Loading...
HomeMy WebLinkAbout2005-074 CCRMember Kay Lasman introduced the following resolution and moved its adoption: RESOLUTION NO. 2005-74 RESOLUTION APPROVING THE ISSUANCE AND SALE OF A MULTIFAMILY HOUSING REVENUE NOTE, SERIES 2005 (UNITY PLACE PROJECT) AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO WHEREAS, pursuant to Minnesota Statutes, Chapter 462C, the City Council of the City of Brooklyn Center, Minnesota (the "City"), on this same date, held a public hearing on a project (as defined below) and on a housing program for the issuance of a revenue note to finance the project; and WHEREAS, sufficient details of the revenue note and other aspects of the financing have been agreed to so that this final note resolution should be adopted on this date. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center, Minnesota (the "City"), as follows: SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. 1.1 Findinss. The City hereby finds, determines and declares as follows: (a) The City is a municipal corporation organized under the laws of the State of Minnesota and is authorized under Minnesota Statutes, Chapters 462C, as amended (the "Act"), to assist the multifamily housing development herein referred to, and to issue and sell the Note, as hereinafter defined, for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. (b) The City has received a proposal that it issue its Multifamily Housing Revenue Note, Series 2005 (Unity Place Project), in an amount not to exceed $5,700,000 (the "Note") to provide funds to be loaned to CHDC Unity LLC, a Colorado limited liability company, the sole member of which is Community Housing Development Corporation, a Minnesota nonprofit corporation (the "Borrower") to finance the renovation of a 112 unit multifamily rental housing facility (the "Project") in the City of Brooklyn Center, Minnesota, located at 7256 Unity Avenue in the City, which Project will be owned and operated by the Borrower and to finance the refunding of the City's Multifamily Housing Revenue Bonds (The Ponds Family Housing Project), Series 1993 (the "Prior Bonds") (the "Refunding"). (c) As required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), the City has on this same date, held a public hearing on the housing program relating to the issuance of one or more revenue notes to finance the Project. RESOLUTION NO. 2005-74 (d) The issuance and sale of the Note by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Note and to sell the Note to U.S. Bank National Association (the "Lender"), as provided herein. The City will loan the proceeds of the Note (the "Loan") to the Borrower in order to finance the Project and to accomplish the Refunding. (e) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into between the City and Borrower, the Borrower has agreed to repay the Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Note. In addition, the Loan Agreement and a Regulatory Agreement among the City, the Lender and the Borrower (the "Regulatory Agreement") contain provisions relating to the construction, maintenance and operation of the Project, indemnification, insurance, and other agreements and covenants which are required or permitted by the Act and which the City, Borrower and Lender deem necessary or desirable for the financing of the Project. Drafts of the Loan Agreement and Regulatory Agreement have been submitted to the City. (f) Pursuant to a Pledge Agreement (the "Pledge Agreement") to be entered into between the City and Lender, the City will pledge and grant a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses). A draft of the Pledge Agreement has been submitted to the City. (g) Pursuant to a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement (the "Mortgage") to be executed by the Borrower in favor of the City, the Borrower will secure payment of amounts due under the Loan Agreement and Note by granting to the City a mortgage and security interest in the property described therein. Pursuant to an Assignment of Mortgage to be executed by the City (the "Assignment"), the City will assign the Mortgage to the Lender. Drafts of the Mortgage and Assignment have been submitted to the City. (h) Pursuant to a Disbursing Agreement (the "Disbursing Agreement") by and among the Borrower, the City and Lender, the Lender will disburse a portion of the proceeds of the Note to the Borrower for the renovation of the Project. A draft of the Disbursing Agreement has been submitted to the City. (i) Certain requirements for the tax-exempt status of the Note are set forth in a Tax Compliance Agreement (the "Tax Compliance Agreement") by and among the City and Borrower. A draft of the Tax Compliance Agreement has been submitted to the City. 0) The Note will be a special limited obligation of the City. The Note shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, nor to enforce payment thereof against any property of the City. The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. RESOLUTION NO. 2005-74 (k) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note for the purpose of financing the costs of the Project and refunding the prior Bonds. (1) The Project constitutes a "qualified residential rental project" within the meaning of Section 142(d) of the Code, and a "multifamily housing development" authorized by the Act, and furthers the purposes of the Act. (m) The purpose of the Project is, and the effect thereof will be, to promote the public welfare by the reduction of debt service costs and the renovation of a facility used as a multifamily housing development designed primarily for occupancy by persons of low and moderate income. (n) The Project is located within the jurisdiction of the City at a site which is easily accessible to employment opportunities, health facilities and other amenities within the City. (o) The Act authorizes (i) the acquisition and renovation of the Project and the refunding of the Prior Bonds, (ii) the issuance and sale of the Note, (iii) the execution and delivery by the City of the Loan Agreement, Regulatory Agreement, Tax Compliance Agreement, Assignment, Disbursing Agreement and Pledge Agreement, (iv) the performance of all covenants and agreements of the City contained in the Loan Agreement, Regulatory Agreement, Assignment, Tax Compliance Agreement and Pledge Agreement, and (v) the performance of all other acts and things required under the constitution and laws of the State of Minnesota to make the Loan Agreement, Assignment, Regulatory Agreement, Tax Compliance Agreement, Disbursing Agreement, Pledge Agreement and Note valid and binding obligations of the City in accordance with their terms. (p) It is desirable that the Borrower be authorized, subject to the terms and conditions set forth in the Loan Agreement, which terms and conditions the City determines to be necessary, desirable and proper, to complete the renovation of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and with or without advertisement for bids as required for the acquisition and installation of municipal facilities. (q) The payments under the Loan Agreement are fixed to produce revenue sufficient to provide for the prompt payment of principal of, premium, if any, and interest on the Note when due, and the Loan Agreement also provides that the Borrower is required to pay all expenses of the operation and maintenance of the Project, including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project and payable during the term of the Loan Agreement. RESOLUTION NO. 2005-74 (r) There is no litigation pending or, to the actual knowledge of the City, threatened against the City questioning the City's execution or delivery of the Note, Loan Agreement, Regulatory Agreement, Disbursing Agreement, Tax Compliance Agreement, Assignment or Pledge Agreement or questioning the due organization of the City, or the powers or City of the City to issue the Note and undertake the transactions contemplated hereby. (s) The execution, delivery and performance of the City's obligations under the Note, Regulatory Agreement, Tax Compliance Agreement, Pledge Agreement, Assignment, Disbursing Agreement and Loan Agreement do not and will not violate any order against the City of any court or other agency of government, or any indenture, agreement or other instrument to which the City is a party or by which it or any of its property is bound, or be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument. 1.2 Authorization and Ratification of Project. The City has heretofore and does hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the terms and conditions imposed by the Lender, to provide for the renovation of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and without advertisement for bids as may be required for the construction and acquisition of other municipal facilities; and the City hereby ratifies, affirms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such City. SECTION 2. THE NOTE. 2.1 Authorized Maximum Amount and Form of Note and Interest Rate. The Note issued pursuant to this Resolution shall be in substantially the form attached hereto as Exhibit A, and shall mature in the years and amounts and be subject to redemption as therein specified, as such may be modified by agreement of the Lender, Borrower and City. The Note shall be issued in the principal amount of $5,085,293. The Note shall bear interest at the annual rate of 5.25% per annum. The sale of the Note to the Lender at a purchase price equal to its stated amount is hereby accepted. The City acknowledges that the Lender may grant participation interests in the Note to other financial institutions in principal amounts of at least $100,000. The final maturity date of the Note shall be not later than 30 years from the date of its issuance. 2.2 The Note. The Note shall be dated as of the date of delivery to the Lender, shall be payable at the times and in the manner, and shall be subject to such other terms and conditions as are set forth therein. 2.3 Execution of Note. The Note shall be executed on behalf of the City by the Mayor and the City Manager (the "Authorized Officers"). In case any Authorized Officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such signatory had remained in office until delivery. In the event of the absence or disability of the Authorized Officer, such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City execute and deliver the Note. RESOLUTION NO. 2005-74 2.4 Delivery of Note. Before delivery of the Note there shall be filed with the Lender (except to the extent waived by the Lender) the following items: (1) an executed copy of each of the following documents: (a) the Loan Agreement; (b) the Pledge Agreement; (c) the Mortgage and Assignment; (d) the Disbursing Agreement; (e) the Regulatory Agreement; (f) the Tax Compliance Agreement; (2) an opinion of Counsel for the Borrower as prescribed by the Lender and Bond Counsel; (3) the opinion of Bond Counsel as to the validity of the Note and tax exempt status of the Note; and (4) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (3) above or that the Lender may reasonably require for the closing. 2.5 Disposition of Note Proceeds. Upon delivery of the Note to the Lender, the Lender shall, on behalf of the City, deposit the proceeds of the Note to be used to refund the Prior Bonds with the trustee for the Prior Bonds and the remaining proceeds of the Note shall be held by the Lender in the Capital Fund established for payment of Project Costs in accordance with the terms of the Loan Agreement and Disbursing Agreement. 2.6 Registration of Transfer. The City will cause to be kept at the office of the City Clerk of the City a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Note. The Note shall be initially registered in the name of the Lender and shall be transferable upon the Note Register by the Lender in person or by its agent duly authorized in writing, upon surrender of the Note together with a written instrument of transfer satisfactory to the City Clerk, duly executed by the Lender or its duly authorized agent. The City may require, as a precondition to any transfer, that the transferee provide evidence to the City that the transferee is a financial institution or other accredited investor under the securities laws. The following form of assignment shall be sufficient for said purpose. RESOLUTION NO. 2005-74 For value received hereby sells, assigns and transfers unto the attached Note of the City of Brooklyn Center, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the books of said City, with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Section 2.9 of the Resolution authorizing the issuance of the Note. Dated: Registered Owner Upon such transfer the City Clerk shall note the date of registration and the name and address of the new Lender in the Note Register and in the registration blank appearing on the Note. 2.7 Mutilated. Lost or Destroved Note. In case a Note shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Lender°s paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost 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. 2.8 Ownership of Note. The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note, whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.9 Limitation on Note Transfers. The Note has been issued without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except as an exempt security or as an exempt transaction. RESOLUTION NO. 2005-74 SECTION 3. MISCELLANEOUS. 3..1 Severabilitv. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions contained herein invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs contained in this Resolution shall not affect the remaining portions of this Resolution or any part thereof. 3.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Note. All such certified copies, certificates and affidavits; including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein. 3.3 Authorization to Execute Aereements. The forms of the proposed Loan Agreement, Pledge Agreement, Regulatory Agreement, Disbursing Agreement, Assignment, Tax Compliance Agreement and Assignment are hereby approved in substantially the form heretofore presented to the City Council of the City, together with such additional details therein as maybe necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the documents and the officers specified in Section 2.3 are authorized to execute the Loan Agreement, Regulatory Agreement, Tax Compliance Agreement, Disbursing Agreement, Assignment and Pledge Agreement in the name of and on behalf of the City and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Note. In the event of the absence or disability of any of the officers specified in Section 2.3, such officers of the City as, in the opinion of the City Attorney, may act in their behalf shall without further act or authorization of the City Council of the City do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. 3.4 Not Oualified Tax-Exempt Oblisation. The Note does not qualify as a "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. 3.5 Program. The City has established a governmental program of acquiring purpose investments for qualified residential rental projects. The governmental program is one in which the following requirements of § 1.148-1(b) of the federal regulations relating to tax-exempt obligations shall be met: (a) the program involves the origination or acquisition of purpose investments; RESOLUTION NO. 2005-74 (b) at least 95% of the cost of the purpose investments acquired under the program represents one or more loans to a substantial number of persons representing the general public, states or political subdivisions, 501(c)(3) organizations, persons who provide housing and related facilities, or any combination of the foregoing; (c) at least 95% of the receipts from the purpose investments are used to pay principal, interest, or redemption prices on issues that financed the program, to pay or reimburse administrative costs of those issues or of the program, to pay or reimburse anticipated future losses directly related to the program, to finance additional purpose investments for the same general purposes of the program, or to redeem and retire governmental obligations at the next earliest possible date of redemption; (d) the program documents prohibit any obligor on a purpose investment financed by the program or any related party to that obligor from purchasing bonds of an issue that finances the program in an amount related to the amount of the purpose investment acquired from that obligor; and (e) the City shall not waive the right to treat the investment as a program investment. 3.6 Headines: Terms. Paragraph headings in this resolution are for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. Capitalized terms used, but not defined, herein shall have the meanings given them in, or pursuant to, the Loan Agreement Adopted by the City Council of the City of Brooklyn Center, Minnesota, this 9th day of May, 2005. Mav 9. 2005 Yate Mayor ATTEST: City Clerk The motion for the adoption of the foregoing resolution was duly seconded by member Diane Niesen and upon vote being taken thereon, the following voted in favor thereof Myrna Kragness, Kathleen Carmody, Kay la.sman, and Diane Niesen; and the following voted against the same: Mary 0` Connor; whereupon said resolution was declared duly passed and adopted. RESOLTUION NO. 2005-74 EXHIBIT A UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF BROOKLYN CENTER, MINNESOTA Multifamily Housing Revenue Note, Series 2005 (Unity Place Project) R-1 Dated June 2005 $5,085,293 FOR VALUE RECEIVED THE CITY OF BROOKLYN CENTER, Hennepin County, Minnesota (the "City"), hereby promises to pay U.S. BANK NATIONAL ASSOCIATION, in Roseville, Minnesota, its successors or registered assigns (the "Lender"), solely from the source and in the manner hereinafter provided, the principal sum of FIVE MILLION EIGHTY-FIVE THOUSAND TWO HUNDRED NINETY-THREE DOLLARS ($5,085,293), or so much thereof remains unpaid from time to time (the "Principal Balance"), with interest thereon from the date hereof until the Tender Date (defined below) at the rate of 5.25% per annum, computed on the basis of actual days elapsed in a year of 360 days, and thereafter until paid or otherwise discharged at the rate per annum determined as provided in paragraph 2 below, in any coin or currency which at the time or times of payment is legal tender for the payment of public or private debts in the United States of America, in accordance with the terms hereinafter set forth. 1. Interest; Pavments. Principal and interest shall be payable on this Note in monthly installments due on the 1st day of each month, commencing on July 1, 2005, through and including June 1, 2020 (the "Tender Date"), in amounts sufficient to fully amortize the principal of this Note based on a 30 year amortization schedule. Commencing on July 1, 2020, and continuing on the 1st day of each month thereafter through and including June 1, 2035 (the "Final Maturity Date"), principal and interest shall be payable on this Note in monthly installments in amounts sufficient to fully amortize the principal of this Note from the Tender Date through and including June 1, 2035 at the adjusted interest rate established in accordance with Section 2 of this Note. On the Final Maturity Date any remaining unpaid Principal Balance and all accrued and unpaid interest thereon shall be paid in full. Payments shall be applied first to accrued and unpaid interest on the Principal Balance and thereafter to reduction of the Principal Balance. A late payment fee in an amount equal to five percent (5%) of the delinquent amount shall be paid with respect to all payments not made within ten (10) days of the date due. 2. Put. Mandatorv Tender and Purchase; and Adiustment of Interest Rate. In lieu of providing for a balloon maturity of this Note on the Tender Date, the Lender has agreed to the terms of this paragraph. The Note is subject to a mandatory tender on the Tender Date to CHDC Unity LLC, a Colorado limited liability company (the "Borrower") for purchase by the 1'760049x2 RESOLUTION NO. 2005-74 Borrower, or for purchase by another purchaser selected by the Borrower and approved by the City. The Lender shall deliver the Note to the Borrower, or its designee, on the Tender Date and this Note shall be purchased from the Lender by or on behalf of the Borrower on the Tender Date for a price equal to the Principal Balance hereof on the Tender Date; provided that the monthly payment due on the Tender Date shall also be due and payable. If this Note is not purchased from the Lender by or on behalf of the Borrower on the Tender Date, the failure to purchase this Note shall constitute an event of default under this Note and an "Event of Default" under the Loan Agreement, and the Lender may exercise its remedies for default, including acceleration of this Note. On the Tender Date, the interest rate of this Note shall be adjusted to an interest rate per annum that will permit the Borrower, with or without the services of a remarketing agent, to remarket the Note at a price equal to one hundred percent of the remaining Principal Balance. The fees and costs of such remarketing shall be borne by the Borrower. The adjusted interest rate and equal monthly payments that amortize the principal of this Note from the Tender Date through the Final Maturity Date shall be set forth on an allonge to this Note. 3. Sufficiencv. In any event, the payments hereunder shall be sufficient to pay all principal and interest due, as such principal and interest becomes due, and to pay any premium or service charge, at maturity, upon redemption, or otherwise. Interest shall be computed on the basis of actual days elapsed in a year of 360 days. 4. Place of Pavment. Principal and interest and premium or service charge, if any, due hereunder shall be payable at the principal office of the Lender, or at such other place as the Lender may designate in writing. 5. Purpose: Citv. This Note is issued by the City to provide funds for a multifamily housing development, as defined in Minnesota Statutes, Section 462C.02, consisting of the acquisition and renovation of facilities owned and operated by the Borrower and the refunding of the City's Multifamily Housing Revenue Bonds (The Ponds Family Housing Project), Series 1993. The proceeds of the Note will be loaned to the Borrower pursuant to a Loan Agreement dated as of June 1, 2005, by and between the City and Borrower (the "Loan Agreement"), and this Note is further issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Chapter 462C, and pursuant to a resolution of the City Council of the City duly adopted on May 9, 2005 (the "Resolution"). 6. Securitv. This Note is secured by a Pledge Agreement dated as of June 1, 2005, between the City and Lender (the "Pledge Agreement") and is further secured by a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement, dated June 1, 2005, executed by the Borrower, as mortgagor, in favor of the City, as mortgagee (the "Mortgage") and assigned to the Lender pursuant to the Assignment of Mortgage (the "Assignment of Mortgage"). The disbursement of the proceeds of this Note is subject to the terms and conditions of the Disbursing Agreement dated as of June 1, 2005, between the Lender, the City and Borrower (the "Disbursing Agreement"). Certain requirements of law with respect to the project financed by this Note are set forth in a Regulatory Agreement dated as of June 1, 2005, by and among the City, Borrower and Lender (the "Regulatory Agreement"). Certain 1760049x2 2 RESOLUTION NO. 2005-74 requirements for the tax-exempt status of interest on this Note are set forth in a Tax Compliance Agreement dated as of June 1, 2005, by and between the City and Borrower (the "Tax Compliance Agreement"). 7. Waiver of Demand: Extension. The City, for itself, its successors and assigns, hereby waives demand, presentment, protest and notice of dishonor; and to the extent permitted by law, the Lender may extend interest and/or principal of or any service charge or premium due on this Note, including the Final Maturity Date, or release any part or parts of the property and interest subject to the Mortgage or to any other security document from the same, all without notice to or consent of any party liable hereon or thereon and without releasing any such party from such liability and whether or not as a result thereof the interest on the Note is no longer exempt from federal or state income tax. In no event, however, may the Final Maturity Date of the Note be extended beyond June 1, 2034. 8. Prenavment. This Note may be prepaid in whole or in part with the consent of the Lender, but not otherwise, as provided in Section 5.1 of the Loan Agreement and on Attachment E to this Note. A request for consent to any such prepayment shall be given to the holder by certified or registered mail, addressed to the holder at its registered address, not less than thirty (30) days prior to the date proposed for prepayment. If the Lender consents to a prepayment of this Note, in whole or in part, then on the date fixed for prepayment funds shall be paid to the holder at its registered address. Upon any partial or full prepayment of the Principal Balance of this Note, there shall also be paid, with respect to the portion of the Principal Balance prepaid, the accrued and unpaid interest on the Principal Balance to be prepaid and the prepayment premium set forth on Attachment E attached hereto and hereby made a part hereof. 9. Acceleration. Upon the occurrence of certain Events of Default, as defined in the Loan Agreement and Mortgage, the Lender may declare the Principal Balance and accrued interest on the Note to be immediately due and payable. 10. Annlication of Prevavments. Any payment made to prepay this Note shall be applied, first, to any applicable prepayment premium set forth on Attachment E to this Note, second, to accrued and unpaid interest on the Principal Balance to be prepaid and, third, to the Principal Balance to be prepaid. 11. Transfer: Registration. As provided in the Resolution and subject to certain limitations set forth therein, this Note is only transferable upon the books of the City at the office of its City Clerk, by the Lender in person or by its agent duly authorized in writing, at the Lender's expense, upon surrender hereof together with a written instrument of transfer satisfactory to the City Clerk, duly executed by the Lender or its duly authorized agent. Upon such transfer the City Clerk will note the date of registration and the name and address of the new registered owner in the registration blank appearing below. The City may deem and treat the person in whose name the Note is last registered upon the books of the City with such registration noted on the Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving payment, or on the account, of the Principal Balance, redemption price or interest and for all other purposes, and all such payments so made to the Lender or upon its order shall be valid and effective to satisfy and discharge the liability upon the Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. 1760049v2 3 RESOLUTION NO. 2005-74 12. Incorporation. All of the agreements, conditions, covenants, provisions and stipulations contained in the Resolution, Mortgage, Assignment of Mortgage, Loan Agreement, Disbursing Agreement, Pledge Agreement, Regulatory Agreement and Tax Compliance Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. 13. Limited Liabilitv. This Note and interest thereon and any service charge or premium, if any, due hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement and Mortgage and do not constitute a debt of the City, within the meaning of any constitutional or statutory limitation, are not payable from or a charge upon any funds other than the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary liability of the City or any of their officers, agents or employees, and no holder of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note or the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement, sufficient to pay all costs of such performance or the enforcement thereof. 14. Riahts on Default. If an Event of Default (as that term is defined in the Mortgage or Loan Agreement) shall occur, then the Lender shall have the right and option to declare, the Principal Balance and accrued interest thereon immediately due and payable, whereupon the same, plus any premiums or service charges, shall be due and payable, but solely from sums made available under the Loan Agreement and Mortgage or other sums paid by the Borrower. Failure to exercise such option at any time shall not constitute a waiver of the right to exercise the same at any subsequent time. 15. Exercise of Remedies. The remedies of the Lender; as provided herein and in the Mortgage, Loan Agreement, Pledge Agreement and Regulatory Agreement, are not exclusive and shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 16. Waivers. The Lender shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Lender, and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. 17. Securities Reeistration. This Note has been issued without registration under state or federal or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. 1760049v2 4 RESOLUTION NO. 2005-74 18. Not Qualified Tax Exempt Obligation. The City has not designated this Note as a "qualified tax exempt obligation" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to exist, to happen and to be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. 1760049v2 5 RESOLUTION NO. 2005-74 IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its name and has caused this Note tobe dated as of , 2005. BROOKLYN CENTER, MINNESOTA By Its Mayor By Its Manager 1760049v2 6 RESOLUTION NO. 2005-74 NOTE REGISTER The ownership of the unpaid Principal Balance of this Note and the interest accruing thereon is registered on the books of the Brooklyn Center, Minnesota, in the name of the holder last noted below. Date of Name and Address Signature of Resistration Registered Owner Clerk U.S. Bank National Association 2690 North Snelling Avenue Suite 220 .2005 Roseville MN 55113 1760049x2 7 RESOLUTION NO. 2005-74 ATTACHMENT E PREPAYMENT OPTION S - BREAK FUNDING Prepayment: There shall be no prepayments of this Note, provided that the Bank may consider requests for its consent with respect to prepayment of this Note, without incurring an obligation to do so, and the Borrower acknowledges that in the event that such consent is granted, the Borrower shall be required to pay the Bank, upon prepayment of all or part of the principal amount before final maturity, a Prepayment Fee equal to the maximum of. (a) zero, or (b) that amount, calculated on any prepayment date, which is derived by subtracting: (a) the principal amount of the Note or portion of the Note to be prepaid from (b) the Net Present Value of the Note or portion of the Note to be prepaid on such date of prepayment. "Net Present Value" shall mean the amount which is derived by summing the present values of each prospective payment of principal and interest which, without such full or partial prepayment, could otherwise have been received by the Bank over the shorter of the remaining contractual life of the Note or next repricing date if the Bank had instead initially invested the Note proceeds at the Initial Money Market Rate. The individual discount rate used to present value each prospective payment of interest and/or principal shall be the Money Market Rate at Prepayment for the maturity matching that of each specific payment of principal and/or interest. "Initial Monev Market Rate" shall mean the rate per annum, determined solely by the Bank, on the first day of the term of this Note or as mutually agreed upon by the Borrower and the Bank, as the rate at which the Bank would be able to borrow funds in Money Markets for the amount of this Note and with an interest payment frequency and principal repayment schedule equal to this Note and for a term as may be arranged and agreed upon by the Borrower and the Bank. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. Borrower acknowledges that the Bank is under no obligation to actually purchase and/or match funds for the Initial Money Market Rate of this Note. "Monev Market Rate At Prepyavment" shall mean that zero-coupon rate, calculated on the date of prepayment, and determined solely by the Bank, as the rate in which the Bank would be able to borrow funds in Money Markets for the prepayment amount matching the maturity of a specific prospective Note payment or repricing date. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. A separate Money Market Rate at Prepayment will be calculated for each prospective interest and/or principal payment date. "Monev Markets" shall mean one or more wholesale funding mechanisms available to the Bank, including negotiable certificates of deposit, 1760049v2 RESOLUTION NO. 2005-74 eurodollar deposits, bank notes, fed funds, interest rate swaps, or others. In calculating the amount of such a prepayment fee, the Bank is hereby authorized by the Borrower to make such assumptions regarding the source of funding, redeployment of funds and other related matters, as the Bank may deem appropriate. If the Borrower fails to pay any Prepayment Fee when due, the amount of such Prepayment Fee shall thereafter bear interest until paid at the default rate specified in this Note (computed on the basis of a 360-day year, actual days elapsed). Any prepayment of principal shall be accompanied by a payment of interest accrued to date thereon; and said prepayment shall be applied to the principal installments in the inverse order of their maturities. All prepayments shall be in an amount of at least $100,000 or if less, the remaining entire principal balance of the loan. 1760049x2 9 RESOLUTION NO. 2005-74 STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF BROOKLYN CENTER I, the undersigned, being the duly qualified and acting Clerk of the City of Brooklyn Center, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City duly called and held on the date therein indicated, insofar as such minutes relate to giving final approval and authorizing the execution as of various documents in connection with the Multifamily Housing Revenue Note, Series 2005 (Unity Place Project). WITNESS my hand this day of , 2005. I~ City Clerk