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112816 EDA Meeting Packet    EDA MEETING  City Hall, 4401 Xylon Avenue North  Monday, November 28, 2016    Commences upon adjournment of the City Council Meeting  Agenda    President Kathi Hemken  Commissioner John Elder  Commissioner Andy Hoffe  Commissioner Eric Lammle  Commissioner Jonathan London      1. Call to order – EDA Meeting of November 28, 2016      2. Roll call      3. Approval of Minutes:   September 12, 2016      4.  Resolution authorizing the execution of a purchase and development agreement  with Alatus New Hope, LLC (project no. 964)      5. Adjournment        EDA Meeting   Page 1 September 12, 2016  CITY OF NEW HOPE  4401 Xylon Avenue North  New Hope, Minnesota 55428    EDA Minutes September 12, 2016  Regular Meeting City Hall      CALL TO ORDER President Hemken called the meeting of the Economic Development Authority  to order at 7:18 p.m.    ROLL CALL Present:          Kathi Hemken, President  John Elder, Commissioner  Andy Hoffe, Commissioner  Eric Lammle, Commissioner  Jonathan London, Commissioner     Staff Present:      Kirk McDonald, City Manager  Aaron Chirpich, Community Development Specialist  Scott Crocker, Police Captain  Vicki Holthaus, AEM  Valerie Leone, City Clerk  Chris Long, City Engineer  Bob Paschke, Director of Public Works  Jeff Sargent, Director of Community Development  Stacy Woods, Assistant City Attorney    APPROVAL OF  MINUTES  Item 3  Motion was made by Commissioner Hoffe, seconded by Commissioner London,  to approve the minutes of August 8, 2016. All present voted in favor. Motion  carried.    EDA LEVY  Item 4  President Hemken introduced for discussion EDA Item 4, Resolution  authorizing the proposed levy of a special benefit levy pursuant to Minnesota  Statutes, Section 469.033, subdivision 6 and approval of a preliminary budget  for fiscal year 2017.    Mr. Kirk McDonald, city manager, stated the proposed EDA levy is $200,000  which is an increase of $50,000 over last year. He explained the increase will be  used for additional funds for the scattered site housing program.     RESOLUTION 2016‐19  Item 4  Commissioner Lammle introduced the following resolution and moved its  adoption “RESOLUTION AUTHORIZING THE PROPOSED LEVY OF A  SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES,  SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A PRELIMINARY  BUDGET FOR FISCAL YEAR 2017”. The motion for the adoption of the  foregoing resolution was seconded by Commissioner Elder, and upon vote  being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe,  Lammle, London; and the following voted against the same: None; Abstained:  None; Absent: None; whereupon the resolution was declared duly passed and  adopted, signed by the president which was attested to by the executive  director.    EDA Meeting   Page 2 September 12, 2016  IMP. PROJECT 973  Item 5  President Hemken introduced for discussion EDA Item 5, Resolution approving  purchase and redevelopment agreement with Great Buy Homes, Inc. for the sale  of 6065 and 6067 Louisiana Avenue North (improvement project no. 973).    Mr. Aaron Chirpich, community development specialist, explained the public  hearing is to consider the sale of EDA‐owned lots at 6065 and 6067 Louisiana  Avenue North to Great Buy Homes for $110,000 ($55,000 per lot). He stated RFPs  were sent to 20 builders and three proposals were received and reviewed with  Council at the August 15 work session. He described the design attributes and  anticipated sales price of $320,000 for each house    Mr. Chirpich stated the builder has requested separate development agreements  for each lot. Mr. Chirpich noted a reimbursement not to exceed $3,500 for curb  cut related costs is included in the development agreements. He also noted  restrictive covenants will be required to ensure the homes are owner‐occupied.    Council Member Elder inquired if the city would incur any additional costs by  providing two documents. Ms. Stacy Woods, assistant city attorney, stated the  costs would be nominal (one additional recording fee). Council Member Elder  recommended the buyer assume any additional costs if they become excessive.    Mayor Hemken opened the floor for comments from the audience. There was  no one present to address the Council for the public hearing.    Mr. Kirk McDonald, city manager, indicated staff has been trying to broaden the  use of various contractors and has received positive reports regarding Great Buy  Homes.    CLOSE HEARING  Item 5    Motion was made by Commissioner Elder, seconded by Commissioner Hoffe,  to close the public hearing. All present voted in favor. Motion carried.    RESOLUTION 2016‐20  Item 5  Commissioner London introduced the following resolution and moved its  adoption “RESOLUTION APPROVING PURCHASE AND  REDEVELOPMENT AGREEMENT WITH GREAT BUY HOMES, INC. FOR  THE SALE OF 6065 AND 6067 LOUISIANA AVENUE NORTH  (IMPROVEMENT PROJECT NO. 973)”. The motion for the adoption of the  foregoing resolution was seconded by Commissioner Hoffe, and upon vote  being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe,  Lammle, London; and the following voted against the same: None; Abstained:  None; Absent: None; whereupon the resolution was declared duly passed and  adopted, signed by the president which was attested to by the executive  director.    ADJOURNMENT Motion was made by Commissioner London, seconded by Commissioner  Lammle, to adjourn the meeting. All present voted in favor. Motion carried.  The New Hope EDA adjourned at 7:30 p.m.    Respectfully submitted,    Valerie Leone, City Clerk  I:\RFA\COMM DEV\Development\Q & R Approve Alatus Purchase and Development Agreement 11‐28‐16.docx   Request for Action November 28, 2016    Approved by: Kirk McDonald, City Manager  Originating Department: Community Development  By: Jeff Sargent, Director   Agenda Title  Resolution Authorizing the Execution of a Purchase and Development Agreement with Alatus New Hope,  LLC. (project No. 964)  Requested Action  Staff requests the Economic Development Authority (EDA) to approve a resolution authorizing the execution  of a contract for private redevelopment with Alatus New Hope, LLC.  Policy/Past Practice  It is a past practice of the staff to get EDA approval/authorization for a development agreement with a private  third‐party owner of a land when a TIF District has been established on the property to make improvements  to the land.  Background  At the February 16, 2016, City Council work session meeting, staff presented the Council with the preliminary  term sheet for the purchase and development agreement with Alatus.  Since that time, the developer has gained  access to the property to conduct further soil tests, and has also been approached by city staff for the potential  of replacing the aging lift station along 58th Avenue and burying the overhead utility lines along Bass Lake  Road from Yukon Avenue to Winnetka Avenue.     When further ground tests were performed, it was determined that the water table level was four feet higher  than originally estimated. This will result in the use of engineered foundation slabs for the construction of the  building, and would also require the building to be raised four feet higher than originally designed in order to  compensate for the water table level. These are added expenses. On September 28, 2016, the EDA approved  updated terms with the developer to cover a portion of the increased costs associated with the soil and  environmental conditions of the site and increased cost to the developer to construct the new lift station for the  city.    The added costs attributed to the modifications of the construction plans because of the water table, the  replacement of the city’s lift station and the burial of the overhead utility lines amount to $3,721,000. For this  reason, the developer requested that the terms of the purchase and development agreement be amended in  order to make the project feasible. Two main changes are requested:    1. The developer will purchase the land for $1,443,000, which is $15,600 more than originally agreed upon,  and will pay the city at the time of closing.  2. The developer would like the pay‐as‐you‐go TIF note to be increased from $4,600,000 to $6,574,000, and  for the TIF note to extend from 15 years to 23 years. It should be noted that the cost increase of the TIF  note of $1,974,000 only covers approximately half of the increased project costs of $3,721,000. The  developer will absorb the remaining costs through a reconfiguration of their business model.     Agenda Section EDA Item Number 4    Request for Action, Page 2    A representative from Ehlers & Associates will be in attendance at the EDA meeting to help answer any  questions that the EDA may have.     Attachments   Resolution   Ehlers Memo (11/28/16)   Purchase and Development Agreement   February 16, 2016 work session minutes   September 19, 2016 EDA minutes    NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY    RESOLUTION NO. 16‐______________    RESOLUTION AUTHORIZING THE EXECUTION OF A PURCHASE AND  DEVELOPMENT AGREEMENT WITH ALATUS NEW HOPE, LLC      BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE NEW HOPE  ECONOMIC DEVELOPMENT AUTHORITY (the ʺAuthorityʺ) AS FOLLOWS:     WHEREAS, the Authority and the City of New Hope, Minnesota (the ʺCityʺ) have created  Tax Increment Financing District No. 11‐1 (the “District”) pursuant to the Minnesota Tax  Increment Financing Law, Minnesota Statutes, sections 469.174‐469.1794 (the “Tax Increment  Act”); and     WHEREAS, the Authority has received a proposal from Alatus New Hope, LLC (the  “Developer”) pursuant to which the Developer would construct a rental housing development  (the “Improvements”) on certain real property in the District to be conveyed by the Authority to  the Developer (the “Property”); and      WHEREAS, the Developer has also proposed that the Authority provide certain financial  assistance to the Developer using tax increment revenues from the District; and     WHEREAS, there has been presented to the Authority’s Board of Commissioners a  proposed Purchase and Development Agreement (the “Contract”) between the Authority and the  Developer setting forth the terms of the Authority’s conveyance of the Property to the Developer  and its provision of financial assistance to the Developer in connection with the construction of  the Improvements.      NOW, THEREFORE, be it hereby resolved by the Board of Commissioner of the Authority  as follows:     1.02. Execution and Performance of Contract and Issuance of the Note.  The appropriate  officers of the Authority are hereby authorized to execute the Contract in substantially the form  presented to the Board of Commissioners, subject to such non‐substantive changes as may be  approved by the Executive Director and the Authority’s legal counsel, to cause the Authority’s  obligations under the Contract to be performed, including its obligation to convey the Property  to the Developer, to execute the Note at the time stated in the Contract and to issue and deliver  the Note described therein at the time provided in the Contract.     Section 2. Form of Note. The Note shall be substantially in the form contained in the  Contract, with the blanks properly filled in.     Section 3. Terms, Execution and Delivery.     3.01. Dates; Interest Payment Dates.  The Note shall be dated as of the date it is issued.  Principal of and interest on the Note shall be payable to the owner of record thereof as of the close  of business on the fifteenth day of the month preceding each Scheduled Payment Date, whether  or not such day is a business day.     3.02. Registration. The Authority appoints the Executive Director as Note Registrar.  The  effect of registration and the rights and duties of the Authority and the Registrar with respect  thereto shall be as follows:     (a) Register. The Registrar shall keep at his/her principal office a Note register in which  the Registrar shall provide for the registration of ownership of the Note and the registration of  transfers or exchanges of the Note.     (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the  registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory  to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized  by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of  the designated transferee or transferees, a new Note of a like aggregate principal amount and  maturity, as requested by the transferor. The Registrar may close the books for registration of any  transfer after the fifteenth day of the month preceding each interest payment date and until such  interest payment date.  The Note shall not be transferred to any person other than an affiliate or  other related entity of the Developer, unless the a has been provided with an opinion of counsel,  acceptable to the Authority, that such transfer is exempt from registration and prospectus  delivery requirements of federal and applicable state securities laws.     (c) Cancellation.  The Note surrendered upon any transfer shall be promptly canceled  by the Registrar and thereafter disposed of as directed by the Authority.     (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar  for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement  on the Note or separate instrument of transfer is valid and genuine and the requested transfer is  legally authorized.  The Registrar shall incur no liability for its refusal, in good faith, to make  transfers which it, in its judgment, deems improper or unauthorized.     (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in  whose name the Note is at any time registered in the Note register as the absolute owner of the  Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on  account of, the principal of or interest on the Note and for all other purposes, and all such  payments so made to any such registered owner or upon the ownerʹs order shall be valid and  effectual to satisfy and discharge the liability of the Authority upon the Note to the extent of the  sum or sums so paid.     (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar  may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax,  fee, or other governmental charge required to be paid with respect to such transfer or exchange  and reasonable legal fees and other costs incurred in connection therewith.     (g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note shall become mutilated  or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity  dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note  or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the  reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a  Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that  such Note was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the  Registrar of an appropriate indemnity in form, substance, and amount satisfactory to it, in which  both the Authority and the Registrar shall be named as obligees.  Any Note so surrendered to the  Registrar shall be canceled by it and evidence of such cancellation shall be given to the Authority.   If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption  in accordance with its terms, it shall not be necessary to issue a new Note prior to payment.     3.03. Preparation and Delivery. The Note shall be prepared under the direction of the  Executive Director of the Authority and shall be executed on behalf of the Authority by the  manual signatures of its Executive Director and President.  In case any officer whose signature,  or a facsimile of whose signature, shall appear on the Note shall cease to be such officer before  the delivery of the Note, such signature or facsimile shall nevertheless be valid and sufficient for  all purposes, the same as if such officer had remained in office until delivery.  Notwithstanding  such execution, the Note shall not be valid or obligatory for any purpose or entitled to any  security or benefit under this Resolution unless and until a certificate of authentication on such  Note has been duly executed by the manual signature of an authorized representative of the  Registrar.  The executed certificate of authentication on the Note shall be conclusive evidence it  has been authenticated and delivered under this resolution.  When the Note have been so  executed and authenticated, it shall be delivered by the Executive Director to the Developer.     Section 4. Pledge of Available Tax Increment. The Authority hereby pledges to the payment  of the principal of and interest on the Note Available Tax Increment, as defined in the Contract.     Section 5. Certification of Proceedings.     5.01 Certification of Proceedings.  The officers of the Authority are hereby authorized and  directed to prepare and furnish to the Developer certified copies of all proceedings and records  of the Authority, and such other affidavits, certificates, and information as may be required to  show the facts relating to the legality and marketability of the Note as the same appear from the  books and records under their custody and control or as otherwise known to them, and all such  certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed  representations of the Authority as to the facts recited therein.     Adopted this 28th day of November, 2016.          _____________________________________        Kathi Hemken, President  Attest:    _______________________________  Kirk McDonald, Executive Director Memo To: Kirk McDonald – Executive Director From: Stacie Kvilvang & Jason Aarsvold Date: November 28, 2016 Subject: Updated Terms For Purchase and Development Agreement – Golf Course Site On February 16, 2016, the EDA approved the terms for a Development Agreement (DA) with Alatus New Hope LLC. for the development of the above referenced site into 182-units of higher-end market rate rental units. On September 19, 2016, the EDA approved updated terms with the Developer to cover a portion of the increased costs associated with the soil and environmental conditions of the site and increased cost to the Developer to construct a new lift station for the City. Following is a summary of the Development Agreement terms: 1. General a. Purchase and Development Agreement with Alatus New Hope LLC 2. Acquisition a. The Developer will acquire the five (5) existing parcels from the EDA for $1,443,000 (this equates to approximately $7,900). b. Closing will happen on or before February 28, 2017 and EDA will provide “clean” title to the property 3. Development and Timing of Construction a. Construction of 182 market rate apartments and related amenities and underground and surface parking b. Developer to construct new joint access off Bass Lake Road for the development and the Golf Course c. Developer to construct a new joint garbage enclosure for the development and the Golf Couse to be located on the Golf Course property i. Developer will store their garbage bin in their property, but will move it to the joint trash enclosure on garbage pick-up day d. Developer to construct a new lift station for the City adjacent to the site Kirk McDonald Updated Terms For Purchase and Development Agreement – Golf Course Site November 28, 2016 Page 2 e. Must commence construction April 1, 2017 and substantial completion by August 30, 2018 4. Platting and Zoning a. Developer will plat property into one (1) parcel b. Developer will prepare and obtain City approval of a planned unit development (“PUD”) and Plat of the Property at their cost and subject to all City ordinances and procedures c. Developer will prepare cross access agreements for the new combined entrance for the development and the Golf Course, and for access onto the Golf Course property where the new trash enclosure will be constructed 5. Burial of Power and Cable Lines a. The developer will pay for the burial of the power and cable lines from Yukon Avenue to Winnetka Avenue b. The EDA will reimburse the developer for $125,000 of the costs associated with the burial of the power and cable lines 6. Park Dedication Fees a. The developer will pay $17,700 in park dedication fees per the City’s policy 7. Payment of Authority Costs a. Developer is required to reimburse EDA for costs of consultants in negotiating and drafting development agreement (fiscal and legal). 8. Tax Increment a. The EDA has created TIF district 11-1 b. The Developer will receive a pay-as-you-go note in the amount of $6.574 million i. Term of the TIF note will be for 23 years ii. Interest will be at the lesser of 4.50% or the Developer’s actual financing rate iii. Developer will receive 95% of the tax increment generated c. The EDA will be reimbursed for the difference in their land assembly costs of $2,363,100 ($2,250,000 was acquisition and the remainder was relocation and demolition costs) and the purchase price by the Developer, which equates to $920,100 i. In August 2015, the EDA approved an interfund loan to allow for this repayment. It is estimated that it will be repaid (with interest at 4%) within 1 ½ to 2 years after the TIF Note is done. Kirk McDonald Updated Terms For Purchase and Development Agreement – Golf Course Site November 28, 2016 Page 3 9. Lookback a. Once the project is stabilized (90% occupied), the Developer is required to submit to the City audited financials detailing the actual Total Development Costs (TDC), along with actual income and expenses. To the extent the Developers annual Cash-on-Cash (COC) return (equity invested divided by cash flow) exceeds 10%, the TIF Note amount will be reduced to reflect a projected annual COC return of not more that 10%. Please contact either of us at 651-697-8500 with any questions. Draft 11-21-16 PURCHASE AND DEVELOPMENT AGREEMENT By and Between NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY and ALATUS NEW HOPE, LLC Dated as of: ____________, 2016 This document was drafted by: BRADLEY & DEIKE, P. A. 4018 West 65th Street, Suite 100 Edina, MN 55435 Telephone: (952) 926-5337 TABLE OF CONTENTS Page PREAMBLE 1 ARTICLE I Definitions Section 1.1. Definitions 3 ARTICLE II Representations Section 2.1. Representations by the Authority 6 Section 2.2. Representations by the Owner 6 ARTICLE III Authority Assistance; Issuance of TIF Note Section 3.1. Basis for Assistance 8 Section 3.2. Issuance of Note 8 Section 3.3. Conditions Precedent to Issuance of TIF Note 8 Section 3.4. Payment of Administrative Costs 9 Section 3.5. Potential Reduction of Assistance 9 Section 3.6. Soils and Environmental Conditions 10 Section 3.7. Title 10 Section 3.8. Closing; Purchase Price 12 Section 3.9. Conditions Precedent to Conveyance of Authority Property 12 Section 3.10. Tax Increment Inter-fund Loan 13 (i) ARTICLE IV Construction of Improvements Section 4.1. Construction of Improvements 14 Section 4.2. Construction Plans 14 Section 4.3. Commencement and Completion of Construction 15 Section 4.4. Certificate of Completion 16 ARTICLE V Insurance and Condemnation Section 5.1. Insurance 17 Section 5.2. Condemnation 18 ARTICLE VI Taxes; Tax Increment Section 6.1. Real Property Taxes 20 Section 6.2. Tax Increment 21 Section 6.3. Owner’s Representations Concerning TIF Note 21 Section 6.4. Assessment Agreement 22 ARTICLE VII Mortgage Financing Section 7.1. Mortgage Financing 23 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Prohibition Against Transfer of Property and Assignment of Agreement 24 (ii) Section 8.2. Release and Indemnification 25 Section 8.3. Environmental Conditions 25 ARTICLE IX Events of Default Section 9.1. Events of Default Defined 26 Section 9.2. Authority's Remedies on Default 26 Section 9.3. No Remedy Exclusive 26 Section 9.4. No Additional Waiver Implied by One Waiver 27 Section 9.5. Costs of Enforcement 27 ARTICLE X Additional Provisions Section 10.1. Representatives Not Individually Liable 28 Section 10.2. Restrictions on Use 28 Section 10.3. Titles of Articles and Sections 28 Section 10.4. Notices and Demands 28 Section 10.5. Disclaimer of Relationships 28 Section 10.6. Modifications 29 Section 10.7. Counterparts 29 Section 10.8. Judicial Interpretation 29 Section 10.9. Business Subsidy Act 29 Section 10.10. Miscellaneous 29 Section 10.11. Termination 30 Section 10.12 Estoppel Certificates 30 SCHEDULE A Description of Property SCHEDULE B TIF Note SCHEDULE C Deed SCHEDULE D Assessment Agreement SCHEDULE E Access Easement SCHEDULE F Access Agreement SCHEDULE G Owner Pro Forma (iii) 1 PURCHASE AND DEVELOPMENT AGREEMENT THIS AGREEMENT, made on or as of the ___ day of _____________, 2016, by and between the New Hope Economic Development Authority, a public body politic and corporate under the laws of the State of Minnesota (hereinafter referred to as the "Authority"), and having its principal office at City Hall, 4401 Xylon Avenue North, New Hope, Minnesota 55428, and Alatus New Hope, LLC, a Minnesota limited liability company (hereinafter referred to as the "Owner"), having its principal office at U.S. Bancorp Center, 800 Nicollet Mall, Suite 2850, Minneapolis, Minnesota 55402. WITNESSETH: WHEREAS, The Authority is a municipal economic development authority organized and existing pursuant to the Constitution and laws of the State of Minnesota and is governed by its Board of Commissioners (the "Board"); and WHEREAS, the Authority and the City of New Hope, Minnesota (the “City”) have established within the City Redevelopment Project No. 1 pursuant to Minnesota Statutes, Sections 469.001 - 469.047, providing for the development and redevelopment of certain areas located within the City (which redevelopment project is hereinafter referred to as the "Project"); and WHEREAS, the Authority and the City have further established Tax Increment Financing District No. 11-1 within the Project pursuant to Minnesota Statutes, Sections 469.174-469.179 (which tax increment financing district is hereinafter referred to as the "Tax Increment District"); and WHEREAS, the Tax Increment District is a redevelopment tax increment financing district intended to facilitate the redevelopment of real property located in the City containing blighted conditions and substandard buildings and improvements; and WHEREAS, pursuant to Minnesota Statutes, Section 469.176, subdivision 4, tax increment derived from the Tax Increment District may be used in accordance with the tax increment financing plan created in connection with the establishment of the Tax Increment District to pay the public redevelopment costs of the Project; and WHEREAS, the Owner has presented to the Authority a proposal pursuant to which the Owner will acquire from the Authority certain real property owned by the Authority within the Project (which property is hereinafter referred to as the "Property" and is more particularly described in Schedule A annexed hereto and made a part hereof) and construct thereon a 182- unit market rate apartment building with underground parking; and WHEREAS, the Owner has as a part of its proposal requested that the Authority provide certain financial assistance to aid in its development, without which such development would not be possible; and 2 WHEREAS, Authority believes that the development activities proposed by the Owner are in the best interest of the City and its residents and in accord with the public purposes and provisions of applicable federal, state and local laws under which the Project is being undertaken and assisted; NOW THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 3 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Sections 469.001-469.047, as amended. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. “Assessment Agreement” means the agreement in the form attached to this Agreement as Schedule D. “Authority” means the New Hope Economic Development Authority, a public body politic and corporate, its successors and assigns. “Available Tax Increment” means, with respect to a Scheduled Payment Date, as defined in the TIF Note, ninety five percent (95%) of the Tax Increment received by the Authority in the six (6) month period preceding such Scheduled Payment Date. “Board” means the Authority’s Board of Commissioners. "City" means the City of New Hope, Minnesota. "Construction Plans" means the site plan, utility plan, grading and drainage plan, landscape plan, elevations drawings and related documents on the construction work to be performed by the Owner on the Property which have been or will be submitted for approval by the Board, together with the resolution of the Board approving such plans and the plans, specifications, drawings and related documents on the construction work to be performed by the Owner on the Property which are to be submitted to the building inspector of the City. "County" means Hennepin County, Minnesota. “Deed” means the deed in the form of Schedule C attached hereto. "Event of Default" means an action by the Owner listed in Article IX of this Agreement. "Improvements" means the improvements to be constructed by the Owner on the Property, consisting of, as of the date of this Agreement (but subject to modifications required by or approved by the Authority), a four story market rate apartment community containing 182 units, together with related improvements. 4 "Local Time" means Standard or daylight savings time in effect on the date in question in the time zone in which the Property is located. “Minimum Market Value” means the market value for tax purposes of the Property and Improvements established by the Assessment Agreement. "Net Proceeds" means any proceeds paid by an insurer to the Owner or the Authority under a policy or policies of insurance required to be provided and maintained by the Owner pursuant to Article V of this Agreement and remaining after deducting all expenses (including fees and disbursements of counsel) incurred in the collection of such proceeds. "Owner" means Alatus New Hope LLC, a Minnesota limited liability company, its successors and assigns. “Permitted Encumbrances” means the provisions of the Deed and this Agreement: reservations of minerals or mineral rights to the State of Minnesota; public utility, roadway and other easements which will not adversely affect the development and use of the Property pursuant to the Owner’s Construction Plans; building laws, regulations and ordinances consistent with the Improvements; restrictions, covenants and easements of record that do not materially adversely affect the development and use of the Improvements and are reasonably acceptable to the Owner; and exceptions to title to the Property which are not objected to by Owner upon examination of the title evidence delivered to the Owner pursuant to the terms of this Agreement. "Project" means the Authority's Redevelopment Project No. 1. "Project Area" means the real property located within the boundaries of the Project. "Project Plan" means the redevelopment plan adopted in connection with creation of the Project. “Property” means the real property described as such on the attached Schedule A. "Reimbursable Costs" means the costs to be reimbursed by the Authority to the Owner as described in Article III of this Agreement, which costs consist of a portion of the cost of constructing the Improvements, including without limitation, the costs of acquiring the Property, and other costs that may be reimbursed under the Act and the Tax Increment Act. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes paid with respect to the Property and Improvements that is remitted to the Authority as tax increment pursuant to the Tax Increment Act, minus deductions required by law. "Tax Increment Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174-469.1794, as amended and as it may be further amended from time to time. 5 "Tax Increment District" means Tax Increment Financing District No. 11-1 created by the Authority and City within the Project Area. “Tax Increment Plan” means the tax increment financing plan adopted by the Authority in connection with its creation of the Tax Increment District, which plan together with the information and findings contained therein is hereby incorporated herein and made a part hereof by reference. "Termination Date" means the latest of the following dates: (i) the date that the Note is paid in full or terminated; (ii) the date that this Agreement is terminated; or (iii) the date that the Interfund Loan described in Section 3.11 has been paid in full. "TIF Note" means the Taxable Limited Revenue Tax Increment Note to be issued by the Authority pursuant to Section 3.2 of this Agreement, which TIF Note shall be in the form of the TIF Note attached to this Agreement as Schedule B, with all blanks filled in and approved by the Authority and the Owner. "Unavoidable Delays" means delays which are the direct result of acts of God, acts of nature, acts of terrorism, inability to obtain necessary materials, unforeseen adverse weather conditions, strikes, other labor troubles, fire or other casualty to the Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, acts of any federal, state or local governmental unit, and which directly results in delays, or any other matter beyond the reasonable control of the party claiming the delay. 6 ARTICLE II Representations Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a municipal economic development authority organized and existing under the laws of the State. Under the laws of the State, the Authority has the power to enter into this Agreement and to perform its obligations hereunder. (b) The Authority owns the Property, acquired the same in accordance with all applicable laws and there has either been no legal challenge to the Authority's acquisition of the Property or the time for such legal challenge has expired. (c) The Authority will cooperate with the Owner with respect to any litigation commenced with respect to the Project Plan, Project, or Improvements and in the Owner's acquisition of any permits or other approvals required in connection with the construction of the Improvements. (d) The Authority has received no notice or communication from any local, state or federal official that the activities of the Owner or the Authority in the Project Area may be or will be in violation of any environmental law or regulation. The Authority is aware of no facts the existence of which would cause it or any portion of the Authority Property to be in violation of any local, state or federal environmental law, regulation or review procedure. (e) 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 Authority is now a party or by which it is bound, or constitutes a default under any of the foregoing (f) To the best of the Authority's knowledge, there is no litigation, pending or threatened, regarding the Authority Property or challenging the validity of this Agreement. (g) The Authority will not issue any further obligations that are payable from or secured by the Available Tax Increment prior to the date that the TIF Note has been paid in full, or terminated in accordance with its terms, without the prior written consent of the Owner, which may be given or withheld in the sole discretion of the Owner. (h) To the best of the Authority’s knowledge, the Tax Increment District is a “redevelopment district” within the meaning of Minnesota Statutes, Section 469.174 subdivision 10, and was created, adopted and approved in accordance with the terms of the Act. The Authority will take no action to impair the collection of the Tax Increment from the Tax Increment District. 7 Section 2.2. Representations by the Owner. The Owner represents that: (a) The Owner is a limited liability company duly organized and authorized to transact business in the State, is not in violation of any provisions of its articles of organization, member control agreement or the laws of the State, has power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its members. (b) The Owner will construct the Improvements in accordance with the terms of this Agreement and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations), except for variances necessary to construct the improvements contemplated in the Construction Plans approved by the Authority. (c) The Owner has received no notice or communication from any local, state or federal official that the activities of the Owner or the Authority in the Project Area may be or will be in violation of any environmental law or regulation. The Owner is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure. In the event that it is necessary to take any action to obtain any necessary permits or approvals with respect to the Property under any local, state or federal environmental law or regulation, the Owner will be responsible for taking such action. (d) Subject to issuance thereof by the City, the County, the State or the United States, as applicable, the Owner 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 Improvements may be lawfully constructed. (e) 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 Owner is now a party or by which it is bound, or constitutes a default under any of the foregoing. (f) The Owner will cooperate with the Authority with respect to any litigation commenced with respect to the Project Plan, Project, or Improvements. (g) The Owner could not and would not proceed with the construction of the Improvements absent the financial assistance being provided by the Authority pursuant to this Agreement. 8 ARTICLE III Issuance of Note; Conveyance of Property Section 3.1. Basis for Assistance. The Authority has acquired the Property for the purpose of facilitating its redevelopment through private development. The Property contained certain blighted conditions and substandard buildings and Improvements. The Authority has caused the buildings and improvements to be demolished and removed from the Property. The Authority is willing to convey the Property to the Owner in order to allow the Owner to construct the Improvements on the Property. In addition, the Authority has determined that construction of the Improvements would not be financially feasible absent the provision of certain public financial assistance. Therefore, in consideration for the Owner’s agreement to undertake the development of the Improvements and its agreement to construct as a part of the Improvements certain amenities that the Authority deems necessary and desirable, the Authority is willing to defray a portion of the Owner’s costs of construction of the Improvements through the issuance and the payment of the TIF Note. Section 3.2. Issuance of TIF Note. The Authority agrees to defray a portion of the Owner’s cost of constructing the Improvements through the issuance of the TIF Note. The costs to be reimbursed by the Authority through the issuance of the TIF Note are referred to herein as the “Reimbursable Costs”. The Reimbursable Costs consist of a portion of the cost of constructing the Improvements. The issuance of the Note shall occur when the conditions set forth in Section 3.3 have been satisfied. The principal amount of the Note will be equal to the Owner’s actual Reimbursable Costs incurred and paid by the Owner, but in no event to exceed $6,574,000. If the Owner’s documented Reimbursable Costs for such items are less than $6,574,000 then the principal amount of the TIF Note shall be such lesser amount. The TIF Note shall be in the form of the TIF Note attached to this Agreement as Schedule B, with all blanks properly completed. Interest at the rate of the lesser of four and one half percent (4.50%) or the rate of financing on the Owner’s construction financing for the Improvements shall accrue on the principal amount of the TIF Note from the date of its issuance up to February 1, 2019, and such accrued interest shall be added to the principal amount of the TIF Note on the first day of each February and August after its issuance up to and including February 1, 2019. From and after February 1, 2018, until the TIF Note is terminated or paid in full, simple non-compounding interest at the rate of the lesser of four and one half percent (4.50%) per annum or the rate per annum of financing on the Owner’s construction financing for the Improvements shall accrue with respect to the principal amount of the TIF Note. Section 3.3. Conditions Precedent to Issuance of TIF Note. Notwithstanding anything to the contrary contained herein, the Authority's obligation to issue the TIF Note shall be subject to satisfaction, or waiver in writing by the Authority, of all of the following conditions precedent: (a) no Event of Default by Owner shall have occurred under this Agreement and be continuing; (b) the Owner shall have closed on financing sufficient to pay all costs to be incurred in connection with the construction of the Improvements; 9 (c) the Owner shall have paid the Reimbursable Costs as described in Section 3.2 of this Agreement and shall have provided to the Authority such documentation of such costs as the Authority shall reasonably request; and (d) the Owner shall have completed construction of the Improvements. Section 3.4. Payment of Administrative Costs. The Owner will reimburse the Authority for all out-of-pocket costs incurred by the Authority in connection with review and analysis of the development proposed under this Agreement, development of the Tax Increment Plan for the Tax Increment District; and the negotiation of this Agreement and any related agreements and documents (collectively, the “Administrative Costs”). The Administrative Costs include fees paid to attorneys, the Authority’s financial advisor, and any planning and engineering consultants retained by the Authority or City in connection with the construction of the Improvements. As security for the Administrative Costs, the Owner deposited with the Authority the amount of $20,000, and the Authority shall pay the Administrative Costs from such funds. If the total Administrative Costs exceed $20,000, the Owner remains responsible for such excess costs, and must pay such costs to the Authority within 10 days after receipt of a written invoice from the Authority describing the amount and nature of the costs to be reimbursed. After the Note has been issued and the certificate of completion referenced in Section 4.4 has been executed and delivered, and all the Administrative Costs related to such actions have been paid, the Authority will refund to the Owner any portion of the balance from the $20,000 deposit (if any) that is not needed to cover the Administrative Costs through such reimbursement date. Notwithstanding anything to the contrary herein, the Owner remains obligated to pay the Administrative Costs after issuance of such certificate of completion, including the costs of any amendments to this Agreement or to the TIF Note. Section 3.5. Potential Reduction of Assistance. (a) On the Calculation Date, as defined below, the amount of the tax increment finance assistance provided pursuant to this Agreement will be subject to adjustment based on a target Cash on Cash Return, as defined below, of 10%. By the Calculation Date, the Owner must deliver to the Authority’s municipal advisor evidence of its Cash on Cash Return. The Cash on Cash Return shall be calculated by the Authority’s municipal advisor based on the Owner’s pro forma financial statement submitted to the Authority’s municipal advisor, a summary of which pro forma is attached to this Agreement as Schedule I (the “Pro Forma”). If the Cash on Cash Return exceeds 10%, then the principal amount of the TIF Note issued to the Owner will be reduced to an amount that results in a stabilized Cash on Cash Return equal to 10% over the term of the TIF Note, in which case the Owner shall deliver the TIF Note to the Authority in exchange for a new TIF Note in the adjusted principal amount upon the Authority’s written request. (b) For the purposes of this Section, the following terms have the following meanings: 10 “Calculation Date” means 60 days after the earliest of (i) the date of Stabilization, as defined below, of the Improvements; (ii) the date of any transfer of the Improvements (provided that the Owner and the Authority may agree that the Calculation Date will occur prior to the actual transfer); or (iii) two years after the date of completion of the Improvements, as evidenced by the City’s issuance of a final certificate of occupancy. “Cash Flow” means Net Operating Income less debt service with respect to the first mortgage loan. “Cash on Cash Return” means Cash Flow divided by the sum of Owner’s actual equity, which excludes any grants or City, Authority, Federal or State funds received by the Owner, and the principal amount of the TIF Note. “Net Operating Income” means total rent and other project-derived revenue, including payments under the TIF Note, less Operating Expenses in accordance with the Pro Forma. “Operating Expenses” means reasonable and customary expenses incurred in operating the Property in accordance with the Pro Forma, including deposits to capital replacement reserves. “Stabilization” is defined as the first date upon which both of the following have occurred: (1) the apartments within the Improvements have achieved 90% occupancy for three consecutive months; and (2) real estate taxes have been fully assessed on the completed Improvements. Section 3.6. Soils and Environmental Conditions. The Owner acknowledges that the Authority makes no representations or warranties as to the environmental conditions existing on the Property or as to the condition of the soils on the Property or its fitness for construction of the Improvements. The Owner shall have the right to enter upon the Property to undertake such environmental and soil tests as the Owner deems necessary to determine the condition of the Property. The Authority shall furnish the Owner with all test results and environmental assessments that it has in its possession relating to the Property. The Owner has completed its testing and analysis of the Property and has determined that the environmental and soil conditions existing on the Property are acceptable. If the Owner closes on the conveyance of the Property to the Owner, the Owner shall be deemed to accept the Property in its "as is" condition and the Authority shall have no further responsibility to the Owner for any defects in the condition of the Property. Section 3.7. Title. (a) Within ten (10) days after the date of this Agreement (the "Commitment Delivery Date"), the Authority shall obtain and furnish to the Owner a commitment for the issuance of an owner's policy of title insurance for the Property issued by Commercial Partners Title, LLC ("Title Company"), naming the Owner as the proposed insured party in the amount of $1,443,000 (the "Commitment"), together with any survey of the Property in the possession of the Authority. The Commitment shall include legible copies of all documents referenced therein, instruments and matters shown as exceptions or referenced therein. Within forty five (45) days after the date of this Agreement, the Owner shall obtain and deliver to the Authority a current land title survey of the Property prepared and certified by a registered land surveyor licensed in the State of Minnesota and satisfactory to the Owner's lender and the Title Company (the "Survey"; the Commitment and the Survey, as amended and revised 11 from time to time may be referred to herein as the "Title Evidence"). The Authority and the Owner contemplate that construction of the Improvements will require a re-plat of the Property. The parties will cooperate to agree upon and finalize a re-plat of the Property by December 31, 2016. (b) The Owner shall have until and through thirty (30) days following the Commitment Delivery Date to notify the Authority of specific objections that the Owner has to the Title Evidence (the "Title Review Period"). Upon expiration of said Title Review Period, if the Owner has not notified the Authority of any unacceptable items in Commitment (including the underlying documents) and the Survey, the Owner shall be deemed to have accepted all exceptions to title referenced in the Commitment and all matters shown on the Survey, and such accepted exceptions shall be included in the term "Permitted Exceptions" as used herein. Any objection and the Authority's response thereto shall be made pursuant to this Section 3.7(b). In the event the Owner does object to any matters shown in the Commitment (including any exception documents) or the Survey within the Title Review Period, the Authority shall have a period of ten (10) days, commencing on the thirty-first (31st) day after the Commitment Delivery Date and ending at 5:00 p.m. Local Time on the tenth (10th) day thereafter (the "Election Period"), to notify the Owner of the steps, if any, the Authority intends to take to cure the objections to title and survey made by the Owner. A title objection shall be deemed to be cured if the title insurer agrees to issue an endorsement to the owner's title insurance and lender's title insurance policies and the Owner and its lender agree that such endorsement constitutes a cure. The parties understand and agree that, without any objection thereto being made by the Owner, the Authority shall have the obligation to remove or cause to be removed, at Closing, all liens that can be satisfied by the payment of money, whether consensual or otherwise, affecting the Property; but provided further that the Authority shall not be obligated to remove any liens created by the Owner in the course of the Owner's due diligence investigations. In the event that the Authority is unable to cure the Owner's objections prior to the expiration of the Election Period, the Authority shall notify the Owner in writing of such fact prior to the expiration of the Election Period. In such event, or if the Authority shall fail to provide any such notice to the Owner, the Owner shall have until ten (10) days prior to the Closing Date (as defined in Section 3.8(a) below within which to either waive the Owner's objections in writing and accept title to the Property subject to the matters which the Authority has been unable to cure, or terminate this Agreement in writing, in which case any deposits made by the Owner to the Authority shall be returned to the Owner and neither the Authority nor the Owner shall have any further obligation hereunder, except as to those obligations provided for herein which are stated to survive termination of this Agreement. If the Owner does not so waive such objections in writing or so terminate this Agreement in writing the Owner shall be deemed to have waived the Owner's objections and accepted the Property subject to the matters which the Authority has been unable or unwilling to eliminate and such accepted exceptions shall be included in the term "Permitted Exceptions". Notwithstanding the foregoing, nothing herein shall prohibit the Owner from objecting to new title matters or new survey matters first appearing on title or the Survey after the initial issuance of each of the same. In such case, the parties shall proceed as though the period beginning on the day after the date after the Owner receives (a) any revised Commitment showing a new title matter; or; or (b) a revised survey showing a new survey matter and ending five (5) days thereafter is the Title Review Period as to any such matter(s). The Election Cure Period shall be three (3) days, and, after the expiration of the Title Review Period, and the Owner 12 shall then have three (3) days after the expiration of the Election Cure Period to either (x) terminate this Agreement and receive a refund of all deposits to the Authority; or (y) proceed to Closing without diminution of the Purchase Price. The Authority shall have no obligation to exercise its powers of eminent domain to clear defects in the title to the Property. The cost of obtaining the title insurance commitment and the cost of title insurance policies in favor the Owner and its lender shall be borne by the Owner. In the event of any termination of this Agreement pursuant to this Section 3.7(b), the parties agree that they shall execute an agreement in recordable form evidencing the cancellation of this Agreement. (c) The Authority shall voluntarily take no actions to encumber title to the Property between the date hereof and the date on which the Deed is delivered to the Owner. Section 3.8. Closing; Purchase Price. (a) Subject to the conditions precedent set forth in Section 3.9 of this Agreement, the Authority agrees to sell the Property to the Owner as provided in this Section 3.8. Closing on the conveyance of the Property to the Owner (the “Closing”) shall occur within thirty (30) days after the date that the conditions precedent contained in Section 3.9 have been satisfied or waived, but in no event later than February 28, 2017. (b) At Closing. the Authority shall deliver to the Owner: (i) a Deed duly executed and acknowledged conveying to the Owner marketable title to the Property subject only to Permitted Encumbrances; and (ii) such other customary documents as are required by the title company issuing the title commitment and title policy to be executed and delivered to effectuate the closing on the conveyance of the Property. (c) All closing costs associated with the Closing will be paid by the Owner. (d) The purchase price to be paid by the Owner shall be $1,443,000 and shall payable in full at the Closing. Section 3.9. Conditions Precedent to Conveyance of the Property. The Authority’s obligation to sell and the Owner’s obligation to purchase the Property shall be subject to satisfaction of the following conditions precedent: (a) The Owner having secured financing or provided to the Authority evidence reasonably satisfactory to the Authority of its ability to secure financing sufficient for the acquisition of the Property and the construction of the Improvements. (b) The Owner having reviewed and approved, or waived any objections to, title to the Property pursuant to Section 3.7 of this Agreement. (c) The City having issued a building permit for the Improvements to the Owner. If all of the conditions precedent to the conveyance of the Property have not been satisfied by February 28, 2017, the Authority shall have the right to terminate this Agreement by giving written notice of termination to the Owner, upon which this Agreement shall terminate 13 and the Authority and Owner shall execute an instrument in recordable form evidencing such termination. Section 3.10. Tax Increment Interfund Loan. (a) The Authority has acquired the Property and the City and the Authority have incurred certain costs to prepare such property for redevelopment, including environmental remediation, demolition of buildings and site clearance. After Owner’s payment of the Deferred Land Amount for the Property there will remain unreimbursed costs incurred by the City and the Authority in the approximate amount of $920,100 (the “Authority Costs”). Subject to all the terms and conditions of this Agreement, upon the conveyance of the Property to the Owner, the City and the Authority will forego receipt of the Authority Costs and the Authority Costs will remain outstanding. The City and the Authority shall reserve the right to collect such Authority Costs through the Interfund Loan, as described in Section 3.9(b) below. (b) The Authority will treat the amount of the Authority Costs as an interfund loan (the “Interfund Loan”) within the meaning of Section 469.178, Subdivision 7 of the Tax Increment Act. The terms of the Interfund Loan are described in a resolution adopted in August, 2015, (the “Loan Resolution”). Until the TIF Note has been paid in full, or terminated in accordance with its terms, the Interfund Loan will be payable only from Tax Increment received by the Authority that is in excess of Available Tax Increment, and under no circumstances shall the Owner or any successor or assign of the Owner, have any responsibility for payment of the Interfund Loan or any portion thereof. 14 ARTICLE IV Construction of Improvements Section 4.1. Construction of Improvements. The Owner agrees that it will construct the Improvements on the Property in accordance with the approved Construction Plans and at all times prior to the Termination Date will operate and maintain, preserve and keep the 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. Section 4.2. Construction Plans. (a) The Owner has submitted and the City and the Authority have approved a site plan for the construction of the Improvements (the "Site Plan"). All Construction Plans for the Improvements shall be consistent with the approved Site Plan. The Construction Plans shall provide for the construction of the Improvements and shall be in conformity with this Agreement, the Site Plan approved by the Authority, and all applicable state and local laws and regulations. The Authority shall approve the Construction Plans in writing if, in the reasonable discretion of the Authority: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans are consistent with the Site Plans previously submitted to the Authority; (iii) the Construction Plans conform to all applicable federal, State and local law, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for the construction of the Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds which will be available to the Owner for the construction of the Improvements, including, without limitation, construction loan proceeds; and (vi) no Event of Default by the Owner has occurred. No approval by the Authority under this Section 4.2 shall relieve the Owner of the obligation to comply with the terms of this Agreement or applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Improvements. No approval by the Authority shall constitute a waiver of an Event of Default. Such Construction Plans shall, in any event, be deemed approved unless rejected in writing by the Authority, in whole or in part. Such rejection shall set forth in detail the reasons therefor, and shall be made within thirty (30) days after the date of their receipt by the Authority. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority or until this Agreement is terminated. The Authority's approval shall not be unreasonably withheld. Notwithstanding any other provisions of this Agreement, the issuance by the City of a building permit for the construction of the Improvements shall constitute the approval of the Construction Plans by the City and the Authority as provided herein. (b) If the Owner desires to make any material change in any Construction Plans after their approval by the Authority, the Owner shall submit the proposed change to the Authority for its approval. For purposes of this Agreement, a “material change” means a change that changes the size, nature or exterior appearance of the Improvements or that substantially reduces the value of the Improvements. 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 such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Owner in writing of its approval. Any requested change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by 15 written notice by the Authority to the Owner, setting forth in detail the reasons therefor. Such rejection shall be made within ten (10) days after receipt of the notice of such change. (c) City approval of the Improvements will occur as a part of a planned unit development process. The Owner acknowledges that it will be required to enter into a planned unit development agreement containing the terms and conditions of the planned unit development approval subject to the Owner’s reasonable approval. Section 4.3. Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, the Owner shall commence construction of the Improvements by April 1, 2017, or on such other date as the parties shall mutually agree. Subject to Unavoidable Delays, the Owner shall complete the construction of the Improvements by August 31, 2018. All work with respect to the Improvements to be constructed or provided by the Owner on the Property shall be in conformity with the Construction Plans as submitted by the Owner and approved by the Authority, and as may be modified as provided in Section 4.2 above. (b) Until construction of the Improvements has been completed, the Owner shall make construction progress reports, at such times as may reasonably be requested by the Authority, but not more than once a month, as to the actual progress of the Owner with respect to such construction. (c) The construction of the Improvements will result in a shared access over the Property to the Improvements and to the City’s golf course. Therefore, at the time that the Authority conveys the Property to the Owner the Owner will execute a perpetual non-exclusive easement over the Property providing such access to the golf course. Such easement will be in the form attached hereto as Schedule E. (d) As a part of its construction of the Improvements the Owner will construct a new trash enclosure on the City’s golf course. Such trash enclosure will serve both the golf course and the Improvements. The location and nature of such enclosure will be as shown on the Owner’s approved Construction Plans. The City and the Owner will enter into an access agreement allowing the Owner to access and use the trash enclosure, which access agreement will be in the form attached to this Agreement as Schedule F. (e) The Owner will pay to the City a park dedication fee in the amount of $17,700 in connection with the development of the Improvements. (f) As part of construction of the Improvements the Owner will, at its sole cost and expense, install a municipal utility lift station. The design and location of the lift station will be agreed upon by the City and the Owner during the process of developing plans for the construction of the Improvements. (g) The Owner will bury the existing power lines located between Yukon Avenue and Winnetka Avenue. The Authority agrees to reimburse the Owner for up to $125,000 of the cost of such work. 16 Section 4.4. Certificate of Completion. (a) Promptly after completion of the Improvements in accordance with those provisions of this Agreement relating solely to the obligations of the Owner to construct the Improvements, and upon request by the Owner, the Authority will furnish the Owner with a Certificate of Completion for the Improvements in a form acceptable for recording in the County Recorder’s Office or the Office of the Registrar of Titles. The Certificate of Completion shall be furnished to the Owner within ten (10) business day after request by the Owner, and shall conclusively satisfy and terminate the agreements and covenants in this Agreement of the Owner, and its successors and assigns, to construct the Improvements. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any obligation of the Owner to any Holder of a Mortgage, or any insurer of a Mortgage, securing money loaned for construction of the Minimum Improvements, or any part thereof. (b) If the Authority shall refuse or fail to provide a Certificate of Completion in accordance with the provisions of this Section 4.4 of this Agreement, the Authority shall, within ten (10) business day after written request by the Owner for the Certificate of Completion, provide the Owner with a written statement, indicating in adequate detail in what respects the Owner has failed to complete the Improvements in accordance with the provisions of this Agreement and what measures or acts will be necessary, in the opinion of the Authority, for the Owner to take or perform in order to obtain the Certificate of Completion. (c) The construction of the Improvements shall be deemed to be completed when the City has issued a final certificate of occupancy for the Improvements (or when the Owner would be entitled to a certificate of occupancy if it requested one), and when all conditions imposed in connection with the City’s approval of the Owner’s development, including the establishment of any completion escrow, if necessary, have been satisfied. 17 ARTICLE V Insurance and Condemnation Section 5.1. Insurance. (a) The Owner will provide and maintain at all times during the process of constructing the Improvements and, from time to time at the request of the Authority, furnish the Authority with proof of payment of premiums on: (i) Builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Improvements at the date of completion, and with coverage available in nonreporting form on the so called "all risk" form of policy; (ii) Commercial general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, including contractual liability insurance), naming the Authority as an additional insured, 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) Worker's compensation insurance, with statutory coverage and employer's liability protection. The policies of insurance required pursuant to clauses (i) and (ii) above shall be in form and content reasonably satisfactory to the Authority and shall be placed with financially sound and reputable insurers licensed to transact business in the State, the liability insurer to be rated A or better in Best's Insurance Guide. The policy of insurance delivered pursuant to clause (i) above shall contain an endorsement by the insurer to in favor of the Authority to give not less than thirty (30) days' advance written notice to the Authority in the event of cancellation of such policy or change affecting the coverage thereunder. (b) Upon completion of construction of the Improvements and prior to the Termination Date, the Owner shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, all risk vandalism and malicious mischief, boiler explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full insurable replacement value of the Improvements, but any such policy may have a deductible amount of not more than $10,000. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co- insurance provisions or otherwise, without the prior consent thereto in writing by the 18 Authority. The term "full insurable replacement value" shall mean the actual replacement cost of the Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be determined from time to time at the request of the Authority, but not more frequently than once every three years, by an insurance consultant or insurer, selected and paid for by the Owner and approved by the Authority. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), and automobile insurance, including owned, non-owned and hired automobiles, against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $2,000,000.00. (iii) Such other insurance, including worker's compensation insurance respecting all employees of the Owner, if any, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Owner may be self-insured with respect to all or any part of its liability for worker's compensation. (c) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Owner which are authorized under the laws of the State to assume the risks covered thereby. (d) The Owner agrees to notify the Authority immediately in the case of damage as to which the cost to repair exceeds $100,000, or destruction of, the Improvements or any portion thereof, as to which the cost to repair exceeds $100,000, resulting from fire or other casualty. In the event of any such damage, the Owner will forthwith repair, reconstruct and restore the Improvements to substantially the same or an improved condition or value as existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, but subject to the rights of Owner’s lenders, the Owner will apply the proceeds of any insurance relating to such damage received by the Owner to the payment or reimbursement of the costs thereof. The Owner shall complete the repair, reconstruction and restoration of the Improvements, whether or not the Net Proceeds of insurance received by the Owner for such purposes are sufficient to pay for the same. Any proceeds remaining after completion of such repairs, construction and restoration shall be retained by the Owner. If the Owner fails to fulfill its obligations to repair, reconstruct and restore the Improvements within a reasonable time after the occurrence of the damage, the Authority shall be entitled terminate the TIF Note and shall be entitled to Net Proceeds of insurance to the extent of the unpaid balance of the Interfund Loan under Section 3.11. Section 5.2. Condemnation. In the event that title to and possession of the Improvements or any material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body (other than the City or the Authority) or other person prior to the Termination Date, the Owner shall, with reasonable promptness after such taking, 19 notify the Authority as to the nature and extent of such taking. Upon receipt of any condemnation award, but subject to the rights of Owner’s lenders, the Owner shall elect to either: (a) use the entire condemnation award to reconstruct the Improvements (or, in the event only a part of Improvements have been taken, then to reconstruct such part) within the Project Area; or (b) retain the condemnation award, less the unpaid balance of the Interfund Loan under Section 3.11 which shall be paid to the Authority, whereupon in the event that a substantial portion of the Property and Improvements have been taken, the Authority's obligations under the TIF Note shall terminate as of the date of the taking. 20 ARTICLE VI Taxes; Tax Increment; Assessment Agreement Section 6.1. Real Property Taxes. The Owner shall pay or cause to be paid when due and prior to the imposition of penalty all real property taxes and installments of special assessments payable with respect to the Property after the Owner acquires the Property. In addition, the Owner agrees that prior to the Termination Date: (1) it will not seek administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to the Improvements or the Property or raise the inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; (2) it will not seek administrative or judicial review of the constitutionality of any tax statute determined by any tax official to be applicable to the Improvements or the Property or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; and (3) it will not cause a reduction in the Minimum Market Value of the Improvements through: (a) willful destruction of the Improvements or any part thereof; (b) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1(d) of this Agreement; (c) a request to the County assessor to reduce the assessed value of the Property below the Minimum Market Value of all or any portion of the Property or Improvements; (d) a petition to the board of equalization of the County to reduce the assessed value of the Property below the Minimum Market Value; (e) a petition to the board of equalization of the State or the commissioner of revenue of the State to reduce the assessed value of the Property below the Minimum Market Value; (f) an action in a district court of the State or the tax court of the State seeking a reduction in the assessed value of the Property below the Minimum Market Value; (g) an application to the commissioner of revenue of the State or to any local taxing jurisdiction requesting an abatement of real property taxes regarding the Property or Improvements; (h) any other proceedings, whether administrative, legal or equitable, with any administrative body within the County or the State or with any court of the State or the federal government regarding a reduction in the assessed value of the Property below the Minimum Market Value; or (i) a transfer of the Property or Improvements, or any part thereof, to an entity exempt from the payment of real property taxes under State law. 21 Notwithstanding anything contained in this Section 6.1 or elsewhere in this Agreement to the contrary, the Owner may contest real property taxes assessed in excess of the Minimum Market Value of the Improvements. The Owner shall notify the City and Authority of any administrative or judicial review affecting the Improvements or the Property. In such event, the Authority will continue to make payments under the TIF Note to the Owner based upon the value stated in the Assessment Agreement, with any additional Tax Increment available for payment being withheld from Owner until such time that the administrative or judicial review affecting the Improvements or the Property is finally determined. The Owner shall not, prior to the Termination Date, apply to any taxing jurisdiction for a deferral or abatement of property tax on the Property or Improvements. Section 6.2. Tax Increment. Subject to the limitations contained in the TIF Note, the Authority hereby pledges to the payment of the TIF Note the Available Tax Increment. Tax Increment received by the Authority in excess of Available Tax Increment shall be the Authority’s property and, the Authority shall be free to use such excess Tax Increment for any purpose for which such Tax Increment may be used under the Tax Increment Act. Section 6.3. Owner’s Representations Concerning TIF Note. The Owner makes the following representations to the Authority with respect to the issuance of the TIF Note: (a) The Owner has not relied on any representations of the Authority, or any of its officers, agents, or employees, and has not relied on any opinion of any attorney of the Authority, as to the federal or State income tax consequences relating to the ownership of the TIF Note by the Owner. (b) The Owner is sufficiently knowledgeable and experienced in financial and business matters, including the purchase and ownership of obligations of a nature similar to the TIF Note, to be able to evaluate the risks and merits of the purchase and ownership of the TIF Note. The Owner has been made aware of the security for the TIF Note and the proposed uses of the proceeds of the TIF Note, and has received the cooperation of the Authority in undertaking any due diligence that the Owner has deemed necessary or appropriate. (c) The Owner understands that the portion of the Tax Increment pledged to the payment of the TIF Note pursuant to this Agreement is the sole source of money that is pledged and will be available for the payments due under the TIF Note; that the Authority is not under any obligation to repurchase the TIF Note from the Owner under any circumstances; that the TIF Note is not a general obligation of the Authority; and that, if the Tax Increment pledged to the payment of the TIF Note pursuant to this Agreement is not sufficient to make the payments due under the TIF Note in full, no right will exist to have taxes levied by the Authority or the City for the payment of the unpaid amounts due under the TIF Note. (d) The Owner understands that the Tax Increment necessary to pay the TIF Note has been estimated assuming that the Improvements will have certain market values on certain dates. All estimates of Tax Increment that have been prepared by or on behalf of the Authority have been done for the Authority’s use only and neither the Authority nor its consultants shall have liability to the Owner if the actual Tax Increment is less than the amounts estimated. In the 22 event, among other things, the Owner fails to complete the Improvements in a timely manner or the market value of the Improvements does not reach certain levels, the Tax Increment pledged to the payment of the TIF Note may be inadequate to pay the total principal of and interest on the TIF Note. (e) The Owner understands that the TIF Note is not registered or otherwise qualified for sale or transfer under the securities laws and regulations of the State or under federal securities laws or regulations, the TIF Note is not listed on any stock or other securities exchange, and the TIF Note will carry no rating from any rating service. Except as provided in this Agreement, including, without limitation Section 8.1 below, the TIF Note may not be transferred to any third party without the prior written approval of the Authority. Section 6.4. Assessment Agreement. (a) At the time of the Closing on the conveyance of the Property to the Owner, the Owner shall, with the Authority, execute an Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd. 8, specifying an assessor’s Minimum Market Value for the Improvements. The amount of the minimum Market Value of the Improvements shall be $27,300,000 as of January 2, 2019, and each January 2 thereafter, notwithstanding the status of construction by such dates. (b) The Assessment Agreement shall be in the form attached as Schedule D with all blanks properly completed. Nothing in the Assessment Agreements shall limit the discretion of the assessor to assign a market value to the property in excess of such Minimum Market Value. The Assessment Agreement shall remain in force for the period specified in the Assessment Agreement. 23 ARTICLE VII Mortgage Financing Section 7.1. Mortgage Financing. On or before January 31, 2017, the Owner shall provide to the Authority evidence of a term sheet or other evidence reasonably satisfactory to the Authority for mortgage financing sufficient for construction of the Improvements. If the Authority finds that the mortgage financing is adequate in amount to provide for the construction of the Improvements, and subject only to such conditions as the Authority approves, such approval not to be unreasonably withheld, delayed or conditioned, then the Authority shall notify the Owner in writing of its approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given within fourteen (14) days from the date when the Authority is provided the evidence of mortgage financing. The issuance of a building permit for the Improvements by the City shall be deemed to evidence the Authority's approval under this Section. If the Authority rejects the evidence of mortgage financing as inadequate, it shall do so in writing specifying in reasonable detail the basis for the rejection. In any event, the Owner shall submit adequate evidence of mortgage financing within thirty (30) days after such rejection. 24 ARTICLE VIII Prohibitions Against Assignment and Transfer, Indemnification Section 8.1. Prohibition Against Transfer of Property and Assignment of Agreement. The Owner represents and agrees that the Owner has not made or created and, prior to the completion of the Improvements, will not make or create, or suffer to be made or created, any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Property or any part thereof or any interest herein or therein, or any contract or agreement to do any of the same, other than to residential tenants in the ordinary course of business, without the prior written approval of the Authority, which approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Owner may transfer the Property, the Improvements, the TIF Note and/or assign its interest in this Agreement to an entity affiliated with the Owner or one of the Owner’s owners, and, after completion of the Improvements, to any entity that purchases the Property and the Improvements, provided that, in each instance, such new entity executes an instrument in a form acceptable to the Authority by which it assumes and agrees to perform the Owner’s obligations under this Agreement. Any such assignment or transfer shall relieve the Owner of any liability under this Agreement. In addition, the TIF Note may be assigned to a lender as collateral for any loan made to the Owner. Section 8.2. Release and Indemnification Covenants. (a) The Owner releases from and covenants and agrees that the Authority, the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority, the City, and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Improvements. (b) Except for any willful misrepresentation, any willful or wanton misconduct or gross negligence of the following named parties, the Owner agrees to protect and defend the Authority, the City, and the 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, and operation of the Improvements. (c) The Authority, the City, and the governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the company or its officers, agents, servants or employees or any other person who may be about the Property or Improvements due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and 25 obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. (e) Nothing in this Section or Section 8.3 will be construed to limit or affect any limitations on liability of the City or Authority under State or federal law, including without limitation, Minnesota Statutes Sections 466.04 and 604.02. (f) The liability of the Owner under this Agreement shall be limited to the Owner and its assets. No member, officer or employee of the Owner shall be personally liable to the Authority or to the City, or any successor in interest, in the event of any default or breach by the Owner or for any amount which may become due to the Authority or the City or any successor in interest or on any obligations under the terms of this Agreement. Section 8.3. Environmental Conditions. (a) The Owner acknowledges that the Authority makes no representations or warranties as to the condition of the soils of the Property or the fitness of the Property for construction of the Minimum Improvements or any other purpose for which the Owner may make use of such property, and that the assistance provided to the Owner under this Agreement neither implies any responsibility by the Authority for any contamination of the Property nor imposes any obligation on the Authority to participate in any cleanup of the Property. (b) Without limiting its obligations under Section 8.2 of this Agreement, the Owner further agrees that, except for any misrepresentation or any misconduct or affirmative act by the Authority or the City and except for any breach by the Authority of its obligations under this Agreement, the Owner will indemnify, defend, and hold harmless the Authority, the City, and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of such parties. Nothing in this section will be construed to limit or affect any limitations on liability of the City or Authority under State or federal law, including without limitation, Minnesota Statutes Sections 466.04 and 604.02. 26 ARTICLE IX Events of Default Section 9.1. Events of Default Defined. The term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides): (a) any failure by Owner to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder; or (b) if, before issuance of the certificate of completion for the Improvements, the Owner shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law, which action is not dismissed within sixty (60) days after filing; or (ii) make an assignment for benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated a bankrupt or insolvent. Section 9.2. Authority's Remedies on Default. Whenever any Event of Default by Owner referred to in Section 9.1 of this Agreement occurs, the Authority may immediately suspend its performance under this Agreement and/or the TIF Note until it receives assurances from the Owner, deemed adequate by the Authority, that the Owner will cure its default and continue its performance under this Agreement and may take any one or more of the following actions after providing sixty (60) days written notice to the Owner of the Event of Default, but only if the Event of Default has not been cured within said sixty (60) days, or such longer period of time as the Authority may reasonably determine if the Event of Default is of a nature that it cannot be cured in thirty (30) days: (a) Terminate this Agreement and/or the TIF Note. (b) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to the Authority to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Owner under this Agreement. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or Owner is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No 27 delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Owner to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 9.5. Costs of Enforcement. Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Owner under this Agreement, the Owner agrees that it shall be liable for the reasonable fees of such attorneys and such other expenses so reasonably incurred by the Authority. 28 ARTICLE X Additional Provisions Section 10.1. Representatives Not Individually Liable. No member, official, or employee of the Authority shall be personally liable to the Owner, or any successor in interest, in the event of any default or breach or for any amount which may become due to Owner or successor or on any obligations under the terms of the Agreement. Section 10.2. Restrictions on Use. The Owner agrees for itself, and its successors and assigns that the Owner, and such successors and assigns, shall until the Termination Date devote the Property to, and only to and in accordance with, the uses specified in this Agreement. Section 10.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.4. Notices and Demands. All notices or communications, required or desired to be given hereunder shall be in writing, sent to the addresses specified below and shall be deemed effective and received (a) upon personal delivery; (b) five (5) days after deposit in the United States mail, certified mail, return receipt requested, postage prepaid; (c) one (1) business day after deposit with a national overnight air courier, fees prepaid, to the Authority or the Owner, as the case may be, or (d) via email at rclux@alatusllc.com, as to the Owner, and _____________ as to the Authority; provided however that if the sending party does not receive a return email acknowledging receipt of the email notice within 24 hours after the same has been sent, the sending party will also provide notice pursuant to either (a) or (c) above. Either party may designate an additional or another address upon giving written notice to the other party at the address for notices below, or as previously changed. Attorneys for either party may give or receive notices for such party. For the purposes of this Agreement, "business day" shall mean a day which is not a Saturday, a Sunday or a legal holiday of the State of Minnesota. (a) if to the Owner, at U.S. Bancorp Center, 800 Nicollet Mall, Suite 2850, Minneapolis, Minnesota 55402, (b) if to the Authority, at City Hall, 4401 Xylon Avenue North, New Hope, Minnesota 55428. Or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 10.5. Disclaimer of Relationships. Nothing contained in this Agreement nor any act by the Authority or the Owner shall be deemed or construed by any person to create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint venture among the Authority, the Owner, and/or any third party. 29 Section 10.6. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Owner and the Authority. Section 10.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.8. Judicial Interpretation. Should any provision of this Agreement require judicial interpretation, the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agent or attorney prepared the same, it being agreed that the agents and attorneys of both parties have participated in the preparation hereof. Section 10.9. Business Subsidy Act. Because the Authority’s assistance to the Owner’s development is being made available for the purpose of developing housing, the assistance does not constitute a business subsidy within the meaning of Minnesota Statutes, sections 116J.993 to 116J.995. Section 10.10 Miscellaneous. (a) Gender; etc. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. (b) Binding Effect. The terms, provisions and covenants and conditions contained in this Agreement shall apply to, inure to the benefit of, and be binding upon, the parties hereto and upon their respective heirs, legal representatives, successors and permitted assigns, except as otherwise herein expressly provided. (c) Captions. The captions inserted in this Agreement are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Agreement, or any provision hereof, or in any way affect the interpretation of this Agreement. (d) Estoppel. Each party agrees that, at any time and from time to time, within ten (10) days after the request of the other party, to sign and deliver to the other party, or such other party's designee, an estoppel certificate in a form reasonably satisfactory to the sending party and the receiving party. (e) Time. Any period of time described in this Agreement by reference to a number of days includes Saturdays, Sundays, and any holiday of the State of Minnesota. Any period of time described in this Agreement by reference to a number of business days does not include Saturdays, Sundays, or any holiday of the State of Minnesota. If the date or last date to perform any act or to give any notice is a Saturday, Sunday, or holiday of the State of Minnesota, that act or notice may be timely performed or given on the next succeeding business day. (f) Severability. If any clause or provision of this Agreement is illegal, invalid or unenforceable under present or future laws effective during the Agreement Term, then and in 30 that event, it is the intention of the parties hereto that the remainder of this Agreement shall not be affected thereby, and it is also the intention of the parties to this Agreement that in lieu of each clause or provision of this Agreement that is illegal, invalid or unenforceable, there be added as a part of this Agreement a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable. (g) Waiver of Jury Trial; Jurisdiction. EACH OF THE AUTHORITY AND THE OWNER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT. This Agreement shall be enforced in any United States District Court for the District of Minnesota or state court of the State of Minnesota sitting in Hennepin County, and the parties consent to the jurisdiction and venue of any such court and waives any argument that venue in such forums is not proper or convenient. (h) Complete Agreement. This Agreement and the exhibits and schedules attached hereto contains all of the agreements and understandings relating to the subject matter herein and therein. This Agreement and the exhibits and schedules attached hereto supersede any and all prior agreements and understandings between the Authority and the Owner and alone expresses the agreement of the parties. (i) Governing Law. This Agreement, the rights of the parties hereunder and the interpretation hereof shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota, without giving effect to conflict of laws principles thereof. (j) Time of Essence. Time shall be of the essence as to this Agreement and each and every provision hereof. Section 10.11 Termination. This Agreement shall be null and void on the Termination Date, provided, that Sections 8.2 and 8.3 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 10.12. Estoppel Certificates. The Authority agrees it will, from time to time upon reasonable prior written request by the Owner, execute and deliver to the Owner and such other parties as the Owner may reasonably designate, within ten (10) business days following the request therefor, written certification, if true, that (a) this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same are in full force and effect as modified), (b) that to the knowledge of the Authority there are not defaults under this Agreement (or specifying any claimed defaults), (c) certifying as to the status of completion of the Improvements, and (d) the outstanding principal amount of the TIF Note. 31 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and the Owner has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY By: _______________________ Name: _________________ Title: _________________ By: _______________________ Name: _________________ Title: _________________ STATE OF MINNESOTA ) ) SS. COUNTY OF ___________) The foregoing instrument was acknowledged before me this _______day of ________, 2016, by ___________________ and ____________________, the President and Executive Director of the New Hope Economic Development Authority, a public body politic and corporate, on behalf of the Authority. _____________________________________ N o t a r y P u b l i c 32 ALATUS NEW HOPE, LLC By: Alatus Yukon LLC Its Managing Member By: ________________________ Robert C. Lux I t s P r e s i d e n t STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _________ day of_____________, 2016, by Robert C. Lux, the President of Alatus Yukon, LLC, a Minnesota limited liability company, the managing member of Alatus New Hope LLC, a Minnesota limited liability company, on behalf of the limited liability companies. _____________________________________ N o t a r y P u b l i c SCHEDULE A Description of Property The Property consists of the parcels of property located in Hennepin County, Minnesota with the following tax property identification numbers: 0611821420008 0611821420009 0611821420010 0611821420011 0611821420012 SCHEDULE B UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY TAXABLE LIMITED REVENUE TAX INCREMENT NOTE (ALATUS NEW HOPE, LLC PROJECT) The New Hope Economic Development Authority (the "Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Alatus Yukon, LLC, a Minnesota limited liability company, or its permitted assigns (the "Owner"), solely from the source, to the extent and in the manner hereinafter provided, the principal amount of this Note, being ____________________________ Dollars ($______________) (the "Principal Amount"), commencing on August 1, 2019, and continuing on each February 1 and August 1 thereafter up to and including February 1, 20__ (the "Scheduled Payment Dates"). Interest at the rate of _____________________ percent (______%) per annum shall accrue from the date of this Note on the Principal Amount and shall be added to the Principal Amount on each February 1 and August 1 up to and including February 1, 2019. From and after February 1, 2019, simple non- compounding interest at the rate of _________________ percent (___%) shall accrue on the outstanding Principal Amount until this Note has been paid in full or terminated in accordance with its terms. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) thirty (30) day months. This Note is the Note defined in that certain Purchase and Development Agreement dated as of ___________, 2016, between the Authority and the Owner (the “Contract”). Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Owner and mailed to the Owner at its postal address within the United States which shall be designated from time to time by the Owner. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Section 469.178, subdivision 4, to aid in financing a "project", as therein defined, of the Authority consisting generally of defraying certain public redevelopment costs incurred and to be incurred by the Owner within and for the benefit of the Authority’s Redevelopment Project No. 1 (the "Project"). THIS NOTE IS A SPECIAL AND LIMITED AND NOT A GENERAL OBLIGATION OF THE AUTHORITY PAYABLE SOLELY OUT OF AVAILABLE TAX INCREMENT, AS DEFINED BELOW, AND NEITHER THE STATE, THE CITY OF NEW HOPE, NOR ANY POLITICAL SUBDIVISION OF THE STATE, SHALL BE LIABLE ON THIS NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT. The scheduled payment of this Note due on any Scheduled Payment Date is payable solely from and only to the extent that the Authority shall have received in the six (6) month period preceding such Scheduled Payment Date "Available Tax Increment". For purposes of this Note, Available Tax Increment with respect to any Scheduled Payment Date shall mean ninety five percent (95%) of the Tax Increment, as defined in the Contract, that has been received by the Authority in the six (6) month period preceding a Scheduled Payment Date. Available Tax Increment constitutes a portion of the real property taxes paid with respect to that certain real property described on the attached Exhibit A (hereinafter referred to as the “Property”). The Authority shall pay on each Scheduled Payment Date to the Owner the lesser of: (i) the Available Tax Increment; or (ii) the amount remaining to be paid under this Note. On the earlier of: (i) the date that this Note has been paid in full; or (ii) February 1, 20__, which is the last Scheduled Payment Date, after making the payment due on such date, the Authority’s payment obligations under this Note shall terminate and this Note shall no longer be an obligation of the Authority. All payments made by the Authority shall be applied first to accrued interest and then to the Principal Amount of this Note. The Authority may, at its option, prepay this Note in whole or in part at any time at a price of the outstanding Principal Amount plus accrued and unpaid interest. The Authority’s obligations herein are subject to the terms and conditions of the Contract. Upon the occurrence of an Event of Default as provided in Section 9.1 of the Contract, which Contract is incorporated herein and made a part hereof by reference, the Authority’s payment obligations hereunder shall be suspended and, upon expiration of all applicable cure periods provided for in Section 9.2 of the Contract, this Note may be terminated by the Authority. Upon such termination, the Authority’s obligations to make further payments hereunder shall be discharged. Such termination may be accomplished by the Authority’s giving of written notice to the then registered owner of this Note, as shown on the books of the Authority. This Note shall not be payable from or constitute a charge upon any funds of the Authority, and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except Available Tax Increment, and then only to the extent and in the manner herein specified. The Owner shall never have or be deemed to have the right to compel any exercise of any taxing power of the Authority or of any other public body, and neither the Authority nor any director, commissioner, council member, board member, officer, employee or agent of the Authority, nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. This Note shall not be transferable or assignable, in whole or in part, by the Owner without the prior written consent of the Authority, which consent shall not be unreasonably withheld, except that the Owner shall have the right to (a) assign this Note to an affiliate or to buyer in accordance with Section 8.1 thereof; and (b) assign this Note to a lender as collateral for any loan made to the Owner. This Note is issued pursuant to Resolution _____ of the Authority and is entitled to the benefits thereof, which resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, the New Hope Economic Development Authority, by its Board of Commissioners, has caused this Note to be executed by the manual signatures of the _____________ and the _____________ of the Authority and has caused this Note to be dated _____________, 20___. ________________________________ _______________________________ EXHIBIT A TO NOTE Description of Property The Property consists of the parcels of property located in Hennepin County, Minnesota with the following tax property identification numbers: 0611821420008 0611821420009 0611821420010 0611821420011 0611821420012 SCHEDULE C SCHEDULE C QUIT CLAIM DEED THIS INDENTURE, between the New Hope Economic Development Authority, Minnesota, a public body politic and corporate under the laws of the state of Minnesota (the "Grantor"), and Alatus New Hope, LLC, a Minnesota limited liability company (the "Grantee"). WITNESSETH, that Grantor, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration the receipt whereof is hereby acknowledged, does hereby grant, bargain, quitclaim and convey to the Grantee, its successors and assigns forever, all the tract or parcel of land lying and being in the County of Hennepin and State of Minnesota described as follows, to-wit (such tract or parcel of land is hereinafter referred to as the "Property"): See Exhibit A Attached Hereto To have and to hold the same, together with all the hereditaments and appurtenances thereunto belonging in any wise appertaining, to the said Grantee, its successors and assigns, forever, The Grantor certifies that the Grantor does not know of any wells on the subject property. IN WITNESS WHEREOF, the Grantor has caused this Deed to be duly executed in its behalf by its President and Executive Director this ______ day of ______________, 2016. NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY By: _________________________________ Its: President By: _________________________________ Its: Executive Director STATE OF MINNESOTA) )ss. COUNTY OF HENNEPIN) The foregoing instrument was acknowledge before me this ____ day of _________, 2016, by __________________________ and ___________________, the President and Executive Director of the New Hope Economic Development Authority, a public body politic and corporate organized and existing under the laws of the state of Minnesota, on behalf of the Authority. ____________________________________ Notary Public This instrument was drafted by: BRADLEY & DEIKE, P.A. 4018 West 65th Street, Suite 100 Edina, Minnesota 55435. Exhibit A to Quit Claim Deed Description of Property SCHEDULE D Assessment Agreement ______________________________________________________________________________ ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY, ALATUS NEW HOPE, LLC, and COUNTY ASSESSOR OF THE COUNTY OF HENNEPIN ______________________________________________________________________________ This document was drafted by: BRADLEY & DEIKE, P.A. 4018 West 65th Street, Suite 100 Edina, Minnesota 55435 THIS AGREEMENT, dated as of this ____ day of _______, 2016, by and between the New Hope Economic Development Authority, a body politic and corporate (the "Authority") and Alatus New Hope, LLC, a Minnesota limited liability company (the "Owner"). WITNESSETH: that: WHEREAS, on or before the date hereof the Authority and the Owner entered into that certain Purchase and Development Agreement (the "Development Agreement") regarding certain real property located in the City of New Hope, hereinafter referred to as the Property and legally described in Exhibit A hereto; and WHEREAS, it is contemplated that pursuant to said Development Agreement the Owner will construct a market rate apartment building on the Property; and WHEREAS, the Authority and Owner desire to establish a minimum market value for said land and the improvements to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the Authority and the County Assessor for the County of Hennepin have reviewed the preliminary plans and specifications for the improvements which it is contemplated will be erected. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. Commencing on January 2, 2019, and continuing on each assessment date thereafter until the termination date stated in paragraph 2 below, the minimum market value which shall be assessed for the land described in Exhibit A and the above described improvements shall be not less than Twenty Seven Million Three Hundred Dollars ($27,300,000), notwithstanding incomplete construction of the above described improvements. 2. This Agreement shall terminate in its entirety on the Termination Date, as defined in the Development Agreement. 3. This Agreement shall be promptly recorded at the expense of the Owner. 4. Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms of the Development Agreement between the Authority and the Owner. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY By: ________________________________ Its President By: ________________________________ Its Executive Director STATE OF MINNESOTA ) ) S S . COUNTY OF ___________) The foregoing instrument was acknowledged before me this _______day of ________, 2016, by ___________________ and ____________________, the President and Executive Director of the New Hope Economic Development Authority, a public body politic and corporate, on behalf of the authority. _____________________________________ Notary Public A L A T U S N E W H O P E L L C By: Alatus Yukon LLC Its Managing Member By: _________________________ Robert C. Lux I t s P r e s i d e n t STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _________ day of_____________, 2016, by Robert C. Lux, the President of Alatus Yukon LLC, a Minnesota limited liability company, the managing member of Alatus New Hope LLC, a Minnesota limited liability company, on behalf of the companies. CERTIFICATION BY COUNTY 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 certifies as follows: The undersigned assessor, being legally responsible for the assessment of the above described property, certifies that the market values assigned to such land and improvements are reasonable. ____________________________________ County Assessor for the County of Hennepin STATE OF MINNESOTA) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ______ day of ___________, 2016, by the County Assessor for the County of Hennepin. ____________________________________ Notary Public EXHIBIT A Legal Description of Land SCHEDULE E Access Easement SCHEDULE F Access Agreement SCHEDULE G Owner Pro Forma