satisfaction of the following conditions precedent: (i) The Residential Developer has submitted and the Authority has approved all information and documentation required by this Agreement as a condition precedent to issuance of the Note, including delivery of the Investment Letter specified in section 4.8 of this Agreement; (ii) The Residential Developer has provided the Authority with documentation showing that the Residential Developer has incurred and paid the amount of the Residential Developer's Qualified Costs at least equal to the principal amount of the Note; (iii) The Residential Developer has executed the Assessment Agreement - Residential and the Commercial Developer has executed the Assessment Agreement - Commercial; (iv) The City has issued a Certificate of Completion for the Minimum Improvements - Residential; and (v) There is no uncured Event of Default under this Agreement. Notwithstanding anything in this Agreement to the contrary, the parties hereto aclamowledge that the Developer made tax payments in payable years 2009 and 2010 pursuant to Assessment Agreements with a Minimum Market Value for the Minimum Improvements- Residential of $13,900,000 for taxes payable in 2009 and 2010 and with a Minimum Market Value for the Minimum Improvements- Commercial of $1,600,000 for taxes payable in 2009 and $8,725,000 for taxes payable in 2010. The parties 11 382688 RHB CT165 -21 subsequently entered into amended Assessment Agreements, copies of which are attached hereto as Exhibit D. Within 10 days of the original date of issuance of the Note, the Authority agrees to pay to the Residential Developer $313,767 in full satisfaction of the Authority's obligations under the Note for years 2009 and 2010. This amount represents the sum of the Available Tax Increment of $111,045 and $202,722 received by the Authority in years 2009 and 2010, respectively. For taxes payable beginning in 2011 through the Termination Date, Available Tax Increment shall be calculated for payment under the Note in accordance with the following formula: total tax capacity valuation of the Minimum Improvements - Residential and the Minimum Improvements - Commercial = $347,500. The resulting percentage (the "Proration Percentage ") shall be the percent of the Available Tax Increment the Authority shall be obligated to pay under the Note for the respective year. Such payment shall be considered full satisfaction for each respective year of the Authority's obligation under the payment schedule of the Note and no deficiency in Available Tax Increment to fully satisfy payments under the payment schedule of the Note in any year shall be payable in any subsequent year. In no year shall the Proration Percentage exceed 100 percent of the scheduled payment under the Note. (d) In addition to payments under the Note and in order to ensure sufficient debt service coverage for the Minimum Improvements - Residential, the Authority agrees to use other funds available to it to reimburse the Residential Developer for a portion of the Qualified Costs. If the Developer first provides documentation to the Authority that the Developer has incurred and paid Qualified Costs of at least $433,000 in addition to those payable under the Note and the conditions precedent for issuing the Note set forth in sections 4.6(c)(iii) and 4.6(c)(iv) have been satisfied, the Authority agrees to make the additional payments to the Developer in the following years and amounts: 2010 $205,000 2011 $140,000 2012 $ 73,000 2013 $ 15,000 The 2010 payment will be made by the Authority within 10 days of the original date of issuance of the Note. Payments due in subsequent years will be made by the Authority on August I of each year. The Authority will reimburse itself for these additional payments from Tax Increment but the Authority's right to reimburse itself from Tax Increment shall be subordinate in priority to the payments due under the Note. (e) The City issued its Series 2006 Bonds, the proceeds of which were used by the Residential Developer to finance a portion of the Minimum Improvements — Residential. The additional payments set forth in section 4.6(d) will be provided to the Residential Developer to ensure that the ratio of debt service coverage on the Series 2006 Bonds to the net revenues of the Minimum Improvements - Residential meets certain minimums during the years in which those payments are provided. The debt service coverage targets (the "Debt Service Coverage Targets ") for those years are as follows: 12 382688 RHB CT165 -21 2010 1.25% 2011 1.27% 2012 1.29% 2013 1.31% For each of the years 2010 through 2013, the debt service coverage ratio will be calculated by dividing the Net Revenues Available for Debt Service during that fiscal year by the Maximum Annual Debt Service. Within 120 days after the last day of the Residential Developer's fiscal year in 2010 through 2013, the Residential Developer agrees to provide the Authority complete audited financial statements for the Residential Developer, which financial statements may be consolidated with affiliates of the Residential Developer if there is supplemental combined information that includes a statement of financial position and statement of activities, together with the related audit report of an accountant showing the revenues of the Minimum Improvements - Residential. At the same time, the Residential Developer will provide the Authority a certificate of the Residential Developer's chief financial officer setting out the Net Revenues Available for Debt Service for the last fiscal year, the Maximum Annual Debt Service, and the ratio of such Net Revenues Available for Debt Service to Maximum Annual Debt Service. On or after January 1, 2015, the Authority will determine whether Net Revenues Available for Debt Service exceeded the Debt Service Coverage Targets. The debt service coverage for years 2010 through 2013 will be reviewed on a cumulative basis. If the Authority determines that the actual debt service coverage during the period 2010 through 2013 exceeded the Debt Service Coverage Targets on a cumulative basis, the Residential Developer agrees to repay to the Authority that portion of the $433,000 equal to the amount by which the Net Revenues Available for Debt Service for the years 2010 through 2013 exceeded the Debt Service Coverage Targets. In no event, however, will the Residential Developer be required to repay to the Authority more than $433,000 under this section 4.6(e). Failure by the Residential Developer to repay to the Authority any amount required under this section 4.6(c) within 90 days after demand by the Authority shall constitute an Event of Default under this Agreement. Section 4.7. Records The Authority may at all reasonable times, after reasonable notice, inspect, examine and copy all books and records of the Developer relating to the Minimum Improvements. These records shall be kept and maintained by the Developer until four years after the Termination Date. Section 4.8. Investment Letter As a condition precedent to the Authority's having any obligation under this Agreement, the Residential Developer shall deliver to the Authority, on or before the date of adoption of the Authorizing Resolution, an investment letter executed by the Residential Developer as purchaser of the Note and in substantially the form set forth at Exhibit G. 13 382688 RHB CT165 -21 Section 4.9. No Representation Regarding Available Tax Increment The Authority's financial commitment for reimbursement of that portion of the Qualified Costs payable under the Note is a revenue obligation only and will be paid by the Authority only out of Available Tax Increment. The Authority makes no representations or warranties that the Available Tax Increment will be sufficient to reimburse the Developer for the specified portion of the Qualified Costs or to make payments under the Note. The Developer acknowledges that Available Tax Increment is subject to calculation by the County and changes in State law and that some or all of the specified portion of the Qualified Costs may not be reimbursed prior to the Termination Date. The Developer acknowledges that the estimates of Available Tax Increment which may have been made by the Authority or its agents, officers or employees are estimates only, are made for the sole use and benefit of the Authority and are not intended for the Developer's reliance. The Developer further understands and acknowledges that no assistance is being provided by the Authority or the City hereunder except through issuance of the Note and pursuant to section 4.6(d) of this Agreement, and that the Developer shall have no claim against any funds of the Authority or the City except as set forth in this Agreement, the Authorizing Resolution or the Note. Section 4.10. Continued Use for Senior Housings Local Priority (a) The Minimum Improvements- Residential are intended for use by seniors. The Residential Developer agrees to restrict the use of the Minimum Improvements - Residential to seniors until the Termination Date. For purposes of this section 4. 10, senior housing shall mean that every residential unit shall be occupied by at least one person age 55 or older and that no persons less than 18 years of age shall reside therein. (b) Subject to the Residential Developer's obligations to restrict housing to seniors, the Residential Developer agrees that, to the extent permitted by law, the Residential Developer will give current residents of Cottage Grove priority preference on any waiting list or leasing order created, maintained or utilized in renting units of the Minimum Improvements- Residential until the Termination Date. ARTICLE V Business Subsidy Act Requirements Section 5.1. Application of Business Subsidy Act All assistance being offered by the Authority under this Agreement is allocated to the Minimum Improvements- Residential. Pursuant to section 116J.993, subd. 3 (7) of the Business Subsidy Act, assistance for housing is exempt from the requirements of the Business Subsidy Act. 14 382688 RHB CT165 -21 ARTICLE VI Insurance Section 6.1. Required Insurance (a) The Developer agrees to provide and maintain at all times during the process of constructing the Minimum Improvements and, from time to time at the request of the Authority, furnish the Authority with proof of payment of premiums on: (i) Builder's risk insurance, written on the so- called `Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100 %) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so called "all risk" form of policy; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above required limits, an umbrella excess liability policy may be used); and (iii) Workers' compensation insurance, with statutory coverage. The policies of insurance required pursuant to clauses (i) and (ii) above shall be placed with financially sound and reputable insurers licensed to transact business in Minnesota. The policy of insurance delivered pursuant to clause (i) above shall contain an agreement of the insurer to give not less than 30 days' advance written notice to the Authority in the event of cancellation of such policy or change affecting the coverage thereunder. (b) Upon completion of construction of the Minimum Improvements, and prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and /or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, heating system explosion, water damage, demolition cost, debris removal, collapse and flood, in an amount not less than the full insurable replacement value of the Minimum Improvements or the Minimum Market Value, whichever is greater. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of coinsurance provisions or otherwise, without the prior consent thereto in writing by the Authority. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements and shall be determined from time to time at the request of the Authority, but not more frequently than once every three 15 382688 RHB CT165 -21 years, by an insurance consultant or insurer, selected and paid for by the Developer and approved by the Authority; and (ii) Such other insurance, including worker's compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self- insured with respect to all or any part of its liability for worker's compensation. Section 6.2. Evidence of Insurance All insurance required in this Article VI shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of Minnesota to assume the risks covered thereby. The Developer agrees to deposit with the Authority copies of policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article VI, each policy shall contain provision that the insurer shall not cancel nor materially modify it without giving written notice to the Developer and the Authority at least 30 days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies; or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. ARTICLE VII Collection of Taxes; Assessment Agreements; Reimbursement of Increment Section 7.1. Taxes The Developer agrees that until the Termination Date: (1) it will not seek administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to any portion of the Minimum Improvements or the Development Property or raise the inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; (2) it will not seek administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to any portion of the Minimum Improvements or the Development Property or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; and (3) it will not cause a reduction below the Minimum Market Value paid in respect of any portion of the Minimum Improvements through: (a) willful destruction of the Minimum Improvements or any part thereof; (b) willful refusal to reconstruct damaged or destroyed property pursuant to section 4.5 of this Agreement; 16 382688 RHB CT165 -21 (c) a request to the County assessor to reduce the assessed value of the Minimum Improvements below the Minimum Market Value of all or any portion of the Minimum Improvements; (d) a petition to the board of equalization of the County to reduce the assessed value of the Minimum Improvements below the Minimum Market Value of all or any portion of the Minimum Improvements; (e) a petition to the board of equalization of the State or the commissioner of revenue of the State to reduce the assessed value of the Minimum Improvements below the Minimum Market Value of all or any portion of the Minimum Improvements; (f) an action in a district court of the State or the tax court of the State seeking a reduction in the assessed value of the Minimum Improvements below the Minimum Market Value of the Minimum hmprovements; (g) an application to the commissioner of revenue of the State or to any local taxing jurisdiction requesting an abatement of real property taxes regarding the Development Property or Minimum Improvements; (h) any other proceedings, whether administrative, Legal or equitable, with any administrative body within the County or the State or with any court of the State or the federal government regarding the Development Property or Minimum Improvements; or (i) a transfer of the Development Property or Minimum Improvements, or any part thereof, to an entity exempt from the payment of real property taxes under State law. The Developer shall not, until the Termination Date, apply to any taxing jurisdiction for a deferral or abatement of property tax on the Development Property or Minimum Improvements. Section 7.2. Assessment Agreements The Residential Developer, the Commercial Developer and the Authority have executed Assessment Agreements pursuant to Minnesota Statutes section 469.177, subd. 8, specifying the Minimum Market Values for the Development Property together with the respective Minimum Improvements. The current Assessment Agreements are attached hereto as Exhibit D. Nothing in the Assessment Agreements shall limit the discretion of the Assessor to assign an assessed value to the Development Property and Minimum Improvements in excess of such Assessor's Minimum Market Values nor prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in such market values for property tax purposes; provided, however, that the Developer shall not seek a reduction of such assessed values below the Assessor's Minimum Market Values set forth in the Assessment Agreements in any year so long as such Assessment Agreements shall remain in effect. The Assessment Agreements shall remain in effect until the Termination Date; provided, that if at any time before the Termination Date either Assessment Agreement is found to be terminated or unenforceable by any Tax Official or court of competent jurisdiction, the Minimum Market Values described in this section 7.2 shall remain an obligation of the Developer or its successors and assigns (whether or not such value is binding on the Assessor), it 17 382688 RHB CT165 -21 being the intent of the parties that the obligation of the Developer to maintain, and not seek reduction of, the Minimum Market Values specified in this section 7.2 is an obligation under this Agreement as well as under the Assessment Agreements, and is enforceable by the Authority against the Developer, its successors and assigns in accordance with the terms of this Agreement. Section 7.3. Right to Collect Delinquent Taxes The Developer acknowledges that the Authority is providing substantial aid and assistance to the Developer. The Developer understands that the real estate taxes on the Development Property and the Minimum Improvements must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that the Developer is also obligated at all times prior to the Termination Date by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements. The Developer acknowledges that at all times prior to the Termination Date this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the County auditor. In any such suit, the Authority shall also be entitled to recover its reasonable out -of- pocket costs, expenses and attorney fees. Section 7.4. Use of Tax Increments Except with respect to its obligations to the Developer under this Agreement in connection with Available Tax Increment, the Authority shall be free to use any Tax Increment it receives with respect to the Minimum Improvements for any purpose for which such Tax Increment may lawfully be used under the TIP Plan and pursuant to the provisions of State law, including payment to the City for the Public Improvements, and the Authority shall have no obligations to the Developer with respect to the use of such Tax Increment. ARTICLE VIII Prohibition A$ajnj Sate or Assi gnment Section 8.1. Prohibition Against Sale or Assignment The Developer represents and agrees that its purchase of the Development Property and its other undertakings pursuant to this Agreement, are, and will be used, for the purpose of redevelopment of the Development Property and not for speculation in land holding. The Developer represents and agrees that: (a) Prior to issuance of the Certificate of Completion for the Minimum Improvements, except by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and will not make or create or suffer to be made or created any total or partial Sale in any mode or form of or with respect to the Minimum Improvement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do the same, without the prior written approval of the Authority unless the Developer remains liable and 18 382688 RHB M65 -21 bound by this Agreement in which event the Authority's approval is not required. Any such Sale shall be subject to the provisions of this Agreement. (b) In the event the Developer, upon Sale of the Development Property or any portion thereof, seeks to be released from its obligations under this Agreement as to the portions of the Minimum Improvements or Development Property that is subject to the Sale, the Authority shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such Sale that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer as to the portion of the Minimum Improvements or Development Property subject to the Sale. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable among the County land records, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Developer under this Agreement as to the portion of the Minimum Improvements or Development Property subject to the Sale and agreed to be subject to all the conditions and restrictions to which the Developer is subject as to such portion; provided, however, that the fact that any transferee to, or any other successor in interest whatsoever of, the Minimum Improvements or Development Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Development Property or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no Sale of, or change with respect to, ownership in the Minimum Improvements or Development Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or remedies or controls provided in or resulting from this Agreement with respect to the Minimum Improvements or Development Property that the Authority would have had, had there been no such Sale. In the absence of specific written agreement by the Authority to the contrary, no Sale or approval by the Authority 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. (iii) Any and all instruments and other legal documents involved in effecting the Sale of any interest in this Agreement or the Minimum Improvements or Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. 19 382688 RHB CT165 -21 (c) Any notice of rejection shall contain detailed reasons for the rejection. The Authority's approval of any Sale shall not be unreasonably withheld. In the event the foregoing conditions are satisfied, the Developer shall be released from its obligation under this Agreement as to the portion of the Minimum Improvements or Development Property that is subject to the Sale. (d) After issuance of the Certificate of Completion for the Minimum Improvements, the Developer may transfer or assign any portion of the Development Property or the Developer's interest in this Agreement for which a Certificate of Completion has been issued, without the prior written consent of the Authority, provided that the transferee or assignee is bound by all the Developer's obligations hereunder. The Developer shall submit to the Authority written evidence of any such transfer or assignment, including the transferee or assignee's express assumption of the Developer's obligations under this Agreement. If the Developer fails to provide such evidence of transfer and assumption, the Developer shall remain bound by all it obligations under this Agreement. F.VNINWHM Events of Default Section 9.1. Events of Default Defined Each and every one of the following shall be an Event of Default under this Agreement: (a) Failure by the Developer to commence and complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement, including the tinning thereof, unless such failure is caused by an Unavoidable Delay; (b) Failure by the Developer to pay real estate taxes or special assessments on the Development Property or Minimum Improvements as they become due; (c) Appeal or challenge by the Developer or any party on its behalf of the Minimum Market Value or the Assessment Agreement until the Termination Date, except as permitted . under section 7.2 of this Agreement; (d) If the Development Property or Minimum Improvements - Residential or Minimum Improvements- Commercial become exempt from payment of real estate taxes prior to the Termination Date; (e) Transfer or Sale of the Development Property or the Minimum hnprovements- Residential or Minimum Improvements- Commmercial or any part thereof by the Developer in violation of section 8.1 of this Agreement and without the prior written permission by the Authority; (f) If the Minimum Improvements- Residential shall no longer be maintained as senior housing; 20 382688 RNB CT165 -21 (g) If the Developer shall file a petition in bankruptcy, or shall snake an assignment for the benefit of its creditors or shall consent to the appointment of a receiver; (h) Failure by the Residential Developer to repay to the Authority any amount owed under section 4.6(e) of this Agreement; or (i) Failure by either party to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or the Assessment Agreement. Section 9.2. Remedies on Default Whenever any Event of Default referred to in section 9.1 of this Agreement occurs, the non- defaulting party may take any one or more of the following actions after providing 30 days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said 30 days. If the Event of Default is by its nature incurable within 30 days, the non - defaulting party may take one or more of the following actions after providing 30 days' written notice to the defaulting party but only if the defaulting party does not provide assurances to the non - defaulting party reasonably satisfactory to the non - defaulting party that the Event of Default will be cured as soon as reasonably possible: (a) Suspend its performance under this Agreement until it receives assurances from the defaulting party, deemed adequate by the non - defaulting party, that the defaulting party will cure its default and continue its performance under this Agreement; (b) Terminate or rescind this Agreement; (c) If the default occurs prior to completion of any portion of the Minimum Improvements, the Authority may withhold the Certificate of Completion; (d) Suspend or terminate payments under the Note and the payments under section 4.6(d) of this Agreement; (e) Enforce the Assessment Agreement; and (f) Take whatever action, including legal or administrative action, which may appear necessary or desirable to the non - defaulting parry to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the defaulting party under this Agreement or the Assessment Agreement. Section 9.3. No Remedy Exclusive No remedy herein conferred upon or reserved to the parties is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from 21 382688 RHB CT165 -21 time to time and as often as may be deemed expedient. In order to entitle the Authority 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 prescribed in section 10.4 of this Agreement. Section 9.4. No Additional Waiver Implied by One Waiver In the event any covenant or agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Release and Indemnification (a) No officer, official, or employee of the Authority shall have any personal financial interest, direct or indirect, in this Agreement, nor shall any such officer, official, or employee participate in any decision relating to the Agreement which affects his or her personal financial interests, directly or indirectly. No officer, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach or for any amount which may become due or on any obligation under the terms of this Agreement. (b) Except for any negligent act or omission of the following named parties, the Developer releases from and covenants and agrees that the Authority and the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to defend, indemnify and hold harmless the Authority and the City and the governing body members, officers, agents, servants and employees thereof 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 Minimum Improvements. (c) Except for any willful misrepresentation or any willful or wanton misconduct or unlawful or fraudulent acts of the following named parties (including any Event of Default by the Authority under this Agreement), the Developer agrees to defend the Authority and the City and the governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to indemnify and to hold the aforesaid harmless fi-om any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising fi-om this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements. (d) The Authority and the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be about the Development Property or Minimum Improvements due to any act of negligence of any person, other than the governing body members, officers, agents, servants and employees of the Authority or City. 22 382688 RHB CT165 -21 Section 10.2. Equal Employment Opportunity The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement it will comply with all applicable equal employment and nondiscrimination laws and regulations. Section 10.3. Restrictions on Use The Developer, for itself and its successors and assigns, agrees to devote the Development Property and Minimum Improvements only to such land uses as may be permissible under the City's land use regulations. Section 10.4. Notices and Demands Except as otherwise expressly provided in this Agreement, any notice, demand, or other communication under the Agreement or any related document by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified United States mail, postage prepaid, return receipt requested, overnight courier or delivered personally to: (a) in the case of the Authority: Cottage Grove Economic Development Authority 7516 80 Street South Cottage Grove MN 55016 Attn: EDA Executive Director (b) in the case of the Residential Developer: PHS /Cottage Grove, Inc. 2845 Hamline Avenue North, Suite 100 Roseville, Minnesota 55113 Attn: Chief Financial Officer (c) in the case of the Commercial Developer: PHS /CG Center, LLC 2845 Hamline Avenue North, Suite 100 Roseville, Minnesota 55113 Attn: Chief Financial Officer or at such other address with respect to such party as that party may, from time to time, designate in writing and forward to the others as provided in this section 10.4. Section 10.5. Counterparts This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.6. Disclaimer of Relationsbiys The Developer acknowledges that nothing contained in this Agreement nor any act by the Authority, the City or the Developer shall be deemed or construed by the Developer or by any third person to create any relationship of third -party beneficiary, principal and agent, limited or general partner, or joint venture between or among the Authority, the City, the Residential Developer or the Commercial Developer. 23 382688 RHB CT165 -21 IN WITNESS WHEREOF, the Authority and the Developer have caused this Agreement to be duly executed in their names and behalves on or as of the date first above written. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY Its President C Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this day of , 2011, by and , president and executive director, respectively, of the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. Notary Public 24 382688 RHB C7165 -21 PHS /COTTAGE GROVE, INC. By X C tc�'P STATE OF MINNESOTA ) ) ss. COUNTY OF ) The f regoing instrument was executed this -30 'a day of cL.t,d/ 2011, by A the CrU of PHS/Cottagk Grove, Inc., a Minnesota co oration, n ehalf of the corporation. ` �uw�/ vwVkr +e�,vvvvvr.�,,lVt/sJMvnhza�, r'tF.AaR� Notaty ` ublic- i'Jlinnesota My C;omrnimon 6xpfros Jan 31 2015 y . w,ewvwwa^,re^w.�vv'v+PVVVwdvw� Notary Public 25 382688 RHB CT165 -21 PHS /CG CENTER, LLC STATE OF MINNESOTA ) ) ss. COUNTY OF ) By C, f`1e°1Av1c1'd -,' MM The foregoing instrument was executed this day of cu c 1 2011, by the C �RO of PHS /CG Center, LLC a Minnesota linlited liabili y 6drapany, on behalf of the company. S`'AhM.F!/V YviNhE L P :, J L * { Wv1 / My o nm n�i 6v�+h v, J,n 31, 2015 � Notary Public c mi ry Si v".n� r"lbbA`eRaet�✓+J'Wb"'e O 26 382688 RHB CT165 -21 LEGAL DESCRIPTIONS: Minimum Improvements — Residential Lot 1, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota Minimum Improvements — Commercial Lot 2, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota 382688 RHB CT165 -21 A-1 LIST OF CONSTRUCTION PLANS AND DRAFT PRELIMINARY PLAN DOCUMENTS SPECIFICATIONS DIVISION 2 - SITE WORT{ NOTE: Sections listed with ( *) are issued through BKBM Civil Engineers. NOTE: Sections listed with ( #) are issued though Brauel & Associates, Ltd. Section 02220 Selective Site Demolition( *) Section 02230 Site Clearing ( *) Section 02300 Earthwork ( *) Section 02320 Trench Excavation and Backfill for Utilities( *) (By Owner) Section 02370 Erosion and Sediment Control ( *) Section 02510 Water Distribution ( *) (By Owner) Section 02530 Sanitary Sewerage ( *) (By Owner) Section 02630 Storm Drainage ( *) (By Owner) Section 02712 Foundation Drainage Systems Section 02740 Asphalt Concrete Paving ( *) Section 02750 Exterior Concrete Pavement ( *) Section 02768 Decorative Cement Concrete Pavement Section 02770 Miscellaneous Site Amenities ( #) (6' -0" high wood fence by Owner) Section 02830 Modular Retaining Walls ( *) Section 02930 Trees, Plants and Ground Cover (#) (included in Landscape Allowance of $109,000.00) Section 02936 Seeding ( #) (Included in Landscape Allowance of $109,000.00) Section 02937 Herbaceous Perennial Plants ( #) (Included in Landscape Allowance of $109,000.00) DIVISION 3 - CONCRETE Section 03300 Cast -in -Place Concrete (Includes value engineering) Section 03410 Plant Precast Structural Concrete Section 03451 Plant Precast Architectural Concrete Elements Section 03542 Gypsum Underlayment DIVISION 4 - MASONRY Section 04711 Manufactured Stone Assemblies (Includes value engineering) Section 04200 Unit Masonry Assemblies (Includes value engineering) DIVISION 5 - METALS Section 05120 Structural Steel Section 05500 Metal Fabrication Section 05720 Ornamental Aluminum Handrails and Railings 382688 RHB CT765 -21 B -1 DIVISION 6 — WOODS AND PLASTICS Section 06100 Rough Carpentry (9' -0" ceiling structure throughout wood -frame areas) Section 06150 Wood Decking Section 06176 Pre - Fabricated Structural Wood Section 06185 Structural Glue - Laminated Timbers Section 06200 Finish Carpentry Section 06600 Plastic Fabrication DIVISION 7 - THERMAL AND MOISTURE PROTECTION Section 07100 Waterproofing Section 07190 Water Repellants Section 07195 Air and Vapor Barriers Section 07210 Section 07311 Section 07460 Section 07462 Section 07531 Section 07610 Section 07620 Section 07840 Section 07920 Building Insulation Asphalt Shingles Siding Accessories Fiber Cement Siding EPDM Membrane Roofing Sheet Metal Roofing Sheet Metal Flashing and Trim Firestopping Systems Joint Sealants 1 �_ f� 1 y _► 1 1� ` _. Section 08110 Steel Doors and Frames Section 08211 Flush Wood Doors Section 08212 Stile and Rail Wood Doors Section 08215 Molded Panel Wood Doors and Frames Section 08300 Elevator Smoke Containment System Section 08311 Access Doors and Frames Section 08361 Sectional Overhead Doors Section 08411 Aluminum Framed Entrances and Storefront Section 08520 Vinyl Windows and Patio Doors Section 08710 Door Hardware Section 08800 Glazing Section 08830 Mirrors DIVISION 9 - FINISHES Section 09253 Section 09260 Section 09310 Section 09511 Section 09650 Section 09652 Section 09653 Section 09680 Gypsum Sheathing Gypsum Board Assemblies Tile Acoustical Panel Ceilings Resilient Flooring Sheet Vinyl Floor Coverings Resilient Wall Base and Accessories Carpet 382688 RHB CT165 21 B -2 Section 09720 Wallcovering Section 09900 Painting Section 09977 Glass Reinforced Wall Panels DIVISION 10 - SPECIALTIES Section 10155 Toilet Compartments Section 10190 Cubicles Section 10505 Metal Lockers Section 10520 Fire Protection Specialties Section 10550 Postal Specialties Section 10990 Miscellaneous Specialties DIVISION 11- EQUIPMENT Section 11450 Residential Kitchen Equipment Section 11175 Waste Chutes DIVISION 12 - FURNISHINGS Section 12455 Kitchen Cabinets Section 12492 Floor Mats and Frames Section 12491 Horizontal Louver Blinds Section 12492 Vertical Louver Blinds DIVISION 1,4 - PASSENGER CONVEYING SYSTEMS Section 14240 Hydraulic Elevators DIVISION 15 - MECHANICAL By Design/Build Mechanical Contractor DIVISION 16 -ELECTRICAL By Design/Build Electrical Contractor 382688 RHD CJ 165-21 B -3 SCHEDULE QE DRAWINGS ARCHITECTURAL - GENERAL: DATED: A0.1 Title Sheet 10/23/06 A0.2 Partition Types, Symbols, Abbreviations 10/23/06 A0.3 Code Plans, Code Data (Shown on Title Sheet, but not including in Plan Set) A0.4 Code Plans (Shown on Title Sheet, but not including in Plan Set) CIVIL: DATED: C0.0 Topographic Survey 10/23/06 C1.0 Site Demolition Plan 10/23/06 C2.0 Grading, Drainage and Erosion Control 10/23/06 C3.0 Utility Plan 10/23/06 C4.0 Paving Plan 10/23/06 C5.0 Paving Plan 10/23/06 C5.1 Detail Sheet 10/23/06 C6.0 Storm Water Pollution Prevention Plan 10/23/06 LANDSCAPE: DATED: L1.1 Site Restoration Plan 10/23/06 L1.2 Overall Landscape Plan 10/23/06 L1.3 Landscape Enlargement Plan Area "A" 10/23/06 L1.4 Landscape Enlargement Plan Area "B" 10/23/06 LL5 Courtyard Enlargement Plan 10/23/06 L1.6 Memory Care Courtyard Enlargement Plan 10/23/06 ARCHITECTURAL: DATED: A2.1 Housing Floor Key Plans 10/23/06 A2.2 Garage Plan Area "A" 10/23/06 A2.3 Garage Plan Area `B" 10/23/06 A2.4 Garage Plan Area "C" 10/23/06 A2.5 First Floor Plan Area "A" 10/23/06 A16 First Floor Plan Area `B" 10/23/06 A2.7 First Floor Plan Area "C" 10/23/06 A2.8 Second Floor Plan Area "A" 10/23/06 A2.9 Second Floor Plan Area `B" 10/23/06 A2.10 Second Floor Plan Area "C" 10/23/06 A2.11 Third Floor Plan Area "A" 10/23/06 A2.12 Third Floor Plan Area `B" 10/23/06 A113 Third Floor Plan Area "C" 10/23/06 A2.14 Fourth Floor Plan Area `B" 10/23/06 A2.15 Fourth Floor Plan Area "C" 10/23/06 A2.16 Enlarged Unit Plans 10/23/06 A2.17 Enlarged Unit Plans 10/23/06 A2.18 Enlarged Unit Plans 10/23/06 A2.19 Enlarged Unit Plans 10/23/06 A2.20 Enlarged Floor Plans (Shown on Title Sheet, but not including in Plan Set) A2.21 Enlarged Floor Plans (Shown on Title Sheet, but not including in Plan Set) A3.1 Exterior Elevations 10/23/06 382688 RHB Cr165 -21 B -4 A3.2 Exterior Elevations 10/23/06 A3.3 Exterior Elevations 10/23/06 A3.4 Exterior Elevations 10/23/06 A3.5 Exterior Elevations 10/23/06 A4.1 Roof Plan Area "A" 10/23/06 A4.2 Roof Plan Area "B" 10/23/06 A4.3 Roof Plan Area "C" 10/23/06 A5.1 Wall Sections 10/23/06 A5.2 Wall Sections 10/23/06 A5.3 Wall Sections (Shown on Title Sheet, but not including in Plan Set) A5.4 Wall Sections (Shown on Title Sheet, but not including in Plan Set) A6.1 Exterior Details 10/23/06 ATI Opening Schedule, Door, Window and Frame Types 10/23/06 A8.1 Interior Elevations and Details 10/23/06 A8.2 Interior Elevations (Shown on Title Sheet, but not including in Plan Set) A8.3 Interior Elevations 10/23/06 A8.4 Interior Elevations 10/23/06 A8.5 Interior Elevations 10/23/06 A8.6 ulterior Elevations (Shown on Title Sheet, but not including in Plan Set) A9.2 Garage Plan Area "A" 10/23/06 A9.3 Garage Plan Area `B" 10/23/06 A9.4 Garage Plan Area "C" 10/23/06 A9.5 First Floor Plan Area "A" 10/23/06 A9.6 Fast Floor Plan Area `B" 10/23/06 A9.7 First Floor Plan Area "C" 10/23/06 A9.8 Second Floor Plan Area "A" 10/23/06 A9.9 Second Floor Plan Area "B" 10/23/06 A9.10 Second Floor Plan Area "C" 10/23/06 A9.11 Third Floor Plan Area "A" 10/23/06 A9.12 Third Floor Plan Area `B" 10/23/06 A9.13 Third Floor Plan Area "C" 10/23/06 A9.14 Fourth Floor Plan Area `B" 10/23/06 A9.15 Fourth Floor Plan Area "C" 10/23/06 A10.1 Room Finish Schedule 10/23/06 STRUCTURAL: DATED: 50.1 Notes 10/23/06 S1.1 Foundation Plan Area "A' 10/23/06 S 1.2 Foundation Plan Area `B" 10/23/06 S1.3 Foundation Plan Area "C" 10/23/06 52.1 First Floor Framing Plan Area "A" 10/23/06 52.2 First Floor Framing Plan Area `B" 10/23/06 52.3 First Floor Framing Plan Area "C" 10/23/06 S2.4 Second Floor Framing Plan Area "A" 10/23/06 52.5 Second Floor Framing Plan Area `B" 10/23/06 52.6 Second Floor Framing Plan Area "C" 10/23/06 517 Third Floor Framing Plan Area "A" 10/23/06 52.8 Third Floor Framing Plan Area `B" 10/23/06 52.9 Third Floor Framing Plan Area "C" 10/23/06 52.10 Fourth Floor Framing Plan Area `B" 10/23/06 52.11 Fourth Floor Framing Plan Area "C" 10/23/06 382688 Run CT) 65-21 B_5 S3.1 Roof Framing Plan Area "A" 10/23/06 S3.2 Roof Framing Plan Area "B" 10/23/06 S3.3 Roof Framing Plan Area "C" 10/23/06 S4.1 Foundation Details 10/23/06 S4.2 Framing Details 10/23/06 S4.3 Framing Details 10/23/06 Addendum No. 1 (Architectural — 15 pages), dated 10/27/06, by Pope Associates, Inc. Addendum No. 1 (Civil — 3 pages), dated 10/27/06, by BKBM Engineers, Inc. Addendum No. 1 (Structural — 5 pages), dated 10/27/06, by Structural Design Associates, Inc. 382688 Ron CT165 -21 B -6 EXHIBIT C FORM OF CERTIFICATE. OF COMPLETION WHEREAS, the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "Authority'), and PHS /CG Center, LLC, a Minnesota limited liability company (the "Commercial Developer "), have entered into a certain Second Amended and Restated Contract for Private Development (the "Contract ") dated the day of 2011, and recorded in the office of the County Recorder in Washington County, Minnesota, as Document No. , which Contract contained certain covenants and restrictions regarding completion of the Minimum Improvements - C,ommercial, as defined in the Contract; and WHEREAS, the Commercial Developer has performed said covenants and conditions in a manner deemed sufficient by the Authority to permit the execution and recording of this certification. NOW, THEREFORE, this is to certify that all construction of the Minimum Improvements - Commercial specified to be done and made by the Commercial Developer has been completed and the covenants and conditions in the Contract have been performed by the Commercial Developer, and the County Recorder in Washington County, Minnesota, is hereby authorized to accept for recording and to record the filing of this instrument, to be a conclusive determination of the satisfactory termination of the covenants and conditions relating to completion of the Minimum Improvements - Commercial. Dated: STATE OF MINNESOTA ) ss. COUNTY OF ) COTTAGE GROVE ECONOMIC DEVELOPMENT AUT14ORITY By Its President By Its Executive Director The foregoing instrument as acknowledged before me this day of 200 by and the president and executive director, respectively, of the Cottage Grove Economic Development Authority, a public body corporate and politic, under the laws of Minnesota, on behalf of the Economic Development Authority. Notary Public 382688 Ron CT165 -21 C -1 AMENDED ASSESSMENT AGREEMENT (Residential) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /COTTAGE GROVE, INC. and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 37573342 RHB CT 165 -21 1205373 Rece ipt#: 157264 I� HMI III �I III III II AGR $46.00 Certified Filed and /or recorded on: 3/16/2011 10:31 AM 1205373 Certificate #F: 63580 Office of the Registrar of Titles rtewm to: Property Records $ Taxpayer Services CITY OF COTTAGE GROVE Washington County, MN 7516 BOTH ST S COTTAGE GROVE MN 55016 Kevin .1 Corbid, County Recorder AMENDED ASSESSMENT AGREEMENT (Residential) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /COTTAGE GROVE, INC. and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 37573342 RHB CT 165 -21 THIS AMENDED ASSESSMENT AGREEMENT dated as of this 12 of i �n , 2010, by and between the Cottage Grove Economic Development Authority, a pn lic boy corporate and politic under the laws of Minnesota (the "Authority ") and PHS /Cottage Grove, Inc., a Minnesota corporation (the "Developer "). WITNESSETH: WHEREAS, the Authority and the Developer previously entered into that certain Assessment Agreement and Assessor's Certification dated November 23, 2004, filed March 22, 2005 as document no. 1155497 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2004 Assessment Agreement "); and WHEREAS, the Authority and the Developer previously entered into an Amended and Restated Contract for Private Development dated December 14, 2006, filed December 21, 2006 as document no. 1.173364 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2006 Development Agreement ") pursuant to which the Developer agreed to construct a residential development (the "Minimum Improvements- Residential ") on the land legally described in Exhibit A attached hereto (the "Property "); and WHEREAS, pursuant to the 2006 Development Agreement, the Authority and the Developer terminated the 2004 Assessment Agreement and established a minimum market value for the Property and the Minimum Improvements- Residential to be constructed thereon under the 2006 Development Agreement by execution of the Assessment Agreement (Residential) dated December 12, 2006 (the "2006 Assessment Agreement "); and WHEREAS, the Authority and the Developer have agreed to adopt this Amended Assessment Agreement in order to modify the minimum market value of the Property and the Minimum Improvements - Residential constructed thereon as of January 2, 2010 for taxes payable in 2011; and WHEREAS, the Assessor for Washington County, Minnesota has reviewed the value proposed for the Property and the Minimum Improvements - Residential for taxes payable in 2011. NOW, THEREFORE, the parties to this Amended Assessment Agreement, in consideration of the promises, covenants and agreement made herein by each and to the other, do hereby agree as follows: The Minimum Market Value of the Property and the Minimum improvements - Residential shall be $14,127,300 as of January 2, 2010 for taxes payable in 2011. 2. Except as explicitly modified by this Amended Assessment Agreement, all terms and conditions of the 2006 Assessment Agreement, including the Minimum Market Value of the Property and the Minimum Improvements - Residential for 375733v2 RHB CT165 -21 taxes payable beginning in 2012 through the Termination Date, shall remain in full force and effect. STATE OF MINNESOTA COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY // ) SS COUNTY OF 0�h/ ) The foregoing instrument as ackno edged bfo e me hisI of /- r 2010, by >n _,` and �� ✓�c president and executive director, respectively, Of the Cottage Gr e Economic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. Public ' NEIL R. 6ELSCAMPER NOTARY PUBLIC • MINNESOTA My Commission Expires Jan. 31, 2015 375733v2 RHB CT165 -21 2 PHS /COTTAGE GROVE, INC. By Its C STATE OF MINNESOTA ) COUNTY OF / y : � T e foregoi g instrument was executed is /� of 2010, by the I f .Zf r1 r �t PHS /Cottage Grove, Inc., a Minne ota corporation, on behalf of corporation. Notq y Public .� . .rrccr r.�rrr✓.. i.� s.¢' 375733v2 RHB C'r165 -21 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the minimum market value proposed for the Property and the improvements constructed thereon and being of the opinion of minimum market value contained in the foregoing Amended Assessment Agreement is reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to the Property and Minimum Improvements - Residential on January 2, 2010 for taxes payable in 2011 shall be not less than $14,127,300 and that the market value assigned to the Property and Minimum Improvements- Residential on January 2, 2011 for taxes payable beginning in 2012 through the Termination Date shall be not less than $13,900,000 as a d in the 2006 Assessment Agreement. _ ( / f As'�essor for Wdshington County, Minnesota STATE OF MINNESOTA ) ) SS COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this 1 �� of 2010, by Bruce Munneke, the Assessor for Washington County, Minnesota. of y Public "° <� LYNNE MARIE FREEZY 3' hlotary PubiiC- Minnesota '°r ?ear: �` My Commiseian Expires Jan 31, 2015 375733v2 RPIB CTI65 -21 4 EXHIBIT A TO ASSESSMENT AGREEMENT LEGAL DESCRIPTION M inimum Improvements - Residential Lot 1, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 375733v2 RH6 CT165 -21 A -1 EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July I of an assessment year, the market value as provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 assessment agreement 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. 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 assessment agreement 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. 375733v2 RHB CP165 -21 B -1 SECOND AMENDED ASSESSMENT AGREEMENT (Residential) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /COTTAGE GROVE, INC. and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 379339 RHB CT165 -21 1205374 opt #: 157264 1 11111111 II��II� III�I III AGR $4600 Certified Filed and/or recorded on: 31162011 1&31 AM 1205374 Certificate #: 63580 Office of the Registrar of Titles Return to: Property Records & Taxpayer services Cm of COTrAGE GROVE Washington County, MN 7516 80TH ST S COTTAGE GROVE MN 55016 Kevin J Corbid, Comity Recorder SECOND AMENDED ASSESSMENT AGREEMENT (Residential) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /COTTAGE GROVE, INC. and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 379339 RHB CT165 -21 THIS SECOND AMENDED ASSESSMENT AGREEMENT dated as of this day of December, 2010, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "Authority") and PHS /Cottage Grove, Inc., a Minnesota corporation (the "Developer "). WITNESSETH: WHEREAS, the Authority and the Developer previously entered into that certain Assessment Agreement and Assessor's Certification dated November 23, 2004, filed March 22, 2005 as document no. 1155497 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2004 Assessment Agreement "); and WHEREAS, the Authority and the Developer previously entered into an Amended and Restated Contract for Private Development dated December 14, 2006, filed December 21, 2006 as document no. 1173364 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2006 Development Agreement") pursuant to which the Developer agreed to construct a residential development (the "Minimum Improvements- Residential ") on the land legally described in Exhibit A attached hereto (the "Property "); and WHEREAS, pursuant to the 2006 Development Agreement, the Authority and the Developer terminated the 2004 Assessment Agreement and established a minimum market value for the Property and the Minimum Improvements - Residential to be constructed thereon under the 2006 Development Agreement by execution of the Assessment Agreement (Residential) dated December 12, 2006 (the "2006 Assessment Agreement"); and WHEREAS, the Authority and the Developer previously agreed to adopt an Amended Assessment Agreement in order to modify the minimum market value of the Property and the Minimum Improvements - Residential constructed thereon as of January 2, 2010 for taxes payable in 2011; and WHEREAS, the Authority and the Developer wish to extend the application of the modified minimum market value of the Property and the Minimum Improvements — Residential constructed thereon as of January 2, 2011, for taxes payable in 2012; and WHEREAS, the Assessor for Washington County, Minnesota has reviewed the value proposed for the Property and the Minimum Improvements - Residential for taxes payable in 2012. NOW, THEREFORE, the parties to this Second Amended Assessment Agreement, in consideration of the promises, covenants and agreement made herein by each and to the other, do hereby agree as follows: The Minimum Market Value of the Property and the Minimum Improvements - Residential shall be $14,127,300 as of January 2, 2011 for taxes payable in 2012. 379339 RHB CT165 -21 1 2. Except as explicitly modified by this Second Amended Assessment Agreement, all terms and conditions of the 2006 Assessment Agreement, including the Minimum Market Value of the Property and the Minimum Improvements - Residential for taxes payable beginning in 2013 through the Termination Date, shall remain in full force and effect. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY Executive Director STATE OF MINNESOTA ) ) SS COUNTY OF WASHINGTON ) Ahe fo in instrument as a4nowledged before me this 1XW December, 2010, by and , president and executive director, respectively, of the e ottage Grove Feonomic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. 379339 RHB CT165 -21 2 PHS /COTTAGE GROVE, INC. By Its STATE OF MINNESOTA ) ) SS COUNTY OF PAMSEX ) The foregoing instrument was executed this ;27 of December, 2010, by gG>tik.'lMa1/er , the cLcitf fivteawera( ofc., of PHS /Cottage Grove, Inc., a Minnesot corporation, on behalf of the corporation. JAN NA R SEU nRANCE "'K NotW Public - Minnesota ?W IF comma Sion CxPlros Jran 31, 2 379339 RHB CT165 -21 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the minimum market value proposed for the Property and the improvements constructed thereon and being of the opinion of minimum market value contained in the foregoing Amended Assessment Agreement is reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to the Property and Minimum Improvements - Residential on January 2, 2011 for taxes payable in 2012 shall be not less than $14,127,300 and that the market value assigned to the Property and Minimum Improvements - Residential on January 2, 2012 for taxes payable beginning in 2013 through the Termination Date shall be not less than $13,900,000 as stated in the 2006 Assessment Agreement. '& Y i i Assessor for Washington County, Minnesota STATE OF MINNESOTA ) ) SS COUNTY OF WASHINGTON } The foregoing instrument was acknowledged before me this a of December, 2010, by Bruce Munneke, the Assessor for Washington County, Minnesota. 379339 RHB CT165 -21 4 EXHIBIT A TO ASSESSMENT AGREEMENT LEGAL DESCRIPTION Minimum Improvements - Residential Lot 1, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 379339 RHB CT165 -21 A -1 EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement 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 provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July I of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 improverents are reasonable. The assessment agreement 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. The owner of the properly 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 assessment agreement during the terra 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them_ 379339 RHB CT165 -21 Im Receipt#: 157264 AGR Return to CITY OF COTTAGE GROVE 7516 BOTH ST 5 COTTAGE GROVE MN 55016 ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among 1205375 $46.00 111 IN 111 Certified Filed and/or recorded on: 3/16/2011 1031 AM 1205375 Certificate #. 63582 Office of the Registrar of Titles Property Records & Taxpayer services Washington County, MN Kevin 7 Corbid, County Recorder THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG Center, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This Document was drafted by: KENNEDY & GRAVEN, Chartered 470 US Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 (612) 337 -9300 375714 RHB CT165 -21 THIS ASSESSMENT AGREEMENT, dated as of this le i iday of - ; 2010, by and between the Cottage Grove Economic Development Authority, a public 'body c rporate and politic under the laws of Minnesota (the "Authority ") and PHS /CG Center, LLC, a Minnesota limited liability company (the "Developer "). WITNESSETH: WHEREAS, on December 14, 2006, the Authority and PHS /Cottage Grove, Inc. ( "PHS /CG, Inc. "), the predecessor in interest of the Developer, entered into an Amended and Restated Contract for Private Development (the "Development Agreement') pursuant to which the Developer agreed to construct certain improvements (the "Minimum Improvements ") on the land legally described in Exhibit A attached hereto (the "Property"); and WHEREAS, PHS /CG, Inc. has conveyed all of its interest in the Property to the Developer, as contemplated under the Development Agreement; and WHEREAS, the Authority and Developer desire to establish a minimum market value for the Property and the Minimum Improvements to be constructed thereon, pursuant to Minnesota Statutes section 469.177, Subd. 8; and WHEREAS, the Authority and the Assessor for Washington County, Minnesota have reviewed the plans and specifications for the Minimum Improvements which the Developer has agreed to construct or cause to be constructed on the Property pursuant to the Development Agreement. NOW, THEREFORE, the parties to this Assessment Agreement, in consideration of the promises, covenants and agreements made herein and in the Development Agreement by each to the other, do hereby agree as follows: 1. The Minimum Market Value for the Property and the Minimum Improvements shall be $562,300 as of January 2, 2010 for taxes payable in 2011, notwithstanding any failure to complete construction of such Minimum Improvements by that date. 2. The Minimum Market Value herein established shall be of no further force and effect for taxes payable after 2011 and this Assessment Agreement shall terminate on December 31, 2010. 3. This Assessment Agreement shall be promptly recorded by the Developer with a copy of Minnesota Statutes section 469.177, Subd. 8, set forth in Exhibit B hereto. The Developer shall pay all costs of recording this Assessment Agreement. 4. Neither the preambles nor the provisions of this Assessment Agreement are intended to, nor shall they be construed as, modifying the terms of the Development Agreement. Unless the context indicates clearly to the contrary, the 375714 RHB Cr165 -21 terms used in this Assessment Agreement shall have the same meaning as the terms used in the Development Agreement. 5. This Assessment Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 6. Each of the parties warrants and represents that it has authority to enter into this Assessment Agreement and to take all actions required of it and has taken all actions necessary to authorize the execution and delivery of this Assessment Agreement. 7. In the event that any provision of this Assessment Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Property, or for carrying out the expressed intention of this Assessment Agreement. 9. Except as provided in Section 8 hereof, this Assessment Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 10. This Assessment Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 11. This Assessment Agreement shall be governed by and construed in accordance with the laws of Minnesota. 375714 RHB CT165 -21 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY STATE OF MINNESOTA } ) SS COUNTY OF WASHINGTON ) T�hg foregoin instrument as acknowledged before me this/. day of�� ' v 2010, by /!'� , and r President and exeeutiv director, respgdlively, of the Cotta e Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. a ) N ary Public u , n ;, NEiL R. SELSCAMPER �,��' -` NOTARY PUBUC•MINNESOTA MY Commission ExQires Jan. 39, 2015 a r y 375714 RHB CT165 -21 PHS /CG CENTER, LLC By ` ° (I Its L� +�� 1�i�awnd} ' - STATE OF MINNESOTA ) ss COUNTY OF sJ � he _foregoing instrument was executed this day of 2010, by .a,r-k , the Chief Financial Officer of PHS /CG Center, LLC, a Minnesota limited'li bility company, on behalf of the company.. Notvly Public 375714 RHB CT165 -21 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market value contained in the foregoing Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to such land and improvements on January 2, 2010, for taxes payable in 2011, shall be not less than $562,300 until termination of this Agreement. Assessor for Washington County, Minnesota STATE OF MINNESOTA ) ) ss COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this / day of tie 2010 by Bruce Munneke, the Assessor for Washington County, Minnesota. N otEffy Public =� .YNNE FtiE FREEZY otary Public- Minnesota Gommis8lon Expires Jan 31, 2015 375714 RHB CT165 -21 EXHIBIT A LEGAL DESCRIPTION PIN #18.027.21.11.0050 Lot 2, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 379343 RHB CT165 -21 A -I EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement 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 provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 assessment agreement 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. 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 assessment agreement 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. 375714 RHB CT165 -21 B -1 AMENDED ASSESSMENT AGREEMENT (Commercial) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG CENTER, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (R1IB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612 - 337 -9300 375713v2 R11B CT165 -21 1205376 Rece ipt#: 157264 IBIIIII IIII�II�IIIIII III IIII IIII IIIIII II AGR $46.00 Certified Filed and /or recorded on: 3/16/2011 10:31 AM 1205376 Certificate #: 63582 Office of the Registrar of Titles Return to: Property Records & Taxpayer Services CITY Of COTTAGE GROVE Washington County, MN 7516 WTN ST 5 COTTAGE GROVE MN 55016 Kevin J Corbid, County Recorder AMENDED ASSESSMENT AGREEMENT (Commercial) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG CENTER, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (R1IB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612 - 337 -9300 375713v2 R11B CT165 -21 THIS AMENDED ASSESSMENT AGREEMENT dated as of this � —''day of v 2010, by and between the Cottage Grove Economic Development Authority, a ' i`c body lorporate and politic under the laws of Minnesota (the "Authority ") and PHS /CG Center, LLC, a Minnesota limited liability company (the "Developer "). WITNESSETH: WHEREAS, the Authority and PHS /Cottage Grove, Inc. (`PHS /CG, Inc. "), the predecessor in interest of the Developer, previously entered into that certain Assessment Agreement and Assessor's Certification dated November 23, 2004, filed March 22, 2005 as document no. 1155497 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2004 Assessment Agreement "); and WHEREAS, the Authority and PHS /CG, Inc. previously entered into an Amended and Restated Contract for Private Development dated December 14, 2006, filed December 21, 2006 as document no. 1173364 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2006 Development Agreement ") pursuant to which PHS /CG, Inc. agreed to construct a commercial facility (the "Minimum Improvements - Commercial') on the land legally described in Exhibit A attached hereto (the "Property "); and WHEREAS, pursuant to the 2006 Development Agreement, the Authority and PHS /CG, Inc. terminated the 2004 Assessment Agreement and established a minimum market value for the Property and the Minimum Improvements - Commercial to be constructed thereon under the 2006 Development Agreement by execution of the Assessment Agreement (Commercial) dated December 12, 2006 (the "2006 Assessment Agreement "); and WHEREAS, PHS /CG, Inc. has conveyed all of its interest in the Property to the Developer, as contemplated under the Development Agreement; and WHEREAS, the Authority and the Developer have agreed to adopt this Amended Assessment Agreement in order to modify the minimum market value of the Property as of January 2, 2010 for taxes payable in 2011; and WHEREAS, the Assessor for Washington County, Minnesota has reviewed the value proposed for the Property for taxes payable in 2011. NOW, THEREFORE, the parties to this Amended Assessment Agreement, in consideration of the promises, covenants and agreement made herein by each and to the other, do hereby agree as follows: The Minimum Market Value of the Property shall be $1,620,400 as of January 2, 2010 for taxes payable in 2011. 375713v2 RHB CT165 -21 I 2. Except as explicitly modified by this Amended Assessment Agreement, all terms and conditions of the 2006 Assessment Agreement, including the Minimum Market Value of the Property for taxes payable beginning in 2012 . through the Termination Date, shall remain in full force and effect. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY Executive Director STATE OF MINNESOTA ) SS COUNTY OF 1Jksk ) T e foregoing instrument as acknovAedged before me his M of 1 2010, by and president and executive director, respectively, a the Cottage Gro c Economic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. NEIL R. BELSCAMPER NOTARY PUBLIC - MINNESOTA My Commission Expires Jan. 35, 2015 375713v2 RHB CT165 -21 2 PHS /CG CENTER, LLC By Its Lit <�' � 3�3a� <, s✓1a� STATE OF MINNESOTA ) ff 66 - COUNTY OF hJ ) )SS � ®® The for oing instrument was executed this 1C of �J. 2010, by the Chief Financial Manager of PHS /CG Center, LLC, a Minnesota limited liability company, on behalf of the company. Public d NEIL R. BELSCAMPER NOTARY PUBLIC • MINNESOTA My Commission Expires Jan. 31, 2015 375713v2 RHB CT165 -21 3 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the minimum market value proposed for the Property and being of the opinion of minimum market value contained in the foregoing Amended Assessment Agreement is reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to the Property on January 2, 2010 for taxes payable in 2011 shall be not less than $1,620,400 and that the market value assigned to the Property on January 2, 2011 for taxes payable beginning in 2012 through the Termination Date shall be $8,725,000 as stated in the 2006 Assessment Agreement. n Assessor for W'ashiiigton Countym-PVlirmesota STATE OF MINNESOTA ) SS COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this L of& i( 2010, by Bruce Munneke, the Assessor for Washington County, Minnesota. wldZ2 O�U a Not dry Public i f 'YNNE MARIE FREEZY Natavy Public- Minnesota y Commission Expires Jan 31, 2015 375713v2 R14B CT165 -21 4 EXHIBIT A TO ASSESSMENT AGREEMENT LEGAL DESCRIPTION Minimum Improvements - Commercial Lot 2, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 375713v2 RHB Ct'165 -21 A -I EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July I of an assessment year, the market value as provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. 'The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 assessment agreement 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. 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 assessment agreement during the term of the agreement filed of record regardless of actual market values which may result from incomplete construction of imiprovernents, 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. 375713v2 R14B Cr165 -21 B -1 AMENDED ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG Center, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This Document was drafted by: KENNEDY & GRAVEN, Chartered 470 US Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 (612) 337 -9300 379343 RI-113 CT165 21 1205377 Recei pt#: 157264 II�I��I��II�III�I ��I�IIIIII�II�I� AGR $46.00 Certified Filed and/or recorded on: 3/1612011 10:31 AM 1205377 Certificate #: 63582 Office of the Registrar of Titles Property Records & Taxpayer Services CITY OF COTTAGE GROVE Washington County, MN 7516 80TH ST 5 Kevin J Corbid, County Recorder COTTAGE GROVE MN 55616 AMENDED ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG Center, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This Document was drafted by: KENNEDY & GRAVEN, Chartered 470 US Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 (612) 337 -9300 379343 RI-113 CT165 21 THIS AMENDED ASSESSMENT AGREEMENT, dated as of this '''day of December, 2010, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "Authority") and PHS /CG Center, LLC, a Minnesota limited liability company (the "Developer "). WITNESSETH: WHEREAS on December 14, 2006, the Authority and PHS /Cottage Grove, Inc. ( "PHS /CG, Inc. "), the predecessor in interest of the Developer, entered into an Amended and Restated Contract for Private Development (the "Development Agreement ") pursuant to which the Developer agreed to construct certain improvements (the "Minimum Improvements ") on the land legally described in Exhibit A attached hereto (the "Property"); and WHEREAS, PHS /CG, Inc. has conveyed all of its interest in the Property to the Developer, as contemplated under the Development Agreement; and WHEREAS, the Authority and the Assessor for Washington County, Minnesota reviewed the plans and specifications for the Minimum Improvements which the Developer agreed to construct or cause to be constructed on the Property pursuant to the Development Agreement; and WHEREAS, the Authority and Developer previously established a minimum market value for the Property and the Minimum Improvements to be constructed thereon and executed an assessment agreement (the "Assessment Agreement'), pursuant to Minnesota Statutes section 469.177, Subd. 8; and WHEREAS, the Authority and the Developer wish to modify the Assessment Agreement to extend its application to taxes payable in 2012. NOW, THEREFORE, the parties to this Amended Assessment Agreement, in consideration of the promises, covenants and agreements made herein, in the Assessment Agreement and in the Development Agreement by each to the other, do hereby agree as follows: 1. The Minimum Market Value for the Property and the Minimum Improvements shall be $562,300 as of January 2, 2011 for taxes payable in 2012, notwithstanding any failure to complete construction of such Minimum hmprovements by that date. 2. The Minimum Market Value herein established shall be of no further force and effect for taxes payable after 2012. 3. Except as explicitly modified by this Amended Assessment Agreement, all terms and conditions of the Assessment Agreement and the Development Agreement shall remain in full force and effect. 379343 RHB CT165 -21 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY STATE OF MINNESOTA COUNTY OF WASHINGTON by /1 Th ins 7 6n-, ment as "' : ,, executive director, respecyi ely, of public body corporate and politic Development Authority. ) SS acknowledgeo before e.this lay of December, 2010, and F, president and the Cotta v Grove Economic Development Authority, a under the laws of Minnesota, on behalf of the Economic Ndtary Public NEIL R. BELSCAMPER NOTARY PUBLIC • MINNESOTA My C omm i ss i on Expires Jan. 31, 2015 379343 RHB CT165 -21 PHS /CG CENTER, LLC By: Its: Chief Financial Officer STATE OF MINNESOTA ) ss COUNTYOF RArtSEY ) The foregoing instrument was executed this 2I +k day of December, 2010, by ti/na.h. hzyer the Chief Financial Officer of PHS /CG Center, LLC, a Minnesota limited liability company, on behalf of the company. JANNA R. SEVERANCE ate' hlotary Public- MEnnesota M commission Expnros .lan 31, 2.015 \.,,, «� Y V Vr 379343 RHB CT165 -21 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constricted and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market value contained in the foregoing Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to such land and improvements on January 2, 2011, for taxes payable in 2012, shall be not less than $562,300 until termination of this Agreement. STATE OF MINNESOTA ) ) ss COUNTY OF WASHINGTON ) Assessor for Washington County, Minnesota The foregoing instrument was acknowledged before me this / day of December, 2010, by Bruce Munneke, the Assessor for Washington County, Minnesota. L Nota � Public YNNE MARIE FREEZY 1 # ' Notary 4'ublicMinnesota y Commission Expires " 31 ,2076 379343 Run CT165 -21 IK46 0 1181 1I\ LEGAL DESCRIPTION PIN #18.027.21.11.0050 Lot 2, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 379343 RHB c r165 -21 A_1 EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement 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 provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 assessment agreement 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 proposes, 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. 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 assessment agreement 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. 379343 RHB CT165 -21 B -1 SECOND AMENDED ASSESSMENT AGREEMENT (Commercial) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG CENTER, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 379356 RHB CT 165 -21 1205378 Rece ipt#: 157264 �IIIIIIIIIIIIII� II�IIIIIIIII�III IIIIIIII�IIIIIIIIII AG R $46.00 Certified Filed and/or recorded on: 311612011 10:31 AM 1205378 Certificate #. 63582 Office of the Registrar of Titles Property Records & Taxpayer Services Return m: Washington County, MN CITY OF COTTAGE GROVE 7516 80TH 5T s Keviv, 7 Corbid, COUnty R"O der COTTAGE GROVE MN 55016 SECOND AMENDED ASSESSMENT AGREEMENT (Commercial) and ASSESSOR'S CERTIFICATION by and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and PHS /CG CENTER, LLC and ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This document drafted by: Kennedy & Graven, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612- 337 -9300 379356 RHB CT 165 -21 THIS SECOND AMENDED ASSESSMENT AGREEMENT dated as of this t ' . day of December, 2010, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "Authority ") and PHS /CG Center, LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: WHEREAS, the Authority and PHS /Cottage Grove, Inc. ( "PHS /CG, Inc. "), the predecessor in interest of the Developer, previously entered into that certain Assessment Agreement and Assessor's Certification dated November 23, 2004, filed March 22, 2005 as document no. 1155497 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2004 Assessment Agreement"); and WHEREAS, the Authority and PHS /CG, Inc. previously entered into an Amended and Restated Contract for Private Development dated December 14, 2006, filed December 21, 2006 as document no. 1173364 in the Office of the Registrar of Titles, Washington County, Minnesota (the "2006 Development Agreement") pursuant to which PHS /CG, Inc. agreed to construct a commercial facility (the "Minimum Improvements- Commercial ") on the land legally described in Exhibit A attached hereto (the "Property"); and WHEREAS, pursuant to the 2006 Development Agreement, the Authority and PHS /CG, Inc. terminated the 2004 Assessment Agreement and established a minimum market value for the Property and the Minimum Improvements- Commercial to be constructed thereon under the 2006 Development Agreement by execution of the Assessment Agreement (Commercial) dated December 12, 2006 (the "2006 Assessment Agreement "); and WHEREAS, PHS /CG, Inc. has conveyed all of its interest in the Property to the Developer, as contemplated under the Development Agreement; and WHEREAS, the Authority and the Developer previously agreed to adopt an Amended Assessment Agreement in order to modify the minimum market value of the Property as of January 2, 2010 for taxes payable in 2011; and WHEREAS, the Authority and the Developer wish to extend the application of the modified minimum market value of the Property as of January 2, 2011 for taxes payable in 2012; and WHEREAS, the Assessor for Washington County, Minnesota has reviewed the value proposed for the Property for taxes payable in 2012. NOW, THEREFORE, the parties to this Second Amended Assessment Agreement, in consideration of the promises, covenants and agreement made herein by each and to the other, do hereby agree as follows: 379356 RHB CT165 -21 I 1. The Minimum Market Value of the Property shall be $1,620,400 as of January 2, 2011 for taxes payable in 2012. 2. Except as explicitly modified by this Second Amended Assessment Agreement, all terms and conditions of the 2006 Assessment Agreement, including the Minimum Market Value of the Property for taxes payable beginning in 2013 through the Termination Date, shall remain in full force and effect. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY C .0 STATE OF MINNESOTA ) ) SS COUNTY OF WASHINGTON ) The fo�; re_�or instrument as acJcnowledged befgre me this of December, 2010, by v / and '« ✓ president and executive director, respe6tively, of the oC ttage Grove V&nomic Development Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Economic Development Authority. N NEIL R. BELSCAMPER ,, NOTARY PUBUC- MINNESOTA .10 M; Commi:Mcr. bores Jan. 31. 2 379356 RHB Cr165 -21 2 PHSICG CENTER, LLC By. Its: Chief Financial Manager STATE OF MINNESOTA ) SS COUNTY OF VDU ) The foregoing instrument was executed this _2= of December, 2010, by %k, ✓t/114 jer , the Chief Financial Manager of PHS /CG Center, LLC, a Minnesota limited liability company, on behalf of the company. "� 1AhNA R SDIFTANC,E x Pdc ary i�Iic- u9snncs Csa P a7in My Conn ission Expiros !2n 3i 201.5 379356 RHB CT165 -21 CERTIFICATION BY ASSESSOR The undersigned, having reviewed the minimum market value proposed for the Property and being of the opinion of minimmn market value contained in the foregoing Amended Assessment Agreement is reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to the Property on January 2, 2011 for taxes payable in 2012 shall be not less than $1,620,400 and that the market value assigned to the Property on January 2, 2012 for taxes payable beginning in 2013 through the Termination Date shall be $8,725,000 as stated in the 2006 Assessment Agreement. Assessor for Washington County, Minnesota STATE OF MINNESOTA ) ) SS COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this 31 sr of December, 2010, by Bruce Munneke, the Assessor for Washington County, Minnesota. 379356 RHB CT165 -21 4 EXHIBIT A TO ASSESSMENT AGREEMENT LEGAL DESCRIPTION Minimum Improvements - Commercial Lot 2, Block One, PHS /Cottage Grove, Inc., according to the recorded plat thereof, Washington County, Minnesota. 379356 RHB CT165 ? 1 A -I EXHIBIT B TO ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement 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 assessment agreement 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 provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. 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 assessment agreement 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 assessment agreement 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 assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. 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 assessment agreement 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 assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. 379356 RHB CT165 -21 B -1 EXHIBIT E LIST OF QtiALIFIED COSTS The Authority shall reimburse the Residential Developer for the following Qualified Costs associated with the Minimum Improvements- Residential out of Available Tax Increment and other funds available to the Authority solely in accordance with the foregoing Agreement: Land Acquisition $1,111,682 Demolition $ 287,000 Relocation $ 623,000 Termination of Leaseholds $ 640,610 In no event shall the Authority reimburse the Residential Developer more than $2,662,292 for the Qualified Costs. 382688 RHB CT165 -21 E -1 EXHIBIT F FORM OF AUTHORIZING RESOLUTION 1 7 �Y •7 � I IT [ •� i � (! 7 RESOLUTION APPROVING SECOND AMENDED AND RETSTATED CONTRACT FOR PRIVATE DEVELOPMENT AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS $2,229,292 LIMITED TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2011A BE IT RESOLVED BY the Cottage Grove Economic Development Authority (the "Authority") as follows: Section 1. Authorization• Award of Sale 1.01. Authorization The Authority has heretofore approved the establishment of Tax Increment Financing District No. 1 -12 (the "TIF District ") within Development District No. I (the "Development District"), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Development District. Pursuant to Minnesota Statutes Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Development District. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its $2,229,292 Limited Taxable Tax Increment Revenue Note, Series 2011A (the "Note ") for the purpose of financing certain costs of the Development District. 1.02. Agreement Approved; Issuance, Sale, and Terms of the Note The Authority hereby approves the Second Amended and Restated Contract for Private Development (the "Agreement ") between the Authority and PHS /Cottage Grove, Inc., formerly known as PHM/Cottage Grove, Inc., a Minnesota non -profit corporation, and PHS /CG Center, LLC, a Minnesota limited liability company (collectively, the "Developer"), and authorizes the President and Executive Director to execute such Agreement in substantially the form on file with the Authority, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. F -1 382688 Run CT165 -21 The Authority hereby authorizes issuance of the Note in accordance with terms set forth in this resolution to the Purchaser, at a price of par. The Note shall be dated as of the date of delivery and shall bear no interest. 1.03. Optional Redemption The Authority may prepay the Note in whole or in part, without premium or penalty, on any date. Section 2. Form of Note The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY No. R -1 $2,229,292 LIMITED TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2011A Rate 0% Principal Amount: $2,229,292 Registered Owner: PHS1Cottage Grove, Inc. Date of Original Issue 20 The Cottage Grove Economic Development Authority (the "Authority"), for value received, certifies that it is indebted and hereby promises to pay to the registered owner specified above, or registered assigns (the "Owner "), but solely from the sources, to the extent and in the manner hereinafter identified, the principal amount specified above, with no interest. The first payment of 5313,767 shall be payable within 10 days of the original date of issue. Subsequent payments shall be payable on each February 1 and August 1 ('Payment Dates "), commencing August 1, 2011, and continuing through August 1, 2018, in accordance with the payment schedule (the "Payment Schedule ") attached hereto. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United Sates of America which, on the Payment Date, is legal tender for the payment of public and private debts. This Note is subject to prepayment in whole or in part at the option of the Authority on any date. F -2 382688 Run CT165 -21 This Note is a single note in the total original principal amount of $2,229,292 to aid in financing a portion of the Qualified Costs of a Development Program undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.124 through 469.134, and is issued pursuant to an authorizing resolution (the "Resolution ") duly adopted by the Authority on April 12, 2011, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment as defined in the Resolution, pledged to the payment hereof under the Resolution, the terms of which are hereby incorporated by reference. This Note shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay this Note or other costs incident hereto except out of moneys pledged . thereto under the Resolution, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of this Note or other costs incident hereto. The Authority shall pay to the Owner the amount of $313,767 within 10 days of the original date of issuance. Payments shall thereafter be made on February 1 and August 1 (`Payment Dates ") commencing on August 1, 2011 and continuing through August 1, 2018. If any amount payable under this Note has not been paid by August 1, 2018, after any payment is made on such date, any amount not paid shall be forgiven and the Authority shall have no further liability with respect thereto. Beginning on August 1, 2011 through the Termination Date, payments shall be made in an amount not to exceed the Payment Schedule and in accordance with the following formula: total tax capacity of the Minimum Improvements- Residential and the Minimum Improvements - Commercial = $347,500. The resulting percentage (the "Proration Percentage ") shall be the percentage of Available Tax Increment the Authority shall be obligated to pay the Owner under the Note for the respective year. Such payments shall be in full satisfaction of the Authority's obligation for such year under the Payment Schedule and no deficiency in Available Tax Increment in any year shall be payable in any subsequent year. In no year shall the Proration Percentage exceed 100 percent of the amount due under the Payment Schedule. If as of any Payment Date there is an uncured Event of Default under the Second Amended and Restated Contract for Private Development between the Authority and PHS /Cottage Grove, Inc., formerly known as PHM /Cottage Grove, Inc., a Minnesota non -profit corporation, and PHS /CG Center, LLC, a Minnesota limited Liability company, dated as of , 2011 (the "Agreement"), the Authority may withhold Available Tax Increment otherwise payable on such Payment Date. If the default is cured in accordance with the Agreement, the Available Tax Increment withheld shall be deferred and paid, without interest thereon, on the next Payment Date after the default is cured. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the Authority's executive director, by the Owner hereof in person or by the Owner's attorney duly authorized in writing, F -3 382688 Run CT165 -21 upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount and maturing on the same dates. 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 exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been manually signed by the Registrar. IN WITNESS WHEREOF, the Cottage Grove Economic Development Authority has caused this Note to be executed with the manual signatures of its president and executive director, all as of the Date of Original Issue specified above. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY Executive Director President REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Authority's executive director, in the name of the person last listed below. Date of Signature of Registration Registered Owner Executive Director Section 3. Terms, Execution and Delivery 3.01. Denomination, Payment The Note shall be issued as a single typewritten note numbered R -1. F -4 382688 RHB CT165 -21 The Note shall be issuable only in fully registered form. Payments on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Payment Dates Payments on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration The Authority hereby appoints the executive director to perform the functions of registrar, transfer agent and paying agent (the "Registrar "). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person (other than an affiliate, or other related entity, of the Owner or the Developer) unless the Authority has been provided with an opinion of counsel or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, and interest on, if any, such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. F -5 382688 RHB CT165 -21 (f) Taxes, Fees and Charges For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. (h) Prepayment In the event the Note is prepaid, notice thereof will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) not more than 60 and not less than 30 days prior to the date fixed for prepayment to the registered owner of the Note to be prepaid at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the prepayment of the Note. 3.04. Preparation and Delivery The Note shall be prepared under the direction of the executive director and shall be executed on behalf of the Authority by the signatures of its president and executive director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the executive director to the Owner or Owners thereof upon payment of purchase price and satisfaction of the conditions of delivery under section 4.6 of the Agreement, and the purchaser shall not be obligated to see to the application of the purchase price. Section 4. Security Provisions 4.01. Pledge The Authority hereby pledges to the payment of the Note of Available Tax Increment, as that term is defined in the Agreement, that is received by the Authority in the six -month period immediately before each Payment Date, limited to the Proration Percentage described in the Agreement and the Note. 4.02. Debt Service Fund Until the date the Note is no longer outstanding has been paid in full (to the extent required to be paid pursuant to this resolution), the Authority shall maintain F -6 382688 RHB CT165 -21 a separate and special "Tax Increment Fund" to be used for no purpose other than the payment of the Note. The Authority irrevocably agrees to appropriate to the Tax Increment Fund Available Tax Increment in the Proration Percentage as is necessary to pay amounts due on the Note on each Payment Date. Interest earnings on funds in the Tax Increment Fund will be credited to that fund. Section 5. Certification of Proceedings 5.01. Certification of Proceedings The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date This resolution shall be effective upon full execution of the Agreement. Adopted this 12 day of April, 2011. Its President And by: Its Executive Director F -7 382688 RHB CT165 -21 EXHIBIT A TO AUTHORIZING RESOLUTION PAYMENT SCHEDULE 2009 $ 111,045 2010 $ 202,722 2011 $ 337,650 2012 $ 337,650 2013 $ 337,650 2014 $ 297,235 2015 $ 240,950 2016 $ 182,690 2017 $ 122,450 2018 S 59,250 TOTAL: $2,229,292 F -A -I 382688 RHB CT165 -21 INVESTMENT LETTER To: The Cottage Grove Economic Development Authority Attention: Executive Director Re: $2,229,292 Limited Taxable Tax Increment Revenue Note, Series 2011A The undersigned, with regard to $2,229,292 in principal amount of the above captioned Note (the "Note ") pursuant to a resolution of the Cottage Grove Economic Development Authority (the "Resolution "), hereby represents to you, to Ehlers and Associates and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, Bond Counsel, as follows: I. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other obligations, to be able to evaluate the risks and merits of the investment represented by the above Note. 2. We understand that the Note is payable from and only from Available Tax Increments, as limited by the Proration Percentage, resulting from increases in the taxable value of certain real property in Tax Increment Financing District No. 1 -12 operated by the Authority. 3. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 4. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Authority, the Note and the security therefore, and that as a reasonable investor we have been able to make our decision to purchase the above Note. 5. We represent to you that we are purchasing the Note for our own account and not for resale or other distribution thereof. 6. We acknowledge receipt of the Note on the date hereof. 384406 RHB CT165 -21 Our Federal Employer ID No. is PHS /COTTAGE GROVE, INC. By: /1 Its: f. fi° V B Its: rvu, Yi Dated: ,3 LY , 2011 This document was drafted by: KENNEDY & GRAVEN, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 384406 RHB CT165 -21 AUTHORIZING RESOLUTION COTTAGE GROVE ECONTOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. RESOLUTION APPROVING SECOND AMENDED AND RETSTATED CONTRACT FOR PRIVATE DEVELOPMENT AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS $2,229,292 LIMITED TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2011A BE IT RESOLVED BY the Cottage Grove Economic Development Authority (the "Authority") as follows: Section 1. Authorization; Award of Sale 1.01. Authorization The Authority has heretofore approved the establishment of Tax Increment Financing District No. 1 -12 (the "TIF District ") within Development District No. 1. (the "Development District"), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Development District. Pursuant to Minnesota Statutes Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Development District. Such bonds are payable fi all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its $2,229,292 Limited Taxable Tax Increment Revenue Note, Series 2011A (the "Note ") for the purpose of financing certain costs of the Development District. 1.02. Agreement Approved; Issuance, Sale, and Terms of the Note The Authority hereby approves the Second Amended and Restated Contract for Private Development (the "Agreement ") between the Authority and PHS /Cottage Grove, Inc., formerly known as PHM /Cottage Grove, Inc., a Minnesota non -profit corporation, and PHS /CG Center, LLC, a Minnesota limited liability company (collectively, the "Developer "), and authorizes the President and Executive Director to execute such Agreement in substantially the form on file with the Authority, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. The Authority hereby authorizes issuance of the Note in accordance with terms set forth in this resolution to the Purchaser, at a price of par. The Note shall be dated as of the date of delivery and shall bear no interest. 384407 Run CT165 -21 1.03. Optional Redemption The Authority may prepay the Note in whole or in part, without premium or penalty, on any date. Section 2. Form of Note The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY h• $2,229,292 LIMITED TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2011A Rate 0% Principal Amount: $2,229,292 Registered Owner: PHS /Cottage Grove, Inc. Date of Original Issue ,20 The Cottage Grove Economic Development Authority (the "Authority"), for value received, certifies that it is indebted and hereby promises to pay to the registered owner specified above, or registered assigns (the "Owner "), but solely from the sources, to the extent and in the manner hereinafter identified, the principal amount specified above, with no interest. The first payment of $313,767 shall be payable within 10 days of the original date of issue. Subsequent payments shall be payable on each February 1 and August 1 (`Payment Dates "), commencing August 1, 2011, and continuing through August 1, 2018, in accordance with the payment schedule (the "Payment Schedule ") attached hereto. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United Sates of America which, on the Payment Date, is legal tender for the payment of public and private debts. This Note is subject to prepayment in whole or in part at the option of the Authority on any date. This Note is a single note in the total original principal amount of $2,229,292 to aid in financing a portion of the Qualified Costs of a Development Program undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.124 through 469.134, and is issued 384407 RHB CT165 -21 2 pursuant to an authorizing resolution (the "Resolution ") duly adopted by the Authority on April 12, 2011, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment as defined in the Resolution, pledged to the payment hereof under the Resolution, the terms of which are hereby incorporated by reference. This Note shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay this Note or other costs incident hereto except out of moneys pledged thereto under the Resolution, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of this Note or other costs incident hereto. The Authority shall pay to the Owner the amount of $313,767 within 10 days of the original date of issuance. Payments shall thereafter be made on February 1 and August 1 ( "Payment Dates ") commencing on August 1, 2011 and continuing through August 1, 2018. If any amount payable under this Note has not been paid by August 1, 2018, after any payment is made on such date, any amount not paid shall be forgiven and the Authority shall have no further liability with respect thereto. Beginning on August 1, 2011 through the Termination Date, payments shall be made in an amount not to exceed the Payment Schedule and in accordance with the following formula: total tax capacity of the Minimum Improvements- Residential and the Minimum Improvements- Commercial _ $347,500. The resulting percentage (the "Proration Percentage ") shall be the percentage of Available Tax Increment the Authority shall be obligated to pay the Owner under the Note for the respective year. Such payments shall be in full satisfaction of the Authority's obligation for such year under the Payment Schedule and no deficiency in Available Tax Increment in any year shall be payable in any subsequent year. In no year shall the Proration Percentage exceed 100 percent of the amount due under the Payment Schedule. If as of any Payment Date there is an uncured Event of Default under the Second Amended and Restated Contract for Private Development between the Authority and PHS /Cottage Grove, Inc., formerly known as PHM /Cottage Grove, Inc., a Minnesota non -profit corporation, and PHS /CG Center, LLC, a Minnesota limited liability company, dated as of 2011 (the "Agreement"), the Authority may withhold Available Tax Increment otherwise payable on such Payment Date. If the default is cured in accordance with the Agreement, the Available Tax Increment withheld shall be deferred and paid, without interest thereon, on the next Payment Date after the default is cured. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the Authority's executive director, by the Owner hereof in person or by the Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect 384407 RHB CT165 -21 3 to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount and maturing on the same dates. 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 exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been manually signed by the Registrar. IN WITNESS WHEREOF, the Cottage Grove Economic Development Authority has caused this Note to be executed with the manual signatures of its president and executive director, all as of the Date of Original Issue specified above. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY Executive Director President REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Authority's executive director, in the name of the person last listed below. Date of Signature of Registration Registered Owner Executive Director Section 3. Terms, Execution and Deliverv 3.01. Denomination, Payment The Note shall be issued as a single typewritten note numbered R -1. The Note shall be issuable only in fully registered farm. Payments on the Note shall be payable by check or draft issued by the Registrar described herein. 384407 RHB c "r 65 -21 4 3.02. Payment Dates Payments on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration The Authority hereby appoints the executive director to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person (other than an affiliate, or other related entity, of the Owner or the Developer) unless the Authority has been provided with an opinion of counsel or a certificate of the transferor, in a forni satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of or on account of, the principal of, and interest on, if any, such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Chartres For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for 384407 RHB CT165 -21 5 any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terns, it shall not be necessary to issue a new Note prior to payment. (h) Prepayment In the event the Note is prepaid, notice thereof will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) not more than 60 and not less than 30 days prior to the date fixed for prepayment to the registered owner of the Note to be prepaid at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the prepayment of the Note. 3.04. Preparation and Deliverv The Note shall be prepared under the direction of the executive director and shall be executed on behalf of the Authority by the signatures of its president and executive director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the executive director to the Owner or Owners thereof upon payment of purchase price and satisfaction of the conditions of delivery under section 4.6 of the Agreement, and the purchaser shall not be obligated to see to the application of the purchase price. Section 4. Security Provisions 4.01. Pledge The Authority hereby pledges to the payment of the Note of Available Tax Increment, as that term is defined in the Agreement, that is received by the Authority in the six -month period immediately before each Payment Date, limited to the Proration Percentage described in the Agreement and the Note. 4.02. Debt Service Fund Until the date the Note is no longer outstanding has been paid in full (to the extent required to be paid pursuant to this resolution), the Authority shall maintain a separate and special "Tax Increment Fund" to be used for no purpose other than the payment of the Note. The Authority irrevocably agrees to appropriate to the Tax Increment Fund Available 384407 RHB CT165 -21 6 Tax Increment in the Proration Percentage as is necessary to pay amounts due on the Note on each Payment Date. Interest earnings on funds in the Tax Increment Fund will be credited to that fund. Section 5. Certification of Proceedings 5.01. Certification of Proceedings The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date This resolution shall be effective upon full execution of the Agreement. Adopted this 12` day of April, 2011. By: Its President And by: Its Executive Director 384407 RflB CT165 -21 7 EXHIBIT A TO AUTHORIZING RESOLUTION PAYMENT SCHEDULE 2009 $ 111,045 2010 $ 202,722 2011 $ 337,650 2012 $ 337,650 2013 $ 337,650 2014 $ 297,235 2015 $ 240,950 2016 $ 182,690 2017 $ 122,450 2018 $ 59,250 TOTAL: $2 384407 RHD CI165 -21