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HomeMy WebLinkAbout06-27-22 EDAE conomic Development Authority City Hall Council Chambers J une 27, 2022 AGE NDA 1.Call to Order The City Council requests that attendees turn off cell phones and pagers during the meeting. A copy of the full C ity Counc il packet, including E D A (E conomic Development Authority ), is available to the public. The packet ring binder is located at the entrance of the council chambers. 2.Roll Call 3.Approval of Consent Agenda The following items are considered to be routine by the Economic Development Authority (E D A) and will been acted by one motion. There will be no separate disc ussion of these items unless a Commissioner so requests, in whic h event the item will be removed from the c onsent agenda and considered at the end of Commission Consideration I tems. a.Approval of Minutes - Approve the meeting minutes from: 6/13 - EDA Session b.Resolution A pproving an Option A greement with J O Properties for Certain E D A -owned Parcels and Term S heet and Resolution S upporting the Use of Tax I ncrement F inancing for a Rental Housing Development Project - Motion to approve a resolution approving an Option Agreement with J O Properties for certain EDA-owned parcels and a term sheet. - Motion to approve a resolution supporting the use of tax increment financing for a rental housing development project. 4.Commission Consideration Items 5.Adjournment Economic Development Authority DAT E:6/27/2022 TO :C ity C ouncil F R O M:D r. Reggie Edwards, City Manager T H R O U G H :N/A BY:Barb S uciu, C ity C lerk/I nterim A s s is tant C ity M anager S U B J E C T:A pproval of Minutes Requested Council A con: - A pprove the mee ng minutes from: 6/13 - E DA S ession B ackground: I n accordance with M innesota S tate S tatute 15.17, the official records of all mee5ngs must be documented and approved by the governing body. B udget I ssues: - None I nclusive C ommunity Engagement: N/A A nracist/Equity Policy Effect: N/A S trategic Priories and Values: O pera5onal Excellence AT TA C H M E N TS : D escrip5on U pload D ate Type 6.13 E DA 6/22/2022 Backup M aterial 6/13/22 -1- MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JUNE 13, 2022 CITY HALL – COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Mike Elliott at 9:06 p.m. 2. ROLL CALL President Mike Elliott and Commissioners Marquita Butler, April Graves, and Kris Lawrence- Anderson. Commissioner Ryan was absent and excused. Also present were Executive Director Reggie Edwards, and City Clerk Barb Suciu. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Graves moved and Commissioner Lawrence-Anderson seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. May 9, 2022 – Regular Session 3b. RESOLUTION NO. 2022-13; AUTHORIZING CHANGING THE NAME OF HE EARLE BROWN HERITAGE CENTER TO THE HERITAGE CENTER OF BROOKLYN CENTER Motion passed unanimously. 4. ADJOURNMENT Commissioner Graves moved and Commissioner Butler seconded adjournment of the Economic Development Authority meeting at 9:08 p.m. Motion passed unanimously. Economic Development Authority DAT E:6/27/2022 TO :C ity C ouncil F R O M:D r. Reggie Edwards, City Manager T H R O U G H :N/A BY:M eg McM ahan, C ommunity D evelopment D irector S U B J E C T:Res olu.on A pproving an O p.on A greement w ith J O P roper.es for Certain E DA -ow ned Parcels and Term S heet and Res olu.on S uppor.ng the U s e of Tax I ncrement F inancing for a Rental H ousing D evelopment P roject Requested Council A con: - Moon to approve a resoluon approving an Opon A greement w ith J O P roperes for certain E DA- ow ned parcels and a term sheet. - Moon to approve a resoluon supporng the use of tax increment financing for a rental housing development project. B ackground: The E DA entered into a preliminary development agreement (P DA ) with J O P roper.es in March 2019. The agreement provided J O P roper.es preliminary development rights to four E DA -owned parcels at 61s t Avenue N and Brooklyn Boulevard for a dura.on of tw o years , while the developer conducted their due diligence and gathered financing for the project. I n M ay 2019, the City applied for a pre-development grant from the M etropolitan C ouncil on behalf of the project. A grant in the amount of $50,000 was awarded to provide site planning and financial analys is assistance to the project. The developer pres ented an update of their project to the E DA in M arch 2020. The update included a revised concept plan, which the E DA indicated their general support of. O n June 28, 2021, the Brooklyn C enter E DA approved an O p.on A greement, a le?er of s upport and a term s heet w ith J O P roper.es related to the dis pos i.on of the land and us e of tax increment financing for the project. These approvals w ere necessary in order to support the developers applica.on to the Minnes ota H ousing F inance A gency (M H FA ) for L ow I ncome H ous ing Tax Credits (L I H TC ), which would provide the majority financing for the project. I n order to have a compe..ve project, the developer mus t s how a financial commitment from the C ity to support the project and site control. The project w as not funded in last year's L I H TC financing round, and so the developer is preparing to apply again on J uly 14 of this year. becaus e some of the financials of the project have changed, the developer is asking for the C ity to renew their approvals of an O p.on A greement, le?er of s upport and term sheet. The developer has made a reques t to the E DA to provide tax increment financing, w hich w ould fill a financial gap in the project. Ehlers, the C ity's public financing consultant, has review ed the request and prepared a res olu.on bas ed on their ini.al as s essment of the projects need. I n addi.on to the le?er of support for the us e of T I F, the developer is reques .ng the execu.on of an O p.on A greement for the E DA -ow ned parcels and a term sheet, w hich outlines the terms and condi.ons under w hich a development agreement would be nego.ated. The O p.on A greement w ould convert to a purchas e agreement should the project meet all of the condi.ons of approval and the developer chos e to exercis e the op.on. The term s heet forms the bas is for a future development agreement A pproval of the O p.on A greement and term sheet does not cons .tute approval of the project. The developer would s.ll be required to submit a full and complete land us e applica.on for formal review and approval by the City prior to being able to exercise the O p.on A greement. A n op.on agreement and term s heet are required as part of the developers applica.on to M H FA for tax credits for the project. Opon A greement The O p.on A greement provides the developer with exclus ive rights and an op.on to purchase the property during the op.on period. The op.on period would go into effect at the signing of the agreement and remain in place un.l 60 days following the developer receiving M H FA financing or J anuary 1, 2024, w hichever occurs firs t. The developer would provide a $2,500 earnes t money payment at s igning of the op.on agreement, and an addi.onal $10,000 upon execu.on of the op.on to purchase. The op.on agreement provides the developer w ith .me to complete their due diligence on the property, including obtaining land us e approvals and rez oning of the property, as well as obtain financing and T I F. The op.on agreement provides right of entry for the developer to conduct due diligence on the property. The developer is reques.ng a land write down on the purchas e price, w hich w ill provide them addi.onal points on their L I H TC applica.on and make the project more compe..ve. The land has been valued at $975,000, and the developer is reques .ng a land w rite dow n in the amount of $750,000, for a total purchas e price of $225,000. This contribu.on to the project by the E DA will aw ard addi.onal points to the project on its M H FA tax credit applica.on. Term S heet A P reliminary Term S heet has been prepared w hich outline the terms under which the developer and the E DA may be w illing to enter into a development agreement. The term s heet ini.ates the nego.a.on of a development agreement. The Term S heet indicates the following terms: D eveloper Condi.ons : a. Execu.on of D evelopment A greement b. S ecure neces s ary financing for the construc.on of the Minimum I mprovements c. S ite Control d. S a.sfac.on of all Buyer ’s C on.ngencies under the O p.on A greement E DA Condi.ons : a. E DA approval of the sale of the P roperty aGer all proceedings required by law b. E DA approval of C ons truc.on P lans c. C ity C ouncil approval of P lanning A pplica.on d. Execu.on of a D evelopment A greement e. S a.s fac.on of all S eller ’s C on.ngencies under the O p.on A greement Minimum I mprovements : 54-unit mul.-family apartment with at leas t 40% of units held for occupancy by persons or families whose incomes do not exceed 60 percent area median income Construc.on S chedule: Construc.on shall be substan.ally complete by D ecember 31, 2025, and the requirement of a "C er.ficate of C omple.on" by the E DA P ublic A ssistance: Lays out the minimum terms of a T I F note Pay-as-you-go-note Not to exceed $482,000 Note w ill be payable from 90% of the tax increment generated by the project for a period up to 15 years A reduc.on in the cash payment of the purchas e of the property by$750,000 Minimum as s essment agreement for the project S upport of T I F Request The developer has made a reques t to the E DA to provide tax increment financing, w hich w ould fill a financial gap in the project. Ehlers, the C ity's public financing consultant, has review ed the request and prepared a res olu.on bas ed on their ini.al as s essment of the projects need. The resolu.on (a?ached), w ould provide a le?er of support for the project, indica.ng the City's w illingnes s to provide tax increment financing s hould the project be aw arded with tax credits from M H FA , and provided the project s a.s fies all condi.ons required by state law as it pertains to the use of public s ubs idy. The le?er of support is required as part of the developers applica.on to M H FA for L I H TC . Ehlers has performed a financial analys is of the project, and iden.fied an amount of tax increment financing, combined with a par.al land write-down, that would be needed to make the project financially feas ible. Bas ed on Ehlers' analys is of the project, project need, and available increment, they have indicated that the project would support tax increment financing in an amount not to exceed $482,000, payable over 15 years , with a land write-down of $750,000. Ehlers' full financial analys is is a?ached to this report. B udget I ssues: There are no budget is s ues to consider at this .me. Cas h proceeds for the sale of the E DA -ow ned property w ill be returned to the T I F 3 account from w hich they originated. Thes e funds will then be available to s upport other redevelopment projects. I nclusive C ommunity Engagement: A nracist/Equity Policy Effect: S trategic Priories and Values: Targeted Redevelopment AT TA C H M E N TS : D escrip.on U pload D ate Type Term S heet 6/21/2022 Backup M aterial T I F A nalys is Memo, F rom Ehlers - D ated J une 21, 2022 6/21/2022 Backup M aterial L e?er of S upport 6/21/2022 Backup M aterial Res olu.on 6/27/2022 Resolu.on Le?er Res olu.on 6/21/2022 Resolu.on Le?er O p.on A greement 6/27/2022 Backup M aterial Preliminary Term Sheet This Term Sheet, dated as of __________, 2022, is intended to set forth the general terms upon which the Developer (as defined below) and the Economic Development Authority of Brooklyn Center, Minnesota (the “EDA”) may be willing to enter into a Development Agreement (the “Development Agreement”). 1. Developer: JO Companies, LLC, a Minnesota limited liability company (or a limited partnership or other entity to be formed thereby or affiliated therewith) 2. Property: Four parcels comprising approximately 1.8 acres of land at the northwest intersection of Brooklyn Boulevard and 61st Avenue N in Brooklyn Center, Minnesota identified as property numbers (1) 34-119-21-43-0049, (2) 34-119-21-43-0050, (3) 34- 119-21-43-0051, and (4) 34-119-21-43-0052, subject to a final plat of the Property. 3. Developer Conditions, as determined to date: a. Execution of Development Agreement b. Secure necessary financing for the construction of the Minimum Improvements c. Site Control d. Satisfaction of all Buyer’s Contingencies under the Option Agreement 4. EDA Conditions, as determined to date: a. EDA approval of the sale of the Property after all proceedings required by law b. EDA approval of Construction Plans c. City Council approval of Planning Application d. Execution of a Development Agreement e. Satisfaction of all Seller’s Contingencies under the Option Agreement 5. Minimum Improvements: Improvements to the Property will include the construction and equipping of a multi-story, approximately 54-unit apartment with at least 40% of the units occupied or held for occupancy by persons and families whose incomes do not exceed 60% of area median income, and underground and surface parking stalls. 6. Construction Schedule: Commence construction on the Minimum Improvements within 30 days after the closing date on the Property under the Option Agreement and substantially complete construction by December 31, 2025. For the purpose hereof, “Commence” shall mean beginning of physical improvement to the Property, including grading, excavation, or other physical site preparation work; and “Complete” shall mean that the Minimum Improvements are sufficiently complete for the issuance of a Certificate of Occupancy. Upon Completion the EDA will issue, if requested by the Developer, a “Certificate of Completion” in recordable form. 7. Public Assistance: Subject to all terms and conditions of the Development Agreement and satisfaction of the requirements of applicable law including a final “but for” analysis, the EDA will reimburse the Developer for costs of construction of the Minimum Improvements as follows: a. in the form of a pay-as-you-go (PAYGO) note in the amount of up to $482,000, bearing simple, non-compounding interest at a rate per annum of up to the lesser of 6% or the rate of interest on the first lien mortgage financing for the Minimum Improvements. The PAYGO note will be payable from 90% of the tax increment generated from the Minimum Improvements for a period of up to 15 years; and b. in the form of a reduction of the cash payment of the purchase price of the Property by an amount equal to $750,000 in exchange for the delivery of a promissory Note by the Developer in favor of the EDA, payable, together with interest at the rate of 4% per annum, solely from the tax increments from the housing tax increment financing district generated by the Minimum Improvements after the final payment of the PAYGO note. The PAYGO note will be issued upon completion of the Minimum Improvements and proof of expenditures related to the construction of affordable housing. 8. Fees: Within two (2) weeks of approval of this Term Sheet by the EDA, Developer shall deposit to the EDA the sum of Ten Thousand Dollars ($10,000.00) to pay for the reasonable out-of-pocket legal, financial consultant and administrative fees associated with this transaction. Unexpended funds will be returned to the Developer and if, additional funds are needed to pay such expenses, the Developer will deposit such additional funds upon request by the EDA. 9. Minimum Assessment Agreement: the Developer will execute and record against the Property a Minimum Assessment Agreement pursuant to which the Property and Minimum Improvements will be assessed based on a minimum market value of a. $2,632,500 as of January 2, 2024; and b. $7,897,500 as of January 2, 2025; and c. $10,530,000 as of January 2, 2026: The Developer acknowledges that except for Section 8 above which shall be binding upon the Developer, this Term Sheet shall not be deemed conclusive or legally binding upon either the Developer or the EDA, and neither the Developer nor the EDA shall have any obligations regarding the Property, the Minimum Improvements or the Public Assistance described herein, unless and until a definitive Development Agreement is approved by the EDA board and executed by both the Developer and the EDA. JO COMPANIES, LLC, A MINNESOTA LIMITED LIABILITY COMPANY By: _________________________ Its: _________________________ SOURCES Amount Pct.Per Unit First Mortgage 2,689,000 13.3%49,796 TIF Mortgage 482,000 2.4%8,926 Low Income Housing Tax Credits 14,749,525 73.0%273,139 Energy Rebate 15,000 0.1%278 Developer Cash 50,100 0.2%928 Land Write-Down 750,000 3.7%13,889 Hennepin County HOME 550,000 2.7%10,185 Hennepin County ARPA 569,463 2.8%10,546 Deferred Developer Fee (14% of Total Fee)339,120 1.7%6,280 TOTAL SOURCES 20,194,208 100%373,967 USES Amount Pct.Per Unit Acquisition Costs 975,000 4.8%18,056 Construction Costs 14,388,990 71.3%266,463 Professional Services 833,643 4.1%15,438 Financing Costs 1,124,575 5.6%20,825 Developer Fee 2,470,000 12.2%45,741 Cash Accounts/Escrows/Reserves 402,000 2.0%7,444 TOTAL USES 20,194,208 100%373,967 1 2 3 4 5 6 7 8 30%24,660 28,170 31,680 35,190 38,010 40,830 43,650 46,740 50%41,100 46,950 52,800 58,650 63,350 68,050 72,750 77,450 60%49,320 56,340 63,360 70,380 76,020 81,660 87,300 92,940 Studio 1 2 3 4 5 6 30%616 660 792 915 1,020 1,126 1,231 50%1,027 1,100 1,320 1,525 1,701 1,877 2,052 60%1,233 1,320 1,584 1,830 2,041 2,253 2,463 June 27, 2022 Minnesota Housing 400 Wabasha Street North St. Paul, Minnesota 55102 Re: Wangstad Commons Apartment, Brooklyn Center, MN Minnesota Housing Tax Credit Program Minnesota Housing 400 Wabasha Street North St. Paul, Minnesota 55102 Re: Wangstad Commons Apartment, Brooklyn Center, MN Minnesota Housing Tax Credit Program Dear Sir/Madam: The City of Brooklyn Center is a first-ring suburb with nearly a third of the City’s housing stock being renter occupied. However, there has not been a new multi-family housing development for more than 40-years which may signal potential issues with deferred maintenance, conversions to higher market- rate products, deteriorating quality and lack of options to meet the changing demands of our residents. Quality affordable housing is an integral component of a vibrant community. It helps families meet their fundamental need of having shelter, prevents and decreases homelessness, and increases residential stability. It ultimately leads to improved educational outcomes for children and improved labor market results for adults. Now is the time to prioritize affordable housing and address this fundamental need within Brooklyn Center. The City’s Comprehensive Plan sets goals, strategies, and priorities in a comprehensive manner to communicate the values of the City, as a governing body. Brooklyn Center has adopted a strategic priority to ensure that all neighborhoods are safe, stable, and accessible to all residents. This priority may only be achieved through public-private partnerships with developers and other units of government. Wangstad Commons will truly be a cooperative development and ensure quality affordable housing is available to low- and moderate-income families within our community. JO Companies submitted an application requesting tax increment financing to support the construction of a 54-unit workforce housing apartment project. On June 27, 2022, the Brooklyn Center Economic Development Authority (the “EDA”) held an initial review of the public assistance request and moved to support the project. They approved an allocation of up to $482,000 in tax increment financing for an anticipated term of 15 years on a pay-as-you-go basis. The EDA’s endorsement is evidenced by this letter of support and the approval of Resolution [number], a copy of which is included with this letter. We respectively request funding approval for the Wangstad Commons Apartment to provide quality affordable housing to our residents. Sincerely, President Elliott Brooklyn Center Economic Development Authority 1 BR305-163-726971.v4 Commissioner _________________ introduced the following resolution and moved its adoption: EDA RESOLUTION NO. 2022-____ RESOLUTION APPROVING AN OPTION AGREEMENT WITH JO COMPANIES, LLC AND A PRELIMINARY TERM SHEET FOR A DEVELOPMENT AGREEMENT WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota (the “Authority”) owns the parcels located in the City of Brooklyn Center (the “City”) legally described on Exhibit A attached hereto (the “Option Property”); and WHEREAS, JO Companies, LLC, a Minnesota limited liability company (the “Developer”) has proposed to develop the Option Property into a multi-story, approximately 54-unit apartment building with at least 40 percent of the units occupied or held for occupancy by persons and families whose incomes do not exceed 60 percent of the area median income, and underground and surface parking stalls (the “Development”); and WHEREAS, the Authority and the Developer have previously negotiated an Option Agreement, dated ________, 2021 and a related term sheet (the “2021 Agreement”), setting out the respective rights of the Developer to purchase the Option Property from the Authority, contingent among other things on the Developer obtaining financing for the Development; and WHEREAS, the Authority and the Developer now propose terminating the 2021 Agreement and replacing it with a new Option Agreement, negotiated by the Authority and the Developer (the “Option Agreement”), setting out the respective rights of the Developer to purchase the Option Property from the Authority, contingent among other things on the Developer obtaining financing for the Development and a related term sheet for certain assistance to be provided for the Development subject to negotiation and approval of a definitive agreement (the “Preliminary Term Sheet”); and WHEREAS, the Authority and the City have undertaken a program to promote economic development and job opportunities, promote the development and redevelopment of land which is underutilized within the City, and promote the development of adequate and affordable housing, and in this connection created a development district in the City; and WHEREAS, the City and the Authority are considering establishing a tax increment financing district which is anticipated to include the Option Property (the “TIF District”) pursuant to Minnesota Statutes Sections 469.174 to 469.1794, as amended (the “TIF Act”); and WHEREAS, the City or the Authority may incur certain costs related to the TIF District which may be financed on a temporary basis from available Authority funds; and WHEREAS, under Section 469.178, subdivision 7 of the TIF Act, the City and the Authority are authorized to advance or loan money from any fund loan from which such advances may legally be made in order to finance expenditures that are eligible to be paid with tax increments under the TIF Act; and 2 BR305-163-726971.v4 WHEREAS, the City has determined that it or the Authority must pay for administrative costs associated with the establishment of the TIF District and certain other costs incurred in connection with the proposed development of the TIF District (the “Cost Advances”) on a temporary basis from the City’s General Fund, the Authority’s General Fund, or any other fund from which such advances, from time to time, may be legally made (the “Fund”) as an interfund loan pursuant to Minnesota Statutes Section 469.178, subdivision 7; and NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority of Brooklyn Center, Minnesota (the “Board”), as follows: 1. Subject to all of the contingencies set forth therein, including, without limitation, the establishment of the TIF District after all proceedings required by the TIF Act and a public hearing on the sale of the Option Property to the Developer in accordance with the requirements of law, the Authority hereby terminates the 2021 Agreement and approves the Preliminary Term Sheet and the Option Agreement, in substantially the forms presented to the Board, together with any related documents necessary in connection therewith, including without limitation, documents or certifications referenced in or attached thereto (the “Development Documents”), which will supersede the 2021 Agreement in its entirety, and hereby authorizes the President and Executive Director to execute, on behalf of the Authority, the Development Documents to which the Authority is a party and to carry out, on behalf of the Authority, the Authority’s obligations thereunder when all conditions precedent thereto have been satisfied. 2. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the Authority and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the Authority. The execution of any instrument by the appropriate officers of the Authority herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. This Resolution shall not constitute an offer and the Development Documents shall not be effective until the date of execution thereof as provided herein. In the event of absence or disability of the authorized officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of legal counsel to the Authority, may act on their behalf. 3. The Authority hereby authorizes the expenditure of available Authority general fund dollars for the administrative costs of the TIF District in such amount as is permitted under the TIF Act and determined necessary and set forth in writing by the Executive Director of the Authority for the establishment of the TIF District. 4. This Resolution supplements the June 14, 2021 interfund loan resolution and is evidence of an internal borrowing by the Authority in accordance with Section 469.178, subdivision 7 of the TIF Act in an amount equal to the Cost Advances, and 3 BR305-163-726971.v4 is a special, limited obligation payable solely from the respective TIF District pledged to the payment hereof under this Resolution (collectively, the “Interfund Loans”). The Authority will reimburse itself solely from the tax increment from the applicable TIF District for the Cost Advances together with interest at the rate of four percent per annum (which is the greater of the rates specified under Section 270C.040 or 549.09, in accordance with Minnesota Statutes Section 469.178, subdivision 7); provided, however, the Executive Director of the Authority is authorized to specify a lower rate. Payments shall be applied first to accrued interest, and then to unpaid principal, unless otherwise specified by the Executive Director of the Authority. Interest accruing from the date of each Cost Advance will be compounded semiannually on February 1 and August 1 of each year and added to principal, unless otherwise specified by the Executive Director of the EDA. 5. Payments on the Interfund Loans may be subordinated to any outstanding or future bonds, notes, or contacts secured in whole or in part with available tax increment and are on a parity with any other outstanding or future interfund loans secured in whole or in part with available tax increment. The Interfund Loans shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City, or the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loans or other costs incident hereto except out of the applicable TIF District. The Authority shall have no obligation to pay any principal amount of the Interfund Loans or accrued interest thereon from any other source, and such amounts may remain unpaid after the final Payment Date. 6. The Authority may at any time, make a determination to forgive the outstanding principal amount and accrued interest on the Interfund Loans, in whole or in part, on any date from time to time, to the extent permissible under law. 7. The Authority may from time to time amend the terms of this Resolution to the extent permitted by law, including without limitation, amending the payment schedule and the interest rate; provided that the interest rate may not be increased above the maximum specified in Section 469.178, subdivision 7 of the TIF Act. _________________________ _________________________________ Date President The motion for the adoption of the foregoing resolution was duly seconded by Commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 4 BR305-163-726971.v4 EXHIBIT A Legal Description of the Option Property Parcel 1 6017 Brooklyn Boulevard Lot 1, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0049 Parcel 2 6101 Brooklyn Boulevard Lot 2, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0050 Parcel 3 3600 61st Avenue N. Lot 3, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0051 Parcel 4 3606 61st Avenue N. Lot 4, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0052 THE BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER RESOLUTION NO. SUPPORTING USE OF TAX INCREMENT FINANCING FOR A RENTAL HOUSING DEVELOPMENT PROJECT WHEREAS, the Brooklyn Center Economic Development Authority (the “EDA”) was created pursuant to the Economic Development Authorities Act, Minnesota Statutes, Sections 469.090 to 469.1080 (the “EDA Act”), and is authorized pursuant to Minnesota Statutes §469.174 to §469.1794 (the “TIF Act”) to use Tax Increment Financing to carry out the public purposes described herein; WHEREAS, the EDA has received a request to provide tax increment financing assistance to JO Companies, LLC, a Minnesota limited liability company (or an affiliated entity, the “Developer”) for construction of a 54-unit multifamily workforce rental housing apartment (the “Project”) to be located on approximately 1.8 acres of land at the northwest intersection of Brooklyn Boulevard and 61st Avenue N in Brooklyn Center, Minnesota; and WHEREAS, in connection with its application to Minnesota Housing for tax credits for the Project, the Developer has requested that the EDA indicate its support of the use of tax increment financing for the Project. NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Brooklyn Center Economic Development Authority (the “Board”) as follows: The EDA supports the use of tax increment financing for the Project in an amount not to exceed $482,000 payable over approximately 15 years; provided, however, that authorization of tax increment financing for the Project is solely within the discretion of the City Council after satisfaction of all conditions required pursuant to the EDA Act and the TIF Act, including without limitation, (i) a public hearing; (ii) determining that tax increment financing assistance is necessary for the Project; and (iii) verification of development financing need that substantiates that “but for” the use of tax increment financing the Project would be unable to proceed. The foregoing resolution was introduced by Commissioner ____ and duly seconded by Commissioner ___ . The following Commissioners voted in favor of the resolution: _______. The following Commissioners voted against the resolution: _______. The following Commissioners were absent: _______. Whereupon the resolution was adopted. ADOPTED: JUNE 27, 2022 President Executive Director 1 BR305-163-725043.v3 OPTION AGREEMENT THIS OPTION AGREEMENT (this “Agreement”) is made and entered into as of this ____ day of ____________, 2022 (the “Effective Date”), by and between the Economic Development Authority of Brooklyn Center, Minnesota, a public body corporate and politic under the laws of Minnesota (the “Seller”) and JO Companies, LLC, a Minnesota limited liability company (the “Buyer”)(together with the Seller and the Buyer referred to herein as the “Parties” or individually as a “Party”). RECITALS A. The Buyer intends to purchase the parcels legally described on Exhibit A attached hereto and hereby made a part hereof (the “Option Property”) from the Seller and to develop the Option Property into a multi-story, approximately 54-unit apartment building with at least 40 percent of the units occupied or held for occupancy by persons and families whose incomes do not exceed 60 percent of the area median income, and underground and surface parking stalls (the “Development”); and B. The Seller wishes to grant the Buyer an option to acquire the Option Property, under the terms and conditions hereunder; and C. The Seller believes that the development of the Option Property is vital and is in the best interests of the Seller and City of Brooklyn Center, Minnesota (the “City”), will result in preservation and enhancement of their tax base, provide additional affordable housing options in the City, and is in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Development will be undertaken. NOW, THEREFORE, in consideration of mutual covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller and the Buyer agree as follows: 2 BR305-163-725043.v3 Terms of the Agreement 1. Recitals. The recitals as set forth above are hereby incorporated into this Agreement. 2. The Option. The Seller hereby grants to the Buyer the exclusive right and option to purchase the Option Property, during the Option Period defined below, subject to the conditions set forth below (the “Option”). 3. Option Payment. Within five business days after the date hereof, the Buyer shall pay and deliver to Commercial Partners Title, located at 200 S. Sixth Street, Suite 1300, Minneapolis, MN 55402 (the “Title Company”), the sum of Two Thousand Five Hundred and No/100 dollars ($2,500), which shall constitute the option payment (the “Option Payment”) hereunder. The Option Payment shall be refundable if, at the end of the Option Period (as defined below), the contingencies set forth in either Section 13(c)(ii) or 13(c)(iii) are not satisfied. In the event that the Buyer purchases the Option Property pursuant to this Agreement, the Option Payment shall be credited against the Purchase Price payable for the Option Property as set forth in Section 6 herein. In the event the Buyer does not exercise the Option or Closing (as defined below) does not occur for any reason whatsoever other than the Seller’s default hereunder or failure of the contingencies set forth in Sections 13(c)(ii) or 13(c)(iii) to be satisfied, the Option Payment shall be retained by the Seller as consideration for granting the Option. 4. Option Period. a. The period during which the Option may be exercised by the Buyer (the “Option Period”) shall commence upon the Effective Date of this Agreement and shall expire on the earlier of 60 days after the Buyer receives an allocation of tax credits for the Development the Minnesota Housing Finance Agency from (“MHFA”) or January 1, 2024 (the “Expiration Date”). During the Option Period, the Seller agrees it will not advertise, list, negotiate for the sale of or sell the Option Property to a third party. b. If the Buyer does not timely exercise the Option, the Option shall lapse, and the Option Payment shall be applied as provided in Section 3 herein and the Buyer shall have no further rights with respect to the Option Property. 5. Exercise of Option. This Option shall be deemed exercised if, within the Option Period, the Buyer gives written notice to the Seller of the Buyer’s intent to exercise the Option and the Buyer will deposit with the Title Company for the benefit of the Seller the sum of Ten Thousand and No/100 dollars ($10,000.00), as earnest money (“Earnest Money”). The Earnest Money shall become nonrefundable at the end of the Due Diligence Period (defined below). In the event that Seller breaches the terms of this Agreement, the Seller shall refund the Earnest Money to the Buyer. Nothing in this Agreement shall entitle the Buyer to make any claim against the Seller or the City for any damages whatsoever and the Buyer’s remedies are strictly limited to the foregoing. Nothing in this Agreement shall be construed as a limitation of or waiver by the Seller of any immunities, defenses, or other limitations on liability to which the Seller is entitled by law. 3 BR305-163-725043.v3 6. Previous Option Agreement. The Parties agree and acknowledge that the previous option agreement dated __________, 2021 by and between the Parties and related term sheet are terminated and superseded in their entirety by this Agreement and the Preliminary Term Sheet dated as of the date hereof. 7. Purchase Price. The total purchase price for the Option Property shall be $975,000, less a land write-down in the amount of $750,000 as set forth in the Buyer’s HTC-1 Workbook submitted to MHFA (the “Purchase Price”). The Purchase Price less the Earnest Money and the Option Payment shall be paid to the Seller from the Buyer on the Closing Date. 8. Closing. Subject to the terms of this Agreement, the closing of the purchase and sale of the Option Property contemplated by this Agreement (the “Closing”) shall occur at the office of the Title Company, or at another location mutually agreed upon by the Parties, on the date 30 days after the expiration of the Due Diligence Period or such other date as agreed to by the Parties in writing (the “Closing Date”). 9. Due Diligence Investigation. Commencing on the date that the Buyer exercises this Option, the Buyer, at its sole cost and expense, shall have a due diligence period of 180 days (“Due Diligence Period”) to make all such investigations as the Buyer, in its sole and absolute discretion, deems reasonable and necessary in determining the suitability of the Option Property for the Buyer’s needs including: a. To examine and inspect the Option Property, to review the Due Diligence Documents, to conduct feasibility studies with regard to the ownership and operation of the Option Property, including, but not limited to, environmental reviews, soil condition testing, surveying, engineering studies, appraisals and any other physical inspections of the Option Property as determined by the Buyer, and to investigate all physical aspects of the Option Property, and to review all other due diligence matters related to the Option Property. The Buyer may enter upon the Option Property to inspect the same, and may conduct tests and examinations with regard thereto, provided that the Buyer’s activities do not unreasonably interfere with the ongoing operation of the Option Property. The Buyer shall promptly restore the Option Property to substantially the same condition in which it existed immediately prior to any physical tests conducted by or on behalf of the Buyer. b. To investigate all zoning, code and governmental regulations or requirements in place at the Option Property, and to obtain all land use and rezoning approvals and permits determined necessary by the Buyer for the Buyer’s intended development and use of the Option Property, including but not limited to all Development Approvals defined herein. c. To secure funding for the purchase and development of the Option Property on terms acceptable to the Buyer, in the Buyer’s sole discretion. The Parties contemplate that such funding may include, without limitation, one or more of the following: 4 BR305-163-725043.v3 i. MHFA Affordable Housing Tax Credits; ii. Tax Increment Financing assistance from the Seller; iii. Commercial loans for the purchase and/or development of the Option Property. d. To obtain, at the Buyer’s sole cost, an appraisal of the Option Property that is satisfactory to the Buyer and all of the Buyer’s funding sources. e. The Buyer shall have until the last day of the Due Diligence Period to provide written notice to the Seller of the Buyer’s intention to terminate this Agreement for any reason. If the Buyer terminates this Agreement within the Due Diligence Period, the transactions contemplated herein shall be considered terminated and the Earnest Money will be returned immediately to the Buyer. 10. Right of Entry. During the Due Diligence Period, the Buyer shall have the right to enter upon the Option Property for the purpose of taking soil tests and borings, making surveys and maps, and performing investigative work, including environmental testing and assessment, as the Buyer may deem necessary; provided, however, the Buyer shall indemnify, defend, and hold the Seller harmless from any mechanics’ liens or claims arising out of such investigative work by the Buyer. The Buyer may assign this right to its agents, employees, or contractors at its sole discretion. Nothing in this Agreement shall be deemed a waiver of defenses or limitations available to the Seller under Minnesota Statutes Chapter 466. a. In consideration for such right of entry, the Buyer agrees to: i. Notify the Seller at least 48 hours in advance of the date and time that the Buyer, its agents, employees, or contractors, will enter the Option Property for the purpose for the entry, in order to permit the Seller to be present during the time any work is being done by the Buyer, its agents, employees, or contractors; ii. Provide to the Seller a copy of all test results and reports prepared by the Buyer or its consultants evaluating the conditions present on the Option Property, as soon as reasonably possible following final completion thereof; iii. Dispose of all solid waste generated during the course of the Buyer’s sampling activities and other work on the Option Property in accordance with applicable federal, state and local laws, rules and regulations; iv. Coordinate activities with the Seller so as to avoid unnecessary disruption to or interference with the Seller’s use of the Option Property; v. Do no unnecessary damage to the Option Property and restore the Option Property to substantially the same condition as the condition in 5 BR305-163-725043.v3 which it was found by the Buyer at the time of entry by the Buyer, its agents, employees, or contractors; and vi. Hold the Seller harmless from and indemnify and defend the Seller from any and all claims, damages, judgments or obligations, including the cost of defense of suit, arising out of damage to the Option Property or arising out of injury to anyone incurred or alleged to have been incurred in connection with or as a result of any work done pursuant to this right of entry, or as a result of the intentional torts or negligence of the Buyer, its agents, employees, or contractors. 11. Title Review and Objections. Within 15 days after exercising the Option, the Seller shall obtain and provide a copy to the Buyer a commitment for an ALTA owner’s title insurance policy which shall be periodically updated in accordance with the Development Documents as subsequently defined herein. Within 30 days after receipt of the title commitment, the Buyer shall notify the Seller in writing of any objections to title, or the objections shall be deemed waived. If any objections are so made, the Seller may be allowed until the Closing Date to cure such objections and make the title to the Option Property good and marketable of record in the Seller. Notwithstanding the foregoing, the Seller shall have no obligation to cure any title objections. If a timely objection has been made by the Buyer pursuant to this Section and title to the Option Property remains unmarketable on the Closing Date, the Buyer, as its sole and exclusive remedy, may either: (A) terminate this Agreement by giving written notice to the Seller; or (B) elect to accept the title in its unmarketable condition and without reduction of the Purchase Price by giving written notice to the Seller. 12. Preliminary Plat & Final Plat. The Buyer, at the Buyer’s expense, shall obtain within 60 days of exercising the Option, a preliminary plat of the Option Property prepared by a licensed land surveyor (the “Preliminary Plat”). The Buyer, at the Buyer’s sole expense, shall comply with all subdivision processes as required by the City Code of the City in order to accomplish the platting of the Option Property. 13. Conveyance Subject to Right of Re-entry. The Seller’s conveyance of the Option Property to the Buyer pursuant to this Agreement shall be made in the form of a quit claim deed (the “Deed”). The Deed shall include a right of re-entry for breach of a condition subsequent in favor of the Seller (the “Right of Re-entry”). The condition subsequent shall be determined by the Seller in accordance with Minnesota Statutes Section 469.105 and set forth in the Deed conveying the Option Property to the Buyer in the form attached to the Development Agreement (as defined below). If the Buyer breaches such condition subsequent, the Buyer shall re-convey the Option Property back to the Seller. If the Buyer fails to re-convey the Option Property to the Seller, the Seller may elect to exercise its right of reentry by commencing an action in Hennepin County District Court to establish the breach of the condition subsequent. If the Seller establishes a breach of the condition subsequent, title to and the right to possession of the Option Property and title to all improvements located thereon reverts to the Seller, and the Buyer is not entitled to any compensation from the Seller for the Option Property or the value of any improvements the Buyer has made to the Option Property. The Buyer must record any certificate of completion or certificate of release of the Right of Re-entry in the proper County land records at its expense. 6 BR305-163-725043.v3 14. Contingencies. a. Buyer’s Contingencies. If the Buyer exercises the Option, the Buyer’s obligation to purchase the Option Property shall be contingent on the following: i. By the end of the Due Diligence Period, the Buyer shall have determined, in its sole and absolute discretion, that it is satisfied with the results and matters disclosed by the Buyer’s investigation of the Option Property pursuant to Section 9 of this Agreement. ii. By the Closing Date, the Buyer shall have obtained, or caused to be obtained, in a timely manner, all required permits, licenses and approvals, including without limitation zoning and land use approvals, final plat approval, and all other approvals which must be obtained for the Development. iii. By the Closing Date, the Buyer shall have obtained approvals from the Seller and the City, following a duly noticed public hearing and the satisfaction of all other conditions required by Minnesota law, of the creation of a housing tax increment financing district that includes the Option Property within its boundaries. iv. By the Closing Date, the Buyer shall have obtained all necessary financing for the Development. v. By the Closing Date, the condition of title shall be satisfactory to the Buyer following the Buyer’s examination of title as provided herein. b. The contingencies set forth above are for the benefit of the Buyer and may be waived by the Buyer in the Buyer’s sole discretion. Notwithstanding any other provision in this Agreement, a waiver of a contingency must be in writing to be effective. At the end of the Due Diligence Period, the Buyer will give written notice to the Seller of the contingencies that have been waived, satisfied, or neither waived nor satisfied. c. Seller’s Contingencies. If the Buyer exercises the Option, the Seller’s obligation to convey the Option Property shall be contingent on the following: i. By the Closing Date, the Buyer shall have obtained, or cause to be obtained, in a timely manner and at its sole and absolute expense, all required permits, licenses and approvals, and shall have met, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met for the Development including without limitation a building permit, any needed variances, final plat or subdivision approval, and zoning and land use approvals; ii. The Buyer shall have obtained approval from the Seller of the sale of the Option Property pursuant to this Agreement following a duly noticed 7 BR305-163-725043.v3 public hearing and the satisfaction of all other conditions required by Minnesota law; iii. By the Closing Date, the Buyer shall have obtained approvals from the Seller and the City, following a duly noticed public hearing and the satisfaction of all other conditions required by Minnesota law, of the creation of a housing tax increment financing district that includes the Option Property within its boundaries; iv. The Buyer and the Seller shall have negotiated and mutually agreed to, the Board of Commissioners of the EDA shall have approved following the satisfaction of all conditions required by Minnesota law, and the Seller and the Buyer shall have executed, effective not later than the Closing Date, a Development Agreement (the “Development Agreement”), providing, among other things, for (i) the platting of the Option Property including, but not limited to, the preliminary plat, final plat, and site plan; (ii) the construction of the Development by the Buyer in accordance with plans, specifications and a timeline approved by the Seller, (iii) the use of up to 90% of the tax increment from the housing tax increment financing district generated from the minimum improvements for the Development for a period of up to 15 years to reimburse the Buyer for a portion of the costs of constructing the Development on the Option Property pursuant to a pay-as-you-go tax increment revenue note, bearing simple, non-compounding interest at a rate per annum of up to the lesser of 6.125 percent or the rate of interest on the first lien mortgage financing for the minimum improvements for the Development (the “PAYGO Note”) in the amount of up to $482,000 subject to a final determination in accordance with applicable law, and (iv) the terms and conditions of the Right of Re-entry in accordance with Section 12 and the form of the Deed to be executed and delivered by the Seller at closing and containing the terms of the Right of Re-entry; and any documents ancillary thereto (collectively, the “Development Documents”); v. The Buyer shall have performed all of the obligations required to be performed by the Buyer under this Agreement or the Development Documents as of the Closing Date and any further contingencies to Closing set forth in such Development Documents shall have been satisfied as provided therein; vi. The Buyer shall have delivered to the Seller all of the Buyer’s Documents described in Section 19. vii. The Buyer shall have submitted the construction plans for the Development to the Seller and the City, and the Seller and the City shall have approved the construction plans pursuant to the Development Documents; 8 BR305-163-725043.v3 viii. By the Closing Date, the Buyer shall have obtained and provided to the Seller evidence of all necessary financing for the Development; and ix. The Seller shall have determined that the Development to be undertaken by the Buyer on the Option Property is in conformance with this Agreement and the development objectives set forth in resolutions of the City and the Seller authorizing the housing tax increment financing district and the Development Documents. d. The contingencies set forth in Section 13(c) are for the benefit of the Seller and may be waived only by the Seller in its sole and absolute discretion. Notwithstanding any other provision in this Agreement, a waiver of a contingency must be in writing to be effective. At the end of the Due Diligence Period, the Seller will give written notice to the Buyer of the contingencies that have been waived, satisfied, or neither waived nor satisfied. e. Seller’s and Buyer’s Options. In the event that any of the foregoing contingencies fail to be satisfied on or before the Closing Date: i. the applicable party may terminate this Agreement, and the Buyer and the Seller shall execute and deliver to each other documentation effecting the termination of this Agreement and the Seller shall return the Earnest Money to the Buyer; or ii. the applicable party may waive such failure and proceed to Closing; provided that the contingencies in Section 13(a) are solely for the benefit of the Buyer and may be waived only by the Buyer as provided in Section 13 (b) and the contingencies in Section 13(c) are solely for the benefit of the Seller and may be waived only by the Seller as provided in Section 13(d); or iii. The Buyer and the Seller may mutually agree to extend the Closing Date. f. If Closing does not occur due to the failure of any of the above contingencies which is not waived by the applicable party, the Seller shall be entitled to retain the Option Payment, except as otherwise provided in Section 3 of this Agreement. g. If the above contingencies are satisfied at the end of the Due Diligence Period or the applicable party elects to waive any unsatisfied contingencies and proceed to Closing, then the Earnest Money shall become non-refundable to the Buyer except in the event of the Seller’s default. 15. Real Estate Taxes and Special Assessments. The Seller shall not be responsible for the payment of any real estate taxes due or special assessments due with respect to the Option Property. The Buyer shall be responsible for all real estate taxes special assessments due with respect to the Option Property which have not been paid prior to Closing. 9 BR305-163-725043.v3 16. Representations and Warranties of the Seller. The Option Property is sold AS-IS. Except as provided herein, the Seller makes no representations or warranties regarding the condition of the Option Property, its use, or the marketability of its title. The Buyer shall be satisfied solely on the basis of its own investigation. Notwithstanding the foregoing, the Seller represents and warrants to the Buyer: a. Unrecorded Agreements. To the Seller’s knowledge, there are no unrecorded agreements, undertakings or restrictions which affect the Option Property. b. Leases. There are no leases or possessory rights of others regarding the Option Property. c. No Default Notice. The Seller has not received notice of a default or breach of any agreement related to the Option Property and is not aware of any facts that would result in the Seller being in default or breach of any such agreement. d. Due Diligence Documents. The Due Diligence Documents delivered or to be delivered to the Buyer hereunder are to the Seller’s actual knowledge correct and complete and, to the Seller’s actual knowledge, do not contain any false information. e. Operations. The Seller has not received any notice of any violation of any laws, ordinances, or regulations relating to the Option Property. f. Condition. To Seller’s actual knowledge, the Option Property complies with all applicable laws, ordinances, regulations, permits, and any applicable restrictive covenants. g. FIRPTA. The Seller is not a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate,” as those terms are defined in Internal Revenue Code Section 1445 and the regulations promulgated thereunder. h. No Proceedings. No legal or administrative proceeding is pending or, to the Seller’s actual knowledge, threatened (i) which would adversely affect the Seller’s right to convey the Option Property to the Buyer as contemplated in this Agreement, or (ii) affecting the Option Property. There are no condemnation or eminent domain proceedings pending or, to the Seller’s knowledge, threatened with respect to the Option Property. i. Private Sewage Systems; Wells. There are no private sewage systems or wells of any kind located on the Option Property. Sewage generated at the Option Property goes to a facility permitted by the Minnesota Pollution Control Agency. j. Use of Property. To the Seller’s actual knowledge, no methamphetamine production has occurred on the Option Property. 10 BR305-163-725043.v3 k. Unpaid Labor and Materials. The Seller is not indebted for labor or material that might give rise to the filing of notice of mechanic’s lien against any portion of the Option Property. l. The obligations of the Buyer under this Agreement are contingent upon the representations and warranties of the Seller contained in this Agreement being true as of the Effective Date and on the Closing Date as if made on the Closing Date. Each of the foregoing representations and warranties shall be deemed remade as of the Closing Date and, as so remade, shall survive the Closing. 17. Due Diligence Documents. Within 10 days after the Effective Date, the Seller shall deliver to the Buyer copies of the documents set forth on Exhibit B attached hereto and incorporated herein (the “Due Diligence Documents”). 18. Closing Costs. a. The Buyer shall pay all costs of the preparation of a title commitment, including the abstracting fees, if required by the title company and all recording fees and charges related to the filing of any instrument required to make title marketable. The Buyer shall also pay the cost of obtaining any title evidence desired by Buyer, including a title commitment, the fees for standard searches with respect to the Seller and the Property, all premiums required for issuance of a title insurance policy any survey costs and all Closing fees charged by the title company and any escrow fees charged by any escrow agent engaged by the parties in connection with this Agreement. b. Buyer shall also pay the following costs: (1) all costs for obtaining government approvals that may be required in order to close on the Property or as required for the Buyer’s intended use of the Property; (2) the cost of preparation of any necessary platting or other subdivision documents, (3) the filing fee to record the deed, (4) the premium for any owner’s or lender’s title insurance policies obtained by or for the benefit of Buyer, (5) Mortgage Registration Tax, (6) any state deed tax, conservation fee or other federal, state or local documentary or revenue stamps or transfer tax with respect to the Deed to be delivered by the Sellers; recording fees and charges related to the filing of the Deed; (7) Buyer’s attorney’s fees; (8) the Seller’s legal, accounting fees and other out of pocket costs incurred in connection with this Agreement and the Development Documents as further provided in Section 25 hereof and in the Development Documents; and (9) all other costs as outlined in the Development Documents entered into between the Parties. 19. Seller’s Closing Documents. At Closing, the Seller shall execute and deliver to the Buyer the following documents (collectively, the “Seller’s Closing Documents”): a. A Quit Claim Deed conveying the Option Property to the Buyer. 11 BR305-163-725043.v3 b. A closing statement prepared by the Title Company to be executed by the Seller, Buyer, and the Title Company at the Closing that accurately describes the economic terms of the transaction described this Agreement. c. An Assignment of any Due Diligence Documents that are consented to and approved by the Buyer, and miscellaneous documents conveying the Seller’s interest to the Buyer together with the consent of all parties having a right to consent to such assignment. d. A non-foreign affidavit, properly executed, containing such information as is required by Code Section 1445(b)(2) and the regulations promulgated thereunder. e. A Designation Agreement designating the “reporting person” for purposes of completing Internal Revenue Service (“IRS”) Form 1099 and, if applicable, IRS Form 8594. 20. Documents to be Delivered by the Buyer. The Buyer agrees to deliver to the Seller the following documents (the “Buyer’s Documents”), duly executed as appropriate, at Closing: a. The Purchase Price. b. Such affidavits of Buyer, Certificates of Value or other documents as may be reasonably required in order to complete the transaction contemplated by this Agreement. c. The final plat of the Option Property as approved by the Seller and the City, to be recorded contemporaneously with Closing contemplated herein. d. Any documentary evidence required to satisfy the contingencies set forth herein. e. The Development Agreement and any documents required pursuant to the terms of the Development Documents. f. A minimum assessment agreement pursuant to which the Option Property and the minimum improvements as defined by the Development Agreement will be assessed based on a minimum market value of: i. $2,632,500 as of January 2, 2024; and ii. $7,897,500 as of January 2, 2025; and iii. $10,530,000 as of January 2, 2026. g. Such other documents as shall be required to carry out the intent of this Agreement. 21. Casualty or Condemnation. If before the recording of the Deed any substantial part of the Option Property is taken by condemnation (including a deed given in lieu thereof), the 12 BR305-163-725043.v3 Buyer shall have the option of (i) enforcing this Agreement (and in such event the insurance proceeds or condemnation award shall belong to the Buyer) or (ii) canceling the Agreement by written notice given within 30 days after the Buyer receives notice of such casualty or condemnation from the Seller. If this Agreement is canceled under this Section, the Earnest Money shall be returned to the Buyer, this Agreement shall be null and void, and the Parties’ obligations hereunder shall be of no further force and effect. 22. Remedies. If either Party defaults under this Agreement, the non-defaulting party shall have the right to terminate this Agreement by giving written notice to the defaulting party. If the defaulting party fails to cure such default within 14 days of the date of such written notice, this Agreement will terminate. The termination of this Agreement shall be the sole and absolute remedy available to the non-defaulting Party for such default. 23. Commissions. Each party represents that it has not engaged any broker in connection with the transactions contemplated by this Agreement and agrees to indemnify and hold the other harmless from anyone claiming a commission/fee through them. 24. Notices. Any notices required herein shall be deemed given when sent in the U.S. Mail, either registered or certified, return receipt requested, or by Federal Express or other overnight delivery service requiring a signature upon receipt, to the parties at the following addresses: SELLER: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, MN 55430 Attn: Executive Director With a copy to: Sarah Sonsalla Kennedy and Graven, Chartered Fifth Street Towers 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 BUYER JO Companies 250 East 6th Street #636 St. Paul, M 55101 Attn: ___________________ With a copy to: ___________________________ ___________________________ ___________________________ 13 BR305-163-725043.v3 25. Reimbursement of Costs. Upon execution of this Agreement by both parties, the Buyer shall deposit with the Seller the sum of Ten Thousand Dollars ($10,000.00) to pay for the Seller’s reasonable out-of-pocket legal, financial consultant, and administrative fees associated with this transaction. Unexpended funds will be returned by the Seller to the Buyer and if, additional funds are needed by the Seller to pay such expenses, the Buyer will deposit such additional funds upon request by the Seller. 26. Survival. All representations, warranties, and indemnities set forth herein shall survive the Closing, except as otherwise provided herein. 27. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 28. Assignment. The Buyer shall have the right to assign its interest to this Agreement to an entity in which the Buyer has an ownership interest, is a member or is otherwise affiliated with. The consent of the Seller shall be required if the Buyer assigns this Agreement to any third party with which the Buyer has no connection. 29. Binding Effect. This Agreement is binding upon the Parties and their respective permitted successors and assigns. 30. Construction. This Agreement shall not be construed more strictly against one Party than the other, merely by virtue of the fact that it may have been prepared primarily by counsel for one of the Parties, it being recognized that both the Buyer and the Seller have contributed substantially and materially to the preparation of this Agreement. 31. Headings. The headings preceding the text of the sections and subsections hereof are inserted solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction, or effect. 32. Severability. The invalidity or unenforceability of any term or terms of this Agreement shall not invalidate, make unenforceable or otherwise affect any other term of this Agreement, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted, and in such event, the remaining terms of this Agreement shall remain in full force and effect. 33. Computation of Time. In computing any period of time pursuant to this Agreement, the day of the act or event from which the designated period of time begins to run will not be included. The last day of the period so computed will be included, unless it is a Saturday, Sunday, or federal holiday, in which event the period runs until the end of the next day which is not a Saturday, Sunday, or federal holiday. 34. Time of the Essence. All times, wherever specified herein for the performance by the Seller or the Buyer of their respective obligations hereunder, are of the essence of this Agreement. 14 BR305-163-725043.v3 35. Complete Agreement. This instrument and any exhibits, schedules or addendums attached hereto contain the entire Agreement of the Parties regarding the subject matter hereof, and supersedes all prior negotiations, agreements, or understandings, whether oral or in writing. This Agreement may not be changed orally but only by an Agreement in writing signed by the Parties. 36. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which, taken together, shall constitute but one and the same instrument. 15 BR305-163-725043.v3 IN WITNESS WHEREOF, the undersigned have signed this Option Agreement as of the day and year first written above. SELLER: ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER By: ______________________________ Mike Elliott Its: President By: ______________________________ Its: Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledgment before me this ____ day of _____________, 2022, by Mike Elliott and ______________, the President and Executive Director, respectively of the Economic Development Authority of Brooklyn Center, Minnesota, a public body corporate and politic in the State of Minnesota on behalf of the Authority. ________________________________ Notary Public 16 BR305-163-725043.v3 BUYER: JO COMPANIES, LLC By: Its: ______________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledgment before me this ____ day of _____________, 2022, by ___________________, the ________________ of JO Companies, LLC, a Minnesota limited liability company on behalf of the company. ________________________________ Notary Public This document was drafted by: Kennedy & Graven, Chartered (SJS) 150 South 5th Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300 BR305-163-725043.v3 EXHIBIT A LEGAL DESCRIPTIONS OF THE OPTION PROPERTY Parcel 1 6017 Brooklyn Boulevard Lot 1, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0049 Parcel 2 6101 Brooklyn Boulevard Lot 2, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0050 Parcel 3 3600 61st Avenue N. Lot 3, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0051 Parcel 4 3606 61st Avenue N. Lot 4, Block 6, Wangstad’s Brooklyn Terrace, according to the recorded plat thereof, County of Hennepin, State of Minnesota. PID 34-119-21-43-0052 BR305-163-725043.v3 EXHIBIT B Due Diligence Documents Copies of the following in the Seller’s possession and related to the Option Property: 1. Copies of real estate tax bills and special assessments (if any), and payment status for the preceding three full calendar years; 2. Statements of any and all expenses related to the Option Property for the preceding three full calendar years; 3. Copies of all agreements affecting the Option Property; 4. All studies and reports in the possession of the Seller relating to environmental status, soil tests, and any other information regarding the environmental and soil conditions; 5. Copies of any written citations from any governmental entities pertaining to the Option Property including those pertaining to any uncured violations of any applicable laws and codes or compliance with the same; 6. All site plans, construction documents, engineer reports, and property assessments performed to date for the Option Property; 7. Any existing surveys of the Option Property; and 8. All certificates of insurance relating to the Option Property and claims made in the last three years.