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HomeMy WebLinkAbout2010 06-14 EDAP • EDA MEETING City of Brooklyn Center June 14, 2010 AGENDA 1. Call to Order —The EDA requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City Council packet, including EDA (Economic Development Authority), is available to the public. The packet ring binder is located at the front of the Council Chambers by the Secretary. 2. Roll Call 3. Approval of Agenda and Consent Agenda —The following items are considered to be routine by the Economic Development Authority (EDA) and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner so requests, in which event the item will be removed from the consent agenda and considered at the end of Commission Consideration Items. a. Approval of Minutes 1. May 24, 2010 — Regular Session • 4. Commission Consideration Items a. Resolution Authorizing the Acquisition of Property to Facilitate Neighborhood Improvements and Redevelopment Opportunities within the Brooklyn Boulevard Corridor (Northbrook Apartments — 6037 Brooklyn Boulevard) Requested Commission Action: — Motion to adopt resolution. b. Resolution Approving Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with Respect to the Payment of Real Estate Taxes and Authorizing Execution of Closing Documents Requested Commission Action: — Motion to adopt resolution. 5. Adjournment • EDA Agenda Item No. 3a • 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 MAY 24, 2010 CITY HALL — COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Tim Willson at 7:45 p.m. 2. ROLL CALL President Tim Willson and Commissioners Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were Executive Director Curt Boganey, Director of Fiscal and Support Services Dan Jordet, Director of Business and Development Gary Eitel, Assistant City Manager/Director of Building and Community Standards Vickie Schleuning, City Attorney Charlie LeFevere, and Carla Wirth, Timesaver Off Site Secretarial, Inc. • 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Ryan moved and Commissioner Yelich seconded approval of the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. May 10, 2010 — Regular Session 2. May 10, 2010 — Executive Session Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2010 -11 AUTHORIZATION ECONOMIC DEVELOPMENT AUTHORITY CONSENT TO ASSIGNMENT OF DEVELOPMENT AGREEMENT AND AUTHORITY TO CONVEY DEVELOPMENT PROPERTY (FBI REGIONAL FIELD OFFICE PROJECT) Executive Director Curt Boganey introduced the item, discussed the history, and stated the purpose of the proposed resolution. 05/24/10 -1- DRAFT i Commissioner Yelich moved and Commissioner Ryan seconded adoption of RESOLUTION • NO. 2010 -11 Authorizing Economic Development Authority Consent to Assignment of Development Agreement and Authority to Convey Development Property. The EDA discussed that it has done everything possible to move this project forward and the action tonight is necessary for Barry Real Estate to transfer rights to the Moslasky Group of Companies, Ph LLC, due to fmancing issues. Mr. Boganey stated if that were to occur, the City would issue a notice of default and Moslasky Group would be allowed a period of time to cure the default. In the event they do not cure the default, the EDA would take necessary legal action. Mr. Boganey advised there is every indication that the project will move forward, noting there have been many conversations with the developer and contractor to review plans and permits. President Willson noted it has been four years since Director of Business and Development Eitel informed the EDA of this project and agreed there is every expectation it will move forward. Motion passed unanimously. 5. ADJOURNMENT Commissioner Lasman moved and Commissioner Roche seconded adjournment of the Economic Development Authority meeting at 7:52 p.m. Motion passed unanimously. 05/24/10 -2- DRAFT EDA Agenda Item No. 4a EDA ITEM MEMORANDUM . DATE: June 9, 2010 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business and Development` SUBJECT: Resolution Authorizing the Acquisition of Property to Facilitate Neighborhood Improvements and Redevelopment Opportunities within the Brooklyn Boulevard Corridor (Northbrook Apartments - 6037 Brooklyn Boulevard) Recommendation: It is recommended that the City Council consider approval/adoption of the Resolution Authorizing the Acquisition of Property to Facilitate Neighborhood Improvements and Redevelopment Opportunities within the Brooklyn Boulevard Corridor (Northbrook Apartments — 6037 Brooklyn Boulevard) Background: On April 26, 2010, the City Council discussed an offer by Gere Fenstad, owner of the the Northbrook Apartments and the potential opportunities associated with this acquisition in the reimaging of Brooklyn Boulevard, • The majority consensus of the Council was that this is an opportune time to acquire Brooklyn Boulevard properties and combine smaller lots into a larger parcel for redevelopment, it is in the community's best interest to acquire single - family homes on Brooklyn Boulevard, and residents support the City having fewer rental properties. The Council directed staff to negotiate the best acquisition price for consideration by the Council at an Executive Session. On May 10, 2010, the City Council held an Executive Session to review a negotiated offer to acquire the Northbrook Apartments. Attached for your reference is a copy of the April 26 staff memorandum and minutes on the Council's discussion on this item. Purchase Agreement: The attached purchase agreement provides for the voluntary sales of the Northbrook Apartment Building, located 6037 Brooklyn Boulevard, for $505,000 with a closing date scheduled for August 2, 2010. The City is required to comply with the Uniform Relocation Assistance and Real Property Acquisitions Policies Act, which applies to all public projects and acquisitions that result in the displacement of tenants from their homes. Mission: Ensuring an attractive, clean, safe community that enluznces the quality of life and preserves the public trust EDA ITEM MEMORANDUM The federal requirements associated with the relocation of the existing tenants will be satisfied • on or before August 25, 2010. Budget Issues: The acquisition, relocation costs, and demolition will be funded from the Housing Fund of Tax Increment District 3, which currently has a fund balance of approximately $2,000,000, exclusive of the funds allocated to the Renew Loan and Remove & Rebuild Program. Tax Increment District No 3 was created in 1994 as a Redevelopment District to provide assistance to various commercial redevelopment and housing development projects within the District. The housing objectives included the following: 1. To acquire blighted or deteriorated residential property for rehabilitation or clearance and redevelopment. 2. To develop housing opportunities for market segments underserved by the City including housing for the disabled and elderly. The special state legislation associated with the creation of this Tax Increment District included provisions that 15% of the revenues generated from tax increment in any year is deposited in the housing development account of the authority and expended according to the tax increment financing plan. Council Goals: Strategic: 1. We will stabilize and improve residential neighborhoods i Mission: Ensuring an attractive, clean, safe community that enhances the quality of life and preserves the public trust • Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION AUTHORIZING THE ACQUISITION OF PROPERTY TO FACILITATE NEIGHBORHOOD STABILIZATION PROGRAM IMPROVEMENTS AND REDEVELOPMENT OPPORTUNITIES WITHIN THE BROOKLYN BOULEVARD CORRIDOR (NORTHBROOK APARTMENTS — 6037 BROOKLYN BOULEVARD) WHEREAS, the Brooklyn Center Economic Development Authority, Minnesota has hereto established Housing Development and Redevelopment Project No. 1, and has established the Tax Increment Financing District No. 3 and adopted a Tax Increment Financingn Plan which includes the following objectives: • To enhance the tax base of the City • To provide maximum opportunity, consistent with the needs of the City, for development by private enterprise • To better utilize vacant or underdeveloped land • To attract new businesses • To acquire blighted or deteriorated residential property for rehabilitation • or clearance and redevelopment • To develop housing opportunities for market segments underserved by the City including housing for the disabled and elderly; and WHEREAS, the Tax Increment Financing Plan for Tax Increment District No. 3 includes a budget of $5,000,000 in the Housing Development Account (Affordable Housing) which includes the following components: • Acquisition of Single and Multi - Family Housing • Rehabilitation of Single and Multi - Family Housing • Environmental Remediation of Single and Multi - Family Housing Properties, and; WHEREAS, the real property located at 6037 Brooklyn Boulevard, (the "Subject Property ") is a voluntary sale by the property owner; and WHEREAS, City staff have negotiated a purchase agreement for the purchase by the EDA of the Subject Property in the amount of $505,000; and WHEREAS, the EDA has determined that acquisition of the Subject Property on the terms and conditions set forth in the proposed purchase agreement is consistent with the goals and objectives of the Brooklyn Boulevard Streetscape Amenities Study, the City's . Comprehensive Plans and the Tax Increment District No. 3 Housing Program and is in the best interests of the City of Brooklyn Center and its citizens. NOW THEREFORE BE IT RESOLVED by the Economic Development • Authority in and for the City of Brooklyn Center, Minnesota, as follows: 1. The purchase agreement for the Subject Property is hereby approved. 2. The President and Secretary of the EDA are authorized and directed to execute the purchase agreement and the Executive Director is authorized and directed to take all such further steps as are necessary to effect the terms thereof. 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. • • • PURCHASE AGREEMENT 1. PARTIES. This Purchase Agreement ( "Purchase Agreement ") is entered into this day of June, 2010, by and between NB PROPERTIES, LLLP, a Minnesota limited liability limited partnership ( "Seller ") and the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER, a public body corporate and politic under the laws of Minnesota ( "Buyer "). 2. SUBJECT PROPERTY. Seller is the owner of that certain real estate (the "Property") located at 6037 Brooklyn Boulevard, Brooklyn Center, Hennepin County, Minnesota and legally described as follows: That part of Lot 4, Block 5, lying South of a line drawn parallel with and distant 138 feet North of, measured at right angles to, the South line of said Lot 4, Wangstad's Brooklyn Terrace. ( "Property"). The sale contemplated by this Agreement includes the following personal property: the personal property identified in paragraphs 3 and 11 below. 3. OFFER/ACCEPTANCE. In consideration of the mutual agreements herein contained, Buyer offers and agrees to purchase and Seller agrees to sell and hereby grants to Buyer the exclusive right to purchase the Property and all improvements and fixtures thereon (except as provided by paragraph 11 below), together with all appurtenances. The following personal property is included in this sale: appliances located in units that, as of the Closing Date, remain occupied by tenants disclosed pursuant to paragraph 5 below. 4. PURCHASE PRICE AND TERMS: A. PURCHASE PRICE. The total Purchase Price ( "Purchase Price ") for the Property is Five Hundred Five Thousand and No /100ths Dollars ($505,000.00). B. TERMS: (1) EARNEST MONEY. The sum of Zero Dollars ($0.00) Earnest Money ( "Earnest Money ") shall be paid by Buyer to the Seller, the receipt of which is hereby acknowledged. (2) BALANCE DUE SELLER. Buyer agrees to pay by check on the Closing Date the remaining Balance Due according to the terms of this Purchase Agreement. (3) DEED/MARKETABLE TITLE. Subject to performance by Buyer, Seller agrees to execute and deliver a Warranty Deed conveying marketable title to the Property to Buyer, subject only to the following exceptions: • a. Building and zoning laws, ordinances, state and federal regulations. 368747v6 CAH BR305 -93 1 b. Reservation of minerals or mineral rights to the State of Minnesota, if any. C. Public utility and drainage easements of record. d. Rights of existing tenants, as disclosed pursuant to paragraph 5 below. e. Title defects waived by Buyer pursuant to paragraph 9 below. (4) DOCUMENTS TO BE DELIVERED AT CLOSING. In addition to the Warranty Deed required at paragraph 4B(3) above, Seller shall deliver to Buyer: a. Standard form Affidavit of Seller. b. Certificate that Seller is not a foreign national. C. Well disclosure certificate, if required, or, if there is no well on the Property, the Warranty Deed must include the following statement: "The Seller certifies that the Seller does not know of any wells on the described real property." d. Assignment of all leases in effect as of the Closing Date, together with payment of tenant deposits and accrued interest thereon from the date of original deposit. e. Bill of sale for personal property items to be transferred to Buyer in accordance with paragraph 11. f. Such other documents as may be reasonably required by Buyer's title • examiner or title insurance company. 5. SELLER INFORMATION DISCLOSURE. Within ten (10) days after full execution of this Agreement, Seller shall provide Buyer with all pertinent information known by or within Seller's possession or control relating to the Property, including but not limited to the following: A. Copies of building plans and specifications, if any, in Seller's possession; B. Copies of any warranties or guarantees relating to the Property, if any; C. Copies of any written notices received from any governmental agency or authority relating to the Property; D. Copies of all existing leases (and amendments thereto) relating to the Property; as well as the current rent roll, and amounts held for security deposits; and copies of all tenant files; E. Copies of all management and service contracts relating to the Property; F. Lists of all personal property located on or at the Property, if any; • 368747v6 CAH BR305 -93 2 G. Copy of any environmental assessments including any Phase I environmental assessments, in Seller's possession or available to Seller, if any. 6. CLOSING DATE. The closing on the sale of the Property shall take place on August 2, 2010 or earlier date as mutually agreed by the parties. 7. REAL ESTATE TAXES. A. Seller shall pay on or prior to the Closing Date all real estate taxes due and payable in 2009 and prior years on the Property, including any delinquent real estate taxes. B. Real estate taxes due and payable in 2010 shall be prorated as of the date of Closing between Buyer and Seller. 8. SPECIAL ASSESSMENTS. A. Seller shall pay on or prior to the Closing Date the balance of all special assessments certified for payment with 2010 real estate taxes. Buyer shall be responsible for all special assessments payable after 2010. B. INTENTIONALLY OMITTED. • C. Seller shall pay any deferred real estate taxes or special assessments, payment of which is required as a result of closing of this sale. D. As of the date of this Purchase Agreement, Seller has not received a notice of hearing for a new public improvement project from any governmental assessing authority, the costs of which project may be assessed against the Property. If a notice of a pending special assessment is issued after the date of this Purchase Agreement and on or before the Closing Date, Buyer shall assume payment of any such special assessment. E. Notwithstanding any other provisions of this Purchase Agreement, Seller shall at all times be responsible to pay special assessments, if any, for delinquent sewer or water bills, removal of diseased trees, snow removal, or other current services provided to the Property by the assessing authority while the Seller is in possession of the Property. 9. TITLE EXAMINATION. A. Buyer shall, promptly after the date of this Agreement, obtain a commitment ( "Title Commitment ") for an ALTA Form B 1997 Owner's Policy of Title Insurance insuring title to the real Property in the amount of the Purchase Price, issued by Old Republic Title Insurance Company. The Title Commitment must 0 commit to insure fee title to the Property subject only to Permitted Encumbrances (as defined below) and insure all covenants, easement rights, restrictions 368747v6 CAB BR305 -93 3 appurtenant to the Property, including rights of access and utility easements. Copies of all recorded documents affecting the Property must accompany the Commitment. B. Survey. At its expense, Buyer may obtain an ALTA/ASCM survey certified to Buyer, its lender and the title company. C. Buyer's Objections. Within ten (10) business days after receiving the Title Commitment, Buyer will make written objections ( "Objections ") to the form and /or contents of the Title Evidence. Buyer's failure to make Objections within such time period will constitute waiver of Objections. Any matter shown on such Title Evidence and not objected to by Buyer shall be a "Permitted Encumbrance." Seller shall have twenty (20) days after receipt of the Objections to cure the Objections, except for existing leases. Seller shall have until closing to cure objections related to leases. Seller shall use its best efforts to correct any Objections. To the extent an Objection can be satisfied by the payment of money, Buyer shall have the right to apply a portion of the cash payable to Seller at the Closing to satisfaction of such Objection and the amount so applied shall reduce the amount of cash payable to Seller at closing. If Objections are not cured within such twenty (20) day period, Buyer will have the option to: (1) terminate this Agreement; OR (2) waive the objections and proceed to close; OR • (3) withhold from the purchase price an amount reasonably required to remove the objections, which in the reasonable judgment of Buyer's title company is sufficient to assure cure of the objections. This amount will be placed in escrow (the "Escrow ") with the title company used to close the transaction ( "Title "), pending such cure. If seller does not cure such Objections within one hundred twenty (120) days after such Escrow is established, Buyer may then cure such Objections and charge the costs of such cure (including reasonable attorney's fees) against the amount in Escrow. Seller shall agree to pay the charges of Title to create and administer the Escrow. 10. CLOSING COSTS AND RELATED ITEMS. The Seller shall be responsible for the following costs: (1) the cost of the Title Commitment; (2) deed transfer taxes and conservation fees required to be paid in connection with the warranty deed to be given by the Seller; (3) recording fees and conservation fees for all instruments required to establish marketable title in Seller; and (4) one- half of any closing fee charged in connection with this transaction. Buyer shall be responsible for the payment of the following costs: (1) recording fee for the warranty deed to be given by the Seller; (2) one -half of any closing fee; (3) title insurance premium, if any. Each party shall be responsible for its own attorneys' fees and costs. 368747v6 CAH BR305 -93 4 • 11. POSSESSION /CONDITION OF PROPERTY. Seller shall deliver possession of the Property to Buyer on the Closing Date. Seller shall remove all personal property not included in this sale from the Property prior to the Closing Date or when a tenant leaves the premises per the Buyer's relocation program. Any furniture, fixtures, equipment or other personal property remaining at the Property as of the Closing Date shall be deemed the property of Buyer and shall be conveyed to Buyer via bill of sale at Closing and may be used by Buyer or disposed of by Buyer as Buyer sees fit. Buyer and Seller will conduct a joint inspection of the Property at a time to be mutually agreed upon prior to Closing for the purpose of identifying personal property that may be reclaimed by Seller at Seller's sole option. Notwithstanding anything to the contrary in this Agreement, Seller shall have the right to salvage and remove the water heater, boiler and air conditioning units and the other items of personal property identified by Seller and Buyer during the inspection within seven days after the Property is vacated by all occupants or, if Closing has already occurred, within seven days after notice by Buyer to Seller that the Property is vacant and unoccupied. The parties acknowledge and agree that the Buyer has no intention of using any of the personal property after the last tenant vacates, and that Seller may reclaim all items of personal property that it desires. Buyer shall be the owner, subject to Seller's right to reclaim the property, of all the personal property located on the Property on the Date of Closing and shall be responsible for its maintenance and condition during any period of tenancy. 12. SELLER'S WARRANTIES. Seller hereby agrees, covenants, and represents and warrants to Buyer that to the best of Seller's knowledge: A. Seller has good and marketable fee simple title interest to the Property and no consents or approvals from any third parties are required. B. There are no notices, orders, suits, judgment or other proceedings related to zoning of the Property that have been violated. C. The Property will, as of the date of closing, be free and clear of all liens, security interests, all encumbrances, options, purchase agreement or right of first refusal, management or maintenance contracts, leases or other occupancy agreements and restrictions except Permitted encumbrances and except as provided in paragraph 4B(3) of this Agreement. Seller shall be responsible, at its sole cost and expense, to terminate all such contracts or covenants not specifically accepted by Buyer. D. All labor or material that have been furnished to the property have been fully paid for or will be fully paid for prior to the Closing Date so that no lien for labor or materials rendered can be asserted against the Property. E. INTENTIONALLY OMITTED. F. No wells or sewage treatment systems are on the Property. Seller agrees to provide an affidavit and all information on any wells on the Property. G. Seller will not renew any existing lease or enter into any new lease after the date of this Agreement. Seller will not extend any existing lease beyond the date of 368747v6 CAH BR305 -93 5 Closing. The information provided pursuant to paragraph 6 above will be accurate • and complete. H. INTENTIONALLY OMITTED. I. There are no contracts or agreements affecting that Property that Seller shall not terminate effective at or prior to the closing. J. Seller warrants that there is no pending or, to the best of Seller's knowledge and belief, threatened condemnation or similar proceedings affecting the Property. In the event any condemnation or eminent domain proceeding shall be commenced at any time prior to the Closing Date, which proceeding results or may result in a taking of all or any of the Property, then either party, at its option, may elect either to terminate this Agreement, and receive a full refund of the Earnest Money, plus all interest accrued thereon, whereupon the parties shall have no further obligations under this Purchase Agreement. The party initiating termination must notify the other party in writing within ten (10) business days of the party's receipt of notice of any condemnation or eminent domain proceeding with respect to the Property. Seller will promptly notify Buyer if Seller receives notice of any condemnation proceeding. If neither party elects to terminate this Agreement, the parties shall close on the sale, without diminution of the Purchase Price; provided, however, that Seller shall assign any condemnation or eminent domain award to Buyer. • The representations and warranties set forth shall be continuing and shall be true and correct on and as of the closing date with the same force and effect as if made at the time and all such representations and warranties shall survive closing and shall not be affected by any investigation, verification or approval by any party. Seller agrees to indemnify and hold Buyer harmless from and against and to reimburse Buyer with respect to any and all claims, demands, causes of action, loss, damage, liabilities, and costs (including attorney's fees and court costs) asserted against or incurred by Buyer by reason of or arising out of the breach of any representation or warranty as set forth in this representation and warranty section. NO WARRANTIES OF SELLER: "AS -IS" PURCHASE. Except for the express representations and warranties provided above, Buyer hereby acknowledges and agrees that Buyer is purchasing and accepting the Property "as -is" and "where -is ", "with all faults ", without relying upon any representation or warranty with respect to the Property made by Seller, oral or written, express or implied. Buyer acknowledges that Seller has made no express or implied representations or warranties with respect to the Property or any condition thereof or financial aspects of the Property. Seller expressly disclaims and Buyer acknowledges and agrees that Seller has disclaimed, any and all representations, warranties or guaranties of any kind, whether oral, express, implied or statutory concerning the Property, including without limitation (i) the value, condition, merchantability, habitability, particular purpose or use, of the Property; (ii) the manner or quality of the construction or material, if any, incorporated into any improvements located on the • 368747v6 CAH BR305 -93 6 • Property; and (iii) the manner, repair, quality, state of repair or lack of repair of any such improvements or personal property contained on the Property or used in connection therewith. The Property does not contain any underground or above ground storage tanks, except a water storage tank located in the basement. If any such tanks have been previously located on the Property, Seller agrees to provide Buyer with any and all information available in connection with removal of any such tanks. To the Seller's knowledge, there are no hazardous substances, as defined in applicable state and federal law, located anywhere in or on the subject Property or affecting the subject Property, except for asbestos in the tiles. 13. REMOVAL OF HAZARDOUS MATERIALS. Seller, prior to vacation of the Property, shall remove all substances which, under state or federal law, must be disposed of at an approved disposal facility. This requirement does not apply to hazardous substances integrated into the building improvements (e.g., asbestos) or soil but applies only to movable equipment, supplies and materials that are located or stored on the Property. Buyer and Seller will conduct a joint inspection of the Property at a time to be mutually agreed upon prior to Closing for the purpose of identifying materials that must be removed by Seller. 14. DISCLOSURE; INDIVIDUAL SEWAGE TREATMENT SYSTEM. Seller discloses that there is not an individual sewage treatment system on or serving the Property. • 15. RISK OF LOSS. The risk of loss or damage to the Property prior to Closing shall be allocated among the parties as provided under this paragraph. If, prior to Closing any portion of the Property is damaged due to causes for which insurance coverage is available, the parties shall proceed to closing as provided under this Agreement and Seller shall assign up to $505,000.00 of the proceeds to Buyer. Any proceeds available beyond the actual damages shall be the property of Seller. Seller represents that Seller has the following insurance coverage for the Property and that Seller will maintain in force Seller's current insurance coverage until Closing: $950,000.00 casualty insurance. If no insurance coverage is available, then Buyer may, at its sole option, terminate this Agreement by giving notice of termination to Seller within 15 days after Buyer receives notice of the damage. Notwithstanding anything else in this paragraph, if the Property is damaged due to the negligent or intentional acts of Buyer, its agents, contractors or employees, then Seller may terminate this Agreement by giving notice of termination to Buyer within 15 days after Seller discovers the damage. If either party terminates this Agreement under this Paragraph, Seller shall promptly return the Earnest Money to Buyer, the parties shall execute a termination of purchase agreement, and the parties thereafter shall have no further rights, liabilities, or obligations under this Agreement. 16. RELOCATION BENEFITS. Seller acknowledges that this transaction is not made under threat of condemnation by Buyer. Seller further acknowledges that Seller has been informed in writing by Buyer that, in the absence of a mutual agreement for the purchase of the Property, the Buyer will not acquire the Property by condemnation; accordingly, Seller acknowledges that Seller is not eligible for relocation benefits. 368747v6 CAH BR305 -93 7 Buyer is obligated to provide relocation benefits and services to tenants who are eligible displaced persons, within the meaning of Minn. Stat. § 117.50. All tenants are entitled to receive • notices regarding eligibility and the notice to move. Seller agrees not to terminate any of the existing month -to -month tenancies or to require any existing tenant to move from the Property prior to the Closing Date, except pursuant to an unlawful detainer proceeding for nonpayment of rent or material violation of any lease term. If a tenant with an existing term lease requests early termination of the lease, Seller must agree to termination as of August 1, 2010 and may at Seller's discretion agree to an earlier termination date requested by the tenant. Seller will provide Buyer with all relevant information requested by Buyer to assist in providing required relocation benefits to occupants. Seller warrants and represents that Seller is not aware of any persons, other than those disclosed to Buyer under paragraph 5 above, who may be entitled to relocation benefits. Buyer agrees to pay to Seller at Closing all rents that Seller would have collected from tenants that have legally terminated their tenancy after the date hereof and prior to the Closing Date. Seller shall notify Buyer in writing of any tenancy that terminates, the date of said termination, and the amount of rent (income) that Seller will lose as a result of said termination. 17. BROKER COMMISSIONS. Buyer and Seller each represents and warrants to the other that there is no broker involved in this transaction with whom either has negotiated or to whom the representing party has agreed to pay a broker commission or finder's fee in connection with negotiations for purchase or sale of the Property. 18. NO MERGER OF REPRESENTATIONS, WARRANTIES. All representations and warranties contained in this Purchase Agreement shall not be merged into any instruments or conveyance delivered at Closing and the parties shall be bound accordingly. • 19. ENTIRE AGREEMENT; AMENDMENTS. This Purchase Agreement constitutes the entire agreement between the parties, and no other agreement prior to this Purchase Agreement or contemporaneous herewith shall be effective except as expressly set forth or incorporated herein. Any purported amendment shall not be effective unless it shall be set forth in writing and executed by both parties or their respective successors or assigns. 20. BINDING EFFECT; ASSIGNMENT. This Purchase Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors and assigns. Buyer shall not assign its rights and interest hereunder without notice to Seller. 21. NOTICE. Any notice, demand, request or other communication which may or shall be given or served by the parties shall be deemed to have been given or served on the date the same is deposited in the United States Mail, registered or certified, postage prepaid and addressed as follows: A. If to Seller: NB Properties, LLLP Attn: Gerald Fenstad 3696 Milton Street Shoreview, MN 55126 368747v6 CAH BR305 -93 8 B. If to Buyer: Brooklyn Center Economic Development Authority Attn: Gary Eitel 6301 Shingle Creek Parkway Brooklyn Center, MN 55430 22. SPECIFIC PERFORMANCE. This Purchase Agreement may be specifically enforced by the parties, provided that any action for specific enforcement is brought within six months after the date of the alleged breach. This paragraph is not intended to create an exclusive remedy for breach of this Purchase Agreement; the parties reserve all other remedies available at law or in equity. 23. INDEMNIFICATION. Buyer agrees to indemnify and hold Seller harmless from and against and to reimburse Seller with respect to any and all claims, demands, causes of action, loss, damage, liabilities, and costs (including attorney's fees and Court costs) asserted against or incurred by Buyer by reason of or arising out of any claim by a tenant arising out of the lease and/or the landlord/tenant relationship after the Date of Closing. Seller agrees to indemnify and hold Buyer harmless from and against and to reimburse Buyer with respect to any and all claims, demands, causes of action, loss, damage, liabilities and costs (including attorney's fees and Court costs) asserted against or incurred by Buyer by reason of or arising out of any claim by a tenant arising out of the lease and/or the landlord/tenant relationship prior to the Date of Closing, even if the claim is made after the Date of Closing. Nothing in this paragraph is intended to alter the Buyer's obligation to pay tenant relocation benefits, and Buyer shall be solely responsible for providing relocation benefits to tenants as required by applicable law. 24. CONTRACT TO BE ASSUMED. The washers and dryers that are located on the Property are leased on a month -to -month basis, and the Buyer agrees to assume the leases of the washers and dryers on a month -to -month basis beginning August 1, 2010. [remainder of page left blank intentionally] 368747v6 CAH BR305 -93 9 IN WITNESS WHEREOF, the parties have executed this Purchase Agreement as of the date written above. SELLER NB PROPERTIES, LLLP By: Its: BUYER ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER By: • I Its: President By: Its: Executive Director 368747v6 CAH BR305 -93 10 • Exhibit A City Council Study/Work Session April 26, 2010 POTENTIAL ACQUISITION OF THE NORTHBROOK APARTMENTS 6037 BROOKLYN BOULEVARD Mr. Eitel presented the offer by Jerald Fenstad, owner of the Northbrook Apartments, and advised of potential opportunities associated with the acquisition in the reimaging of Brooklyn Boulevard. He noted the City owns two homes on Brooklyn Boulevard that could also be included in the reimaging of Brooklyn Boulevard that was identified in the 2030 Comprehensive Plan. Mr. Eitel asked whether the Council was interested in purchasing Mr. Fenstad's property assuming all eleven units are vacant. The Council discussed its goal of reimaging Brooklyn Boulevard and the use of the TIF 3 Housing Fund as the funding source for property acquisition. City Manager Boganey stated if the Council is in agreement to pursue acquisition, a not -to- exceed cost could be established and requirement placed for a $110,000 escrow account to cover reallocation costs. It was noted the • assessed value of $545,000 was based on a valuation period of 2008 and 2009 so it may not necessarily represent the current market value of the property. City Attorney Charlie LeFevere advised that State law allows the Council to meet in closed session to formulate an acquisition offer and give direction to staff. Mr. Eitel requested Council direction on two policy questions: Does the Council believe that it is in the community's best interest to continue the acquisition of properties within the Brooklyn Boulevard Corridor? Does the City Council support the prioritizing of the use of TIF #3 Housing Funds for this acquisition? Mr. Eitel stated if the Council determines to move forward, staff will do its best job to negotiate a fair purchase price for the Council's consideration. 04/26/10 -3- It was the majority consensus of the Council that this is an opportune time to acquire Brooklyn Boulevard properties and combine smaller lots into a larger parcel for redevelopment, it is in the community's best interest to acquire single - family homes on Brooklyn Boulevard, and residents support the City having fewer rental properties. The Council directed staff to negotiate the best acquisition price for consideration by the Council at an Executive Session. MEMORANDUM - COUNCIL WORK SESSION DATE: April 22, 2010 . TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business and Development SUBJECT: Opportunity to acquire the Northbrook Apartments, 6037 Brooklyn Boulevard as part of the reimaging of Brooklyn Boulevard Corridor. Recommendation: It is recommended that the City Council consider the offer by Jerald Fenstad, the owner of the Northbrook Apartments and the potential opportunities associated with the acquisition in the reimaging of Brooklyn Boulevard. Background: Sales of Northbrook Apartments: Mr. Fenstad has indicated his plans to sell the Northbrook Apartments this year and is inquiring on the potential interest of the City as a prospective buyer of Brooklyn Boulevard properties. This 11 unit apartment building, constructed in 1961 on a 26,120 sq. ft. lot, is zoned R -5 Multiple Family Residence District and has a 2010 assessed valuation of $545,000. Mr. Fenstad has indicated that the 11 units would be vacant and is asking $560,000 with a • closing to occur on or before June 30 2010. Federal Relocation Laws: The City is required to comply with the Uniform Relocation Assistance and Real Property Acquisitions Policies Act Laws that apply to all public projects and acquisitions that result in the displacement of tenants from their homes. Our consultant has previously advised use that these costs could be in the $10,000 to $15,000 per unit ranges. Note: an apartment complex acquisition by a neighboring community reported that their relocation benefits were $5,000- $6,000 per unit with about 50% of the tenants receiving benefits. Consideration of these potential costs should be considered in the negotiations /structuring of the purchase agreement. It may be possible to arrive at a sales price not to exceed an agreed upon price that includes the potential payments of relocation costs. An example of this option, as applied to this offer would be $450,000 paid at closing and $110,000 placed in an escrow account from which draws are authorized to pay for relocation costs. Upon satisfaction of the relocation requirements the seller retains the balance of the escrow account. Should the Council decide to proceed with this acquisition, our Relocation Consultant will be included in the drafting of the purchase agreement. i Mission Ensuring; tin attractive, clean, safe community that enhancers the qualltl- of life autl preserves the public trust MEMORANDUM - COUNCIL WORK SESSION . Visioning / Remmaging of the Brooklyn Boulevard Corridor: The 2030 Comprehensive Plan Update recognized this portion of the Brooklyn Boulevard corridor as a community planning issue that required additional review and specific attention on the issues and opportunities associated with land use planning and guidance related to the Land Use and Transportation Elements of the Plan. As part of the implementation strategies of the plan, there has been discussion of commencing with a scoping plan that indentifies the issues ( including existing conditions, constraints, and problems areas) , the agencies and partners that have a role in this right of way corridor, the potential partners in this study ( property owners, area residences, business owners, and the development community) and potential opportunities that would assist in identifying and developing options (the casting of different visions, updating the current land uses, or reimaging this transportation corridor and reshaping its land uses). After this step, that will emphasize ownership in the study and its outcome, the City will be asking the County to participate in retaining the appropriate consultants to undertake the updating of the former Brooklyn Boulevard Corridor Studies and Streetscape Plans. With respect to the visioning of the Brooklyn Boulevard Corridor, I believe that the potential opportunities associated with property acquisitions provides the City with the ability to control the planning and redevelopment of future land uses and right of way management that has . limited the City's and County's ability in the past to reimage this portion of the corridor. Note: The discussions with the Planning Commission on implementation strategies will continue to focus on our successes (the Boulevard Market redevelopment, the 69 Ave. Parkway (east of Brooklyn Boulevard) the initial phase of the Brooklyn Boulevard improvements that extended to 65 Avenue, the Xerxes & Bass Lake Road Streetscape Improvements, and the Bellvue /53 Avenue Streetscape improvements and the lessons that we have learned from these projects. Council Policy Issues 1. Does the City Council believe that it is in the community's best interest to continue the acquisition of properties within the Brooklyn Boulevard corridor? 2. Does the City Council support the prioritizing of the use of TIF #3 Housing Funds for this acquisition? Budget Issues: Funding source could be TIF 3 housing fund which has approximately $2,000,000 in unallocated funds and an annual revenue stream of approximately $300,000 through remaining life of this Tax Increment District/2021. • Council Goals: Strategic: Alicsion: Fnsurii*, an / attractive. dean, safe community that enhances the quality of life andpreserves the public trust MEMORANDUM - COUNCIL WORK SESSION 3. We will stabilize and improve residential neighborhoods • 5. We will continue to maintain and upgrade City infrastructure improvements Ongoing: 5. We will improve the image of the City with citizens and others • Mission: Ensuring an attractive, clean, safe community that enhances the quality of life atul presen es the public trust EDA Agenda Item No. 4b I� EDA ITEM MEMORANDUM • DATE: June 10, 2010 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business and Development` SUBJECT: Resolution Approving Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with Respect to the Payment of Real Estate Taxes and Authorizing Execution of Closing Documents. (FBI Regional Field Office Project) Recommendation: It is recommended that the City Council consider approval/adoption of the Resolution Approving Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with respect to the payment of Taxes and Authorizing Execution of Closing Documents. (FBI Regional Field Office Project) Background: On October 20, 2009, the City Council adopted Resolution No. 2009 -18, Authorizing the Execution of a Third Amendment to Real Estate Option Agreement. This amendment provided technical corrections and procedural revisions to the draft Development Agreement that was • attached to the initial Option Agreement with the GSA, dated March 19, 2008. The Development Agreement provided for Barry Minneapolis, LLC to close on the property within 120 days from the execution of the agreement, to commence construction no later than May 31, 2010 and to complete the minimum improvements no later than October 12, 2011. On February 22, 2010, the EDA adopted Resolution No. 2010 -04 Authorizing the execution of the First Amendment to the Development Agreement, which included the following: P g : g - An extension of -the closing date until April 29, 2010, - The acknowledgement of the plans by Barry Real Estate to assign their developer's right, title and interests in and to the lease with the GSA and the development agreement for this FBI Regional Field Office Project to PH, LLC. ( Molasky Group of Companies) , - An extension of the commencement of construction date from May 31, 2010 to July 31, 2010, and - The extension of the completion date from October 1, 2011 to December 31, 2011. On April 26, 2010, the EDA was informed that a delay in the closing was being requested allow the GSA and Barry Real Estate ( Barry Minneapolis, LLC) to complete the assignment of the lease and conveyance of the development rights to Molasky Group of Companies. The action of the EDA was the adoption of Resolution No. 2010 -07 Authorizing execution of a Second Amendment to the Development Agreement, which included the following: - An extension of the closing date until June 10, 2010, • - An extension of the commencement of construction date from July 31, 2010 to August 31, 2010, and Mission: Ensuring an attractive, clean, safe community that enhances the quality of lzfe and preserves the public trust EDA ITEM MEMORANDUM - The extension of the completion date December 31, 2011 to January 1, 2012. • On May 24, 2010, the EDA adopted Resolution No. 2010 -11, Resolution Authorizing Economic Development Authority Consent to Assignment of Development Agreement and Authority to Convey Development Property. This action formally approved the Assignment of the development agreement from Barry Minneapolis, LLC, a Georgia Limited Liability Company, to PH, LLC, a Nevada Limited Liability Company, pursuant to Article IX, Section 1.2 of the Development Agreement. Resolution Approving Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restrictions with Respect to Payment of Real Estate Taxes and Authorizing Execution of Closing Documents. As part of the financing of the construction of this project, the lender, Teacher's Insurance and Annuity Association of America, a New York corporation has requested that the subordination agreement be approved by the EDA as part of the closing of the financial documents. Attached is a Resolution prepared by Briggs and Morgan, the EDA's legal counsel, the Covenant and Restriction with Respect to the Payment of Real Estate Taxes, the Development Agreement Subordination Agreement, and a summary /outline of the contents of the subordination agreement. Covenant and Restriction with Respect to the Payment of Real Estate Taxes . In consideration of the EDA's agreement to execute the Subordination Agreement, the Developer, PH LLC. has agreed to memorialize and strengthen the provisions within the Development Agreement which acknowledges that the Development Property will not be exempt from ad valorem real estate property taxes. The execution of this covenant, which will be recorded in the Official Records and binding to the property, provides that during the period from January 1, 2011 to December 31, 2030, the owner will pay or cause to be paid all ad valorem real estate taxes due and payable with respect to the property and improvements and will not apply for or otherwise seek to have the Property or the improvements exempted from ad valorem real estate taxes. Additionally in the event that, for any reason, the property or improvements become, in any way, exempt, in whole or in part, from the obligation to pay ad valorem real estate taxes during the period described above, the owner will make annual payments in lieu of ad valorem real estate taxes during the described period. Development Agreement Subordination Agreement The subordination agreement memorializes the development agreement and the assignment and assumption agreement; it references that the lender is making a loan up to a maximum principal amount of $62,500,000, that is secured by a Mortgage, Assignment of Development Agreements and Rents, Security Agreement, and Fixture Filing which will encumber the Development Property; and that this loan will be cross — collateralized and cross defaulted with other loans the Alission: Ensuring an attractive, clean, safe community that enhances the quality of life and preserves the public trust EDA ITEM MEMORANDUM lender has or is making with certain affiliates of the Developer that are identified within the agreement that total approximately $201,500,000. As a condition of the Loan's funding and executions of the documents evidencing the Loan, the lender has required the Developer and Authority execute this agreement, which protects the lenders interest in this mortgaged property regardless of any claims, violations, defaults, or foreclosures which may occur and provides for lenders right to cure any notice of default. Attached for your reference (Exhibit A) are the sections within the development agreement relating to payment of real estate taxes and the subordination agreement. Budget Issues: There are no budget issues to consider. Council Goals: Select not more than two. Strategic Goal #2: Aggressively proceed with implementation of City's redevelopment plans. Ongoing Goal #3: Moving towards maintaining or lowering the level of City property taxes. • Alission: Ensuring an attractive, clean, safe community that enhances the quality of life and preserves the public trust EDA ITEM MEMORANDUM EXHIBIT A • Articles from the Development Agreement by and Between Economic Development Authority of Brooklyn Center and Barry Minneapolis, LLC Article III Conveyance of Development Property, Section 3.7 Acknowledgements by Developer The Developer acknowledges and agrees that: (a) no promises or commitments of any type or kind have been made by the Authority with respect to providing financial assistance to the Minimum Improvements, whether by loan, grant, bond issuance of otherwise; (b) the Developer will need to obtain all permits and approvals for the design, construction and operation of the Minimum Improvements required by applicable law, including all building and environmental permits and approvals, and that no promises have been made by the Authority with respect to waiving or modifying any applicable permitting requirements; (c) the City must approve a subdivision of the Property, as defined in the Option Agreement, to allow the Deed to be recorded in the County land records and no promises have been made by the Authority with respect to the City's waiver or modification of any applicable subdivision requirements; and (d) no promises or commitments have been made by the Authority with respect to the assessed valuation of the Minimum Improvements or any of the facilities ancillary thereto. The Developer acknowledges that the Development Property will not be exempt from ad valorem real estate property taxes. Article VI Certain Financing Provisions, Section 6.5 Subordination of Agreement In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the Authority agrees to subordinate the provisions of this Agreement, to the documents executed in connection with the Construction Loan Mortgage, provided that such subordination shall not deprive the Authority or otherwise limit any of the Authority's rights or remedies under this Agreement. • :Mission: Ensuring an attractive, clean, safe community that enhances the quality of life and preserves the public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION APPROVING DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES AND AUTHORIZING EXECUTION OF CLOSING DOCUMENTS A. WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "Authority ") and the United States of America, acting by and through the U.S. General Services Administration (the "GSA ") have heretofore entered into a Real Estate Option Agreement (as amended, the "Option Agreement ") providing for the Authority's conveyance of certain real property (as defined in the Development Agreement, the "Development Property ") to the GSA for the purpose of constructing office space containing up to approximately 173,572 square feet of rentable space with an onsite parking facility structure having a minimum of 347 secured and visitor parking spaces (the "Project ") within the City of Brooklyn Center, Minnesota (the "City "). • B. WHEREAS, by that certain Assignment of Option Agreement dated effective as of June 19, 2009, the GSA assigned its rights under Option Agreement to Barry Minneapolis, LLC (`Barry C. WHEREAS, Barry exercised the option granted in the Option Agreement by delivering to the Authority, inter alia, that certain Development Agreement dated October 16, 2009 (the "Development Agreement "). D. WHEREAS, the Authority and Barry have amended the Development Agreement pursuant to that First Amendment to Development Agreement dated effective as of February 22, 2010 and that Second Amendment to Development Agreement dated effective as of April 27, 2010. E. WHEREAS, PH LLC, a Nevada limited liability company ( "PH "), and Barry entered into that certain Purchase Agreement dated as of December 21, 2009, as amended by that certain First Amendment to Purchase Agreement dated as of January 15, 2010, as amended by that certain Second Amendment to Purchase Agreement, dated March 29, 2010 (collectively, the "Purchase Agreement "), which Purchase Agreement will be assigned by PH to PH Minneapolis, LLC, a Nevada limited liability company (such entity referred to herein as the "Developer "). F. WHEREAS, pursuant to a certain Assignment and Assumption Agreement, previously approved by the Authority, Barry will assign to Developer all of Barry's rights and obligations under the Development Agreement (the "Assignment "). EDA RESOLUTION NO. • G. WHEREAS, Developer is obtaining financing for the construction of the Project from Teacher's Insurance and Annuity Association of American, a New York corporation ( "Lender); H. WHEREAS, as a condition to providing such financing of the construction of the Project, Lender requires the Authority's agreement to subordinate certain rights of the Authority under the Development Agreement and the Deed, as contemplated in the Development Agreement, and to further modify certain provisions of the Development Agreement, as set forth in that certain Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with Respect to the Payment of Real Estate Taxes (the "Subordination Agreement "). I. WHEREAS, Developer and Lender have agreed that, in consideration of the Authority's execution of the Subordination Agreement, the Developer shall execute and record that certain Covenant and Restriction with Respect to the Payment of Real Estate Taxes (the "Tax Covenant "), which obligates Developer and its successors and assigns, including Lender, to pay real estate taxes on the Project and prohibits the application by any such owner to apply for tax- exempt status for the Project. J. WHEREAS, Section 3.9(b)(iv) of the Development Agreement requires the Authority to provide a resolution of the Authority authorizing the Authority's conveyance of the Development Property to Developer (the "Conveyance ") and identifying the individuals • authorized to execute the Deed (as defined in the Development Agreement) to be granted in connection with the Conveyance and any other documents required under the Development Agreement in connection with the Conveyance (together with the Deed, the "Closing Documents "). NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Authority of Brooklyn Center, Minnesota, as follows: L The Board of Commissioners hereby approves the Subordination Agreement and Tax Covenant, including the documents in substantially the form submitted, and the President and Executive Director are hereby authorized and directed to execute the Subordination Agreement, including implicit modifications of the Development Agreement, and the Tax Covenant on behalf of the Authority. 2. The Board of Commissioners hereby approves the Conveyance, including the execution of the Closing Documents and any documents reasonably required in connection therewith, and the President and Executive Director are hereby authorized and directed to execute any document required to complete the Conveyance on behalf of the Authority. • EDA RESOLUTION NO. 3. The Board of Commissioners recognizes that the Developer's obligation to close on the purchase of the Development Property on or before the Closing Date set forth in the Development Agreement is contingent on Developer closing on financing for the Project, as set forth in Section 3.8(a)(i) of the Development Agreement, further recognizes that Developer was unable to close on such financing on or before June 10, 2010, and hereby approves an extension of the Closing Date to occur on or before June 18, 2010. 4. The approval hereby given to the Subordination Agreement, Tax Covenant and the Conveyance (including the execution of any and all Closing Documents) includes approval of such additional details contained in the documents related thereto as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Authority officials authorized by this resolution to execute documents required in connection with the Authority's consent to the Assignment and with the Conveyance. The execution of such documents by the appropriate officer or officers of the Authority shall be conclusive evidence of the approval of the Assignment and Conveyance (including the execution of any and all Closing Documents) in accordance with the terms hereof. June 14, 2010 • 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. • STATE OF MINNESOTA COUNTY OF HENNEPIN • CITY OF BROOKLYN CENTER I, the undersigned, being the duly qualified and acting Secretary of the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the Board of Commissioners of the City held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Approving Development Agreement Subordination Agreement and Agreement Re ardin Covenant and Restriction with Respect to �' Regarding P the Payment of Real Estate Taxes and Authorizing Execution of Closing Documents. WITNESS my hand as such Secretary of the Board of Commissioners of the Economic • Development Authority of the City of Brooklyn Center, Minnesota this day of June, 2010. Secretary i • The area above is reserved for Recorder's use DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES THIS DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES (this "Agreement ") is made and entered into as of the day of June, 2010, by and between PH MINNEAPOLIS, LLC, a Nevada limited liability company ( "Developer "), TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation (together with its successors and assigns, "Lender "), WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as collateral trustee for Lender (together with its successors and assigns, the "Collateral Trustee "), and ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the "Authority "). • RECITALS 15699253.11.BUSINESS A. The Authority and Barry Minneapolis, LLC ( "Barry ") are parties to that certain Development Agreement dated October 16, 2009, as amended by that certain First Amendment • to Development Agreement, by and between the Authority and Barry dated as of February 22, 2010 and as further amended by that certain Second Amendment to Development Agreement, by and between the Barry and the Authority dated as of April 27, 2010 (as amended, and as may from time to time be amended, supplemented, restated or otherwise modified, the "Development Agreement "); B. On the date hereof, all of Barry's rights and obligations in and to the Development Agreement have been transferred and assigned to Developer pursuant to that P �' � P P certain Assignment and Assumption Agreement the 'Ass and Assumption � P �' ( g P Agreement ") dated as of the date hereof, a true, correct and complete copy of which is attached hereto as Exhibit A ; C. In connection with the execution hereof, Lender is making a loan (the "Loan ") in the original principal amount of up to a maximum of approximately $62,500,000 to Developer, which such Loan is secured by, among other things, a certain Mortgage, Assignment of Development Agreements and Rents, Security Agreement and Fixture Filing (the "TIAA Mortgage ") from Developer in favor of Collateral Trustee which encumbers the real property set forth on Exhibit B attached hereto (the "Property ") as more particularly described therein; D. The Loan is and/or will be cross - collateralized and cross - defaulted with certain other loans made or to be made by Lender or certain of its affiliates to certain affiliates of Developer as described on Exhibit C attached hereto (such loans, collectively, the "Other . � Loans "); E. In connection with the sale of the Property from the Authority to the Developer, Authority and Developer executed that certain Covenant and Restriction With Respect To the Payment of Real Estate Taxes (the "Covenant "), which such Covenant is intended to be filed in the applicable local land records and encumber the Property; F. As a condition of the Loan's funding and the execution of the documents evidencing the Loan, Lender has required that Developer and the Authority execute this Agreement; and NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, the parties agree as follows: AGREEMENT 1. Development Agreement The Authority and Developer each hereby represents and warrants that (a) the Development Agreement is presently in full force and effect and has not been amended or modified in an way other than implicit amendments resulting from the Y Y( P g execution of this Agreement), and (b) a complete, true and correct copy of the Development Agreement, including all amendments (other than implicit amendments resulting from the execution of this Agreement), is attached hereto as Exhibit D . • 15699253.11.BUSINESS • 2. Acknowledgement of Assignment The Authority hereby consents to the assignment of the Development Agreement from Barry to Developer pursuant to the Assignment and Assumption Agreement and hereby recognizes the Developer as the "Developer" as described in the Development Agreement. 3. Subordination of Development Agreement The Authority hereby subordinates the Development Agreement and all of its right, title and interest thereto and therein to the lien of the TIAA Mortgage and acknowledges that the Development Agreement and each and every term and condition therein is expressly subject and subordinate to the terms of the TIAA Mortgage and all other documents and instruments evidencing or securing the Loan (collectively, the "Loan Documents "). 4. Subordination of Business Subsidy The Authority hereby subordinates the Business Subsidy (as defined in the Development Agreement) and all of its rights and remedies Developer's payment and (including an right to a payment) with respect p p y ( g Y P Y ect thereto to the P of h Loans and the Other Loans. Notwithstanding anything to the contrary performance the g Y g Y contained in the Development Agreement, no Successor Owner shall have any obligation or liability under Section 4.9 of the Development Agreement or otherwise with respect to any Business Subsidy. 5. No Default The Authority and Developer each hereby represents to the best of er are in default or Event of their actual knowledge that neither the Authority nor the Developer Default under the terms and conditions of the Development Agreement or the Covenant and no event has occurred which with the giving of notice or passage of time would constitute such a default or Event of Default. 6. Consent to Mortgage The Authority hereby represents and warrants that neither the Loan nor the execution, delivery or recording of the TIAA Mortgage and related Loan Documents or the documents evidencing or securing the Other Loans (a) constitutes a prohibited assignment or other transfer of the Development Agreement or an assignment or other transfer requiring the Authority's consent, or (b) violates the terms of Section 6.1 of the Development Agreement. 7. No Other Mortgage The Authority hereby represents and warrants that the Authority has received no notice of and has no knowledge of any Construction Mortgage (as defined in the Development Agreement) or Mortgage (as defined in the Development Agreement) encumbering the Property (other than the TIAA Mortgage). 8. No Notices; No Right to Cure Loan. Notwithstanding anything to the contrary contained in the Development Agreement (including, without limitation, Section 6.4 and Section 10.4 thereof), the Authority hereby agrees that the Authority shall have no right to cure any default or event of default under the Loan or the Other Loans and Lender shall have no obligation to accept any such cure from the Authority it being understood and agreed that nothing contained in the Development Agreement shall in any way hinder or delay the Lender's (or Collateral Trustee's) right to exercise all rights and remedies under the TIAA Mortgage and . the other Loan Documents (provided the foregoing shall not be deemed to limit the Authority's rights set forth in Section 15, below). Neither Lender nor Collateral Trustee shall have any 15699253.11.BUSINESS obligation under the Development Agreement to provide the Authority with any notice sent under the TIAA Mortgage or the other Loan Documents. • 9. Intentionally Omitted 10. No Cross Default Notwithstanding anything to the contrary contained in the Development Agreement (including, without limitation, Section 10.1(e) thereof), each of the Authority and the Developer agree that a default or event of default under any of the Loan or the Other Loans shall not, by itself, constitute an Event of Default under the Development Agreement until Lender (or Collateral Trustee) shall have commenced foreclosure proceedings under the TIAA Mortgage (although the circumstances giving rise to such default or event of default may also give rise to an Event of Default under the Development Agreement). 11. No Claims; Defenses As of the date hereof, the Authority hereby represents to the best of its actual knowledge that the Authority has no claims, demands, causes of action, defenses, setoffs or counterclaims against Developer arising out of the Development Agreement or the Covenant or in any way relating thereto, or arising out of any other transaction between the Authority and the Developer. 12. No Amendment The Authority and the Developer hereby agree that neither the Authority nor the Developer shall amend, supplement, restate, terminate or otherwise modify the Development Agreement or the Covenant or the rights and responsibilities of the parties thereto unless Lender shall have granted it prior written consent in each instance, and any amendment, supplement, restatement, termination or modification purported to be effected without Lender's • prior written consent shall not be effective. I 13. Copies of Notices The Authority hereby agrees that so long as the TIAA Mortgage remains outstanding, the Authority shall give Lender (and Collateral Trustee) a duplicate copy of any and all notices of default or other notices in writing which the Authority may give or serve upon Developer pursuant to the terms of the Development Agreement or the Covenant, and any such notice shall not be effective until said duplicate copies are delivered to the Lender (and Collateral Trustee). 14. Approval of Preliminary Plans The Authority hereby represents and warrants that it has received the Preliminary Plans and that such Preliminary Plans have been approved by the Authority in accordance with the terms of the Development Agreement. 15. Conditions to Exercise of Rights of Reverter (a) Prior to Foreclosure Sale Notwithstanding anything to the contrary contained in the Development Agreement, so long as the TIAA Mortgage remains outstanding, the Authority will not have the right to enforce its rights of rentry, reverter or revestment described in Section 10.4 of the Development Agreement (the "Rights of Reverter ") (which Rights of Reverter are reserved in the deed conveying the Property from Authority to Developer (the "Deed") recorded i in the Hennepin County Registrar of Titles connection with the Developer's acquisition of the Property) prior to a foreclosure sale of the Property pursuant to the TIAA Mortgage (a "Foreclosure Sale ") unless the Authority has the right to exercise its Rights of Reverter under • the Development Agreement at such time and both of the following conditions have been met: 15699253.11 -BUSINESS • (i) the Lender (or Collateral Trustee) has failed to pursue a cure of the default under the Development Agreement or foreclosure of the TIAA Mortgage within the time periods established in Section 18, and (ii) the Lease between Developer and The General Services Administration for the premises described therein located at the Property has been terminated. If both such conditions have been met, Authority will have the right to exercise the Rights of Reverter subject to the TIAA Mortgage. Throughout all applicable periods of redemption following a Foreclosure Sale, Authority agrees that the Rights of Reverter are subject to and shall be exercised in accordance with the term and conditions set forth in this Section 15. (b) After a Foreclosure Sale If a Foreclosure Sale shall occur, the Authority shall have the right, for a period of time not to exceed the Developer's statutory redemption period under Minnesota law (the "Redemption Period"), after issuance of the sheriff's certificate of sale evidencing the Foreclosure Sale (the "Sheriff's Certificate ") to the winning. bidder at such Foreclosure Sale (the "Sheriffs Certificate Holder "), to commence an action in the District Court in Hennepin County seeking to enforce its Rights of Reverter, provided all of the following conditions are satisfied: (i) The Authority names the Sheriff's Certificate Holder in such action and serves the Sheriff's Certificate Holder with all relevant pleadings; (ii) Before issuance of any order declaring that the Property has reverted to the Authority (the "Order "), Authority first deposits with the District Court Administrator, by wire • deposit (as the District Court Administrator may direct), a sum sufficient to equal or exceed the amount (the "Redemption Amount's necessary to enable the Authority to redeem the Property as successor owner from the Foreclosure Sale and including, without limitation, any costs, advances or other amounts permitted to be included in any redemption price to the extent permitted by court order or ruling); and (iii) The Order requires the simultaneous reversion of title to the Property to the Authority and the District Court Administrator's disbursement to the Sheriff's Certificate Holder, or to the Sheriff of Hennepin County for the benefit of the Sheriff's Certificate Holder, of the Redemption Amount. Any amounts deposited by the Authority in excess of the Redemption Amount shall be disbursed by the District Court Administrator to the Authority as the Authority may direct. 16. Termination of Rights of Reverter Notwithstanding anything to the contrary contained in the Development Agreement or the Deed, the Rights of Reverter shall terminate, extinguish and be of no further force or effect upon the expiration of the Redemption Period without redemption by the Developer. 17. No Violation of Leases Notwithstanding anything to the contrary contained in the Development Agreement, the Authority shall not enforce any right or remedy set forth in the Development Agreement (including, without limitation, Section 10.4 thereof) to the extent any such action would constitute a default or violation of any lease entered into by Developer with respect to the Property. The provisions of this Section 17 shall not, under any circumstances, • prohibit the Authority from enforcing the Covenant against the Developer or from enforcing its rights under Section 15 of this Agreement. 15699253.11.BUSINESS 18. Lender's Right to Cure Lender (or Collateral Trustee) may, at its option, within sixty (60) days after the Authority's notice of default under the Development Agreement or the • Covenant to the Lender, pay any amount stipulated to be paid by Developer or do any other act or thing required of the Developer by the terms of the Development Agreement or the Covenant; and all payments so made and all things so done or performed by the Lender shall be as effective as the same would have been if done and performed by Developer. Further, and except as set forth in Section 15, above, the Authority shall not have the right to pursue any enforcement action against Developer for default or Event of Default under the Development Agreement or the Covenant if Lender (or Collateral Trustee) commences, within one hundred twenty (120) days after the Authority's notice of default to Lender, and thereafter continuously and diligently prosecutes (subject to force majeure) the cure of defaults that can reasonably be cured without obtaining possession, and as to defaults that cannot reasonably be cured without obtaining possession, commences within one hundred twenty (120) days after the Authority's notice of default to the Lender and thereafter continuously and diligently prosecutes (subject to force majeure) appropriate proceedings for foreclosure or other enforcement of the TIAA Mortgage and, upon obtaining possession or the appointment of a receiver, promptly commences and thereafter diligently prosecutes the cure of any such defaults; provided however, Lender shall not be obligated to continue such possession or to continue such foreclosure proceedings after such default shall have been cured. Any default by Developer not susceptible of being cured by Lender (or Collateral Trustee) shall be deemed to have been waived by the Authority upon completion of such foreclosure proceeding or upon such acquisition of the Property, it being understood and agreed that any purchaser in any foreclosure sale and any subsequent purchaser of the Property acquiring title from or through the purchaser in any foreclosure sale (each such person, the "Successor Owner "), may become the legal owner and holder of the Property and the • Developer's interest under the Development Agreement through such foreclosure proceedings or acquisition or by assignment of Developer's interest under the Development Agreement in lieu of foreclosure. 19. Right to Enforce Lender (or Collateral Trustee) may enforce its rights under the TIAA Mortgage and acquire title to Developer's interests in the Property in any lawful manner and, pending foreclosure of any TIAA Mortgage and to take possession of the Property (subject to applicable law). If Lender (or Collateral Trustee) shall acquire title to the Property and the Developer's interest in the Development Agreement by foreclosure, such Successor Owner may, subject to the rights of the Authority set forth in Section 15 freely assign Im its entire interest in the J Y Y Property and the Development Agreement to any entity and thereupon shall be released from all liability for the performance or observance of the covenants and conditions set forth in the Development Agreement from and after the date of such assignment. 20. Termination; Limitation on Liability Subject to the Authority's rights set forth in Section 15 above if a Successor Owner shall become the owner of the Property by foreclosure, at Lenders (or Collateral Trustee's) option, the Development Agreement shall terminate and be of no further force or effect. Notwithstanding anything to the contrary set forth herein, no Successor Owner shall be: (a) liable for any default, act or omission of any prior Developer under the Development Agreement under the Covenant; (b) bound by any amendment, restatement modification or supplement to the Development Agreement or the Covenant made without Lender's written consent thereto; (c) liable for any monetary damages or . other amounts owing to the Authority from any prior Developer under the Development 15699253.11.BUSINESS • Agreement or the Covenant, or (d) liable for any Business Subsidy or any obligation or liability of the Developer under Section 4.9 of the Development Agreement. 21. Extension Completion Date Each of the Authority and the Developer agrees t in h event that the maturity date of the Construction Loan that the y as defined in the TIAA ( Mortgage) is extended pursuant to the terms of the Loan Documents, the date for required completion of the Minimum Improvements set forth in Section 4.3 of the Development Agreement shall be deemed extended for a period of not less than forty -five (45) days following the maturity date of the Construction Loan as so extended; provided, however, under no circumstances will the maturity date of the Construction Loan be extended beyond February 1, 2013, without the consent of the Authority, which may be granted or withheld in its sole and absolute discretion. 22. Condemnation; Casualty Notwithstanding anything contained in the Development Agreement to the contrary, in the event of any casualty to or condemnation of the Property or any portion thereof during such time as any TIAA Mortgage shall remain unsatisfied, the Lender (or Collateral Trustee) shall be entitled to receive all insurance proceeds and/or condemnation awards (in an amount not to exceed the amount of the outstanding indebtedness secured by the TIAA Mortgage) otherwise payable to Developer and apply such proceeds in accordance with the TIAA Mortgage and shall have the right, but not the obligation, to restore the Property. • 23. Lender's Interest Notwithstanding anything contained herein to the contrary, the Authority's recourse, if any, against the Lender (or Collateral Trustee) under the Development Agreement, the Covenant or otherwise shall be expressly limited to the Lender's (or Collateral Trustee's) interest in the Property, if any, at the time in question. 24. Estoppel Certificate Upon Lender's (or Collateral Trustee's) written request, the Authority shall provide Lender with an estoppel certificate which shall certify to Lender and Collateral Trustee (a) as to the compliance by Developer of the terms and conditions required under the Development Agreement and the Covenant, (b) as to whether Developer is not in default in payment, performance or observance of any other condition or covenant to be performed by Developer under the Development Agreement or the Covenant, (c) as to whether there are any offsets or counterclaims on the part of the Authority under the Development, Agreement or the Covenant, and (d) as to such other matters related to the Development Agreement or the Covenant as Lender may reasonably determine from time to time. • 15699253.11.BUSINESS 25. Notices All notices and other communications under this Agreement are to be in • writing and sent to the addresses as set forth below. Notices shall be deemed to have been duly given upon the earlier of: (i) actual receipt; (ii) one (1) business day after having been timely deposited for overnight delivery, fee prepaid, with a reputable overnight courier service, having a reliable tracking system; (iii) one (1) business day after having been sent by telecopier (with answer back acknowledged) provided an additional notice is given pursuant to (ii); or (iv) three (3) business days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by certified mail, postage prepaid, return receipt requested, and in the case of clause (ii) and (iv) irrespective of whether delivery is accepted. A new address for notice may be established by written notice to the other parties; provided, however, that no address change will be effective until written notice thereof actually is received by the party to whom such address change is sent. If to Developer: c/o The Molasky Group of Companies 100 City Parkway, Suite 1700 Las Vegas, Nevada 89106 Attn: Vice President and Chief Financial Officer with a courtesy copy to: Lionel Sawyer & Collins 300 South Fourth St. #1700 Las Vegas, Nevada 89101 Attn: Jeffrey P. Zucker i If to Lender: Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Director, Global Private Markets, Portfolio Management TIAA Authorization #AAA -6965 Investment ID. # 0006743 with a courtesy copy to: Teachers Insurance and Annuity Association 8500 Andrew Carnegie Blvd. Mail Stop C2 -06 Charlotte, North Carolina 28262 Attn: Associate General Counsel and Director, Asset Management Law TIAA Authorization #AAA -6965 Investment ID. # 0006743 • 15699253.11.BUSINESS • with a copy to: Dechert LLP 200 Clarendon Street 27th Floor Boston, MA 02116 Attention: Matthew Clark with a copy to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, New York 10017 Attention: David Persky re: FBI Minneapolis CTL with a copy to: Teachers Insurance and Annuity Association of America 8500 Andrew Carnegie Blvd. Mail Stop C2 -06 Charlotte, North Carolina 28262 Attention: Keith Atkinson • with a copy to: Dechert LLP 200 Clarendon Street 27th Floor Boston, MA 02116 Attention: Lewis Burleigh If to Collateral Trustee: Wells Fargo Bank Northwest, National Association 299 South Main Street 12th Floor, MAC: U1228 -120 Salt Lake City, Utah 84111 Attn: Val T. Orton re: NARA If to the Authority: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, MN 55430 -2199 Attn: Executive Director 15699253.11.BUSINESS 26. Entire Agreement; Modification This Agreement is the entire agreement • between the parties hereto with respect to the subject matter hereof, and supersedes and replaces all prior discussions, representations, communications and agreements (oral or written). This Agreement shall not be modified, supplemented, or terminated, nor any provision hereof waived, except by a written instrument signed by the party against whom enforcement thereof is sought, and then only to the extent expressly set forth in such writing. 27. Binding Effect; Joint and Several Obligations This Agreement is binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors, and assigns, whether by voluntary action of the parties or by operation of law. 28. Unenforceable Provisions Any provision of this Agreement which is determined by a court of competent jurisdiction or government body to be invalid, unenforceable or illegal shall be ineffective only to the extent of such determination and shall not affect the validity, enforceability or legality of any other provision, nor shall such determination apply in any circumstance or to any party not controlled by such determination. 29. Duplicate Originals; Counterparts This Agreement may be executed in any number of duplicate originals, and each duplicate original shall be deemed to be an original. This Agreement (and each duplicate original) also may be executed in any number of counterparts, each of which shall be deemed an original and all of which together constitute a fully executed Agreement even though all signatures do not appear on the same document. 30. Governing Law This Agreement shall be interpreted and enforced according to the laws of the State where the Property is located (excluding any choice of law rules that may direct the application of the laws of another jurisdiction). 31. Consent to Jurisdiction Each party hereto irrevocably consents and submits to the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Property is located with respect to any legal action arising with respect to this Agreement and waives all objections which it may have to such jurisdiction and venue. 32. WAIVER OF JURY TRIAL TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HERETO WAIVES AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT. 33. Conflicts In the event of a conflict between the terms of this Agreement and the terms of the Development Agreement or the terms of the Covenant, the terms of this Agreement shall govern and control. It is the express intention of the parties hereto that this document shall be deemed to amend and modify the terms of the Development Agreement and the Covenant. 34. Reliance The Authority executes this Agreement with the understanding that all of the Developer's right, title and interest in the Development Agreement will be and/or has been collaterally assigned to Lender (and Collateral Trustee) for the purpose of securing the Loan. This Agreement is binding upon the Authority, its successors and assigns and shall inure to the benefit of Lender and Collateral Trustee and their respective successors and assigns. • 15699253.11.BUSINESS • IN WITNESS WHEREOF, THIS AGREEMENT has been executed by the parties hereto as of the date first above written. DEVELOPER: PH MINNEAPOLIS, LLC, a Nevada limited liability company By: PH Minneapolis MM, Inc., a Nevada corporation, Manager By: Richard S. Worthington, President or Bradley J. Sher, Secretary and Treasurer or Suzanne Sanders, Vice President LENDER: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation By: Name: Title: Director AUTHORITY: ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota By: Name: Title: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION By: Name: Title: • 15699253.11.BUSINESS • STATE OF ) SS: COUNTY OF ) On this day of 2010, before me appeared as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State Commission expires: • Notary — please affix seal in area designated above 15699253.11.BUSINESS • STATE OF ) SS: COUNTY OF ) On this day of , 2010, before me appeared as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State . Commission expires: Notary — please affix seal in area designated above 15699253.11.BUSINESS • STATE OF ) SS: COUNTY OF ) On this day of , 2010, before me appeared , as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State Commission expires: • Notary — please affix seal in area designated above • 15699253.11.BUS INESS STATE OF ) SS: COUNTY OF ) On this day of , 2010, before me appeared , as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State • Commission expires: Notary — please affix seal in area designated above • 15699253.11.BUSINESS EXHIBIT A • Assignment and Assumption Agreement • 15699253.11.BUSINESS • EXHIBIT B Legal Description THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HENNEPIN, STATE OF MINNESOTA AND IS DESCRIBED AS FOLLOWS: Lot 1, Block 1, Richardson Park 3` Addition, according to the recorded plat thereof, Hennepin County, Minnesota, together with the benefits of that certain Grant of Easements for Access and Use, across, through, over and upon Lot 2, Block 1, Richardson Park 3` Addition, according to the recorded plat thereof, Hennepin County, Minnesota, dated June , 2010, recorded June , 2010 in the office of the Hennepin County Recorder as Document No. , and in the office of the Hennepin County Registrar of Titles as Document No. • 15699253.1 I .BUSINESS EXHIBIT C • Other Loans 1. Loan to PH Cincinnati, LLC in an amount equal to $40,777,599.00. 2. Loan to PH NARA, LLC in an amount equal to approximately $106,000,000. 3. Loan to PH Portland, LLC in an amount equal to approximately $54,730,000. • 15699253.11.BUSINESS • EXHIBIT D Development Agreement • 15699253.11.BUSINESS • Recording Requested by and when recorded return to: COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES THIS COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES (this " Covenant ") is entered into this _ day of June, 2010 (the " Effective Date "), by and between the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the " Authority "), and PH Minneapolis, LLC, a Nevada limited liability company ( " Developer "). The Authority and Developer are together referred to herein as the " Parties ," and, each, a " Party ." RECITALS A. Concurrently herewith, the Authority is conveying to Developer, by Limited Warranty Deed (the "Deed "), certain real property located in the City of Brooklyn Center, Minnesota, commonly referred to as 1501 Freeway Boulevard, as such real property is more fully described on Exhibit A attached hereto and incorporated herein by reference (the "Property"). B. The Authority is conveying the Property to Developer pursuant to that certain Development Agreement dated October 16, 2009, as amended by that certain First Amendment to Development Agreement dated February 22, 2010 and that certain Second Amendment to Development Agreement dated April 27, 2010 (collectively, the " Development Agreement which Development Agreement relates to the conveyance of the Property in connection with the construction of certain improvements on the Property, including, without limitation, the construction of a Class A office building and related improvements (the " Improvements "). C. The Deed reserves to the Authority, upon the occurrence of a "Developer Event of Default," as defined in Section 10.1 of the Development Agreement and Developer fails to cure such default within the period and in the manner stated in Section 10. 1, the right to re -enter and take possession of the Property and, upon re -entry by the Authority, to terminate and revest in the Authority the estate conveyed by the Deed to Developer, its assigns or successors in interest, in accordance with the terms of the Development Agreement (the "Right of Re- entry "). • 2560697v5 . D. Teachers Insurance and Annuity Association of America, a New York corporation ( "Lender ") is making a loan (the "Loan ") in the original principal amount of up to a maximum of $ to Developer, which Loan will be secured by, among other things, a certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the "TIAA Mortgage ") from Developer in favor of Wells Fargo Bank Northwest, National Association, as collateral trustee for Lender (together with its successors and assigns, the "Collateral Trustee "), which TIAA Mortgage will be recorded against the Property subsequent to this Covenant. E. In connection with the Loan, Lender has requested and the Authority has agreed to execute that certain Development Agreement Subordination Agreement (the "Subordination Agreement ") dated June _, 2010 which is to be recorded in each of the Hennepin County Recorder's Office and the Office of the Hennepin County Registrar of Titles (the "Official Records ") subsequent to the recording of this Covenant. In the Subordination Agreement, the Authority subordinates is rights under the Development Agreement and the Right of Re -entry to the lien of the Mortgage. F. In consideration of the Authority's agreement to execute the Subordination Agreement, the Developer has agreed to execute this Covenant, to be recorded in the Official Records and to bind the Property to the terms and conditions herein for the term stated. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: • 1. Covenant to Pay Real Estate Taxes During the period from January 1, 2011 to December 31, 2030, Owner (as defined below): (a) will pay or cause to be paid all ad valorem real estate taxes due and payable with respect to the Property and the Improvements and (b) will not apply for or otherwise seek to have the Property or the Improvements exempted from ad valorem real estate taxes. In the event that, for any reason, the Property or Improvements become, in any way, exempt, in whole or in part, from the obligation to pay ad valorem real estate taxes during the period described above, Owner shall make annual payments in lieu of ad valorem real estate taxes to the City of Brooklyn Center on October 16 of each year in an amount equal to the difference between the amount of ad valorem real estate taxes that would have been due and payable in that year with respect to the Property and the Improvements absent the exemption and the amount, if any, of the ad valorem real estate taxes Owner actually paid in that year. Nothing herein shall prevent an Owner from contesting the amount of ad valorem real estate taxes for any reason other than that such Owner is a tax exempt entity. As used in this Covenant, "Owner" shall mean such person or entity as owns fee title to the Property at the relevant time. 2. No Subordination; Survival This Covenant shall be recorded in the Official Records prior to the execution, delivery and recording of the TIAA Mortgage. The parties hereby agree that in no event is this Covenant to be subject to or subordinate to any instrument or agreement securing any financing of the Property or the Improvements. This Covenant shall survive the foreclosure of any mortgage, including the TIAA Mortgage, affecting the Property and shall survive the Authority's exercise of its Right of Re- entry. 2560697v5 3. Damages; Injunctive Relief In the event of any default of this Covenant by Owner, the Authority shall have the right to seek damages, injunctive relief or any other remedy • available at law or in equity. Notwithstanding anything to the contrary contained herein, the Authority shall have no right to exercise its Right of Re -entry based solely on a default by Developer or Owner under this Covenant. 4. Miscellaneous (a) Binding Effect; Joint and Several Obligations This Covenant runs with title to the Property and the Improvements and is binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors, and assigns, whether by voluntary action of the parties or by operation of law, including, without limitation, all successor Owners. (b) Amendment This Covenant may only be amended by a document executed by Owner and the Authority and duly recorded in the Official Records. (c) Governing This Covenant shall be governed by and construed in accordance with the substantive and procedural laws of the State of Minnesota. (d) Consent to Jurisdiction Each party hereto irrevocably consents and submits to the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Property is located with respect to any legal action arising with respect to this Covenant and waives all objections which it may have to such jurisdiction and venue. • (e) Attorney's Fees Should any Party employ an attorney or attorneys to enforce any of the terms and conditions hereof, or to protect any right, title, or interest created or evidenced hereby, the non - prevailing Party in any action pursued in courts of competent jurisdiction shall pay to the prevailing Party all reasonable costs, damages, and expenses, including attorneys' fees, expended or incurred by the prevailing Party. (f) Conflicts In the event of a conflict between the terms of this Covenant and the terms of the Development Agreement or the terms of the Subordination Agreement, the terms of this Covenant shall govern and control. (g) Counterparts This Covenant may be executed in counterparts. Each counterpart of this Covenant shall constitute an original, and all such counterparts taken together shall constitute one and the same grant. [Signatures appear on the following pages.] 2560697v5 • IN WITNESS WHEREOF, the undersigned have affixed their signatures hereto as of the date first set forth above. AUTHORITY ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, also known as Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic By: Name: Title: By: Name: • Title: STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) This Covenant with Respect to the Payment of Real Estate Taxes was acknowledged before me on this day of June, 2010, by Tim Willson and Cornelius Boganey, as President and as Executive Director, respectively of the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic, on behalf of said body. Notary Public [Authority's Signature Page to Covenant with Respect to the Payment of Real Estate Taxes] • 2560697v5 IN WITNESS WHEREOF, the undersigned have affixed their signatures hereto as of the . date first set forth above. DEVELOPER PH LI LLC MIINNEAPO S, , a Nevada limited liability company By: PH Minneapolis MM, Inc., a Nevada corporation, Manager By: Richard S. Worthington, President or Bradley J. Sher, Secretary and Treasurer or Suzanne Sanders, Vice President STATE OF ) COUNTY OF ) • This Covenant with Respect to the Payment of Real Estate Taxes was acknowledged before me on this day of June, 2010, by as of PH Minneapolis MM, Inc. a Nevada corporation, the Manager of PH Minneapolis, LLC, a Nevada limited liability company, on behalf of PH Minneapolis, LLC. Notary Public [Grantee's Signature Page to Covenant with Respect to the Payment of Real Estate Taxes] • 2560697v5 Exhibit A Legal Description of Property Lot 1, Block 1, RICHARDSON PARK 3 RD ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota. • Drafted by Briggs and Morgan, P.A (DVD) 2200 IDS Center 80 South Eighth Street Minneapolis, MN 55402 (612) 977 -8400 i 2560697x5 SUMMARY OF • DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES The following is a summary of the provisions of the above - referenced agreement being submitted for approval by the EDA council (the numbering used in this summary is consistent with the section numbering used in the agreement; "PH" refers to the developer): 1. EDA and PH each represent that the Development Agreement is in effect and has not been amended other than the two prior amendments. 2. EDA consents to the assignment of the Development Agreement from Barry Minneapolis, LLC to PH. 3. EDA agrees to subordinate its rights under the Development Agreement to the lien of the mortgage (in exchange, the EDA receives PH's covenant to pay taxes at least through 2031; this document and obligation would survive foreclosure). 4. EDA agrees to subordinate the Business Subsidy to the lien of the mortgage (and agrees that the Business Subsidy is a personal obligation of PH). 5. EDA and PH each represent that there are no defaults under the Development Agreement • (this document and the resolution will cure any technical defaults). 6. EDA consents to the mortgage (required due to mortgage arguably not conforming to requirements of Section 6.1 of the Development Agreement re: cross - collateralization). 7. EDA represents It knows of no other mortgages on the property. 8. EDA agrees that it will receive no notice from lender of PH default and will not have the right to cure a default of PH under its loan documents. 9. Omitted. 10. EDA and PH each agree that a default under the mortgage will not an Event of Default under the Development Agreement (as currently provided) until foreclosure proceedings are commenced. 11. EDA represents it has no current claims or rights of setoff against PH. 12. EDA and PH agree that no amendment to the Development Agreement or Tax Covenant will be binding unless consented to in advance by lender. 13. EDA agrees to provide lender copies of all notices to PH (notice to PH is not effective . until notice to lender is given). 2565608v1 14. EDA has approved preliminary plans. 15. While the mortgage is outstanding, EDA will not enforce its right of reverter prior to a foreclosure sale unless (i) the lender is not pursuing a cure or foreclosure (i.e., they are doing nothing), and (ii) the GSA has terminated its lease. Following a foreclosure sale, EDA may exercise its right of reverter during the redemption period (by going to court), but must follow certain requirements (name the new holder of the sheriff's certificate and serves such party with all pleadings, place the funds required to redeem with the court, and simultaneous reverter and disbursement of funds). 16. The right of reverter terminates at the end of the redemption period (we are asking the lender to carve out redemption by PH, in which case the EDA would retain its right of reverter). 17. EDA agrees not to exercise remedies that would cause a default under the GSA lease (required because the GSA can terminate the lease if, for example, the EDA exercised its right of reverter and became the owner of the property). This does not prevent the EDA from enforcing the tax covenant or exercising reverter rights under Section 15. 18. Lender is provided additional time to cure defaults by PH under the Development Agreement and the EDA agrees not to exercise its remedies under the Development Agreement until the lender has had time to exercise its remedies under the mortgage and loan documents. • 19. Lender may become the owner f h f it forecloses i mortgage, and ma y o the property i o is y assign the interest in the property and Development Agreement to any entity. The EDA retains its rights under section 15 (it can use reverter if project is not completed). 20. Lender may elect to terminate the Development Agreement after foreclosure. No future owner would be responsible for defaults of developer or lender. The tax covenant would remain in effect. 21. The completion date for the project will be extended if the mortgage is required to be extended, but not past February 1, 2013 (13 months) without the consent of the EDA. The remaining provisions are largely boilerplate, but please let us know if there are any questions. • 25656080