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Home My WebLink About2016-06-15 PACKET 11.A. Cottage J Grove ��er� Pride and Qro�P�rity Me�t C I t�/ C O U I'1 C I I REGULAR AGENDA Acfion Request Form 11 .A. Meeting Date 6/15/2016 Department Community Development Title of Request Approval of the Dominium Development Agreement Staff Recommendation Consideration of a motion to: 1. Recommend approval of the Developers Agreement with Dominium, and authorize the City legal counsel to make any necessary language modifications to address the proposed building configuration from 100% affordable senior housing to 80% affordable senior housing/20% affordable non-age restricted housing. 2. Recommend approval for pominium to provide proof of parking on the site plan due to the change in senior unit count configuration. The developer will be required to provide all appropriate landscape, payment of tree mitigation and stormwater management as per the requirements of the City Code. ATTACH MENTS: Description Type Upload Date Dominium Development Staff Memo Cover Memo 6/10/2016 Dominium Development Agreement Backup Material 6/10/2016 Cottage � Grove �here Pride and PrOSPerity MeeY TO: Honorable Mayor and City Council Charlene Stevens, City Administrator FROM: Jennifer Levitt, Community Development Director/ City Engineer DATE: June 10, 2016 RE: Dominium Backg rou nd/Discussion In 2007 the senior housing master plan for Southpoint Ridge Development was approved. Following approval of the master plan, construction of White Pines Senior Living began and the final phase was completed in 2010. A single-family residential dwelling and two accessory structures are located in the southeast corner of the senior housing master plan site. The site was formally known as the Hill-Gibson House. The property had been added to the City's Register of Historic Sites and Landmarks in December 1998. In April 2016, a certificate of appropriateness authorizing the delisting of the property from the City's Local Register of the Historic Sites and Landmarks was approved by the City Council. Project Proposal Dominium Development (Dominium) is proposing the construction of a 184-unit affordable senior rental apartments. A minimum of 40 percent of the units will be occupied by persons with incomes less than 60 percent of inedian income. The proposed apartment building has four residential floors comprising of 73 one-bedroom units, 79 two-bedroom units, and 32 three- bedroom units. An underground parking level in the basement level has 132 parking spaces. Ninety parking spaces are proposed outside for residents, guests, and employees. The gross land area for the entire project is 5.02 acres and the overall residential density is approximately 37 units per acre. Economic Development Authority Dominium Development June 14, 2016 Page 2 of 6 The site plan for the proposed affordable senior rental apartment project is shown below. ��'r� � ..�..., �� \ .. . -� .— '��POIPI D°u0/�• - - .. � \\� I�nr ,-E��t � ....::..m. .\ No.v'-\��, � :i` .. � �`� /�' � .f'� .. �. \ ?'�\ '/ ` � �..« � M_ �''r:�� .....w„ - �. �� -��<��,. �., =� -�, ,..,._ ,.,,. '� \ �� ,,,..�......,��. �v ....,.,. . ,�,'._.._' ' , V� � '\L „'..�... ,\�j , ..�+�� I� .. .�..... .� , ---\�a.�� ' \� " .. , i ., i� �� , �m� ,,,. .....:. , ��; . ... ` ' _..,��.,..... �'o�`.i _... .. ,„ �_ _ ��,. ,r�':'...,,.. . _ � ` 'o _ ...�..... � s e� , � ,�-__-.—_ __- � „„ . '�yy . i .,\ ` ..k.�... d'�� - ^, R, �S .. � . � � ��y c,-j�i�yC f ,��}, �. ,. � VTHGOINT PIOGE Ll � �' �^�'�'r � �� f.�-1 4 w4 � �-. . �. Y N7)71i3M 1 �,^Y.(. Y.i �,1 Z A: �� .� {i+w `�� J� 1.��. ► . / - '� w� ��zy,,. � �y. � -.� �� tA- t..li^ �\.. . � � . +��? . \"'Y'�';�'7�i�� R.` Y i � h � . \ . � � f. •y} i� ' � !j �' 2- . "c r. w. �r.'�-�. �� ,�l� \ � � 7. s. - a ` .��y�.. i�,� . y .r'o�d��+ ., ,�, ,{ <. � > ? �,�.* t,� �'�: Lh� SR. . • __ .- ^�� _q+ �,� %i��. �^ �� y� .� � Whit n�s , s�`�: �� '{� �,j{ .. ; , J. a �� y�n��A� .f++� ,�' �'ai �/ ' � ��x "ft�-M,ay� r .! � .: � , �� +� . \� ',f' � �� `''� . ` ;} ^ � , ; ,' „ ._=;. -_ -- \ �u�;�.,�vs�,�" -�` �� i�l�+ .:� �I: � ~ s E ` ri�> � c� � -Y. � � I �.` ._� � , _--- �:�, \ . c �.� � +t''t .:�� . l8•�yLT�.h. _ \` � \ z�n�.. . ,\ ,\ �.�1!!'.� ��3 . .. � T:�ti's ��,�„�-I 7 1 5..;f R K. �ti ��. �` !��E�� 'q "•� , ,"�-�-',� 'S' rdt } , �+ t r. . . � •\� .� . ��. � '�� L•• � +j� � , 7 � . � ,��. . \ � .7rc. +� aa w, . .�q", i �^e J..,;r i'� r .T q7�► ,� � _ � z' � -i �• .�� _ , � `�� : y, a . �r ' - � , ,' !�t ' �y� •. r � ��. / -� :�o ` � .` � ' �� \.`�\ �/(�, \ . 'j e� ` \.S` _ L��'.V � .'� �= .+ j '� !� ..� t��K""+rr ... t ��/ � , ,� „Lj,, ,yo� �; � ,� �_ _ _ �\ \"'�Q � `�boG'._ / �'\�``,+�,,�' �`. ,,:�,�� e. . .j \,. ,,. �. _ .t!�= , �'1' nj� r � a .�� .. ��` . � . Rd\ ��:� � �K t,h�`,�; � . E - � i .�� . � \... ��c� �A � °W �d'r� '� ' 3' , ,r'�� \�,<�. �`. �qra ,.��'r� � , �� ; '��}� .,� � . ,�� ,� - - /�\\�h'j.y�� `r.,. ��`O� �i'C 1�. �7_. �. . ' _ ._ J � . `\\1C`r��. � . I %...� .. . �y� .:4C�' ��. ..9."_ __._ ._. Proposed Senior Housing Project Site Economic Development Authority Dominium Development June 14, 2016 Page 3 of 6 Building Design/Layout The exterior building materials and architecture will be complimentary to White Pines Senior Living. The architectural design for the four-story apartment building will include varying exterior wall facades on all sides of the apartment building. The apartment building's primary main entry is on the east side of the building, facing East Point Douglas Road. A roof-structure canopy will be located above the paved access drive to the main building entrance. An outdoor patio area is also proposed on the right side of the main entrance. The proposed apartment building will have four residential floors and a underground parking garage with 132 parking spaces. The building will also features an entry lounge, offices, library, clubroom, social/ kitchen room, fitness room, TV/theater room, and a salon. An on-site management office will be located on the first level. The table below shows the breakdown of the various living units proposed and the square footage range for each residential unit type. Living Unit Type Number of Unit Types Percentage of Unit Types Unit Sizes One-bedroom 73 40% 760-900 sq. ft. Two-bedrooms 79 43% 950- 1,100 s .ft. Three-bedrooms 32 17% 1,200— 1,450 sq. ft. The building exterior elevations are illustrated below. . . . �r . ,a . . �. L � i "^; i i�� „� � �: f � �.:� . � � _.. . I1�E � F� I�. �i '.r� ��.1�,,,�1��■ 1�' .�. 1 �._ 1 :(yL�i' , L_�' �• L.� l_�� `��[�"J I ��`. � . 1 1 t t �� ' I�1 � 3i�a,l {7---j � � �W i f� u Q3 IlydJ '�_� ��[L_ L l_ :�j�..: .�.��...JI�I.n L: �. yL. _ u�II_l.� .F_ I� �� ., i ��'>-----e.a-<� South Elevation Facing State Highway 61 � � a .�. � � � � r . --- �� J.] : �� . .. - — � :. 1:: - - - - - � : :. - t� ], n 3 •: : �,n �3_� -:1,� � � J :�i �.. �, .._ , �� . .. . :�- . : , • - �tl � C � � :J ��:� � � I �. r i�� ::1 � � �� 1]�'�T� � '^�__ -4_ I r� � . , . . /�EST ELEVATK,W �a West Elevation Facing State Highway 61 _ < < � � - �� `- ` - - - . �Ti — — -- - i� ;I ��, ; - — - - tft i� �� - �- r� k ❑ i. u i:: tr��i•� n G I p�i I: {-{- i i. _ : _ r F- n , „ �![ �� i��`� r ��!� �� € a r" �� i�i� . �I�� _ � �� d�., �:F �y_ � ��\:F'-.:.=��:ti \l` North Elevation Facing East Point Douglas Road (Main Entrance) Economic Development Authority Dominium Development June 14, 2016 Page 4 of 6 -" _ � � � � �. ti f �� T3 . , • � _:,�- ] � .� � � , '. � �- . _ _ .. � � � � - . �� :��. _�: �: 3, �,: �_� �:� o :- , , __ �� ,�� : �.��.� :�, a ��.,� I.. � L:..7 1L..1� !""h�r � �� ::_l, � � LiJ.� .i-� _� �. .1f�f✓~ ,� ]��..�� _ � .=" .-�=•STE,=.4-".!� \_'%f ` East Elevation Facing East Point Douglas Road Planning Commission/City Council Approvals On April 25, 2016, the Planning Commission held a public hearing on the proposed Dominium project. No other public oral testimony or written comments were received. The Planning Commission voted 8 to 0 to recommended approval of the proposed Dominium project. The Dominium project was forwarded to the City Council on May 4, 2016, for a public hearing. No public or written comments were received. The City Council voted 5 to 0 approving the Dominium project. Development Agreement and Tax Increment Financing (TIF) In February 2016 the Economic Development Authority (EDA) requested the City Council call for a public hearing to establish TIF District 1-17 (Dominium). The City Council approved the TIF District with a vote of 4 to 0 to facilitate the construction of 184 affordable apartment units for seniors in the City. Recently Minnesota Senate failed to pass a $1.5 billion bonding bill in May 2016. The impact this will have on the Dominium Development project will include the available amount of bonding available for the project. The impact will be felt State wide for all projects requesting financial assistance. Projects that would have been funded in the bonding bill will have to be delayed for at least a year or find other financial assistance to fund projects for 2016. As of today a special session has not been agreed upon to work through the issues of the bonding bill. Therefore, the available funding is significantly less the original $1 billion. Dominium is working to be proactive in getting the project completed, yet with the complications that have risen at the State level, Dominium wants to improve their competitiveness. In order for pominium to be competitive for the remaining funds in the State they are requesting a change in the percentage of senior apartment units. Originally Dominium proposed a 100% affordable senior building. Now with the change in available State funding they want to change it to 80% affordable senior units. The remaining 20% of the apartment units would still be affordable but not restricted to seniors. Ultimately this would allow for someone looking for affordable housing option access to 20% of the units in the Dominium project Impact on Proposed Development Unit Configuration Dominium is committed to the City of Cottage Grove and the development of the 184-unit affordable apartment building. Dominium is requesting a change in the percentage of allowed Economic Development Authority Dominium Development June 14, 2016 Page 5 of 6 affordable units for seniors. Seniors is defined as, individuals who are age 55 or older. The request is for 80% affordable senior apartment units and 20% affordable units that are not restricted to seniors as defined. For example, you may see someone interested in an apartment unit whose income is 60 percent or less of the area median gross income and meets the affordability requirement but who is 53 years of age. It is highly unlikely you would see a dramatic shift in the age demographic of someone looking at the units that fall within the 20% affordable. Mostly likely you will see a potential resident that is on the cusp of what is traditionally defined as "senior". The entire development will continue to be affordable to seniors. The term senior is defined as Dominium is now requesting that 80% of the units are designated for seniors who meet the definition. The remaining 20% will still be affordable but may be for an individual who is not quite yet defined as a senior. The City staff will direct legal counsel to ensure language in the development agreement would solidify the division of units. Parking City staff requested that Dominium show a proof of parking on their site plan in case in the future there would became a parking concern at the development due to the proposed change of 80% affordable senior apartment units instead of 100% affordable senior units. Dominium's architectural staff reviewed the plans and determined that at 1.20 parking spaces per unit, some parking spaces would be lost in the underground garage but they were able to gain an additional 27 parking spaces in the surface parking lot. The proof of parking for the development would increase the total number of parking spaces to 249 from the approved 222 spaces. The site plan is be revised to show the proof of parking. Dominium will also be required to maintain the approved landscaping requirements and tree mitigation as required per the City Code. � ..Y�. , �. '_� ..v�o � �O1M� Oou�f�• ..�.� � A++�t p��V � _--'-'- —_��y � � �a.. _____ �[� �r ' � os �-'"o""=�- � ' +A �-'.}r . u��r � J' ~~ '. • �' . ,. '^�' . _ •.NJ� [/�,,,,�.. . '.a`.�. n� ' +�� J' .. .,:�:Lti�i.�.�' .�....� i .....�... ; ' ..,.."'='::; ,.�� .. �� ` �� ,.. • ' ��i.0 -'�� ^��,�� _.... 4''� �\�- � ..:;•,,, ,ti a .� ,� � ... 4: � _ , :_ ' �� ;; m� ..._ ... ,.,,:• -�. �;-,»:�::�: , ^x'-:�. ;�� ` �t . ` � '�� --- �- � __..._ a .,. - � , k ` � _._...��... .�,�y ....x �..---. " e�V - -• � -- _ `_.--- . +. .-..,�..... �¢ . ..�.... �� . ` F _. ::::�:.. �!.. ..r.� ♦ .'. �� ._ , 4� -_ ,.�.4-�.�,;- � .`��•_ --- �:::r:-�... �� - .- - __-- -o . .,_.... �� ---- + �.. .�� . _ _ - �". � � . :I ---- . . `�.�.'�, � �,r'� - .. r - ��F� ` i�i_ Proof of Parking Area (in red) Economic Development Authority Dominium Development June 14, 2016 Page 6 of 6 If Dominium uses the proof of parking area for the development they will be required to provide landscaping of the parking lot per City Code as well as pay for tree mitigation and storm water management. The Developer has agreed to these conditions if the proof of parking area needs to be structured at a future date. The Economic Development Authority (EDA) will review and consider approval of the proposed recommendations at their June 14t" meeting. City staff will report the EDA's recommendation to City Council during staff's presentation of this agenda item. Recommendation Consideration of a motion to: 1. Recommend approval of the Developers Agreement with Dominium, and authorize the City legal counsel to make any necessary language modifications to address the proposed building configuration from 100% affordable senior housing to 80% affordable senior housing/20% affordable non-age restricted housing. 2. Recommend approval for pominium to provide proof of parking on the site plan due to the change in senior unit count configuration. The developer will be required to provide all appropriate landscape, payment of tree mitigation and stormwater management as per the requirements of the City Code. CONTRACT FOR PRIVATE DEVELOPMENT By and Between COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and CITY OF COTTAGE GROVE And COTTAGE GROVE LEASED HOUSING ASSOCIATES I,LLLP This document was drafted by: KENNEDY& GRAVEN, CHARTERED (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: 612-337-9300 477072v6 RHB CT165-53 TABLE OF CONTENTS Pa�e PREANIBLE ..................................................................................................................................1 ARTICLE I Definitions Section1.1. Definitions................................................................................................................2 Section1.2. Exhibits....................................................................................................................5 Section 1.3. Rules of Interpretation .............................................................................................5 ARTICLE II Representations and Warranties Section 2.1. Representations by the EDA....................................................................................6 Section 2.2. Representations by the City.....................................................................................6 Section 2.3. Representations and Warranties by the Developer..................................................7 ARTICLE III Propertv Acquisition; Issuance of Note; Financin� Section 3.1. Status of Development Property..............................................................................8 Section 3.2. Issuance of TIF Pay-As-You-Go Note ....................................................................8 Section 3.3. Conditions Precedent to Issuance of Note...............................................................8 Section 3.4. Housing Revenue Bonds..........................................................................................9 Section 3.5. Evidence of Other Financing...................................................................................9 Section3.6. Records ..................................................................................................................10 Section 3.7. No Business Subsidy..............................................................................................10 ARTICLE IV Construction and Maintenance of Minimum Improvements Section 4.L Construction of Improvements; Fees.....................................................................10 Section 4.2. Construction Plans.................................................................................................10 Section 4.3. Letter of Credit Requirement.................................................................................1 l Section 4.4. Commencement and Completion of Construction; Repair....................................12 Section 4.5. Certificate of Completion ......................................................................................13 Section 4.6. Declaration Regarding Income Restrictions; Qualification of the TIFDistrict.............................................................................................................13 Section4.7. Senior Housing.......................................................................................................15 Section 4.8. Recognition of Historic Site...................................................................................15 i 477072v6 RHB CT165-53 ARTICLE V Insurance Section5.1. Insurance................................................................................................................15 ARTICLE VI Collection of Taxes; Assessment A�reement Section6.1. Taxes......................................................................................................................17 Section 6.2. Assessment Agreement..........................................................................................18 Section 6.3. Suspension or Reduction of Payments on TIF Note..............................................18 Section 6.4. Right to Collect Delinquent Taxes.........................................................................19 Section 6.5. Use of Tax Increment.............................................................................................19 ARTICLE VII Prohibitions A�ainst Sale; Assi�nment; Indemnification Section 7.1. Representation as to Development.........................................................................19 Section 7.2. Prohibition Against Sale; Assignment of Agreement............................................19 Section 7.3. Release and Indemnification Covenants................................................................21 ARTICLE VIII Events of Default Section 8.1. Events of Default Defined .....................................................................................21 Section 8.2. Remedies on Default..............................................................................................22 Section 8.3. Remedies After Certificate of Completion............................................................23 Section 8.4. No Remedy Exclusive............................................................................................24 Section 8.5. No Additional Waiver Implied by One Waiver ....................................................24 ARTICLE IX Additional Provisions Section 9.1. Conflict of Interests; EDA and City Representatives Not Individually Liable .....24 Section 9.2. Equal Employment Opportunity............................................................................25 Section 9.3. Restrictions on Use; City Approval Required .......................................................25 Section 9.4. Titles of Articles and Sections...............................................................................25 Section 9.5. Notices and Demands ............................................................................................25 Section9.6. Counterparts...........................................................................................................26 Section9.7. Recording...............................................................................................................26 Section9.8. Amendment............................................................................................................26 Section9.9. EDA Approvals......................................................................................................26 TESTIMONIUM ...........................................................................................................................27 SIGNATURES ........................................................................................................................27-29 ii 477072v6 RHB CT165-53 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY EXHIBIT B FORM OF NOTE EXHIBIT C FORM OF DECLARATION OF RESTRICTIVE COVENANTS EXHIBIT D FORM OF CERTIFICATE OF COMPLETION EXHIBIT E FORM OF 1NVESTMENT LETTER EXHIBIT F FORM OF ASSESSMENT AGREEMENT iii 477072v6 RHB CT165-53 CONTRACT FOR PRIVATE DEVELOPMENT THIS CONTRACT FOR PRIVATE DEVELOPMENT (the "Agreement"), made this day of , 2016, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "EDA"), the city of Cottage Grove, a municipal corporation under the laws of Minnesota(the "City"), and Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership (the "Developer"). WITNES SETH: WHEREAS, on March 8, 2016, the EDA modified the development district program (the "Program") for Development District No. 1 (the "Development District"), pursuant to Minnesota Statutes, sections 469.090 to 469.1082; and WHEREAS, on March 8, 2016, the EDA approved a tax increment financing plan (the "TIF Plan") for Tax Increment Financing District No. 1-17 (Dominium), a housing tax increment financing district, (the "TIF District"), pursuant to Minnesota Statutes, sections 469.174 to 469.179; and WHEREAS, on April 6, 2016, the City held a public hearing and approved the modified Program and the TIF Plan and took other actions in support of the Developer's project; and WHEREAS, in order to achieve the obj ectives of the modified Program and the TIF Plan, the EDA is prepared to offer certain financial assistance to the Developer in order to bring about development of a senior independent living rental facility in accordance with this Agreement; and WHEREAS, the EDA believes that the fulfillment generally of this Agreement is in the vital and best interests of Cottage Grove and the health, safety, 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 and TIF District have been established; and WHEREAS, on May 4, 2016, the City granted preliminary approval regarding issuance of its revenue obligations for the Developer's proj ect. NOW, THEREFORE, in consideration of the mutual covenants and obligations of the EDA, the City and the Developer, each party does hereby represent, covenant and agree with the other as follows: 1 477072v6 RHB CT165-53 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement the following terms shall have the meaning give to them below unless a different meaning clearly appears from the context: "Administrative Costs" means the EDA's administrative expenses as defined in section 469.174, subd. 14 of the TIF Act. "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Assessment Agreement" means the agreement establishing a Minimum Market Value of the Development Property and the Minimum Improvements substantially in the form attached hereto as Exhibit F. "Assessor" means the assessor for Washington County, Minnesota. "Available Tax Increment," means, on each Payment Date, 90 percent of the Tax Increment attributable to the Development Property and paid to the EDA by Washington County in the six months preceding the Payment Date. Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default under this Agreement. "Business Subsidy Act" means Minnesota Statutes, sections 116J.993 through 116J.995, as amended. "Certificate of Completion" means the certification provided to the Developer pursuant to Section 4.4 of this Agreement. "City" means the City of Cottage Grove, Minnesota. "Code" means the United States Internal Revenue Code of 1986, as amended. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Developer on the Development Property to construct the Minimum Improvements, which (a) must be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building official of the City, and (b) must include at least the following (1) site plan; (2) foundation plan; (3)floor plan for each floor, (4) cross sections of each floor plan (length and width); (5) elevations (all sides, including a building materials schedule); (6) landscape and grading plan; and (7) other plans or supplements to the foregoing plans as the EDA may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County" means Washington County, Minnesota. 2 477072v6 RHB CT165-53 "Declaration" means the Declaration of Restrictive Covenants substantially in the form attached hereto as Exhibit C. "Developer" means Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership, or its permitted successors and assigns. "Development District" means the EDA's Development District No. 1. "Development District Program" or "Program" means the plan for development and redevelopment of Development District No. 1, as modified. "Development Property" means the real property legally described in Exhibit A attached hereto. "Economic Development Authorities Act" or "EDA Act" means Minnesota Statutes, sections 469.090 through 469.108, as amended. "EDA" means the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota. "Event of Default" means an event or action listed in Section 8.1 of this Agreement. "Holder" means the owner of any Mortgage on the Development Property or Minimum Improvements. "Housing and Redevelopment Authorities Act" or"HRA Act" means Minnesota Statutes, sections 469.001 through 469.047, as amended. "Housing Revenue Bonds" means taxable or tax-exempt housing revenue obligations issued by the City under Minnesota Statutes, Chapter 462 in an estimated principal amount not to exceed $25,000,000 in order to finance the acquisition, construction and equipping of the Minimum Improvements. "Interfund Loan" means the interfund loan in the amount of$100,000 authorized by the City on Apri16, 2016. "Investment Letter" means the investment letter in the general form attached hereto as Exhibit E to be provided to the EDA by the Developer prior to issuance of the Note. "Letter of Credit" or "LOC" means the irrevocable letter of credit the Developer is required to deliver to the City in accordance with Section 4.3 hereof. "Material Change" means a change in Construction Plans that adversely affects generation of tax increment or changes the number of Rental Housing Units. 3 477072v6 RHB CT165-53 "Maturity Date" means February 1, 2034 or the date the Note has been paid in full or terminated, whichever is earliest. "Minimum Improvements" means construction on the Development Property of an affordable senior independent living rental housing complex containing up to 184 Rental Housing Units and, at the Developer's option, no more than one Visitors' Unit. "Minimum Market Value" means a minimum market value for real estate tax purposes of $21,436,000 with respect to the Development Property and Minimum Improvements as of January 2, 2019 for taxes payable beginning in 2020 through the Termination Date. "Mortgage" means any mortgage made by the Developer which is secured in whole or in part with the Development Property or the Minimum Improvements. "Qualifying Costs" means the cost of land acquisition, utilities, site improvements, underground parking and affordable housing expenses made by the Developer regarding the Minimum Improvements which are to be reimbursed by the EDA with Available Tax Increment. "Qualifying Tenant" means a person or household occupying a Rental Housing Unit whose income is 60 percent or less of area median gross income for the applicable calendar year. "Rental Housing Units" means the up to 184 senior independent living rental housing units constructed as the Minimum Improvements. "Sale" means any sale, conveyance, exchange, refinancing or other transfer of the Developer's interest in the Development Property or Minimum Improvements, as more fully defined in Section 7.2 of this Agreement. "State" means the State of Minnesota. "Tax Credit Law" means Section 42 of the United States Internal Revenue Code of 1986, as amended. "Tax Increment" means that portion of the real property taxes which is paid with respect to the TIF District and which is remitted by Washington County to the EDA as tax increment pursuant to the Tax Increment Financing Act. "Tax Increment Financing Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, sections 469.174 to 469.179, as amended. "Tax Increment Financing District" or "TIF District" means the EDA's Tax Increment Financing District No. 1-17 (Dominium), a housing tax increment financing district. "Tax Increment Financing Note" or "Note" means the Taxable Tax Increment Revenue Note (Cottage Grove Leased Housing Associates I, LLLP) in the principal amount of$1,695,000 to be issued by the EDA to the Developer substantially in the form attached hereto as Exhibit B. 4 477072v6 RHB CT165-53 "Tax Increment Financing Plan" or "TIF Plan" means the Tax Increment Financing Plan for the TIF District, as approved by the EDA on March 8, 2016 and by the City on April 6, 2016, and as it may be amended from time to time. "Tax Official" means any County 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 the earliest of the following (a) the date of receipt by the EDA of the final payment from the County of Tax Increment from the TIF District; (b) the date when the Note has been fully paid, defeased or terminated in accordance with its terms; or(c)the date of termination of the Note and this Agreement by the EDA due to an Event of Default as set forth in Section 8.1 of this Agreement. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, lockouts or other labor troubles, prolonged adverse weather or acts of God, 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 acts of any federal, state or local governmental unit (other than the EDA or the City in properly exercising its rights under this Agreement) which directly result in delays. "Visitors' Unit" means no more than one residential unit reserved for short-term rental exclusively by persons visiting family or friends residing in a Rental Housing Unit. Section 1.2. Exhibits. The following exhibits are attached to and by reference made a part of this Agreement: Exhibit A Legal Description of Development Property Exhibit B Form of Note Exhibit C Form of Declaration of Restrictive Covenants Exhibit D Form of Certificate of Completion Exhibit E Form of Investment Letter Exhibit F Form of Assessment Agreement Section 13. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance with and governed by the laws of Minnesota. (b) The words "herein" and "hereofl' 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. 5 477072v6 RHB CT165-53 (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. ARTICLE II Representations and Warranties Section 2.1. Representations bv the EDA. The EDA makes the following representations: (a) The EDA is an economic development authority duly organized and existing under the EDA Act and also having the powers of a housing and redevelopment authority under the HRA Act. The EDA has the power to enter into this Agreement and carry out its obligations hereunder. (b) The individuals executing this Agreement and related documents and agreements on behalf of the EDA have the authority to do so and to bind the EDA by their actions. (c) Development District No. 1 is a redevelopment project within the meaning of the HRA Act and was adopted and approved in accordance with the HRA Act. (d) The TIF District No. 1-17 (Dominium) is a housing tax increment financing district within the meaning of the TIF Act and was adopted and approved in accordance with the TIF Act. (e) The execution, delivery and performance of this Agreement and of any other documents or instruments required or authorized pursuant to this Agreement by the EDA, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof, do not and will not conflict with or constitute a breach of or default under any existing agreements or obligations to which the EDA is a party or by which the EDA is bound. (f) To the best of the EDA's knowledge, there is no pending or threatened suit, action or proceeding against the EDA before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the EDA to perform its obligations hereunder, or the validity or enforcement of this Agreement. Section 2.2. Representations bv the CitX. The City makes the following representations: (a) The City is a municipal corporation under the laws of Minnesota. (b) The individuals executing this Agreement on behalf of the City have the authority to do so and to bind the City by their actions. (c) The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein and fulfillment of the terms hereof do not and will not 6 477072v6 RHB CT165-53 conflict with or constitute a breach of or a default under any existing agreement or obligation to which the City is a party or by which the City is bound. (d) To the best of the City's knowledge, there is no pending or threatened suit, action or proceeding against the City before any court, arbitrator, administrative agency or other government authority that materially or adversely affects the validity of any of the transactions contemplated hereby, the ability of the City to perform its obligations hereunder or the validity or enforcement of this Agreement. Section 2.3. Representations and Warranties bv the Developer. The Developer represents and warrants that: (a) The Developer is a limited liability limited partnership duly organized and in good standing under the laws of Minnesota, is duly authorized to transact business within the State, and has the power to enter into this Agreement and carry out its obligations hereunder. (b) The individuals executing this Agreement and related documents and agreements on behalf of the Developer have the authority to do so and to bind the Developer by their actions. (c) The Developer will construct, operate and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Program, the TIF Plan and all local, state and federal laws and regulations, including, but not limited to, environmental, zoning building code, rental licensing and public health laws and regulations. (d) The Developer has received no notice or communication from any local, State or federal official that the proposed activities of the Developer or the EDA under this Agreement may or will be in violation of any environmental law or regulation. The Developer is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, State or federal environmental law, regulation or review procedure. (e) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, State and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. The Developer did not obtain a building permit for any portion of the Minimum Improvements before April 6, 2016, the date of approval of the TIF Plan by the City. (f) 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 of any restriction or any evidences 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. (g) The development proposed by the Developer hereunder would not occur but for the tax increment financing assistance and other assistance being provided by the EDA hereunder. 7 477072v6 RHB CT165-53 (h) The Developer will promptly advise the EDA in writing of all litigation or claims affecting any part of the Development Property or the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Development Property or the Minimum Improvements or materially affecting the Developer or its business which may delay or require changes in construction of the Minimum Improvements. (i) No more than 20 percent of the square footage of the Minimum Improvements will consist of commercial, retail or other nonresidential uses. ARTICLE III Propertv Acquisition; Issuance of Note; Financin� Section 3.1. Status of Development PropertX. The Developer agrees to acquire the Development Property by December 31, 2016. Section 3.2. Issuance of TIF Pav-As-You-Go Note. (a) In consideration of the Developer constructing the Minimum Improvements and to finance the reimbursement of the Qualifying Costs, the EDA will issue and the Developer will purchase the Note in the principal amount of$1,695,000 in substantially the form attached hereto as Exhibit B. The EDA and the Developer agree that the consideration from the Developer for the purchase of the Note will consist of the Developer's payment of the Qualifying Costs which are incurred by the Developer in at least the principal amount of the Note. The EDA will deliver the Note upon satisfaction by the Developer of all the conditions precedent specified in section 3.3 of this Agreement. (b) The Developer understands and acknowledges that the EDA makes no representations or warranties regarding the amount of Available Tax Increment, or that revenues pledged to the Note will be sufficient to pay the principal of and interest on the Note. Any estimates of Tax Increment or Available Tax Increment prepared by the EDA or its financial advisors in connection with the TIF District or this Agreement are for the benefit of the EDA and are not intended as representations on which the Developer may rely. (c) The EDA acknowledges that the Developer may assign the Note to a lender that provides the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The EDA consents to this type of assignment, conditioned upon receipt of an investment letter from the lender in a form reasonably acceptable to the EDA. Section 3.3. Conditions Precedent to Issuance of Note. Notwithstanding anything in this Agreement to the contrary, the EDA shall not be obligated to issue the Note until all of the following conditions precedent have been satisfied: (a) The Developer has acquired the Development Property in fee; (b) The Developer has submitted a commitment for financing pursuant to Section 3.5 of this Agreement which is adequate, in the EDA's reasonable opinion, to finance construction of the Minimum Improvements; 8 477072v6 RHB CT165-53 (c) The Developer has submitted a certification as detailed below that it has paid for the Qualifying Costs; (d) The Developer has submitted and the EDA has approved the Construction Plans; (e) The Developer has executed a Declaration of Restrictive Covenants in substantially the form attached hereto as Exhibit C; (� The Developer has submitted an Investment Letter in substantially the form attached hereto as Exhibit E; (g) The Developer has executed an Assessment Agreement in substantially the form attached hereto as Exhibit F; and (h) There has been no Event of Default on the part of the Developer which has not been cured. The Developer shall deliver to the EDA a certification that it has incurred and paid the Qualified Costs in an amount at least equal to the principal amount of the Note together with reasonable evidence supporting that certification. Reasonable evidence must include, at a minimum, a settlement statement regarding the Development Property and paid invoices describing the other costs incurred and paid. Section 3.4. Housin� Revenue Bonds. On May 4, 2016, the City gave preliminary approval to the issuance of the Housing Revenue Bonds in the estimated principal amount not to exceed $25,000,000 to finance all or a portion of the costs of the Minimum Improvements, subj ect to (i) receipt of allocation of bonding authority from the office of Minnesota Management and Budget; (ii) final approval following the preparation of bond documents; and (iii) final determination by the City that the financing of the Minimum Improvements and the issuance of the Housing Revenue Bonds are in the best interest of Cottage Grove. Section 3.5. Evidence of Other Financin�. Before the EDA shall be obligated to issue the Note, the Developer agrees to submit to the EDA evidence of a commitment for financing which is adequate, in the EDA's reasonable opinion, for the construction of the Minimum Improvements. This may include the Housing Revenue Bonds or other private financing. If the EDA finds that the financing complies with the terms of this Section 3.5 and is sufficiently committed and adequate in amount to provide for the construction of the Minimum Improvements, the EDA shall notify the Developer in writing of its approval. Such approval shall not be unreasonably withheld. If the EDA rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection and the Developer shall have 30 days thereafter to submit a commitment for additional or alternate financing acceptable to the EDA. If the Developer fails to submit a commitment for financing acceptable to the EDA within said period of time or any additional period to which the EDA may agree, the EDA may notify the Developer of its failure to comply with the requirement of this Section 3.5 and may terminate this Agreement at its sole discretion. If for any reason the Developer is unable to obtain 9 477072v6 RHB CT165-53 adequate financing the Developer shall notify the EDA and may terminate this Agreement at its sole discretion. Section 3.6. Records. The EDA and its representatives will have the right at all reasonable times after reasonable notice to inspect, examine and copy all books and records of the Developer relating to the Minimum Improvements and the Qualifying Costs for which the Developer has been reimbursed under the Note. Section 3.7. No Business Subsidv. The parties agree and understand that the purpose of the EDA's financial assistance to the Developer is to facilitate development of a senior independent living residential rental housing project and is not a "business subsidy" within the meaning of Minnesota Statutes, sections 116J.993 to 116J.995. ARTICLE IV Construction and Maintenance of Minimum Improvements Section 4.1. Construction of Improvements; Fees. (a) The Developer agrees that it will construct the Minimum Improvements on the Development Property substantially in accordance with the approved Construction Plans and at all times prior to the Termination Date, will operate and maintain, preserve and keep the Minimum Improvements or cause the improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Neither the EDA nor the City will have any obligation to operate or maintain the Minimum Improvements. (b) The Developer agrees to pay the following development fees to the City at or before the time a building permit is issued for the Minimum Improvements: Sanitary Sewer Area Charge $3,189.00 Water Area Charge 5,015.00 Storm Water Area Charge 17,046.00 Tree miti ation fees 57,570.00 Park Dedication Fee (commercial rate) 38,000.00 Indirect Costs (Consulting engineering, legal and administrative) 20,000 Indirect Costs (City Engineering Fee) 15,000 Public Improvements to East Point Douglas Road 34,417 $190,237 *Indirect Costs are estimates only; any actual costs in excess of estimate will be billed to Developer (c) The City previously constructed public improvements to East Point Douglas Road which benefited the Development Property, among others, and deferred collection of assessments for such improvements. Prior to the time of issuance of a building permit for the Minimum Improvements, the Developer agrees to pay the City $34,417 (which is reflected in the above chart) to satisfy its allocated portion of said assessment if said assessment has not been paid previously. Section 4.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, the Developer will submit to the Construction Plans to the EDA. The 10 477072v6 RHB CT165-53 Construction Plans must provide for the construction of the Minimum Improvements and must be in substantial conformity with the Development Program, the TIF Plan, this Agreement, and all applicable State and local laws and regulations. The EDA will approve the Construction Plans in writing i£ (i) they conform to the terms and conditions of this Agreement; (ii) they conform to the goals and objectives of the Development Program; (iii) they conform to all applicable federal, State and local laws, ordinances, rules and regulations; (iv) they are adequate to provide for construction of the Minimum Improvements; (v) they do not provide for expenditures in excess of the funds available to the Developer from all sources (including the Developer's equity)for construction of the Minimum Improvements; and (vi)there is no uncured Event of Default. Approval may be based upon a review by the City's building official of the Construction Plans. No approval by the EDA will relieve the Developer of the obligation to comply with the terms of this Agreement, the Development Program, the TIF Plan or applicable federal, State and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the EDA or the City will constitute a waiver of an Event of Default. (b) If approval of the Construction Plans is requested by the Developer in writing at the time of submission, the Construction Plans will be deemed approved unless rejected in writing by the EDA, in whole or in part. Any rej ection must set forth in detail the reasons therefore, and must be made within 20 days after the date of their receipt by the EDA. If the EDA rej ects any Construction Plans in whole or in part, the Developer must submit new or corrected Construction Plans within 20 days after written notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans will continue to apply until the Construction Plans have been approved by the EDA. The EDA's approval will not be unreasonably withheld, delayed or conditioned and will constitute a conclusive determination that the Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to the EDA's satisfaction with the provisions of this Agreement relating thereto. (c) If the Developer desires to make any Material Change in the Construction Plans after their approval by the EDA, the Developer must submit the proposed change to the EDA for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 of this Agreement with respect to the previously approved Construction Plans, the EDA will approve the proposed change and notify the Developer in writing of its approval. Any change in the Construction Plans will, in any event, be deemed approved by the EDA unless rejected, in whole or in part, by written notice by the EDA to the Developer, setting forth in detail the reasons therefor. Any rej ection must be made within 20 days after receipt of the notice of such change. The EDA's approval of any change in the Construction Plans will not be unreasonably withheld. Section 4.3. Letter of Credit Requirement. (a) Prior to the issuance of a building permit by the City for the Minimum Improvements, the Developer shall deposit with the City an irrevocable Letter of Credit for the landscaping trees, shrubs and irrigation required by the City ("Landscaping Improvements") in the amount of 150 percent of the value of the Landscaping Improvements. 11 477072v6 RHB CT165-53 (b) All cost estimates shall be reasonably acceptable to the City Engineer. The issuing bank and form of the LOC or cash deposit shall be subj ect to approval by the City Finance Director and City Attorney, which approval shall not be unreasonably withheld, delayed or conditioned and shall continue to be in full force and effect until released by the City. The LOC shall be for a term ending no sooner than one year after substantial completion of the Minimum Improvements. In the alternative, the LOC may be for a one year term provided it is automatically renewable for successive one year periods from the present or any future expiration dates with a final expiration date of no sooner than one year after substantial completion of the Minimum Improvements and further provided that the LOC states that at least 60 days prior to the expiration date the bank will notify the City that if the bank elects not to renew for an additional period. The LOC shall secure completion of the Landscaping Improvements and compliance by the Developer with the financial terms of this Agreement. The City may draw down on the LOC or cash deposit without any further notice than that provided in Article VIII relating to an Event of Default because of(i) an Event of Default by the Developer; or (ii) upon the City receiving notice that the LOC will be allowed to lapse before one year after substantial completion of the Minimum Improvements (c) If the City draws on the LOC, the City shall use the LOC proceeds or cash deposit to reimburse the City for its costs and to cause the Landscaping Improvements to be constructed to the e�tent practicable and to satisfy any unpaid financial obligations owed by the Developer to the City pursuant to this Agreement. If the City Engineer determines that the Landscaping Improvements have been constructed and after retaining 10 percent of the proceeds for later distribution, the remaining proceeds shall be distributed to the Developer. With City approval, the LOC may be reduced from time to time as financial obligations are paid and portions of the Landscaping Improvements are completed. Section 4.4. Commencement and Completion of Construction; Repair. (a) Subj ect to Unavoidable Delays, the Developer must commence construction of the Minimum Improvements by December 31, 2016, and must substantially complete construction of the Minimum Improvements by December 31, 2018. Construction is considered to be commenced upon the beginning of physical improvements on the Development Property. (b) All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property must be in substantial conformity with the Construction Plans as submitted by the Developer and approved by the EDA. The Developer agrees for itself, its successors and assigns, and every successor in interest to the Development Property, or any part thereof, that the Developer will promptly begin and diligently prosecute to completion the development of the Development Property through the construction of the Minimum Improvements thereon, and that the construction will in any event be commenced and completed within the period specified in Section 4.4(a) of this Agreement. Until construction of the Minimum Improvements has been completed, the Developer will make reports, in the detail and at the times as may reasonably be requested by the EDA, as to the actual progress of the Developer with respect to the construction. (c) The Developer agrees to notify the EDA immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In the event this type of damage or destruction 12 477072v6 RHB CT165-53 occurs, the Developer will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing the damage and, to the extent necessary to accomplish the repair, reconstruction and restoration, the Developer will apply the net proceeds of any insurance relating to the damage received by the Developer to the payment or reimbursement of the costs thereo£ The Developer will complete the repair, reconstruction and restoration of the Minimum Improvements, regardless of whether the net proceeds of insurance received by the Developer is sufficient to pay for the same. Any net proceeds remaining after completion of the repairs, construction and restoration will be the property of the Developer. (d) Notwithstanding anything to the contrary contained in this Agreement, in the event of damage to the Minimum Improvements in excess of$100,000 and the Developer fails to complete any repair, reconstruction or restoration of the Minimum Improvements within 18 months from the date of damage, the EDA may, at its option, terminate the Note as provided in Section 8.2 hereo£ If the EDA terminates the Note, the termination will constitute the EDA's sole remedy under this Agreement as a result of the Developer's failure to repair, reconstruct or restore the Minimum Improvements. Thereafter, the EDA will have no further obligations to make any payments under the Note. Section 4.5. Certificate of Completion. (a) Promptly after substantial completion of the Minimum Improvements in accordance with the provisions of this Agreement, the EDA will furnish the Developer with a Certificate of Completion in substantially the form attached hereto as Exhibit D. The certification by the EDA will be a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Developer and its successors and assigns to construct the Minimum Improvements and the dates for the completion thereof. (b) The Certificate of Completion provided for in this Section 4.5 will be in the 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 EDA refuses or fails to provide any certification in accordance with the provisions of this Section 4.5, the EDA will, within 30 days after written request by the Developer, provide the Developer with a written statement indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement or is otherwise in default and what measures or acts it will be necessary, in the opinion of the EDA, for the Developer to take or perform in order to obtain the certification. (c) The construction of the Minimum Improvements will be considered substantially complete when the Developer has received a certificate of occupancy from the City for all Rental Housing Units. Section 4.6. Declaration Re�ardin� Income Restrictions; Qualification of the TIF District. The Developer agrees that the Minimum Improvements are subject to the following tenant income restrictions: 13 477072v6 RHB CT165-53 (a) The Developer will cause 40 percent or more of the Rental Housing Units in the Minimum Improvements to be occupied by Qualifying Tenants whose household income is 60 percent or less of the area median gross income, all as further described in the Declaration attached hereto as Exhibit C. Prior to any payment under the Note, the Developer will deliver the executed Declaration to the EDA in recordable form. (b) As a condition to initial and continuing occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver to the Developer a certification in which the prospective Qualifying Tenant certifies as to his or her income. In addition, the person will be required to provide whatever other information, documents, or certifications are reasonably deemed necessary by the Executive Director of the EDA to substantiate his or her income, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant. Certifications will be maintained on file by the Developer with respect to each Qualifying Tenant who resides in a Rental Housing Unit or resided therein during the immediately preceding calendar year. (c) The form of lease to be utilized by the Developer in renting any Rental Housing Unit to any person who is intended to be a Qualifying Tenant will provide for termination of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to income. (d) On or before February 15 of each year during the term of the Declaration, commencing on the first February 15 after issuance of the Certificate of Completion, the Developer must submit evidence of tenant incomes, showing that the Minimum Improvements meet the income restrictions set forth in the Declaration. The EDA will review the submitted evidence related to the income restrictions required by Section 469.1761 of the TIF Act to determine that the TIF District remains qualified as a housing district under the TIF Act. (e) While the covenants in this Section 4.6 are in effect, the EDA and its representatives will have the right at all reasonable times, and after reasonable notice, to inspect and to examine and copy all books and records of the Developer and its successors and assigns relating to the covenants described in this Section 4.6 and in the Declaration. (� The Developer acknowledges that the primary purpose for requiring compliance by the Developer with the rental restrictions provided in this Agreement is to ensure compliance of the Minimum Improvements with the income covenants set forth herein and the continued eligibility of the EDA's TIF District No. 1-17 (Dominium) as a housing tax increment financing district under the TIF Act. If prior to the Termination Date the EDA reasonably determines, based on the reports submitted by the Developer or, if the EDA receives notice from the State Department of Revenue, the State Auditor any Tax Official or any court of competent jurisdiction that the TIF District does not qualify or no longer qualifies as a housing district due to action or inaction of the Developer, such event will be deemed an Event of Default by the Developer under this Agreement; provided, however, that the EDA may not exercise any remedy under this Agreement so long as the determination is being contested in good faith and has not been finally adjudicated. In addition to any remedies available to the EDA under Article VIII hereof, the Developer will indemnify, defend and hold harmless the EDA for any damages or costs resulting therefrom, including any Tax Increment the EDA may be required or agrees to 14 477072v6 RHB CT165-53 repay as a result of any action taken under section 469.1771 of the TIF Act for violation of said Act relating to disqualification of the TIF District. (g) The Developer covenants and agrees that the Developer will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the Minimum Improvements prior to the Termination Date that the transferee assume in writing, in a form acceptable to the EDA, all duties and obligations of the Developer under this section 4.6 regarding income restrictions and verification of Qualified Tenants by means of an assumption agreement acceptable to the EDA. The Developer will deliver an executed copy of the assumption agreement to the EDA prior to the transfer. Section 4.7. Senior Housin�. The Minimum Improvements will be a senior housing project. All Rental Housing Units must be occupied by at least one person who is at least 55 years of age of the time of initial occupancy. This restriction shall terminate no earlier than the Maturity Date. The Visitors' Unit shall not be subj ect to any age restriction. Section 4.8. Reco�nition of Historic Site. On April 6, 2016, the City authorized delisting the Hill-Gibson House and property, a component of the Development Property, from the City's Local Register of Historic Sites and Landmarks. A condition of such action by the City is that the Developer is required to comply with the following: (a) Provide a historic display and education plan for the site that is reviewed by the Cottage Grove Advisory Committee on Historic Preservation and reasonably approved by the Community Development Department; (b) Preserve photographic documentation of the existing structures on the Development Property prior to demolition; (c) Use its best efforts to preserve and reuse significant architectural features such as the log floor j oists and other structural components of the buildings; and (d) Use its best efforts to incorporate historic names in the Development Property or Minimum Improvements that have been associated with the historic site. ARTICLE V Insurance Section 5.1. Insurance. (a) The Developer or its general contractor will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the EDA, furnish the EDA with proof of payment of premiums on policies covering the following: (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 15 477072v6 RHB CT165-53 coverage available in non-reporting form on the so-called "all risk" form of policy. The interest of the EDA must be protected in accordance with a clause in form and content satisfactory to the EDA; (ii) Commercial general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with a Protective Liability Policy with limits against bodily injury and property damage of not less than $2,000,000 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. (b) Upon completion of construction of the Minimum Improvements and prior to the Termination Date, the Developer must maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the EDA will 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 the risks as are ordinarily insured against by similar businesses. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $2,000,000. (iii) Other insurance, including workers' compensation insurance respecting all employees, if any, of the Developer, in an 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 workers' compensation. (c) All insurance required in this Article V of this Agreement must 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. Upon request, the Developer will deposit annually with the EDA policies evidencing all the insurance, or a certificate or certificates or binders of the respective insurers stating that the insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement, each policy must contain a provision that the insurer will not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the EDA 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 will deposit with the EDA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. 16 477072v6 RHB CT165-53 (d) All of the insurance provisions set forth in this Article V will terminate upon the Termination Date. ARTICLE VI Collection of Taxes; Assessment A�reement Section 6.1. Taxes. The Developer agrees that prior to the Termination Date: (i) it will not seek administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to 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; (ii) it will not seek administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to 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 (iii)it will not cause a reduction in the Minimum Market Value assessed in respect of the Minimum Improvements or the Development Property below the Minimum Market Value described in section 6.2(a) of this Agreement through: (a) willful destruction of the Minimum Improvements or any part thereof; (b) failure to reconstruct damaged or destroyed property pursuant to Section 4.4 of this Agreement; (c) a request to the Assessor to reduce the Minimum Market Value of all or any portion of the Minimum Improvements or the Development Property; (d) a petition to the board of equalization of the County to reduce the Minimum Market Value of all or any portion of the Minimum Improvements or the Development Property; (e) a petition to the board of equalization of the State or the commissioner of revenue of the State to reduce the Minimum Market Value of all or any portion of the Minimum Improvements or the Development Property; (� an action in a district court of the State or the tax court of the State seeking a reduction in the Minimum Market Value of the Minimum Improvements or the Development Property; (g) an application to the commissioner of revenue of the State or to any local taxing jurisdiction requesting an abatement or deferral of real estate taxes on the Minimum Improvements or the Development Property; (h) a transfer of the Minimum Improvements or the Development Property, or any part thereof, to an entity exempt from the payment of real estate taxes under State law and that entity applies for tax exemption; or 17 477072v6 RHB CT165-53 (i) 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. Section 6.2. Assessment A�reement. (a) At the time of execution of this Agreement, the EDA and the Developer shall execute an Assessment Agreement for the Development Property and Minimum Improvements. The Assessment Agreement shall specify a Minimum Market Value of $21,436,000 as of January 2, 2019 for taxes payable beginning in 2020 through the Termination Date, notwithstanding any failure to start or complete the Minimum Improvements on the Development Property by said date or any failure to reconstruct the Minimum Improvements after damage or destruction before the Termination Date. (b) The Assessment Agreement shall be substantially in the form attached hereto as Exhibit F. Nothing in the Assessment Agreement shall limit the discretion of the Assessor to assign a market value to the Minimum Improvements or the Development Property in excess of the Assessor's Minimum Market Value nor prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in any increase in the market value established pursuant to Section 6.2(a) of this Agreement; provided, however, that the Developer shall not seek a reduction of such market value below the Assessor's Minimum Market Value set forth in the Assessment Agreement in any year so long as such Assessment Agreement shall remain in effect. The Assessment Agreement shall remain in effect until the Termination Date; provided that if at any time before the Termination Date the Assessment Agreement is found to be terminated or unenforceable by any Tax Official or court of competent jurisdiction, the Minimum Market Value described in this Section 6.2 shall remain an obligation of the Developer or its successors and assigns (whether or not such value is binding on the Assessor), it being the intent of the parties that the obligation of the Developer to maintain, and not seek reduction of, the Minimum Market Value specified in this Section 6.2 is an obligation under this Agreement as well as under the Assessment Agreement, and is enforceable by the EDA against the Developer, its successors and assigns, in accordance with the terms of this Agreement and the Assessment Agreement. Notwithstanding anything contained in this Agreement to the contrary, the Developer shall not be precluded from contesting the Minimum Market Value if the Minimum Improvements or the Development Property, or any substantial portion thereof, is acquired by a public entity through eminent domain prior to the Termination Date. Section 6.3. Suspension or Reduction of Pavments on TIF Note. a) The Developer may, at any time following the issuance of the Certificate of Completion, seek through petition or other means to have the assessors estimated market value for the Development Property reduced to not less than the Minimum Market Value. Such activity must be preceded by written notice from the Developer to the EDA indicating its intention to do so. b) Upon receiving notice that the Developer seeks a reduction in the Minimum Market Value of all or any portion of the Development Property, or otherwise learning of the Developer's intentions, the EDA may suspend or reduce payments due under the Note except for the portion of such payments from Available Tax Increment, based on the Minimum Market Value, or the assessor's estimated market value for the year in which the Minimum Improvements have been completed, if less than Minimum Market Value, until the actual amount of the reduction in market value is determined, whereupon the EDA will make the 18 477072v6 RHB CT165-53 suspended payments less any amount that the EDA is required to repay the County as a result any retroactive reduction in market value of the Development Property. During the period that the payments are subject to suspension, the Authority may make partial payments on the Note, from the amounts subject to suspension, if it determines, in its sole and absolute discretion, that the amount retained will be sufficient to cover any repayment which the County may require. The EDA's suspension or reduction of payments of the Note pursuant to this Section 6.3 shall not be considered a default under Section 8.1 hereof. Section 6.4. Ri�ht to Collect Delinquent Taxes. The Developer acknowledges that the EDA and the City are providing substantial aid and assistance in furtherance of the development of the Minimum Improvements through issuance of the Note and the Housing Revenue Bonds. The Developer understands that the Available Tax Increment pledged to payment of the Note is derived from real estate taxes on the Development Property, which taxes 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 it is also obligated 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 this obligation creates a contractual right on behalf of the EDA or the City 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 this type of suit, the EDA or the City will also be entitled to recover its costs, expenses and reasonable attorney fees. Section 6.5. Use of Tax Increment. Except as provided for in this Agreement, the EDA shall be free to use any Tax Increment it receives from the County with respect to the TIF District for any purpose for which such increment may lawfully be used under the TIF Act and the EDA shall have no obligations to the Developer with respect to the use of such Tax Increment. ARTICLE VII Prohibitions A�ainst Sale; Assi�nment; Indemnification Section 7.1. Representation as to Development. The Developer represents and agrees that its purchase of the Development Property and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property with the Minimum Improvements and not for speculation in land holding. Section 7.2. Prohibition A�ainst Sale; Assi�nment of A�reement. The Developer represents and agrees that prior to issuance of the Certificate of Completion for the Minimum Improvements: (a) Except only 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 making 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, which shall include any assignment, conveyance, or lease, or any trust or 19 477072v6 RHB CT165-53 power, or transfer in any other mode or form of or with respect to the Agreement, the Development Property, the Minimum Improvements or any part thereof or any interest therein, or any contract or agreement to do any of the same (except a lease for a Rental Housing Unit to a residential occupant), without the prior written approval of the EDA unless the Developer remains liable and bound by this Agreement in which event the EDA's approval is not required. Any Sale of this type will be subject to the provisions of this Agreement. (b) In the event the Developer, upon transfer or assignment of the Development Property or Minimum Improvements seeks to be released from its obligations under this Agreement, the EDA will be entitled to require, except as otherwise provided in this Agreement, as conditions to any release that: (i) Any proposed transferee will have the qualifications and financial responsibility, in the reasonable judgment of the EDA, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer. (ii) Any proposed transferee, by instrument in writing satisfactory to the EDA and in form recordable among the land records, will, for itself and its successors and assigns, and expressly for the benefit of the EDA, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, will not, for whatever reason, have assumed these obligations or so agreed, and will not(unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the EDA) deprive the EDA 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 transfer of, or change with respect to, ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring and whether voluntary or involuntary, will operate, legally or practically, to deprive or limit the EDA of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the EDA would have had, had there been no transfer or change. In the absence of specific written agreement by the EDA to the contrary, no transfer or approval by the EDA thereof will 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 transfer of any interest in this Agreement or the Development Property governed by this Article VII must be in a form reasonably satisfactory to the EDA. In the event the foregoing conditions are satisfied, the Developer will be released from its obligation under this Agreement. 20 477072v6 RHB CT165-53 After issuance of the Certificate of Completion for the Minimum Improvements, the Developer may transfer or assign the Development Property or the Minimum Improvements or the Developer's interest in this Agreement if it obtains the prior written consent of the EDA, which consent will not be unreasonably withheld, and the transferee or assignee is bound by all the Developer's obligations hereunder. The Developer must submit to the EDA written evidence of any 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 written evidence of transfer and assumption, the Developer will remain bound by all its obligations under this Agreement. Section 7.3. Release and Indemnification Covenants. (a) The Developer releases from and covenants and agrees that the EDA, the City and their governing body members, officials, agents, servants and employees will not be liable for and agrees to indemnify and hold harmless the EDA, the City and their governing body members, officers, agents, servants and employees 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. (b) Except for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Developer agrees to protect and defend the EDA, the City and their governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance and operation of the Minimum Improvements or the Development Property. (c) The EDA, the City and their respective governing body members, officials, agents, servants and employees will 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. (d) All covenants, stipulations, promises, agreements and obligations of the EDA and the City contained herein will be deemed to be the covenants, stipulations, promises, agreements and obligations of the EDA or the City and not of any governing body member, officer, agent, servant or employee of the EDA or the City in his or her individual capacity. ARTICLE VIII Events of Default Section 8.1. 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 acquire the Development Property in fee as required by this Agreement; 21 477072v6 RHB CT165-53 (b) Failure by the Developer to obtain approval from the City and other entities necessary in order to construct the Minimum Improvements; (c) Failure by the Developer to obtain financing for construction of the Minimum Improvements as specified in Section 3.5 of this Agreement; (d) 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 timing thereof, unless such failure is caused by an Unavoidable Delay or waived by the Developer and the EDA; (e) Failure of the Developer to pay real estate taxes or special assessments on the Development Property or Minimum Improvements as they become due prior to the Termination Date; (f) Failure of the Developer to comply with the requirement of section 4.6 of this Agreement regarding occupancy by Qualifying Tenants or any action or inaction by the Developer which results in the TIF District no longer qualifying as a housing tax increment financing district prior to the Termination Date; (g) Prior to the Termination Date, appeal or challenge by the Developer of the Minimum Market Value of the Development Property or the Minimum Improvements under this Agreement or the Assessment Agreement, except as otherwise permitted in Article VI of this Agreement. (h) Transfer of the Minimum Improvements or the Development Property, or any part thereof, to an entity exempt from the payment of real estate taxes under State law and that entity applies for tax exemption prior to the Termination Date; (i) Sale of the Development Property or the Minimum Improvements, or any portion thereof, by the Developer in violation of Article VII of this Agreement and without written permission by the EDA; (j) Failure to operate the Minimum Improvements as a senior housing facility in accordance with Section 4.7 of this Agreement; (k) If the Developer shall file a petition in bankruptcy, or shall make an assignment for the benefit of its creditors or shall consent to the appointment of a receiver; or (1) 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, including but not limited to any action necessary for the establishment of the TIF District. Section 8.2. Remedies on Default. Whenever any Event of Default referred to in Section 8.1 of this Agreement occurs, the non-defaulting party may exercise 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 or, if the Event 22 477072v6 RHB CT165-53 of Default is by its nature incurable within 30 days, the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Suspend its performance under this Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under this Agreement. (b) Cancel and rescind or terminate this Agreement. (c) Enforce the Assessment Agreement. (d) If the default occurs prior to completion of the Minimum Improvements, the EDA may withhold any undelivered Certificate of Completion. (e) Upon a default by the Developer, the EDA may suspend payments under the Note or terminate the Note and the TIF District, subject to the provisions of Section 8.3 of this Agreement. (f) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, including but not limited to any reimbursement of Tax Increment due under section 4.5(f) of this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. Notwithstanding anything herein to the contrary, any Holder or the limited partner of the Developer may cure an Event of Default by the Developer under the terms of this section 8.2 and with notice to the EDA of its intent to cure. Section 8.3. Remedies after Certificate of Completion. After the EDA has issued its Certificate of Completion for the Minimum Improvements, the EDA may exercise its rights under Section 82(e) only for the following Events of Default: (a) the Developer fails to pay real estate taxes or assessments on the Development Property or Minimum Improvements or any part thereof when due, and the taxes or assessments have not been paid, or provision satisfactory to the EDA made for their payment, within 30 days after written demand by the EDA to do so; or (b) the Developer takes or permits an action prohibited by section 6.1 of this Agreement; or (c) the Developer fails to operate the Minimum Improvements as a senior housing facility in accordance with Section 4.7 of this Agreement; or (d) the Developer fails to comply with Developer's obligation to operate and maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition, pursuant to Article IV hereof; provided that, upon Developer's failure 23 477072v6 RHB CT165-53 to comply with Developer's obligations under Article IV hereof, if uncured after 30 days' written notice to the Developer of the failure, the EDA may only suspend payments under the Note until the Developer complies with said obligations. If the Developer fails to comply with said obligations for a period of 18 months, the EDA may terminate the Note and the TIF District; or (e) the Developer fails to comply with the income restrictions or to deliver annual rent and income reports as provided in Section 4.6 of this Agreement and the Declaration; provided that, upon the Developer's failure to provide annual reports, if uncured after 30 days' written notice to the Developer of the failure, the EDA may only suspend payments under the Note until the Developer delivers said reports. If the Developer fails to deliver rent and income reports for a period of six months following the date the reports are due after written notice to the Developer of the failure, the EDA may terminate the Note and the TIF District; or (� a final determination by the State or a court of competent jurisdiction that the TIF District does not or no longer qualifies as a housing tax increment financing district under the TIF Act; or (g) the Developer transfers the Minimum Improvements or Development Property, or any part thereof, to an entity exempt from the payment of real estate taxes under State law. Section 8.4. No Remedv Exclusive. No remedy herein conferred upon or reserved to the EDA or the Developer is intended to be exclusive of any other available remedy or remedies, but each and every remedy will be cumulative and will 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 will impair any right or power or will be construed to be a waiver thereof, but any right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the EDA to exercise any remedy reserved to it, it will not be necessary to give notice, other than the notice required in Section 8.2 of this Agreement. Section 8.5. No Additional Waiver Implied bv One Waiver. In the event any covenant or agreement contained in this Agreement should be breached by any party and thereafter waived by another party, the waiver will be limited to the particular breach so waived and will not be deemed to waive any other concurrent, previous or subsequent breach hereunder. ARTICLE IX Additional Provisions Section 9.1. Conflict of Interests; EDA and Citv Representatives Not Individually Liable. The EDA, the City and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the EDA or the City has any personal interest, direct or indirect, in the Agreement, nor has any member, official, or employee participated in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is, directly or indirectly, interested. No member, official, agent, servant or employee of the EDA or the City will be personally liable to the Developer, or any successor in interest, in the event of any default 24 477072v6 RHB CT165-53 or breach by the EDA or the City or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 9.2. Equal Emplovment O�portunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, State and local equal employment and non-discrimination laws and regulations. Section 9.3. Restrictions on Use; Citv A�roval Required. (a) The Developer agrees that, prior to the Termination Date, the Developer and its successors and assigns will use the Development Property and Minimum Improvements solely for the development of senior independent living residential rental housing in accordance with the terms of this Agreement, and will not discriminate upon the basis of race, color, creed, sexual orientation or national origin in the lease, rental, use or occupancy of the Development Property or Minimum Improvements, or any part thereof. (b) The Developer acknowledges that the City has not granted approval for any significant commercial, retail or other non-residential uses in connection with the Minimum Improvements and understands that if any such uses are proposed in the future, subject to applicable limitations under the TIF Act regarding housing tax increment districts, appropriate approvals must first be obtained from the City. Section 9.4. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and will be disregarded in construing or interpreting any of its provisions. Section 9.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other will be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) as to the Developer: Cottage Grove Leased Housing Associates I, LLLP 2905 Northwest Boulevard, Suite 150 Plymouth, MN 55442 Attn: Jeffrey R. Huggett with a copy to: Winthrop & Weinstine, P.A. 225 South Sixth Street, Suite 3500 Minneapolis, MN 55402 (b) as to the EDA: Cottage Grove Economic Development Authority 12800 Ravine Parkway South Cottage Grove, MN 55016 Attn: Charlene R. Stevens, Executive Director 25 477072v6 RHB CT165-53 with a copy to: Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 Attn: Ronald H. Batty (c) as to the City: City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 Attn: Charlene R. Stevens, City Administrator with a copy to: LeVander Gillen & Miller, P.A. 633 Concord Street South, Suite 400 South St. Paul, MN 55075 Attn: Korine Land or at any other address with respect to any party as that party may, from time to time, designate in writing and forward to the other as provided in this Section 9.5. Section 9.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which will constitute one and the same instrument. Section 9.7. Recordin�. The EDA intends to record this Agreement and any amendments thereto with Washington County. The Developer must pay all costs for recording. Section 9.8. Amendment. This Agreement may be amended only by written agreement approved by the EDA and the Developer. Section 9.9. Termination. This Agreement terminates on the Termination Date, except that termination of the Agreement does not terminate, limit or affect the rights of any party that arise before the Termination Date, specifically including but not limited to the EDA's right to seek reimbursement from the Developer for any Tax Increment the EDA may be required or agrees to repay for violation of the Tax Increment Act caused by the action or inaction of the Developer. �� 26 477072v6 RHB CT165-53 IN WITNESS WHEREOF, the EDA, the City and Developer have each caused this Agreement to be duly executed in its name and behalf as of the date first above written. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By Myron Bailey, President And by: Charlene R. Stevens, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2016, by Myron Bailey and Charlene R. Stevens, 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 27 477072v6 RHB CT165-53 CITY OF COTTAGE GROVE By Myron Bailey, Mayor And by: Charlene R. Stevens, City Administrator STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2016, by Myron Bailey and Charlene R. Stevens, the Mayor and City Administrator, respectively, of the city of Cottage Grove, a municipal corporation under the laws of Minnesota, on behalf of the City. Notary Public 28 477072v6 RHB CT165-53 COTTAGE GROVE LEASED HOUSING ASSOCIATES I, LLLP By Its By Its STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2016, by and , the and , respectively, of Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership, on behalf of the limited liability limited partnership. Notary Public 29 477072v6 RHB CT165-53 EXHIBIT A TO DEVELOPMENT AGREEMENT LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY [to be completed] A-1 477072v6 RHB CT165-53 EXHIBIT B TO DEVELOPMENT AGREEMENT FORM OF TIF NOTE UNITED STATE OF AMERICA STATE OF MINNESOTA WASHINGTON COUNTY No. R-1 $1,695,000 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY TAXABLE TAX 1NCREMENT REVEN UE NOTE (COTTAGE GROVE LEASED HOUSING ASSOCIATES I SENIOR HOUSING PRO7ECT) Date Rate of Ori�inal Issue 4.6% The Cottage Grove Economic Development Authority (the "EDA"), for value received, certifies that it is indebted and hereby promises to pay to Cottage Grove Leased Housing Associates I, LLLP, or registered assigns (the "Owner"), the principal sum of $1,695,000 and to pay interest thereon at the rate of 4.6% per annum, as and to the extent set forth herein. This Note is issued pursuant to the Contract for Private Development between the EDA and the Owner dated , 2016 (the "Agreement"). Capitalized terms not otherwise defined herein have the meanings provided in the Agreement. 1. Pavments. Principal and interest ("Payments") will be paid on August 1, 2019, and each February 1 and August 1 thereafter to and including February 1, 2034 ("Payment Dates"), in the amounts and from the sources set forth in Section 3 herein. Payments will be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or any other address as the Owner may designate upon 30 days written notice to the EDA. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein will accrue on the unpaid principal, commencing on the date of original issue. Interest will be simple, non-compounding interest and will be computed on the basis of a year of 360 days and twelve 30-day months and charged for actual days principal is unpaid. To the extent that Available Tax Increment is insufficient to pay B-1 477072v6 RHB CT165-53 principal and interest on any Payment Date, unpaid interest will not be added to principal. 3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the amount of and solely payable from "Available Tax Increment," which will mean, on each Payment Date, 90 percent of the Tax Increment attributable to the Development Property (defined in the Agreement) and paid to the EDA by Washington County in the six months preceding the Payment Date. Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default by the Owner under the Agreement. The EDA will have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the EDA to pay the entire amount of principal or interest on this Note on any Payment Date will not constitute a default hereunder as long as the EDA pays principal and interest hereon to the extent of Available Tax Increment. If on any Payment Date there is insufficient Available Tax Increment to pay accrued and unpaid interest on this Note on such date, the amount of such deficiency shall be deferred and paid, without interest thereon, on the next Payment Date on which the EDA has Available Tax Increment in excess of the amount necessary to pay the accrued and unpaid interest on this Note on such subsequent Payment Date. The EDA will have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2034. 4. Optional Prepavment. The principal sum and all accrued interest payable under this Note is pre-payable in whole or in part at any time by the EDA without premium or penalty. No partial prepayment will affect the amount or timing of any other regular payment otherwise required to be made under this Note. 5. Default. If on any Payment Date there has occurred and is continuing any Event of Default under the Agreement, the EDA may, notwithstanding any notice and cure provisions in the Agreement, withhold from Payments hereunder all Available Tax Increment. If the Event of Default is thereafter cured in accordance with the Agreement, the Available Tax Increment withheld under this Section shall be deferred and paid, without interest thereon, within 30 days after the Event of Default is cured. If on any date there has occurred and is continuing, after notice and opportunity to cure have been provided in accordance with the Agreement, any Event of Default under the Agreement, the EDA may exercise its remedies under the Agreement, including but not limited to terminating this Note. Reference is hereby made to all of the provisions of the Agreement, including without limitation Article VIII thereof for a fuller statement of the rights and obligations of the EDA to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. 6. Nature of Obli�ation. This Note is a single note in the total principal amount of $1,695,000 issued to aid in financing certain Qualifying Costs of a Development District undertaken by the EDA pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended and is issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.179, as amended. This Note is a limited obligation of the EDA which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest B-2 477072v6 RHB CT165-53 hereon will not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the EDA. Neither the State of Minnesota, nor any political subdivision thereof will be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, 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 the principal of or interest on this Note or other costs incident hereto. 7. Estimated Tax Increment Pavments. Any estimates of Tax Increment or Available Tax Increment prepared by the EDA or its financial advisors in connection with the TIF District or the Agreement are for the benefit of the EDA, and are not intended as representations on which the Developer may rely. THE EDA MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX 1NCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND 1NTEREST ON THIS NOTE. 8. Re�istration and Transfer. This Note is issuable only as a fully registered note without coupons. Subj ect to certain limitations set forth herein, this Note is transferable upon the books of the EDA kept for that purpose at the principal office of the Executive Director of the EDA as Registrar, 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 EDA, duly executed by the Owner. Upon the transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the EDA with respect to the transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note will not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the EDA has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the EDA, that the transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. 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 EDA according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. �� B-3 477072v6 RHB CT165-53 IN WIT`NESS WHEREOF, the board of commissioners of 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 Myron Bailey, President Charlene R. Stevens, Executive Director B-4 477072v6 RHB CT165-53 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Executive Director of the EDA, in the name of the person last listed below. Date of Re�istration Re�istered Owner Si�nature of EDA Executive Director Cottage Grove Leased Housing Associates I, LLLP 2905 Northwest Boulevard Suite 150 Plymouth, MN 55442 Federal ID # B-5 477072v6 RHB CT165-53 EXHIBIT C TO DEVELOPMENT AGREEMENT FORM OF DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTNE COVENANTS (the "Declaration") dated as of , 2016, by Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership (the "Developer"), is given to the Cottage Grove Economic Development Authority, a body corporate and politic under the laws of Minnesota (the "EDA"). RECITALS WHEREAS, the EDA entered into that certain Contract for Private Development between the EDA and the Developer, dated , 2016, filed , 2016 in the for Washington County as Document Na (the "Agreement")„ and WHEREAS, pursuant to the Agreement, the Developer is obligated to cause construction of a senior independent living rental housing complex containing up to 184 rental housing units on the property described in Exhibit A hereto (the "Property"), and to cause compliance with certain income covenants described in Section 4.6 of the Agreement; and WHEREAS, Section 4.6 of the Agreement requires that the Developer cause to be executed an instrument in recordable form substantially reflecting the covenants set forth in Section 4.6 of the Agreement; and WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set forth herein will be and are covenants running with the Property for the term described herein and binding upon all subsequent owners of the Property for the term described herein, and are not merely personal covenants of the Developer; and WHEREAS, capitalized terms in this Declaration have the meaning provided in the Agreement unless otherwise defined herein. NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Developer agrees as follows: 1. Term of Restrictions. (a) Occupancv and Rental Restrictions. The term of the Occupancy Restrictions set forth in Section 3 of this Declaration will commence at the end of the first taxable year of credit period for the Property under the Tax Credit Law. The period from commencement to termination is the "Qualified Project Period." G1 477072v6 RHB CT165-53 (b) Termination of Declaration. This Declaration will terminate upon the Termination Date. (c) Removal from Real Estate Records. Upon termination of this Declaration, the EDA will, upon request by the Developer or its assigns, file any document appropriate to remove this Declaration from the real estate records of Washington County, Minnesota. 2. Proj ect Restrictions. (a) the Developer represents, warrants, and covenants that: (i) All leases of Rental Housing Units to Qualifying Tenants (as defined in Section 3(a)(i) hereo� will contain clauses, among others, wherein each individual lessee: (1) Certifies the accuracy of the statements made in its application and Eligibility Certification (as defined in Section 3(a)(ii) hereo�; and (2) Agrees that the family income at the time the lease is executed will be deemed substantial and material obligation of the lessee's tenancy; that the lessee will comply promptly with all requests for income and other information relevant to determining low or moderate income status from the Developer or the EDA, and that the lessee's failure or refusal to comply with a request for information with respect thereto will be deemed a violation of a substantial obligation of the lessee's tenancy. (ii) the Developer will permit any duly authorized representative of the EDA to inspect the books and records of the Developer pertaining to the income of Qualifying Tenants residing in the Proj ect. 3. Occupancv Restrictions. (a) Tenant Income Provisions. The Developer represents, warrants, and covenants that: (i) Qualifvin� Tenants. From the commencement of the Qualified Proj ect Period, 40 percent or more of the Rental Housing Units will be occupied (or treated as occupied as provided herein) or held vacant and available for occupancy by Qualifying Tenants. Qualifying Tenants means those individuals or households who are determined from time to time by the Developer to have income that is 60 percent or less of the area median gross income for the applicable calendar year. For purposes of this definition, the occupants of a residential unit will not be deemed to be Qualifying Tenants if all the occupants of such Rental Housing Unit at any time are "students," as defined in Section 151(c)(4) of the Internal Revenue Code of 1986, as amended (the "Code"), not entitled to an exemption under the Code. The determination of whether an individual or family is of low or moderate income will be made at the time the tenancy commences and on an G2 477072v6 RHB CT165-53 ongoing basis thereafter, determined at least annually. If during their tenancy a Qualifying Tenant's income exceeds 60 percent of the area median gross income, the next available unit (determined in accordance with the Code and applicable regulations) (the "Next Available Unit Rule") must be leased to a Qualifying Tenant or held vacant and available for occupancy by a Qualifying Tenant. If the Next Available Unit Rule is violated, the Unit will not continue to be treated as a Qualifying Unit. (ii) Certification of Tenant Eli�ibility. As a condition to initial and continuing occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver to the Developer a Certification of Tenant Eligibility substantially in the form attached as Exhibit B hereto, or in any other form as may be reasonably approved by the Executive Director of the EDA (the "Eligibility Certification"), in which the prospective Qualifying Tenant certifies as to income. In addition, the person will be required to provide whatever other information, documents, or certifications are deemed necessary by the Executive Director of the EDA to substantiate the Eligibility Certification, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on file by the Developer with respect to each Qualifying Tenant who resides in a Proj ect unit or resided therein during the immediately preceding calendar year. (iii) Lease. The form of lease to be utilized by the Developer in renting any Rental Housing Units in the Project to any person who is intended to be a Qualifying Tenant will provide for termination of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to the Eligibility Certification. (iv) Annual Report. The Developer covenants and agrees that during the term of this Declaration, it will prepare and submit to the EDA on or before February 15 of each year, a certificate substantially in the form of Exhibit C hereto, executed by the Developer, (a) identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Proj ect, including the percentage of the Rental Housing Units of the Proj ect which were occupied by Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding the date of the certificate; (b) describing all transfers or other changes in ownership of the Proj ect or any interest therein; and (c) stating that to the best knowledge of the person executing the certificate after due inquiry, all the units were rented or available for rental on a continuous basis during the year to Qualifying Tenants and that the Developer was not otherwise in default under this Declaration during the year. (v) Notice of Non-Compliance. The Developer will immediately notify the EDA if at any time during the term of this Declaration the Rental Housing Units in the Proj ect are not occupied or available for occupancy as required by the terms of this Declaration. C-3 477072v6 RHB CT165-53 4. Transfer Restrictions. The Developer covenants and agrees that the Developer will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the Project prior to the termination of the Occupancy Restrictions provided herein (the "Transfer") that the transferee of the Project pursuant to the Transfer assume in writing in a form acceptable to the EDA, all duties and obligations of the Developer under this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the Occupancy Restrictions provided herein (the "Assumption Agreement"). The Developer will deliver the Assumption Agreement to the EDA prior to the Transfer. 5. Enforcement. (a) The Developer will permit, during normal business hours and upon reasonable notice, any duly authorized representative of the EDA to inspect any books and records of the Developer regarding the Proj ect with respect to the incomes of Qualifying Tenants. (b) The Developer will submit any other information, documents or certifications requested by the EDA which the EDA deems reasonably necessary to substantiate the Developer's continuing compliance with the provisions specified in this Declaration. (c) The Developer acknowledges that the primary purpose for requiring compliance by the Developer with the restrictions provided in this Declaration is to ensure compliance of the property with the income covenants set forth in Section 4.6 of the Agreement and the continued eligibility of the EDA's Tax Increment Financing District No. 1-17 (Dominium) as a housing tax increment financing district under Minnesota Statutes, Sections 469.174 through 469.179, and by reason thereof, the Developer, in consideration for assistance provided by the EDA under the Agreement that makes possible the construction of the Minimum Improvements (as defined in the Agreement) on the Property, hereby agrees and consents that the EDA will be entitled, for any breach of the provisions of this Declaration, and in addition to all other remedies provided by law or in equity, to enforce specific performance by the Developer of its obligations under this Declaration in a state court of competent jurisdiction. The Developer hereby further specifically acknowledges that the EDA cannot be adequately compensated by monetary damages in the event of any default hereunder. (d) The Developer understands and acknowledges that, in addition to any remedy set forth herein for failure to comply with the restrictions set forth in this Declaration, the EDA may exercise any remedy available to it under Article VIII of the Agreement. 6. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold harmless, the EDA from and against all liabilities, losses, damages, costs, expenses (including attorneys' fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of any nature arising from the consequences of a legal or administrative proceeding or action brought against them, or any of them, on account of any failure by the Developer to comply with the terms of this Declaration, or on account of any representation or warranty of the Developer contained herein being untrue. G4 477072v6 RHB CT165-53 7. A�ent of the EDA. The EDA will have the right to appoint an agent to carry out any of its duties and obligations hereunder, and will inform the Developer of any agency appointment by written notice. 8. Severabilitv. The invalidity of any clause, part or provision of this Declaration will not affect the validity of the remaining portions thereof. 9. Notices. All notices to be given pursuant to this Declaration must be in writing and will be deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the addresses set forth below, or to any other place as a party may from time to time designate in writing. The Developer and the EDA may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, or other communications are sent. The initial addresses for notices and other communications are as follows: (a) as to the Developer: Cottage Grove Leased Housing Associates I, LLLP 2905 Northwest Boulevard, Suite 150 Plymouth, MN 55442 Attn: Jeffrey R. Huggett with a copy to: Winthrop & Weinstine, P.A. 225 South Sixth Street, Suite 3500 Minneapolis, MN 55402 (b) as to the EDA: Cottage Grove Economic Development Authority 12800 Ravine Parkway South Cottage Grove, MN 55016 Attn: Charlene R. Stevens, Executive Director with a copy to: Ronald H. Batty Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 10. Governin� Law. This Declaration is governed by the laws of the State of Minnesota and, where applicable, the laws of the United States of America. 11. Attornevs' Fees. In case any action at law or in equity, including an action for declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the Developer agrees to pay the reasonable attorneys' fees and other reasonable expenses paid or incurred by the EDA in connection with the action. 12. Declaration Bindin�. This Declaration and the covenants contained herein will run with the real property comprising the Project and will bind the Developer and its successors and assigns and all subsequent owners of the Project or any interest therein, and the benefits will GS 477072v6 RHB CT165-53 inure to the EDA and its successors and assigns for the term of this Declaration as provided in Section 1(b). 13. Relationship to Tax Credit Law Requirements. Notwithstanding anything to the contrary, during any period while 40 percent or more of the Rental Housing Units in the Property are subj ect to income limitations applicable to housing tax increment financing districts under Minnesota Statutes, sections 469.174 through 469.179, evidence of compliance with the Tax Credit Law requirements filed with the EDA at least annually will satisfy any requirements otherwise imposed under this Declaration. During any portion of the Qualified Project Period as defined herein when the Tax Credit Law income restrictions do not apply to the Property, this Declaration controls. �� Drafted by: Kennedy & Graven Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 G6 477072v6 RHB CT165-53 IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive Covenants to be signed by its respective duly authorized representatives, as of the day and year first written above. COTTAGE GROVE LEASED HOUSING ASSOCIATES I, LLLP By Its By Its STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2016, by and , the and , respectively, of Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership, on behalf of the limited liability limited partnership. Notary Public C-7 477072v6 RHB CT165-53 This Declaration is acknowledged and consented to by: COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By: Myron Bailey, President By: Charlene R. Stevens, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2016, by Myron Bailey and Charlene R. Stevens, 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 G8 477072v6 RHB CT165-53 EXHIBIT A TO FORM OF DECLARATION OF RESTRICTIVE COVENANTS Le�al Description [to be completed] C-A-1 477072v6 RHB CT165-53 EXHIBIT B TO FORM OF DECLARATION OF RESTRICTIVE COVENANTS Certification of Tenant Eligibility TE\�\T I\CO�IE C ERTIFICAI'IO\ Effective Date: „ =n'ial�ei�hiction J �ec�r'if�aticn �;� �thr P�9ove-in Cate: P�RI I-DE�"ELOP�IE\T B�'I.� Prcpert�Name C�unn... SIN= .�cdcea; L-uit\un;'^e�: - � =Be.u�c.om; PART II.HOL-SEHOLD C014POSII'IO\ Fi:scti.;me C'�Iid61e Relsticrsl.ip:c�Head DatecT'Sir.li F�T Sccisl`ecuri�,oc H3.lib:= La•.rlan:e _ _iur:al o'Hou;eh.ld ;�I\LDD 1�1�';• Sn�dert �lieu Fe�.Na. 1 HE_AD J 6 P.�RI'III.�\\-C:1L I\C0�3E(L"SE:�\\L:1L��30L"\iS) i--1i (Bl ;C;� D'; H3'�fUr— En;ployment�:'3:aee; Soc.5eciuirr Peusicas PnL lic As.i.tauce Othec I:i_.uie TDI'ALS Add tctals from(Ai tluou�h;D;�.aLo•re TOT.�L NCOAtE fE; �0.0� P�RI'I�'.I�CO]iE FRO�L ASSE'IS Hshld�ftr ;F' i Gl [H] i:;� — T;pe��f A*,�:et C I Cash F'alur�i��:;et �anua]Iucome Fi�om?�:;et I'OT 3L S Tetal Cavh Z-alue Payc�6.ck Rate If(Hj is orer S�OOG X 2 Q0°o =(7) Impute3Iac Eo:er t�e g:eater of thz tetal af cohw:u I.�r I:iu_pured iucocu IOTAL LVC'�P:fE FF?O'.S.4SSET5(K1 �i;T.tal Anuuel 3cusehcld Inceme frcm a115oittces�cid(El aud fK) HDL'SEHOLD CERIIFIC:ITIO\&SIG�ATLRES The ui:orm�:�a ca thi;:orm•.�:ill L e i:sed tc detervuue masiiuLuu iacexue eligililin�. I��.ce ha�e pr_•.i3ed fcr each pec;�ai;;;:t fccth in P�:t II acceptaLle•::r:ficati.a ef:v:xeut ai:tic:pated wunal iaceme. I�r:z agree t_uctifi�the]aadl�rd iuuuediarel�:upeu any n;emUei o:tne k�cuseL•cld uie�:iag.nt oi the uuit or au�nzn�member iu,ciu�ia. I��.se aeree te uotiF:ihz laudlcrd iuvnediatel�upoa aa,:memLer becenuu�a inll time;tndeut. L'nder penaltie;cf pe:jtv�•,I�'['e�ertifi•that the ivf�rmau�n pre=�ented iu tlus Ce�tificatiou is mie avd accurate te thz 6est of m��eLu�kno:•:lzdge and belie£ Tl�z nndersigaed nulhzr iwdersllIIdS CI181�iI:'.1CI1ll�fal;e rzpre.eu[atien,hereia:_a;ntu[e.au act eF Fraud- False.uvsleacline or ui:.mplete infcru��tiou uia•:re�ult in the tz�xuiaati.a cf the lea;e aereement. Sienatiue 1➢arel Sieuanue rJa;c; SiQnatiuz l��p� Sienanue rJn�c; :I.i:�_,-_:CreditPrc�ac-. ra,y.��uosu c�:.�ano:•. Page 1 >.u:::r�c if�i cq� C—B-1 477072v6 RHB CT165-53 P.�RI'�'. DEI'ER�II\:�'II�\OF ItiCD�iE ELIGIBILIrI' TaTAL.�1TIti:1L 3U�5=30LD INCQ]fE Hnt�selN�ld\lc�t�lnton'ic K�°crri�:tinn:it C.u_eu-Iucci�ie Limit s 1�0�o: FRObf�LL SOL'RCES: From itzm(Li onyage 1 J 60°Io (, 50°/a oit.r io c ocunie cxt . (� 40��0 (1 34°u 110°0�d recer[ifica�ion', Cm�reat Tlaxiiuuui Income � � Yes (� No Liuut per F,uulti Siz�: H��.i�:ekiold I:i��n;e�t"�fo-:e-:i� H�w;ea�ld�ixe at A1c�e-ia P.�R'I�Z AE\T i eaaut Faiel Reut Reut�ri�tau�e RA T;�pe Unlitt All:+<<�avice Otherven-optioua]charoe: GROSS REVTFORLTIIT: Unit Meets Rent Restriction at: i Teuaat paid reat pins L'tilir,.�llo�,caa,e& - I 60°/0 � 50°/o L) 404�6 �ther uca-,pti,aal charae;) �- () 30°I () Aiasimum Reut Luuit f.r tlus uuit: P�RT�'II. SI'L"DE\T SI_ TL"S �FLE.ILL�1CCUPA�]TS FULL TI]fE ST�:DE\1�' ` (�� PfeViOUSIy IPi FOStef Ca�� [f}�es.choose a studeut expla�ialinn"lali��<<ad��uu:neniacionl �„'' TANF assi=_tan[= Cj Sir�qle par�n�ldapendant child Q Y�s '.1 No � ]oC Trainirv�Prc�ram (j p•qarried?join!retu�^ P?�R'I�'III. PROGR��L TI'PE \fuL the proeraiuisj li�ted':.el:r: i�. tl_.ugh e;Y.r v:luch thi; h.nseh.ld s nnit<<ill be couated t.•.cud the pr.pzrt.:s .ccnpauc.:rerjuuemeut;- L'ader each pr.�ammarl:el.iadi�a;e:kie l:cu;ehcld',incc�ne.tatn:a:estaLlishedlv tlu,certiCicati.urecertificati.u. � � r��•�t � I ar:=nerip: � F.H7V Other{speuFy bNow) lName of Pi ogr ofr,� Tnrem�Stat..s In[cm-Stat..s T�-�.�,�cr,r�� Q [=505�o AP9GI (_;' Eligihl� r) VI T ❑ � [=60 io AP•1GI (;' S0°�i.'�IMGI �,'_] LI (� [=80'i6 AMGI �_l �I�" �`] OI'* ❑ (J OI"" n OI*' 'x L'p�u cz�e�tificatiuu.hcu_ehcld•..as dzteruuaed o•:zr-in:ouiz fOII accordin�to eli�ibilit•:requi:e:uent;of the prograuiisl uiarl�_ed abc,e. SIG��TL-RE OF OR-\ER'REPRESE\T:1II�-E Baszd ca the repre�eatati_n:hereui wd up_u ihe prc,f;aud d..cum:i::anen reqiured tc be subiuittzd.the iu3i�idnaL;s}uauied ia Pai2 II of thi:Tenaat Iacciue Cextificaneu is'ue eliai6le uvckr the prc�.isious,i Sectiou w'cf tl�e Interua]Re�euue C cde.a,aineuded.and the Lwd Use Restnctiuu Agreeineut�iP apphcable',�.to li•:e m a uuit ia thic.Project. SIGNATL"RE OF OC;'SE&REPAESEtiT�TI�'E D.�TE ��: -_,_�-d��a�� ra�l�iue�,��-��ano� Paqe 2 �o-==x-�if�i.�c� C—lJ-2 477072v6 RHB CT165-53 EXHIBIT C TO FORM OF DECLARATION OF RESTRICTIVE COVENANTS Certificate of Continuing Program Compliance _ � - � -- -- � I �''�' I I � #. - ��i� J�, � R � 1 I =� � � , �� . � ,� � ; � � � � �� , � , � �j ' � � � � � ,�. _ �� - � � � � �� l1� E- � � � �� J � T (� 3 _ �i�� r � � x � I �, � � � = ta- - - r� , —� =� �� 8{� , � ;�� '� I j� . - ..Y.� � . � . �,_� t � �. �tz. '� � � � -` " , ._.. . . i . _ . _ . . . _-� . _ � i � GG1 477072v6 RHB CT165-53 EXHIBIT D TO DEVELOPMENT AGREEMENT FORM OF CERTIFICATE OF COMPLETION WHEREAS, the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "EDA"), and Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership (the "Developer"), have entered into a certain Contract for Private Development (the "Agreement") dated the day of , 2016, and recorded in the office of the in Washington County, Minnesota, on the day of , 20 as Document No. , which Agreement contained certain covenants and restrictions regarding completion of the Minimum Improvements, as defined in the Agreement; and WHEREAS, the Developer has performed said covenants and conditions in a manner deemed sufficient by the EDA to permit the execution and recording of this certification. NOW, THEREFORE, this is to certify that all construction of the Minimum Improvements specified to be done and made by the Developer has been completed and the covenants and conditions in the Agreement have been performed by the Developer, and the 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. Dated: COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By: Myron Bailey, President By: Charlene R. Stevens, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument as acknowledged before me this day of , 201 , by Myron Bailey and Charlene R. Stevens, 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 477072v6 RHB CT165-53 �-� EXHIBIT E TO DEVELOPMENT AGREEMENT FORM OF INVESTMENT LETTER To the Cottage Grove Economic Development Authority (the "EDA") Attention: Executive Director Dated: , 2016 Re: $1,695,000 Tax Increment Revenue Note (Cottage Grove Leased Housing Associates I Senior Housing Project) The undersigned, as Purchaser of$1,695,000 in principal amount of the above-captioned Tax Increment Revenue Note (Cottage Grove Leased Housing Associates I Senior Housing Proj ect) (the "Note"), approved by the Board of Commissioners of the Cottage Grove Economic Development Authority on , 2016, hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, as legal counsel to the EDA, as follows: 1. We understand and acknowledge that the Note is delivered to the Purchaser on this date pursuant to the Contract for Private Development by and between the EDA and the Purchaser dated , 2016 (the "Agreement"). 2. The Note is payable as to principal and interest solely from Available Tax Increment pledged to the Note, as defined therein. 3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above-stated principal amount of the Note. 4. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering document or disclosure containing material information with respect to the EDA and the Note has been issued or prepared by the EDA, and that, in due diligence, we have made our own inquiry and analysis with respect to the EDA, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 5. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a 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 EDA, the Note and the security therefor, and that as reasonable investors we have been able to make our decision to purchase the above-stated principal amount of the Note. E-1 477072v6 RHB CT165-53 6. We have been informed that the Note (i) is not being registered or otherwise qualified for sale under the `Blue Sky" laws and regulations of any state, or under federal securities laws or regulations, (ii)will not be listed on any stock or other securities exchange, and (iii)will carry no rating from any rating service. 7. We acknowledge that the EDA and Kennedy & Graven, Chartered, as legal counsel to the EDA, have not made any representations or warranties as to the status of interest on the Note for the purpose of federal or state income taxation. 8. We represent to you that we are purchasing the Note for our own account and not for resale or other distribution thereof, except to the extent otherwise provided in the Note or as otherwise approved in writing by the EDA. 9. All capitalized terms used herein have the meaning provided in the Agreement unless the context clearly requires otherwise. 10. The Purchaser's federal tax identification number is 11. We acknowledge receipt of the Note on the date hereof. IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the date and year first written above. COTTAGE GROVE LEASED HOUSING ASSOCIATES I, LLLP By: Its: By: Its: E-2 477072v6 RHB CT165-53 EXHIBIT F TO DEVELOPMENT AGREEMENT FORM OF ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and COTTAGE GROVE LEASED HOUSING ASSOCIATES I,LLLP and COUNTY ASSESSOR FOR WASHINGTON COUNTY, MINNESOTA This Document was drafted by: KENNEDY& GRAVEN, Chartered (RHB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612)337-9300 F-1 477072v6 RHB CT165-53 THIS ASSESSMENT AGREEMENT, dated as of this day of , 2016, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "EDA"), and Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership (the"Owner"). WITNES SETH: WHEREAS, on or before the date hereof, the EDA and the Owner have entered into a Contract for Private Development (the "Agreement") concerning the property legally described on Exhibit A hereto, (the "Development Property"); and WHEREAS, pursuant to the Agreement, the Owner will construct a senior independent living rental housing facility consisting of up to 184 Rental Housing Units and, at the option of the Owner, no more than one Visitors' Unit on the Development Property (the "Minimum Improvements"); and WHEREAS, the EDA and the Owner desires to establish a minimum market value for the Development Property and the Minimum Improvements to be constructed thereon, pursuant to Minnesota Statutes, section 469.177, Subd. 8; and WHEREAS, the EDA and the County Assessor for Washington County, Minnesota have reviewed the Plans for the Minimum Improvements which the Owner has agreed to construct on the Development Property pursuant to the Agreement. NOW, THEREFORE, the parties to this Assessment Agreement, in consideration of the promises, covenants and agreements made herein and in the Agreement by each to the other, do hereby agree as follows: 1. The Minimum Market Value for the Development Property with the Minimum Improvements shall be Twenty-One Million Four Hundred Thirty-Six Thousand Dollars ($21,436,000). The parties agree that this Minimum Market Value shall be placed against the Development Property as of January 2, 2019, for taxes payable beginning in 2020 notwithstanding any failure to start or complete construction of such Minimum Improvements by that date. 2. The Minimum Market Value herein established shall be of no further force and effect and this Assessment Agreement shall terminate on the Termination Date. The Termination Date has the meaning given to it under the Agreement. 3. This Assessment Agreement shall be promptly recorded by the Owner with a copy of Minnesota Statutes, section 469.177, Subd. 8 set forth in Exhibit B hereto. The Owner 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 Agreement. Unless the context indicates clearly to the contrary, the terms used in this Assessment Agreement shall have F-2 477072v6 RHB CT165-53 the same meaning as the terms used in the Agreement. 5. This Assessment Agreement shall inure to the benefit of and be binding upon the parties and their successors and assigns. 6. Each of the parties 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 any provision of this Assessment Agreement shall be 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 Development 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 but one and the same instrument. 11. This Assessment Agreement shall be governed by and construed in accordance with the laws of Minnesota. �� F-3 477072v6 RHB CT165-53 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By: Myron Bailey, President And by: Charlene R. Stevens, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument as acknowledged before me this day of , 2016, by Myron Bailey and Charlene R. Stevens, 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 F-4 477072v6 RHB CT165-53 COTTAGE GROVE LEASED HOUSING ASSOCIATES I, LLLP By: Its: By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was executed before me this day of , 2016, by and , the and , respectively, of Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership, on behalf of the limited partnership. Notary Public F-5 477072v6 RHB CT165-53 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 Agreement appears reasonable, hereby certify as follows: The undersigned Assessor being legally responsible for the assessment of the described property, hereby certifies that the market value assigned to such land and improvements at the property, legally described on Exhibit A attached hereto, shall be not less than Twenty-One Million Four Hundred Thirty-Six Thousand Dollars ($21,436,000) as of January 2nd, 2019, for taxes payable beginning in 2020, until termination of this Agreement. County Assessor for Washington County, Minnesota STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON) The foregoing instrument was acknowledged before me this day of , 2016, by , the County Assessor, Washington County, Minnesota. Notary Public F-6 477072v6 RHB CT165-53 EXHIBIT A TO ASSESSMENT AGREEMENT The Development Property is legally described as follows: [to be completed] 477072v6 RHB CT165-53 F-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 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. 477072v6 RHB CT165-53 F-B-1