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Home My WebLink About2016 02-08 EDAPEDA MEETING City of Brooklyn Center February 8, 2016 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. January 11, 2016 - Regular Session b.Resolution Authorizing the Executive Director to Write Off Uncollectible Accounts Receivable 4. Commission Consideration Items a.Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project) Requested Commission Action: —Motion to adopt resolution. b.Resolution Approving an Administrative Amendment to Budget for Tax Increment Financing Plan for Tax Increment Financing District No. 4 in Connection with Pooling for Affordable Housing Requested Commission Action: —Motion to adopt resolution. C. Resolution Authorizing Preparation of a Final Development Agreement Related to the Development of the Opportunity Site 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 JANUARY 11, 2016 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 7:51 p.m. 2.ROLL CALL President Tim Willson and Commissioners April Graves, Kris Lawrence-Anderson, Lin Myszkowski, and Dan Ryan. Also present were Executive Director Curt Boganey, Public Works Director/City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Planning and Zoning Specialist Tim Benetti, City Attorney Troy Gilchrist, and Denise Bosch, TimeSaver Off Site Secretarial, Inc. 3.APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Ryan moved and Commissioner Graves seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. December 7, 2015 - Special Session Motion passed unanimously. 4.COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2016-01 ELECTING OFFICERS FOR THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER Executive Director Curt Boganey stated the officers would be the same as last year and presented the following officers to serve through December 31, 2016: President/Treasurer Tim Willson Vice-President Dan Ryan Assistant Treasurer Nathan Reinhardt 01/11/16 4- DRAFT Secretary Gary Eitel Commissioner Myszkowski moved and Commissioner Ryan seconded to adopt RESOLUTION NO. 2016-01 Electing Officers for the Economic Development Authority in and for the City of Brooklyn Center. Motion passed unanimously. 4b. RESOLUTION NO. 2016-02 OPTING NOT TO WAIVE LIMITED TORT LIABILITY FOR 2016 Executive Director Curt Boganey introduced the item, discussed the history, and stated the purpose of the proposed resolution. Commissioner Ryan moved and Commissioner Myszkowski seconded to adopt RESOLUTION NO. 2016-02 Opting Not to Waive Limited Tort Liability for 2016. Motion passed unanimously. 5. ADJOURNMENT Commissioner Graves moved and Commissioner Lawrence-Anderson seconded adjournment of the Economic Development Authority meeting at 7:55 p.m. Motion passed unanimously. 01/11/16 -2- DRAFT EPA Agenda Item No. 3b EDA ITEM MEMORANDUM DATE: January 29, 2016 TO: Curt Boganey, City Manager FROM: Jim Glasoe, Director of Community Activities, Recreation and Services SUBJECT: Resolution Authorizing the Executive Director to Write Off Uncollectible Accounts Receivable Recommendation: It is recommended that the Economic Development Authority consider writing off uncollectable accounts and removing them from the active accounts receivable list. Background: Per the attached summary, staff is recommending that the following accounts be removed from the active accounts receivable list. These accounts were established between 2008 and 2014. All staff collection efforts for these accounts have been exhausted and some have been sent to collection agencies, with limited success. Collection efforts will continue where feasible. However, as there is little reasonable expectation of payment, staff recommends that they be removed from the active accounts receivable list. Upsize $966.65 On October 29, 2008 Upsize IviN held a meeting at Earle Brown Heritage Center. The original event invoice total was $9,457.53. This matter was referred to a collection agency. The customer made payments until there was a remaining balance of $966.65. The remaining balance was paid to the collection agency. Palmer/Landsteiner $76.37 On September 15, 2012, the Palmer/Landsteiner wedding reception was held at Earle Brown Heritage Center. The original event invoice total was $157.55. This matter was referred to a collection agency. A payment in the amount of $81.18 was paid to Earle Brown Heritage Center. The remaining balance of $76.37 was paid to the collection agency. Coalition for Impartial Justice $164.83 Despite signed contract 16603 and a signed Banquet Event Order, Coalition for Impartial Justice never showed up for their February 20, 2014 meeting and failed to reschedule it. The catering company requested an invoice for food items that were prepared and set out so an invoice for $164.83 was sent to the customer. Although seven late notices have been sent, we still have not received a response from them regarding this matter. Budget Issues: The active Accounts Receivable list would be amended accordingly. Strategic Priorities: e Enhanced Community Image Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves time public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO.___________ RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR TO WRITE OFF UNCOLLECTIBLE ACCOUNTS RECEIVABLE WHEREAS, the Executive Director has reported the following Earle Brown Heritage Center accounts receivables are not expected to be collected; and WHEREAS, Staff collection efforts have been exhausted and these accounts have been turned over to a collection agency and a collection attorney; and WHEREAS, collection efforts will continue by the agency and the attorney as feasible, while the accounts will be removed from the receivable records and charged off as uncollectible accounts. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of Brooklyn Center, Minnesota, that the Executive Director is authorized to write off from the EDA' s records as uncollectible the following accounts receivable: Convention Center Upsize $966.65 Palmer/Landsteiner $ 76.37 Coalition for Impartial Justice $164.83 Grand Total $1,207.85 February 8, 2016 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. EPA Agenda Item No. 4a EDA 1ITIM MEMORANDUM DATE: February 8, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). Background: On January 28, 2016, the City Council/EDA Work Session included an update by Jenny Boulton, Kennedy & Graven, on the EDA' s purchase agreement and draft tax increment agreement associated with the Sanctuary at Brooklyn Center Senior Living Project. Attached for your reference is a copy of the January 28th staff memorandum which provided background on past City Council and EDA meetings relating to the proposed sales of the EDA's lots at 6121, 6107, and 6101 Brooklyn Boulevard for an affordable senior housing project; the creation of a Housing Tax Increment District; and the use of a Pay-As-You-Go Note to bridge a portion of the financial gap necessary to finance the project. Purchase Agreement for 6121 Brooklyn Boulevard, Lot 1, Block 1 Chrysler Motors Corporation 2 Addition The purchase agreement establishes the price at $1,500,000 and provides for the following conditions that the buyer, SCA Properties, LLC, will need to complete and deliver to the City no later than September 30, 2016: (i)A Purchase Price Promissory Note in the $1,500,000 and a Purchase Price Mortgage as approved by the City Attorney. (ii)A title insurance policy (iii)Approved plans, specifications, drawing and related documents for the construction of the minimum improvements consistent with the PUD (iv)Evidence that they have closed on construction financing for the project and certify that there are sufficient funds and equity commitments to complete the construction of the Project (v)The Declaration of Restrictive Covenants as defined in the TIF Development Agreement (vi)The PUD Agreement (vii) The TIF Development Agreement Mission: Ensuring an attractive, clean, safe, inclusive cafnnulnit)' that enhances the qiiahitj' of life ,for all people and preserves the public trust I I N N ak'A LA I MhTA (I) 1I WJhYÀ1 The Purchase Price Promissory Note has a 25 year term which matches the life of the Tax Increment District and includes the following provisions to protect the EDA' s equity in the Promissory Note in the event of a sales or refinancing/restructuring debt: - In the event the project is sold, 50% of the Net Sale Proceeds would be applied to the repayment of the Note up to the $1,500,000 principal amount The owner has indicated that upon satisfying the tax credit requirements of ownership (projected to be in the range of 12-15 years) they could sell the project. - In the event of refinancing the project for any amount that exceeds the Minimum Improvements and any additional capital improvements, 50% of the increase principal amount shall be used to repay the note up to the $1,500,000 principal amount. The execution of the purchase agreement at this time provides the developer with sufficient control of the site to proceed with funding applications for the tax credit bonds and private placement bonds proposed to finance this project. The required public notification and hearing relating to the FDA's conveyance of this parcel is proposed to occur later this Spring with the public hearing on the conduit bond financing (private placement sales of bonds) for this project. TIF Development Agreement By and Between Economic Development Authority of Brooklyn Center, Minnesota and SCA Properties, LLC On October 26h1 the City Council conducted a public hearing on establishing a 25 year Affordable Housing Tax Increment District for this senior housing project with the intentions of using the tax increment generated from the development to fund a $1,500,000 Pay-As-You-Go Note and an additional $300,000 for future land acquisitions of adjacent properties. At that time, the City's financial consultant provided their analysis (But-For-Test) which indicated that the following tax increment assistance was necessary for the project to proceed: 1.Assistance in the site acquisition cost, which was proposed to be resolved by the FDA's issuance of a Promissory Note in the amount of $1,500,000. 2.The bridging of a'$1,500,000 gap in their loan ratio to finance the project, which was proposed to be resolved by the EDA's issuance of a Pay-As-You-Go Note to be repaid from tax increment generated by this development. The attached TIF Development Agreement is a comprehensive document prepared by the FDA's legal counsel which recites the purpose of creating this tax increment district; defines the project and the minimum improvements to be completed; includes provisions to assure that the purpose of creating the District are achieved and the interests of the FDA are protected; identifies the tax increment assistance and provides the financing tools to fund the approved tax increment assistance; and identifies the legal remedies and actions in the event of a default in the agreement. The agreement includes the documents necessary to implement the Tax Increment Assistance determined necessary for this 158 unit affordable senior housing project to proceed. Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for al/people and preserves the public trust The Developer has indicated that with the approval of this purchase agreement and TIF development agreement, they intend to proceed with the final architectural plans with the expectation of starting construction this summer and a 2017 completion date. Resolution Approving A Development Agreement and Purchase Agreement (SCA Properties Senior Housing Project) The EDA's legal counsel, Kennedy & Graven, has prepared the attached resolution with authorizes the President of the EDA and Executive Director to execute the Purchase Agreement at this time. Additionally, the resolution provides an approval of the TIF Development Agreement and authorizes its future execution by the President of the EDA and Executive Director, subject to final approval by legal counsel to the EDA. Budget Issues: There are no General Fund budget issues related to these actions. The initial land acquisition was acquired with a tax increment bond and any future repayments of the Purchase Price Promissory Note would be repaid to that Tax Increment Fund. The TIF Pay-As-Go-Note is only funded by Tax Increment District No.6 from the tax increment to be received from this project. Strategic Priorities: • Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION APPROVING A DEVELOPMENT AGREEMENT AND A PURCHASE AGREEMENT (SCA PROPERTIES SENIOR HOUSING PROJECT) WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota ("EDA") has established Tax Increment Financing (Soils Condition) District No. 4 and Tax Increment Financing District No. 6 (Housing District) (the "TIF Districts") within its Municipal Development District No. 1 (the "Development District"), pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended; WHEREAS, the EDA has received a proposal from SCA Properties, LLC (the "Developer") that the EDA assist the Developer with certain public costs associated with the construction of an affordable senior assisted living facility (the "Project"); WHEREAS, the EDA has caused to be prepared a TIF Development Agreement by and between the EDA and the Developer (the "Development Agreement") setting forth the terms and conditions under which the Developer will construct the Project and the EDA will provide tax increment financing assistance from the TIP Districts in connection therewith; WHEREAS, the EDA has caused to be prepared an Agreement of Purchase and Sale (the "Purchase Agreement") by and between the EDA and the Developer setting forth the terms of the sale, in connection with the Project, of property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as (i) that part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota, being registered land as is evidenced by Certificate of Title No. 1384364 and (ii) Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota, abstract property (the "Property"); WHEREAS, the Purchase Agreement acknowledges that conveyance of the Property remains contingent upon approval by the EDA following a duly noticed public hearing regarding the sale of the Property to Developer; WHEREAS, the EDA believes that the development of the Project pursuant to the Development Agreement and the Purchase Agreement, and fulfillment generally of the Development Agreement and the Purchase Agreement, are in the vital and best interests of the EDA and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the development has been undertaken and is being assisted. NOW, THEREFORE, BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic Development Authority of City of Brooklyn Center, Minnesota as follows: 1. The EDA hereby approves the Purchase Agreement (provided however that the conveyance of the Property is subject to approval by the EDA following a duly noticed public hearing) and the Development Agreement in substantially the forms presented to the Board, together with any related documents necessary in connection therewith, including without limitation all documents referenced in or attached to the Development Agreement and the Purchase Agreement, and any deed or other documents necessary to convey the Property to Developer, all as described in the Development Agreement and the Purchase Agreement (collectively, the "Development Documents") and the President and the Executive Director are hereby authorized and directed to execute the Development Documents on behalf of the EDA and to carry out, on behalf of the EDA, the EDA's obligations thereunder. 2. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. February 8, 2016 Date President ATTEST: Secretary 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. MEMORANDUM COUNCW WORK SESSI{ON DATE: January 25, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development JS SUBJECT: Updates on the EDA's purchase agreement and draft tax increment agreement associated with the Sanctuary at Brooklyn Center Senior Living Project. The purpose of this work session item is to provide the City Council with an update on the draft purchase agreement, status of the tax increment agreement, and the financing structure for the Sanctuary at Brooklyn Center Senior Living Project. Jenny Boulton, Kennedy & Graven, will be providing an overview of documents that are being prepared for the EDA's consideration of the purchase agreement at the February 8, 2016 EDA Meeting and the future approval of the project's Tax Increment Development Agreement. Background: On March 9, 2015, the City Council/EDA Work Session included a discussion on the potential sale and redevelopment of approximately 5.5 acres of EDA owned properties, located at 6121, 6107 and 6101 Brooklyn Boulevard for an affordable assisted care senior apartment development consisting of the following: • a four story apartment building with 140, one-bedroom senior assisted care units; and • a one story building with 24 studio units offering specialized assisted care for seniors. The City Council/EDA reviewed a conceptual plan overlaid on an aerial photograph of the site and a narrative provided by SCA Properties and Evergreen Real Estate Development Corporation describing their plans to develop and operate an affordable assisted senior housing project using Low Income Housing Tax Credits and Medicaid Elderly Waiver reimbursements. The City Council/EDA determined the conceptual development illustrated by SCA Properties was consistent with the EDA's development vision for this site, and that Staff was directed to proceed with negotiating a Letter of Intent with SCA Properties for the development of an affordable assisted care senior housing project. On March 23, 2015, the EDA adopted Resolution No. 20 15-06, a Resolution Approving a Letter of Intent to Purchase with SCA Properties, LLC regarding 6121 Brooklyn Boulevard, 6107 Brooklyn Boulevard and 6101 Brooklyn Boulevard. The March 23rd staff memorandum recognized a financial gap of approximately $2,000,000 that was intended to be addressed during the Negotiations and Feasibility Period. Mission: Ensuring an attractive, clean, safe, inclusive coinniunity that enhances the quality of life for all people and preserves the public trust I I M (I) P]Jk'A ES1BJ[iJ I !ALI) 1 Ii F1I1 (ikl At the August 10, 2015 work session, the City Council/EDA was informed that the funding gap had grown to $3,000,000 and that efforts to secure other financial support were unsuccessful. The following funding strategy was proposed for City Council/EDA's consideration: 1.The developer will address $1.5M of the gap by deferring 50% of their development fee; and 2.The creation of a TIF Housing District with a Pay-As—You-Go Note would provide the remaining $1.5 M cash needed, plus $300,000 for the future acquisition of two adjacent properties. The new negotiations also provided a revised site layout with the developer proposing that the development would be limited to the 6121 Brooklyn Boulevard site (4.5 acres acquired for $1,500,000) and that the EDA's conveyance of the land would be in the form of a 2'' mortgage with provisions for a repayment formula from the sales proceeds of a future sales. Additionally, Tom Denaway, Springsted Financial, provided a memorandum on the need for assistance (But For Test) and exhibits illustrating how the project will generate tax increment, a cash flow analysis over the term of the district, and a payment schedule for the Pay-As-You-Go Note, and a schedule for the creation of a new Tax Increment Housing District. On October 26, 2015, the City Council conducted a public hearing on establishing a new Affordable Housing TIF District for this senior housing project. After conducting the public hearing, the Council moved to adopt Resolution No. 2015-163, a Resolution Approving a Modification to the Redevelopment Plan for Housing Development and Redevelopment Project No. 1 and Establishing a Tax Increment Financing District Therein and Approving a Tax Increment Financing Plan Therefor (TIF District No. 6, Affordable Senior Housing). The EDA also adopted a companion resolution, Resolution No. 2015-24. A copy of the map identifying TIF District No. 6 and an updated memorandum on the need for assistance (But-For-Test) to reflect the revised project and source of financing is enclosed. Draft Purchase Agreement for Lot 1, Block 1 Chrysler Motors Corporation 2 d Addition The purchase agreement establishes the price for this 4.5 acre lot at $1,500,000 and provides for the following conditions that the buyer, SCA Properties, LLC, will need to complete and deliver to the City no later than September 30, 2016: (i)A Purchase Price Promissory Note in the $1,500,000 and a Purchase Price Mortgage as approved by the City Attorney. (ii)A title insurance policy (iii)Approved plans, specifications, drawing and related documents for the construction of the minimum improvements consistent with the PUD (iv)Evidence that they have closed on construction financing for the project and certify that there are sufficient funds and equity commitments to complete the construction of the Project (v) The Declaration of Restrictive Covenants as defined in the TIF Development Agreement Mission: Ensuring an attractive, clean, safe, inclusive conununity that enhances the quality of life for al/people and preserves the public trust k'4 I I'A (II 1I I1BJ EI1IJ1iJ I 'LI) 1 S1 !Hhikl (vi)The PUD Agreement (vii)The TIF Development Agreement The execution of the purchase agreement at this time provides the developer with sufficient control of the site to proceed with funding applications for the tax credit bonds and private placement bonds proposed to finance this project. Draft TIF Development Agreement By and Between Economic Development Authority of Brooldyn Center, Minnesota and SCA Properties, LLC The TIF Development Agreement is the comprehensive document which includes all of the elements of the development project including: - Article I Definitions - Article II Representations and Warranties - Article III Conveyance of the Development Property - Article IV Construction of Minimum Improvements - Article V Tax Increment Assistance - Article VI Encumbrance of the Development Property - Article VII Insurance and Maintenance - Article VIII Transfer Limitation and Indemnifications - Article IX Events of Defaults and Damages - Article X Additional Provisions - Exhibits A-J Documents referenced within the Agreement. Jenny Boulton will provide a brief overview of the components of the TIF Development Agreement that is being assembled for this project. For your reference the following sections of the draft agreement have been included at this time: - Introduction and Table of Contents - Article I, Definitions - Article V, Tax Increment Assistance Section 5.6 of Article V, Use of Tax Increment, identifies that the EDA shall be free to use Tax Increment, other than the Available Tax Increment herein pledged to the payment of the TIF Note, for any other purpose for which the Tax Increment may lawfully be used pursuant to applicable provisions of the Minnesota law. This provision provides the EDA with the option to use the Excess Tax Increment identified within Tax Increment District No. 4 for the debt service payments (2016-2020) for the 2013 TIF Bonds issued to acquire this site in lieu of the current use of TIF 3 Housing Funds. Policy Issues: The purpose of this work session item is to inform the City Council/EDA of future considerations and pending actions related to the Sanctuary at Brooklyn Center Senior Housing Project. There are no policy issues at this time. Mission: Ensuring an offrod/ye, clean, safe, inclusive community that enhances the quality of ilfe for al/people and preserves the public trust k"4 I 3k!4 (I) 1IJ1IJ EIWJ[IJ I i'LI] 1 Si *J (IIJl Strategic Priorities: Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust Housing Development and Redevelopment Project No. 01 and Tax Increment Financing (TIF) District No. 6 A B c D E F \ 53 = = I I,: LOCAL STREET 4INDEX 11 5 if ifif / li'4 t\ NLI fl - • • • • • fl • - LI B-I 14 LI • • • • • - 6201 if U- 61 - 3600 6101 LEGEND PARK Project Area Boundary I TIF District No. 6 N) ,/Cl/per A IBROOKL.YA' W--E CENTER 0 025 05 1 V —t.I -0rtee S Cleated by. Brooklyn Center Bveinese end Development Dept lOIS Donrvment Perk: L.tUenretComoev\TIFateeslTF_DISTRICT_N0_B mod S pri n cj ste d Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com MEMORANDUM TO: Gary Eitel, Business and Development Director FROM: Tom Denaway, Assistant Vice President/Consultant DATE: January 19, 2016 SUBJECT: Brooklyn Center Affordable Assisted Living - Need for Assistance Determination At the request of the City we have prepared this determination of the potential need for financial assistance for an affordable housing assisted living project, to be located on the former 'Cars with Heart" site at 6121 Brooklyn Boulevard in the City of Brooklyn Center. The Developer SCA Properties is proposing the development of an approximately 158 unit affordable senior housing facility on the development site, for which they are seeking financial assistance from the City in the form of land donation and Tax Increment Financing (TIF) assistance. Project Description The Developer is proposing the construction of an affordable senior assisted living facility of approximately 158 total units. The project will include a mix of service types with approximately 130 units set aside for assisted living, and 28 units set aside for special needs residents. The assisted living units will be a mix of studio and one-bedroom units, ranging in size from 400 square feet to 575 square feet. While the special need units will be approximately 400 square feet. The Developer will be seeking MHFA tax credit assistance, which will require the development to maintain the units as available for persons of low and moderate income. Additionally, as a result of the use of tax credits the project will receive a 4d property tax classification, which will result in a lower tax capacity and subsequently a lower property tax expense. The Developer is anticipating construction beginning in 2016, with first occupancy occurring in approximately September of 2017, and the project achieving full occupancy in 2019. Assistance Request The Developer is seeking assistance from the City in two potential forms: Land Contribution: - The Developer is seeking the contribution of the land from the City for the development of the site. This land contribution is projected to have an anticipated value of approximately $1.5 million based on the City's original purchase price for the property. The Developer has agreed to accept the land contribution as a loan from the City, secured by a subordinate second mortgage on the project. The proposed loan would be made at an interest rate of 0%, and repayment of the principal amount of the loan ($1,5M) would occur on a cash available basis upon sale of the property by the Developer. This anticipated sale is expected to occur at a period of fifteen or more years from project initiation. The City would be able to receive repayment on the loan from 50% of the residual proceeds available after repayment of the first mortgage outstanding and all closing costs, up to the basis of $1.5M. Based on the proposed terms the City would be eligible to be repaid the $1.5M value of its land contribution to the project, pending the future performance of the project. Pay-As-You-Go TIF Assistance: - The Developer is seeking Tax Increment Financing (TIF) assistance from the City through the creation of an affordable housing TIF District on the development site. The creation of the TIF District would allow them to seek TIF assistance from the City in a principal amount of $1.8M. The Developer has indicated the TIF assistance is necessary to achieve the underwriting standards required by the anticipated project financing through the issuance of conduit debt housing bonds. Additionally, the Developer has agreed to provide the City with $300,000 to be used towards the City's acquisition of the two adjacent residential properties. In total the anticipated principal amount of the TIF assistance is $1,800,000, subject to TIF revenue capacity. Since the Developer is seeking the reimbursement of these costs on a pay-as-you-go basis, they will be responsible for funding these costs up-front and will receive TIF assistance over time to reimburse them for the principal amount of the assistance, plus interest carrying cost on these expenditures. The City will be obligated to reimburse the Developer from 97,5% of the annually captured TIF revenue, up to the point at which the pay-as-you-go note was repaid. The City would not be obligated to make any reimbursement payments in excess of the 97.5 percentage of the annually generated TIF Revenue, as defined in a development agreement. The structure of this TIF assistance on a pay-as-you-go basis puts all potential repayment risk and future TIF District performance on the Developer and does not obligate the City to make any additional payments in the event that future TIF revenue is less than currently projected. Conversely, in the event that TIF revenue is greater than projected, the pay-as-you-go note would be repaid early and the District could be decertified and the property placed back on the general property tax rolls. Need for Assistance Request Evaluating affordable housing tax credit projects requires a bit of a unique perspective in evaluating the need for potential public financial assistance. Given the nature of these projects, and the significant transaction fees incurred as part of the tax credit process and the additional third-party equity the tax credits provide, we typically evaluate the need for assistance on the basis of project feasibility with and without the requested TIF assistance. In these cases we evaluate project feasibility on the basis of the project's ability to secure private financing for project costs not funded by tax credit equity. The Developer provided us with a detailed listing of the sources and uses for the project, an operating pro forma, and a breakout of anticipated operating revenues and expenses. In outlining the anticipated sources of funds, the Developer detailed the anticipated underwriting standards necessary to achieve placement of the private financing of the project, which is projected to occur through the issuance of conduit housing bonds. The Developer is anticipating that this debt will be issued with an approximately 5.75% interest rate over a 40-year repayment term, and will require a minimum Debt Coverage Ratio (DCR) of 1,35x. The DCR is the amount by which projected net operating income (after property taxes) exceeds the projected annual debt-service amount. In the underwriting of financing through this program, the Developer has to illustrate the net operating income of the project exceeds the anticipated debt- service amount by a factor of 1.35 times. The Developer prepared a pro forma illustrating the project, with assistance, was capable of supporting private financing of $24,600,000 while achieving the necessary DCR of 1.35x. This with assistance scenario is based on the Developer being able to capitalize the TIF pay-as-you-go note in an up-front amount of approximately $1,650,000. Based on this capitalized TIF amount, the Developer is able to achieve the underwriting standards necessary to finance the project based on a private debt obligation of $24,600,000. Conversely, without assistance the private debt amount would be increased by the anticipated up-front value of the TIF note of $1,650,000, to a total of approximately $26,250,000. In this without assistance scenario, the Developer's pro forma would only be capable of achieving a DCR of 1.277x, as a result of the increased debt amount due to the due to the lack of TIF assistance. The lower DCR of this without assistance scenario, is below what would be necessary to achieve private financing of the project, Therefore, as a result of using the DCR and the underwriting standards necessary to secure private financing as a measure of project feasibility, we can determine that the project would be unlikely to proceed but-for the requested TIF assistance. FAN k'A I l tS]J &IJ Pi aui IJ'V'I This Agreement of Purchase and Sale (the "Agreement") is made and entered into this day of , 2016 (the "Effective Date"), by and between the Economic Development Authority of Brooklyn Center, Minnesota, a body politic and corporate organized and existing under the Constitution and laws of the State of Minnesota (the "Seller") and SCA Properties, LLC, a Florida limited liability company, or permitted assigns (the "Purchaser"). This Agreement sometimes refers to Seller and Purchaser individually as a "Party" and collectively as the "Parties." 1.Development Property. The real property that is the subject of this Agreement is located in the City of Brooklyn Center, Hennepin County, Minnesota (the "City") consisting of: (a) the land legally described in Exhibit A attached hereto (the "Land"); (b) any water or mineral rights owned by, or leased to, Seller; (c) any property that accrues to the Land as a result of the vacation of adjacent rights of way; and (d) all improvements and personal property, if any, located on the land (collectively, the "Development Property"). 2.Purchase and Sale. Seller agrees to sell and convey the Development Property to Purchaser pursuant to the terms of this Agreement, and Purchaser agrees to purchase the Development Property from Seller pursuant to the terms of this Agreement. 3.Purchase Price. The purchase price (the "Purchase Price) to be paid to the Seller by the Purchaser for the Development Property is ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000). The Purchase Price shall be paid on the Date of Closing (as defined below) by the delivery of a promissory note (the "Purchase Price Note") which is in substantially the form attached hereto as Exhibit B in the amount of the Purchase Price and which is secured by that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement, which is in substantially the form attached hereto as Exhibit C, dated as of the Date of Closing, by the Purchaser in favor of the Seller (the "Mortgage"). 4.Earnest Money. There shall be no earnest money or other deposit required pursuant to this Agreement. 5. Conveyance Terms. Upon Purchaser's full performance of Purchaser's obligations under this Agreement, Seller must execute and deliver to Purchaser a Quit Claim Deed conveying fee title to the Development Property to Purchaser subject only to: (a)Building, zoning and subdivision statutes, laws, ordinances and regulations; (b)Reservations of minerals or of mineral rights in favor of the State of Minnesota, if any; (c) The lien of real estate taxes and special assessments not yet due and payable; 468986v8 JSB BR291-353 (d)Covenants, conditions, restrictions, easements, encumbrances or other defects in title which are disclosed by the Evidence of Title, as defined in Section 9, and which are not the subject of an Objection, as defined in Section 10, or which are the subject of an Objection that Purchaser has waived pursuant to the provisions of Section 10(b); (e)Right of Reentry as described in the Quit Claim Deed attached as Exhibit (hereinafter, collectively, the "Permitted Encumbrances"). 6.Possession. Upon Purchaser's full performance of Purchaser's obligations under this Agreement, Seller must deliver possession of the Development Property to Purchaser. 7.Closing. The Parties must meet at the offices of Seller at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota on the date 60 days following the Purchaser's delivery of written notice to the Seller that the Purchaser intends to close on the purchase of the Land, or such other date as the Parties may establish by written agreement, but in no event later than September 30, 2016, (the "Date of Closing"), at which time: (a) Seller must: (i)execute and deliver to Purchaser the deed described in Section 5 above. Seller will include on the deed the statement "The Seller certifies that the Seller does not know of any wells on the described real property." (ii)execute and deliver to Purchaser and Purchaser's title insurer, if any, an appropriate Minnesota Uniform Conveyancing Blank Form Affidavit evidencing the absence of bankruptcies, judgments, tax liens involving parties with the same or similar names as the Seller and evidencing the absence of mechanic's lien rights affecting the Development Property, unrecorded interests affecting the Development Property, persons in possession of the Development Property and known encroachments or boundary line questions affecting the Development Property; (iii)execute and deliver to Purchaser a non-foreign affidavit in recordable form containing such information as is required under IRC Section 1445(b) (2) and any regulations relating thereto; (iv)provide Purchaser or Title, as defined in Section 8, with the information necessary to complete a Minnesota Certificate of Real Estate Value; (v)deliver to Purchaser the Date Down Certificate described in Section 12; (vi)pay or provide evidence of payment of the real estate taxes and, if applicable, levied or pending special assessments pursuant to the provisions of Section 11; 2 468986v8 JSB BR291-353 (vii)execute and deliver the TIF Development Agreement, between the Seller and the Purchaser, in substantially the form approved by the Seller on February 8, 2016 (the "TIF Development Agreement"); (viii)execute and deliver the PUD Agreement (as defined in the TIF Development Agreement); and (ix) execute and deliver the TIF Note (as defined in the TIF Development Agreement). (b) Purchaser must: (i)execute and deliver to Seller the Purchase Price Note in the amount of $1,500,000 and in substantially the form attached as Exhibit B and execute and deliver to Seller the Mortgage in substantially the form attached as Exhibit C; (ii)pay or provide evidence of payment of the following: the premium for Purchaser's owner's policy of title insurance, if any; the charges for any endorsements to Purchaser's title insurance policy that Purchaser elects to purchase; the State Deed Tax due upon the execution of the deed described in Section 5; real estate taxes and, if applicable, levied or pending special assessments pursuant to the provisions of Section 11; mortgage registration tax due and payable upon recording of the Mortgage; all recording costs associated with recording all documents associated with this transaction; all costs associated with Purchaser's financing, if any, including mortgagee's title insurance policy costs and premiums, if any; and Title's fee(s) to conduct and insure the closing of this transaction; (iii)deliver to the Seller the plans, specifications, drawings and related documents for the construction of the Minimum Improvements consistent with the PUD (as such terms are defined in the TIP Development Agreement) to be located on the Development Property (the "Project") which shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the building inspector of the City (the "Construction Plans") and the Seller shall have approved such Construction Plans in the manner set forth in Section 4.2 of the TIF Development Agreement and the City shall have approved a building permit for the construction of the Project; (iv)deliver to the Seller evidence that the Purchaser has closed on construction financing for the Project with the lender thereof in an amount which the Developer shall certify is sufficient, together with equity commitments, to complete construction of the Project in accordance with the Construction Plans approved by the Seller; (v)deliver to the Seller the Declaration (as defined in the TIP Development Agreement); (vi)execute and deliver the PUD Agreement; 468986v8 JSB BR291-353 (vii) execute and deliver the TIF Development Agreement and satisfy the conditions set forth in Section 5.2(a) thereof and any other conditions set forth therein that must be satisfied as of the Date of Closing; and 8.Title Commitment. The Purchaser may order, in -Purchaser's sole discretion and at the Purchaser's expense, a commitment (the "Title Commitment") issued by any title insurance company acceptable to Purchaser ("Title"), for an owner's title insurance policy in the full amount of the Purchase Price, showing fee simple title to the Development Property in Seller. 9.Survey. Purchaser may order, in Purchaser's sole discretion and at the Purchaser's expense, a currently dated survey of the Development Property (the "Survey" and, together with the Title Commitment, "Evidence of Title"). The Survey may be prepared in accordance with the most current minimum detail and classification ALTA!ASCM land title standards, and may include any Table A items that Purchaser may request. 10. Defects and Cure. Within twenty (20) business days of Purchaser's receipt of the last item of the Evidence of Title or within twenty (20) business days of Purchaser's discovery of a defect in Seller's title to the Development Property which defect was not reasonably ascertainable from the Evidence of Title, Purchaser may give Seller written notice of alleged defect(s) in Seller's actual and record title to the Development Property and request that Seller cure such defect(s) to Purchaser's satisfaction ("Objections"). The Permitted Encumbrances described in clauses (a), (b), (c) or (e) of Section 5 hereof may not serve as a basis for an Objection. Within twenty (20) business days of Seller's receipt of Purchaser's Objection(s), Seller must notify Purchaser, in writing, if Seller will attempt to cure such defect(s) to Purchaser's satisfaction on or before the Date of Closing. If Seller notifies Purchaser that Seller will attempt to cure such defect(s) to Purchaser's satisfaction, Seller must use commercially reasonable efforts to do so, but Seller has no obligation to commence a law suit or pay money to cure such defect(s) to Purchaser's satisfaction. If Seller notifies Purchaser that Seller does not intend to cure such defect(s) to Purchaser's satisfaction or if Seller notifies Purchaser that Seller intends to cure such defect(s) to Purchaser's satisfaction but is unable to do so on or before the Date of Closing, Purchaser must, on or before the Date of Closing, either: (a)terminate this Agreement pursuant to the procedures set forth in Section 20 below; or (b)notify Seller that Purchaser waives Purchaser's Objections. If Purchaser waives Purchaser's Objections, the matters giving rise to such Objections will be deemed a Permitted Encumbrance and the Parties must fully perform their obligations under this Agreement. If Purchaser makes an Objection and does not notify Seller of Purchaser's election to terminate this Agreement pursuant to subsection (a) above before Seller and Purchaser meet to close this transaction pursuant to Section 7, Purchaser will be deemed to have waived Purchaser's Objection. 4 468986v8 JSB BR291-353 11. Real Estate Taxes and Special Assessments. The Parties must pay the real estate taxes (which term, as used in this Agreement, includes service charges assessed against real property on an annual basis pursuant to Minnesota Statutes 429.10 1) and special assessments as follows: (a)On or before the Date of Closing, Seller must pay the real estate taxes, and any installments of special assessments certified for payment therewith and any penalties and interest thereon that are due and payable in 2015 or prior calendar years with respect to the Development Property; (b)On or before the Date of Closing, Seller shall pay any and all installments of special assessments levied or pending against the Development Property as of the Date of Closing; and (c) Purchaser and Seller must pro rate the real estate taxes, if any, which are payable with respect to the Development Property in the year of closing on a per-diem basis using a calendar year, to the Date of Closing. 12. Seller's Representations. Seller makes the following representations to Purchaser, based solely upon the actual knowledge of Gary Eitel, in his capacity as Director of Business & Development of the City of Brooklyn Center, Minnesota, a municipal corporation under the Constitution and laws of the State of Minnesota: (a)Seller represents that there has been no labor or materials furnished to the Development Property for which payment has not been paid. (b)Seller represents that there are no unrecorded mortgages, contracts, purchase agreements, options, leases, easements or other agreements or interest relating to the Development Property. (c)Seller represents that there are no persons in possession of any portion of the Development Property other than pursuant to a recorded document or as may be disclosed on the Survey. (d)Seller represents that the Development Property and the improvements thereon, if any, are not in violation of any statute, law, ordinance or regulation. (e)Seller represents that there is no action, litigation, governmental investigation, condemnation or administrative proceeding of any kind pending against Seller, involving any portion of Development Property, and no third party has threatened Seller with commencement of any such action, litigation, investigation, condemnation or administrative proceeding. (f)Seller represents that there are no wells, as that term is defined in Minnesota Statutes, Section 1031.005, subd. 21, located on the Development Property. (g) Seller represents for purposes of Minnesota Statutes, Section 115.55, that there are no individual sewage treatment systems on or serving the Development Property 468986v8 JSB BR291-353 and any sewage generated on the Development Property goes to a facility permitted by the Minnesota Pollution Control Agency. (h) Seller represents for purposes of Minnesota Statutes, Section 152.0275, subdivision 2(m), that the Development Property has not been used for methamphetamine production. If, at any time prior to the Date of Closing, Seller acquires actual knowledge of events or circumstances which render the representations set forth in this Section 12 inaccurate in any respect, Seller must immediately notify Purchaser, in writing. At closing, an authorized representative of Seller must execute and deliver to Purchaser a certificate of Seller certifying that the representations contained in this Section 12 are true as of the Date of Closing or, if such representations are no longer true, describing, in detail, the reasons why the representations are no longer true (the "Date Down Certificate"). Should Purchaser determine that any of the above representations as set forth in this Section 12 are inaccurate in any respect, Purchaser may terminate this Agreement pursuant to the procedure set forth in Section 20 below, which shall be Purchaser's sole and exclusive remedy. 13. Purchaser's Representations. Purchaser hereby represents to Seller as follows: (a)The individuals executing this Agreement on behalf of Purchaser represent and warrant that they have the authority to execute this Agreement on behalf of Purchaser and to bind Purchaser. Purchaser represents that Purchaser has the full and complete authority to enter into this Agreement and to purchase the Development Property. (b)Purchaser represents that Purchaser has not engaged a real estate agent in connection with this transaction. 14. Purchaser's Inspection and "AS IS" Sale. At all times prior to the Date of Closing, Purchaser and its agents have the right, upon reasonable notice to Seller, to go upon the Development Property to inspect the Development Property and to determine the condition of the Development Property including, specifically, the presence or absence of Hazardous Substances, in, on, or about the Development Property. Purchaser agrees to indemnify and defend Seller from and to hold Seller harmless against any and all claims, causes of action or expenses, including attorneys fees, relating to or arising from Purchaser's or Purchaser's agents or contractors presence on the Development Property prior to the Date of Closing. Purchaser agrees to repair any damage to the Development Property caused by such inspections and to return the Development Property to substantially the same condition as existed prior to Purchaser's inspection. PURCHASER ACKNOWLEDGES THAT PURCHASER IS PURCHASING THE PROPERTY IN RELIANCE ON THE REPRESENTATIONS OF SELLER SET FORTH IN SECTION 12; ON PURCHASER'S INSPECTION OF THE PROPERTY PURSUANT TO THIS SECTION 14; AND ON PURCHASER'S JUDGMENT REGARDING THE SUFFICIENCY OF SUCH INSPECTIONS. PURCHASER IS NOT RELYING ON ANY WRITTEN OR ORAL REPRESENTATIONS, WARRANTIES OR STATEMENTS THAT SELLER OR SELLER'S AGENTS HAVE MADE EXCEPT FOR THE REPRESENTATIONS SET FORTH IN SECTION 12 OF THIS AGREEMENT. SUBJECT TO PURCHASER'S 6 468986v8 JSB BR291-353 RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO SECTION 15, PURCHASER IS PURCHASING THE PROPERTY IN "AS IS" CONDITION RELYING 15. Purchaser's Contingencies. Purchaser's obligations under this Agreement are contingent on: (a)Purchaser's determination, based on the inspections described in Section 14 above and any other relevant information, that the condition of the Development Property is acceptable to Purchaser; (b)Purchaser's ability to obtain a title insurance policy and endorsements insuring Purchaser's title to the Development Property all in a form acceptable to Purchaser in Purchaser's sole and absolute discretion; (c)the representations of Seller contained in Section 12 are true and correct in all material respects as of Closing; (d)Seller has in all material respects performed and observed all covenants, agreements and conditions of this Agreement to be performed or observed by it prior to or at Closing; (e)Purchaser has determined that it can proceed with its planned use of the Property without significant additional expense and that the same is economically feasible; (f)Purchaser has obtained the approval of the City of Brooklyn Center and any other relevant governmental authorities for all required rezoning permits, licenses, variances, site plan reviews, platting, PUD and other approvals necessary for Purchaser's planned use of the Development Property, and has obtained commitments for financing deemed necessary by Purchaser for Purchaser's planned use of the Development Property, in Purchaser's sole judgment; and (g) Seller has delivered to Buyer all of the items required to be delivered to Buyer pursuant to Section 7(a). If any condition set out in this Section 15 is unsatisfied before or on the Date of Closing, Purchaser may at its option: (i)waive the condition and proceed with closing; (ii)delay the Date of Closing for up to sixty (60) days to allow the conditions set forth in (c), (d) or (g) to be satisfied; or (iii) terminate this Agreement. 16. Seller's Contingencies. Seller's obligations under this Agreement are contingent on the Seller having approved, after a public hearing as required by law, the sale of the 7 468986v8 JSB BR291-353 Development Property pursuant to this Agreement and Purchaser having delivered the items set forth in Sections 7(b) and that no Developer Event of Default shall exist under the TIF Development Agreement. 17.Condemnation. If a public or private entity with the power of eminent domain commences condemnation proceedings against all or any part of the Development Property, Seller must immediately notify Purchaser, and Purchaser may, at Purchaser's sole option, terminate this Agreement pursuant to Section 20 below. Purchaser has twenty (20) business days from the effective date of Seller's notice to Purchaser to exercise Purchaser's termination right. If Purchaser does not terminate this Agreement within said twenty (20) business day period, the Parties must fully perform their obligations under this Agreement, with no reduction in the Purchase Price, and Seller must assign to Purchaser, on the Date of Closing, all of Seller's right, title and interest in any award made or to be made in the condemnation proceedings. Seller must not designate counsel, appear or otherwise act with respect to any such condemnation proceedings without Purchaser's prior written consent unless Purchaser fails to respond within seven (7) days to a request for such written consent. 18.Assignment. Purchaser may not assign Purchaser's rights or obligations under this Agreement to a third party without the written consent of Seller, except that Purchaser may assign Purchaser's rights and obligations under this Agreement to a partnership whose general partner(s), or to a limited liability company whose managing member, includes Purchaser or the principals of Purchaser, without the consent of Seller. When Purchaser is required to obtain consent, Seller may grant or withhold Seller's consent to an assignment in Seller's sole and absolute discretion. 19. Default. If either Party defaults in the performance of any of the Party's obligations under this Agreement, the non-defaulting Party may, after written notice to the defaulting Party, suspend performance of its obligations under this Agreement, and the rights of the non-defaulting Party are as follows: (a)Purchaser's Default. If Purchaser defaults in the performance of any of Purchaser's obligations under this Agreement, Seller has the right to terminate this Agreement pursuant to Minnesota Statutes, Section 559.21. The remedies set forth in this Section 19(a) are Seller's sole and exclusive remedies in the event of Purchaser's default. (b)Seller's Default. If Seller defaults in the performance of any of Seller's obligations under this Agreement, Purchaser may terminate this Agreement pursuant to Section 20 below. The remedies set forth in this Section 19(b) are Purchaser's sole and exclusive remedies in the event of Seller's default. 20. Termination of this Agreement. Sections 10, 12, 15, 17 and 19(b) of this Agreement allow Purchaser to terminate this Agreement under certain conditions. Section 16 allows Seller to terminate this Agreement under certain conditions. Section 19(a) allows Seller to terminate this Agreement under certain conditions; provided, however, such termination is governed by Minnesota Statutes, Section 559.21 and not by this Section 20. The following procedures govern an exercise of those termination rights: 8 468986v8 JSB BR291-353 (a)The party that desires to terminate this Agreement (the "Terminating Party") must notify the other party (the "Non-Terminating Party"), in writing, of the Terminating Party's intent to terminate this Agreement. (b)The Terminating Party's notice must recite the Section of this Agreement that authorizes the Terminating Party's termination of this Agreement and must describe the facts and circumstances which the Terminating Party asserts justify termination under the referenced Section. (c)The Terminating Party's notice of termination will be effective as of the date the Terminating Party deposits the notice of termination with the United States Postal Service, with all necessary postage paid, for delivery to the Non-Terminating Party via certified mail, return receipt requested, at the address set forth in Section 23. If the Terminating Party delivers a notice of termination in a different manner than described in the preceding sentence, the notice of termination will be effective as of the date the Non- Terminating Party actually receives the notice of termination. The Terminating Party must also mail a copy of the notice of termination to the Parties' respective attorneys as provided for in Section 23 below. (d)If the Non-Terminating Party disputes the Terminating Party's right to terminate this Agreement, the Non-Terminating Party must so notify the Terminating Party, in writing, within five (5) business days of the Non-Terminating Party's receipt of the Terminating Party's notice of termination. (e)If the Non-Terminating Party does not dispute the Terminating Party's right to terminate the Agreement, Purchaser must execute and deliver to Seller a recordable quit claim deed or other recordable instrument evidencing the termination of this Agreement and Purchaser's rights in the Development Property. (f)If the Parties dispute the validity of an attempted termination of this Agreement, either Party may initiate a civil action in a court of competent jurisdiction to determine the status of this Agreement, and the Party that prevails in any such action is entitled to recover its reasonable attorneys' fees and costs in the action from the non- prevailing Party. 21.Time. Time is of the essence for all provisions of this Agreement. If Seller and Purchaser have not previously closed pursuant to this Agreement, this Agreement shall terminate and have no further force or effect after September 30, 2016. 22.Survival of Terms. The Parties' obligations under this Agreement survive Seller's delivery of a deed to Purchaser and the closing of this transaction. 23. Notices. All notices provided for in this Agreement must be in writing. The notice must be effective as of the date two days after the Party sending such notice deposits the notice with the United States Postal Service with all necessary postage paid, for delivery to the other Party via certified mail, return receipt requested, at the address set forth below. If Party delivers a notice provided for in this Agreement in a different manner than described in the preceding sentence, notice will be effective as of the date the other party actually receives the 9 468986v8 JSB BR291-353 notice. The Party sending the notice must also mail a copy of the notice to the Parties' respective attorneys via first class United States mail at the addresses set forth below: Purchaser: SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, FL 34103 Attn: Garrett G. Carlson, Sr. with a copy to: McGrann Shea Carnival Straughn & Lamb, Chartered U.S. Bancorp Center, 800 Nicollet Mall, Suite 2600 Minneapolis, MN 55402-7035 Attn: Peter L. Cooper Seller: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, MN 55430-2199 Attn: Executive Director with a copy to: Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South 6th Street Minneapolis, MN 55402 Attn: Jenny Boulton 24.Full Agreement. The Parties acknowledge that this Agreement represents the full and complete agreement of the Parties relating to the purchase and sale of the Development Property and all matters related to the purchase and sale of the Development Property. This Agreement supersedes and replaces any prior agreements, either oral or written, and any amendments or modifications to this Agreement must be in writing and executed by both Parties to be effective. 25.Governing Law. This Agreement has been made under the laws of the State of Minnesota and such laws control its interpretation. 10 468986v8 JSB BR291-353 Dated: , 2016 SELLER: (I) 1 I'll) By President ATTEST: By: Executive Director S-i 468986v8 JSB BR291-353 Dated , 2016 PURCHASER: SCA PROPERIES, LLC, a Florida limited liability company By: Its S-2 468986v8 JSB BR291-353 I *:i :11 :i U ii geMU ijai[si 1 I U [OtI] i J {SJ J al The property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 1384364. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property A-i 468986v8 JSB BR291-353 Ink!&I•I.JV Ipv,ii..p -j__, I ai tii %i DU J 1 (Si au (S)k' I If[S) 'a(.i ai SCA Properties, LLC (the "Developer"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay to the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA") or its registered assigns (the registered owner of this Note is referred to herein as the "Registered Owner"), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS and no/100 Dollars ($1,500,000) without interest thereon. (a)The principal amount of this Purchase Price Promissory Note (the "Note") shall equal, from time to time, the principal amount stated above, as reduced to the extent that such principal shall have been paid in whole or in part pursuant to the terms hereof. This Note is issued pursuant to that certain Agreement of Purchase and Sale, dated as of, 2016, as the same may be amended from time to time (the "Purchase Agreement"), by and between the EDA and the Developer and is secured by that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement dated as of the date hereof, by the Developer in favor of the EDA (the "Mortgage"). (b)The Developer acknowledges that the EDA will credit TIF 4 Available Tax Increment (as defined in the TIF Development Agreement, dated as of , 20, as the same may be amended from time to time, between the EDA and the Developer (the "TIP Development Agreement")) to the payment of this Note pursuant to the Interfund Loan (as defined in the TIF Development Agreement). Notwithstanding the application of TIP 4 Available Tax Increment (as defined in the TIF Development Agreement) to the payment of this Note, except as provided in (e), the principal of this Note shall be due and payable, as provided in (c) below, on any date prior to December 31, 2043 (the "Note Maturity Date") on which the Developer sells, assigns, conveys, leases or transfers in any other mode or manner (a "Sale") all or any portion of the property legally described on Exhibit A attached hereto or the improvements thereon (the "Development Property") except: (i)to an Affiliate of the Developer (as defined in the TIP Development Agreement); (ii)to a tenant renting, in the ordinary course, a unit of the senior housing facility to be located on the Development Property. (c) Any Sale shall be in an arms-length transaction for a sale price of not less than the fair market value of the Development Property, as improved, as determined by a qualified appraiser, not affiliated with the Developer or the purchaser of the Development Property (the "Sale Price"). The principal amount of this Note shall be due and payable, without interest, in an amount equal to the lesser of $1,500,000 or the then outstanding principal balance of this Note or 50% of the proceeds remaining from the Sale Price after payment of closing costs and the payment in full of the Construction Loan (as defined in the TIF Development Agreement) as evidenced by a settlement statement prepared by a title company not affiliated with the Developer or the purchaser of the Development Property (the "Net Sale Proceeds"). If 50% of B-i 468986v8 JSB BR291-353 the Net Sale Proceeds is less than $1,500,000, the difference shall be deemed paid in full upon payment of 50% of the Net Sale Proceeds and delivery of the settlement statement to the EDA. (d)In addition, the principal amount of this Note shall be due and payable, without interest, in an amount equal to the lesser of $1,500,000 or 50% of the proceeds of any loan or other financing or refinancing in an amount exceeding the costs of the Minimum Improvements and any additional capital improvements thereto, plus reasonable transaction costs, as authorized pursuant to Article VI of the TIF Development Agreement, as evidenced by a loan closing memorandum prepared by the lender. (e)The principal of and interest on this Note shall be deemed paid in full on the Note Maturity Date if, as of such date, (i) the Developer continues to operate the Minimum Improvements (as defined in the TIF Development Agreement) and (ii) no Event of Default under the TIF Development Agreement exists and remains uncured after the period allowed therein. (f) This Note may be prepaid by the Developer at any time. B-2 468986v8 JSB BR291-353 IN WITNESS WHEREOF, SCA Properties, LLC, has caused this Note to be executed and delivered as of , 20. SCA PROPERTIES, LLC, a Florida limited liability company By: Its B-3 468986v8 J5B BR291-353 Exhibit A to Purchase Price Note LEGAL DESCRIPTION PROPERTY The property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 1384364. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property B-4 468986v8 JSB BR291-353 EXHIBIT C I D] 1I ti) J &IJ (Ii as J (Ii aL (SI C4 468986v8 JSB BR291-353 i *i :u :i i LI1U N SJ W k"A 10 a aui 3 inches reserved for recordi QUIT CLAIM DEED DEED TAX DUE: ECRV: DATE: (month/day/year) FOR VALUABLE CONSIDERATION, Economic Development Authority of Brooklyn Center. Minnesota (insert name of Grantor) a public body politic and corporate under the laws of Minnesota ,("Grantor"), hereby conveys and quitclaims to _______________________________________________________________________________ (insert name of Grantee) SCA Properties, LLC, a limited liability company under the laws of Florida, ("Grantee"), real property in Hennepin County, Minnesota, legally described as follows: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 1384364. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property Check here if all or part of the described real property is Registered (Torrens) El together with all hereditaments and appurtenances and subject to the Right of Re-Entry for Breach of Condition Subsequent in favor of Grantor which is described on Exhibit A. Check applicable box: El The Seller certifies that the Seller does not know of any wells on the described property. O A well disclosure certificate accompanies this document (If electronically filed, insert WDC number: 0 I am familiar with the property described in this instrument and I certify that the status and number of wells on the described real property have not changed since the last previously filed well disclosure certificate. Economic Development Authority of Brooklyn Center, Minnesota By: Tim Willson Its: President By: Curt Boganey Its: Executive Director D-1 468986v8 JSB BR291-353 State of Minnesota, County of HENNEPIN This instrument was acknowledged before me on , 2016 by Tim Willson, as President and by Curt Boganey, as Executive Director of Economic Development Authority of Brooklyn Center, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the public body. Notary Public THIS INSTRUMENT WAS DRAFTED BY:TAX STATEMENTS FOR THE REAL PROPERTY (insert name and address)DESCRIBED IN THIS INSTRUMENT SHOULD BE SENT TO: Kennedy & Graven, Chartered (insert name and address of Grantee to whom tax 470 U.S. Bank Plaza statements should be sent) 200 South 6th Street Minneapolis, MN 55402 SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, FL 34103 Attn: Garrett G. Carlson, Sr. D-2 468986v8 JSB BR291-353 EXHIBIT A TO QUIT CLAIM DEED EXECUTED BY THE ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, GRANTOR, IN FAVOR OF SCA PROPERTIES, LLC, GRANTEE. The Economic Development Authority of Brooklyn Center, Minnesota, Grantor, is conveying the property described in the attached Quit Claim Deed (the "Development Property") to SCA Properties, LLC, Grantee, subject to a right of reentry for breach of conditions subsequent in favor of Grantor. The condition subsequent is that, barring any Unavoidable Delays, Grantee shall commence construction in accordance with an approved site plan for the Development Property (the "Project") beyond the point of site preparation by the date 12 months from the date of this Quit Claim Deed, as set forth in Section 3.3 and Section 4.3 of that certain TIF Development Agreement between the Grantor and Grantee dated as of, 201_ (the "TIF Development Agreement"). If Grantee breaches the condition subsequent, Grantee shall re- convey the Development Property back to Grantor. If Grantee fails to re-convey the Development Property to the Grantor, Grantor may elect to exercise its right of reentry by commencing an action in Hennepin County District Court to establish the breach of the condition subsequent. If Grantor establishes a breach of the condition subsequent, title to and the right to possession the Development Property, and title to all improvements located thereon reverts to Grantor, and Grantee is not entitled to any compensation from Grantor or the City of Brooklyn Center, Minnesota for the value of any improvements Grantee has made to the Development Property. The Grantee shall notify the Grantor when construction of the Project has commenced beyond the point of site preparation. The Grantor shall, within 14 days after such notification, inspect the Project in order to determine whether • construction of the Project has been commenced. If the Grantor determines that construction of the Project has commenced beyond the point of site preparation, the Grantor shall furnish to the Grantee a Certificate of Release and Satisfaction in the form attached hereto as Exhibit B. The Certificate of Release and Satisfaction issued for the Project shall conclusively satisfy and terminate the right of reentry of the Grantor in this Quit Claim Deed or pursuant to the TIF Development Agreement. D-3 468986v8 JSB BR291-353 EXHIBIT B TO QUIT CLAIM DEED EXECUTED BY THE ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, GRANTOR, IN FAVOR OF SCA PROPERTIES, LLC, GRANTEE. ('d N (SJJ 1i m iahuII'fiYdN F1 i'tI N [SAI 1.Recitals. Recital One. SCA Properties, LLC, a limited liability company (the "Developer") is the owner of the real property legally described in Exhibit A hereto (the "Development Property"). Recital Two. Developer acquired title to the Development Property from the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA") pursuant to a deed dated 20 and recorded in the office of the Hennepin County Recorder on as Document No. and filed in the office of the Hennepin County Registrar of Titles on as Document No. (the "Deed"). Recital Three. The Deed includes a right of re-entry for breach of conditions subsequent in favor of the EDA (the "Right of Re-entry"). Recital Four. The EDA and the Developer are parties to a TIF Development Agreement dated ______,2016 (the "TIF Development Agreement"). Recital Five. Pursuant to Section 3.3 of the TIF Development Agreement, the Developer is obligated to commence, or cause to be commenced, construction of the Minimum Improvements (as defined in the TIF Development Agreement) on the Development Property in accordance with an approved site plan and planned unit development for the Development Property (the "Project") beyond the point of site preparation by the date 12 months from the date of the Deed. Recital Six. The EDA's Right of Re-entry would be triggered by the Developer's failure to commence, or cause to be commenced, construction of the Project beyond the point of site preparation by the date 12 months from the date of the Deed. Recital Seven. The Developer has represented to the EDA that the Developer has timely commenced construction of the Project beyond the point of site preparation as required under the TIF Development Agreement, and has requested this Certificate of Release and Satisfaction from the EDA. 2.Certificate of Release. The EDA hereby certifies that the Developer has satisfied its obligations with respect to commencing construction of the Project beyond the point of site D-4 468986v8 JSB BR291-353 preparation on the Development Property. The EDA further acknowledges and agrees that the Development Property is hereby released from the Right of Re-Entry. 468986v8 JSB BR291-353 IN WITNESS WHEREOF, the EDA has caused this certificate to be duly executed on its behalf this day of ,20. ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER, MINNESOTA By Its President And By Its Executive Director STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this day of 20_ by __ and , the President and Executive Director of the Economic Development Authority of the City of Brooklyn Center, Minnesota a body corporate and politic established pursuant to Minnesota Statutes, Chapter 469, on behalf of the Authority. Notary Public DRAFTED BY: Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South 6th Street Minneapolis, MN 55402 D.6 468986v8 JSB BR291-353 i &i vs IaI'i I S)IA I h1 W .1 S] VJI Illil LI) Y'I t[IAI e Phase I Environmental Site Assessment dated January 9, 2014, prepared by Peer Engineering, Inc. o Phase I Environmental Site Assessment dated September 18, 2008, prepared by Peer Engineering, Inc. o Revised Proposal for a Geotechnical Evaluation and Preparation of a Development Response Action Plan (DRAP) dated October 8, 2015, prepared by Braun Intertec Corporation o Table 1 - Summary of Soil Analytical Results, The Sanctuary, Brooklyn Center, Minnesota [DRAFT] o Table 2 - Summary of Water Analytical Results, The Sanctuary, Brooklyn Center, Minnesota [DRAFT] o Table 3 - Summary of Vapor Analytical Results, The Sanctuary, Brooklyn Center, Minnesota [DRAFT] • Waste Profile Sheet prepared by SKB Environmental • Report of Laboratory Analysis RE: Project: B1507280 FMR CHRYSLER DEALERSH dated August 25, 2015, prepared by Pace Analytical Services, Inc. o Report of Laboratory Analysis RE: Project: B1507 Fmr Chrysler dealership dated August 17, 2015, prepared by Pace Analytical Services, Inc. 9-2-15 photograph of Howe site and 6121 Brooklyn Boulevard [Purchaser's assessments and reports to be added.] E-1 468986v8 JSB BR291-353 I I I I) 1'i I U] 4 I Mh WI 1 IYA I aihi I EC O N OM IC D a'i I U] I 3PhI 'IS] JBR OOKLYN C DIhI I DI t MINNESOTA I] SCA PROPERTIES, LLC ,2016 469017v4 BR291-353 ARTICLE I DEFINITIONS .3 Section1.1 Definitions ............................................................................................ 3 ARTICLE II REPRESENTATIONS AND WARRANTIES................................................8 Section 2.1 Representations and Warranties of the EDA.......................................8 Section 2.2 Representations and Warranties by the Developer..............................9 ARTICLE III CONVEYANCE OF DEVELOPMENT PROPERTY..................................11 Section 3.1 Conveyance of Development Property..............................................11 Section 3.2 Purchase Price ....................................................................................11 Section 3.3 Conveyance Subject to Right of Re-entry .........................................11 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS..............................12 Section 4.1 Planned Unit Development . ...............................................................12 Section 4.2 Construction Plans . ............................................................................12 Section 4.3 Construction of Minimum Improvements .........................................12 Section 4.4 Commencement and Completion of Construction.............................13 Section 4.5 Effect of Delay...................................................................................13 Section 4.6 Compliance with Environmental Requirements................................13 Section 4.7 Additional Responsibilities of the Developer....................................14 Section 4.8 Certificate of Completion ..................................................................14 ARTICLE V TAX INCREMENT ASSISTANCE ............................................................... 16 Section 5.1 Creation of TIF District and Approval of Tax Increment Financing Plan...........................................................16 Section 5.2 Purchase Agreement; Purchase Price Note and Purchase Price Mortgage............................................................................................16 Section 5.3 Issuance of TIF Note..........................................................................17 Section 5.4 Execution of Assessment Agreement................................................18 Section 5.5 Review of Taxes ................................................................................19 Section 5.6 Use of Tax Increments.......................................................................19 Section 5.7 Income and Rent Restrictions ............................................................ 20 ARTICLE VI ENCUMBRANCE OF THE DEVELOPMENT PROPERTY......................21 Section 6.1 Encumbrance of the Development Property......................................21 Section 6.2 Copy of Notice of Default to Financing Parties ................................. 21 Section 6.3 Mortgagee's Option to Cure Events of Default.................................21 Section 6.4 Defaults Under Mortgage ..................................................................21 Section 6.5 Subordination.....................................................................................21 ARTICLE VII INSURANCE AND MAINTENANCE.........................................................22 Section7.1 Insurance............................................................................................23 Section7.2 Subordination.....................................................................................23 Section 7.3 Maintenance and Operation of the Development..............................24 ARTICLE VIII TRANSFER LIMITATIONS AND INDEMNIFICATION..........................25 Section 8.1 Representation as to Development.....................................................25 Section 8.2 Limitations on Transfer......................................................................25 Section 8.3 Indemnification ..................................................................................27 Section 8.4 Limitation...........................................................................................28 1 ARTICLE IX EVENTS OF DEFAULT AND DAMAGES ................................................29 Section 9.1 Events of Default Defined .................................................................29 Section 9.2 Developer Events of Default .............................................................. 29 Section 9.3 EDA Events of Default......................................................................30 Section 9.4 EDA Remedies on Default.................................................................30 Section 9.5 Developer Remedies on Default........................................................30 Section 9.6 No Remedy Exclusive........................................................................31 Section 9.7 No Additional Waiver Implied by One Waiver.................................31 ARTICLE X ADDITIONAL PROVISIONS ......................................................................32 Section 10.1 Conflicts of Interest............................................................................32 Section 10.2 Titles of Articles and Sections...........................................................32 Section 10.3 Notices and Demands ........................................................................32 Section10.4 Counterparts.......................................................................................32 Section10.5 Law Governing ..................................................................................32 Section 10.6 Consents and Approvals ....................................................................33 Section 10.7 Representatives ..................................................................................33 Section 10.8 Superseding Effect.............................................................................33 Section 10.9 Relationship of Parties.......................................................................33 Section10.10 Term...................................................................................................33 Section10.11 Venue ................................................................................................33 Section 10.12 Provisions Surviving Rescission or Expiration..................................33 EXHIBIT A DESCRIPTION OF DEVELOPMENT PROPERTY .................................A-i EXHIBIT B CERTIFICATE OF COMPLETION ...........................................................B-i EXHIBIT C ELIGIBLE COSTS .....................................................................................C-i EXHIBIT D FORM OF TIF NOTE .................................................................................D-1 EXHIBIT E FORM OF COLLATERAL ASSIGNMENT OF TIF DEVELOPMENT AGREEMENT ...............................................................E-i EXHIBIT F COMPLIANCE CERTIFICATE ..................................................................F-i EXHIBIT G FORM OF DECLARATION OF RESTRICTIVE COVENANTS.............G-1 EXHIBIT H FORM OF ASSESSMENT AGREEMENT ................................................H-i 11 Ill !tS1 I K1 1I DI1 I THIS TIF DEVELOPMENT AGREEMENT is made and entered into this day of , 2016, by and between the ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a body corporate and politic organized and existing under the laws of the State of Minnesota (the "EDA"), and SCA PROPERTIES, LLC, a Florida limited liability company, or permitted assigns (the "Developer"). I 1NVFi • WHEREAS, pursuant to Minnesota Statutes, Section 469.090 through 469.1081 and Sections 469.001 through 469047, the EDA has formed Housing Development and Redevelopment Project No. 1 (the "Project Area") and has adopted a Redevelopment Plan (the "Redevelopment Plan") for the Project Area which sets forth development objectives for the Project Area. A major objective of the Redevelopment Plan is to foster the development and redevelopment of housing facilities in the Project Area; WHEREAS, the Developer has submitted a proposal to the EDA in connection with the construction of a housing development on the Development Property. The Development Property is within the Project Area; WHEREAS, the Developer intends to acquire the Development Property and construct thereon the Minimum Improvements (as defined herein); WHEREAS, under Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the "TIF Act"), the EDA is authorized to finance certain public redevelopment costs of .a housing development and redevelopment project area with tax incrementrevenues derived from a tax increment financing district established within such project area; • WHEREAS, the EDA has heretofore adopted a tax increment financing plan and created and established Tax Increment Financing District No. 6 (Housing District) as a housing tax increment financing district pursuant to the TIF Act (the "TIF District"); WHEREAS, in order to set forth the conditions under which the EDA will provide certain tax increment assistance to the Developer, the EDA and Developer have agreed to enter into this Agreement; WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement pursuant to an exemption for housing; and WHEREAS, the EDA believes that the development of the Development Property, as more ftilly set forth in this Agreement, is in the best interests of the residents of the City of Brooklyn Center, Minnesota (the "City"), and will facilitate the redevelopment of blighted areas in the City, and increase housing opportunities, and will otherwise benefit the health, safety, morals and welfare of the residents of the City, in accordance with the public purpose and 4690170 BR291-353 provisions of the applicable State and local laws and requirements under the Redevelopment Plan; and NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 469017v4 BR291-353 : I{S) m 311 DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: "Affiliate" means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with a Person and any purchaser of all or substantially all of the assets of such Person. For this purpose, "control" means the power to direct management and policies, directly or indirectly, whether through ownership of at least a majority of its voting securities, or the right to designate or elect at least a majority of the members of its governing body, or by contract, or by other arrangements, and the terms "controlling" and "controlled" have correlative meanings. "Agreement" means this TIF Development Agreement as the same may be from time to time modified, amended or supplemented. "Assessment Agreement" means the minimum assessment agreement, in substantially the form of the agreement attached as Exhibit H hereto and made a part of this Agreement, between the Developer and the EDA. "Available Tax Increment" means 97.5% of the Tax Increment. "Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in Minnesota are authorized by law or executive order to close. "Certificate of Completion" means the certificate in substantially the form attached hereto as Exhibit B signed by the EDA Representative certifying completion of the Minimum Improvements. "Certificate of Release and Satisfaction" means the certificate in substantially the form attached as Exhibit B to the Deed, signed by the EDA Representative certifying the construction of the Minimum Improvements on the Development Property has commenced beyond the point of site preparation. "City" means the City of Brooklyn Center, Minnesota, a municipal corporation. "Closing" means the closing on the conveyance of the Development Property by the EDA to the Developer. "Closing Date" means the date on which the EDA conveys the Development Property to the Developer, which date shall be the date determined in accordance with the Purchase Agreement. "Completion Date" means the date the Certificate of Completion is executed by the EDA Representative. 469017v4 BR291-353 "Construction Lender" means a lender who makes a Construction Loan to the Developer. "Construction Loan" means any loan or loans to be made to provide financing for the construction of the Minimum Improvements. "Construction Plans" means the plans, specifications, drawings and related documents for the construction of the Minimum Improvements which shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the building inspector of the City. "County" means Hennepin County, Minnesota. "Declaration" means the Declaration of Restrictive Covenants in substantially the form attached hereto as Exhibit G. "Deed" means the Quit Claim Deed executed by the EDA conveying the Development Property to the Developer, in the form attached as Exhibit D to the Purchase Agreement. "Developer" means SCA Properties, LLC, its successors or assigns. "Developer Event of Default" means the occurrence of an Event of Default set forth in Section 9.2 hereof. "Developer's Representative" means the of the Developer, or his or her designee evidenced in writing to the EDA. "Development" means the Development Property and the Minimum Improvements. "Development Property" means the real property legally described in Exhibit A hereto. "EDA" means the Economic Development Authority of Brooklyn Center, Minnesota, its successors and assigns. "EDA Representative" means the Executive Director of the EPA or his or her designee. "Eligible Costs" means the costs identified on Exhibit C attached hereto. "Event of Default" means any of the events described in Sections 9.2 or 9.3. "Financing Party" means any mortgagee of a Mortgage, any Construction Lender, any other lender or other Person providing constructionor permanent financing for the Minimum Improvements, or any member or partner of the Developer. "Interfund Loan" means the internal loan of TIF 4 Available Tax Increment from the TIF District No. 4 account to the TIF District No. 6 account to provide assistance to the Developer as set forth in Section 5.2. 4690170 BR291-353 "Market Value" or 'Market Valuation" means the market value of real property as determined by the assessor of the County in accordance with Minnesota Statutes, Section 273.11 (or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). "Minimum Improvements" means the construction by the Developer of an affordable senior assisted living facility consisting of approximately 158 total units, which will include approximately 86 one-bedroom and 44 efficiency apartment units for assisted living and approximately 28 studio apartment units for special needs residents on the Development Property, all consistent with the PUD and any approved development plans. "Mortgage" means any mortgage of all or any part of the Development Property granted by Developer. "Parties" means the Developer and the EDA. "Party" means the Developer or the EDA, as the context may require. "Person" means any individual, corporation, partnership, joint venture, limited liability company or partnership, association, trust, unincorporated organization, or government, or any agency or political subdivision thereof. "PUD" has the meaning provided in Section 4.1. "PUD Agreement" has the meaning provided in Section 4.1. "Purchase Agreement" means the Agreement of Purchase and Sale, between the EDA and the Developer, dated 20l6, for the sale of the Development Property to the Developer. "Purchase Price Note" means the Promissory Note from the Developer to the EDA, in substantially the form attached as Exhibit B to the Purchase Agreement, dated 2016, evidencing the Developer's obligation to pay the purchase price of the Development Property. "Purchase Price Mortgage" means the Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement, against the Development Property in substantially the form attached as Exhibit C to the Purchase Agreement, dated 2016, made by the Developer in favor of the EDA to secure the Purchase Price Note. "Sale" means any sale, direct or indirect, conveyance, assignment, transfer, exchange or other disposition of all or a part of the Developer's interest in the Minimum Improvements, to any Person other than an Affiliate. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes generated by the Development Property and any improvements thereon which is actually remitted to and received 4690170 BP.291-353 and retained by the EDA as tax increment under the TIP Act after deducting the amount of Tax Increment, if any, which must be paid to the City, the school district(s), the County and the State pursuant to Minnesota Statutes, Section 469.177, subdivisions 9 and 11, Section 469.176, subdivision 4h, and Section 469.175, subdivision la or are otherwise allocated to other taxing jurisdictions pursuant to the TIP Act; for purposes of this definition, "generated by the Development Property and any improvements thereon" means the portion of Tax Increment actually received by the EDA from the TIF District determined by the EDA, in its sole determination, to have been derived from the Development based on the ratio that the captured tax capacity of the Development Property bears to the total captured tax capacity of the TIF District, taking into account tax delinquencies and petitions. "Tax Official" means any City or County assessor; County auditor; City, County, or State board of equalization; the Commissioner of Revenue of the State; or any State or Federal district court, the Tax Court of the State, or the State Supreme Court. "TIFAct" means Minnesota Statutes, Sections 469.174 through 469.1794, as amended, or any successor statutes. "TIF District" means Tax Increment Financing District No. 6 (Housing District) as the same is amended from time to time. "TIF District No. 4" means Tax Increment Financing (Soils Condition) District No. 4 (France Avenue Business Park Project) created by the City and the EDA. "TIF 4 Available Tax Increment" means the tax increment received by the EDA from TIP District No. 4 and not otherwise pledged to other obligations of TIF District No. 4. "TIF Note" means the Taxable Tax Increment Revenue Note (The Sanctuary at Brooklyn Center Project) to be executed by the EDA and delivered to the Developer pursuant to Section 5.3 hereof, a copy of which is attached hereto as Exhibit P. "TIF Note Payment Date" means each February 1 and August 1, commencing on the first February 1 or August 1 following the dated date of the TIF Note and thereafter to and including the TIF Note Termination Date; provided, that if any such date should not be a Business Day, the TIF Note Payment Date shall be the next succeeding Business Day. "TIF Note Terniination Date" means the earlier of (i) February 1, 2044, (ii) the date the TIP Note is paid in full, (iii) the date on which the TIP District expires or is otherwise terminated, or (iv) the date the TIF Note or this Agreement is terminated or rescinded in accordance with its terms. "TIF Plan" means that certain Tax Increment Financing Plan for the TIF District approved by the EDA, as amended from time to time. "Unavoidable Delays" means delays, outside the control of the party claiming its occurrence, which delay the activities contemplated by this Agreement, and which are the direct result of (a) unusually severe or prolonged bad weather, (b) acts of God, fire or other casualty to the Minimum Improvements, (c) litigation commenced by third parties which, by injunction or 469017v4 BR291-353 other similar judicial action, directly results in delays, (d) acts of any federal, State or local governmental unit which directly result in delays, (e) strikes, or other labor trouble, (f) delays in delivery of materials for the Minimum Improvements, (g) soil conditions of the Development Property or (h) acts of war or terrorism, not existing on the date hereof. VA 469017v4 BR291-353 ARTICLE II I IN ai FJ t1i Di aw V'dV (iJFLIPI'AI 1 1W V I I1 Section 2.1 Representations and Warranties of the EDA. The EDA makes the following representations and warranties: (a)The EDA is a body corporate and politic organized and existing under the laws of the State of Minnesota with the authority to enter into this Agreement and carry out its obligations hereunder. (b)The EDA has taken all action necessary to create the Project Area and the TIF District, to adopt and approve the Redevelopment Plan and TIF Plan, to approve this Agreement, and to authorize the execution and delivery of this Agreement, and any other documents or instruments required to be executed and delivered by the EDA pursuant to this Agreement. (c)The EDA has elected in the TIF Plan to retain 100% of the captured net tax capacity of the Tax Increment Financing District to finance permissible expenditures under the TIF Act, and has elected that the duration of the TIF District will be the maximum duration permitted by the TIF Act. (d)The activities of the EDA are undertaken for the purpose of fostering the redevelopment and renovation of certain real property that is or was occupied primarily by substandard and obsolete buildings, which will revitalize this portion of the Project Area, increase tax base, increase employment opportunities and provide safe and sanitary housing for seniors. (e)The .execution, delivery and performance of this Agreement, and any other documents or instruments required pursuant to this Agreement by the EDA does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not, conflict with or constitute on the part of the EDA a breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the EDA is a party or by which the EDA or any of its property is or may be bound, or (ii) legislative act, constitution or other proceeding establishing or relating to the establishment of the EDA or its officers or its resolutions. (f)There is not pending, nor to the best of the EDA's knowledge is there threatened, any suit, action or proceeding against the EDA before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the EDA to perform its obligations hereunder, or as contemplated hereby or thereby, or the validity or enforceability of this Agreement. (g) No member of the Board of the EDA or officer of the EDA, has either a direct or indirect interest in this Agreement or the Development within the meaning of Minnesota Statutes, Sections 412.311 and 471.87, as amended, or any successor statute. 8 4690170 BR291-353 Section 2.2 Representations and Warranties by the Developer. The Developer represents and warrants that: (a)The Developer is a limited liability company organized and in good standing under the laws of Florida, is duly authorized to transact business within the State, is not in violation of any provisions of its organizational documents or to the best of the Developer's knowledge the laws of the State or Florida, has the power and authority to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its governing body. (b)The Developer will construct, or cause - to be constructed, the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan, the PUD and all local, State and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations), except for variances necessary to construct the Minimum Improvements contemplated in the Construction Plans approved by the City. (c)The Developer will obtain, or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in atimely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (d)The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions hereof do not and will not conflict with or result in a material breach of any of the terms or conditions of the Developer's organizational documents or any restriction Or- any agreement or instrument to which the Developer is now a party or by which it is bound or to which any property of the Developer is subject, and do not and will not constitute a material default under any of the foregoing. To the best of the Developer's knowledge, the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions thereof do not and will not result in a material violation of any order, decree, statute, rule or regulation of any court or of any state or federal regulatory body having jurisdiction over Developer or its properties, including its interest in the Development, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of Developer contrary to the terms of any instrument or agreement to which Developer is a party or by which it is bound. (e)To the best of the Developer's knowledge, the execution and delivery of this Agreement will not create a conflict of interest prohibited by Minnesota Statutes, Section 412.311, as amended, or any successor statute. (f)The Developer would not construct the Minimum Improvements but for the execution of this Agreement and the tax increment financing assistance made available hereunder. 9 4690170 BR291-353 (g)The Developer will fully cooperate with the EDA and the City with respect to any litigation commenced by third parties with respect to the activities contemplated by this Agreement. (h)There are no pending or threatened legal proceedings, of which the Developer has notice, contemplating the liquidation or dissolution of the Developer or threatening its existence, or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning the authority of the Developer to execute and deliver this Agreement or the validity of this Agreement. (i)The Developer has not received any notice from any local, State or federal official that the activities of the Developer or the EDA with respect to the Development Property may or will be in violation of any environmental law or regulation. Other than as disclosed in the reports and other information listed on Exhibit E to the Purchase Agreement (the "Environmental Reports"), the Developer is not aware of any State or federal claim filed or planned to be filed by any party relating to any violation of any local, State or federal environmental law, regulation or review procedure, and the Developer is not aware of any violation of any local, State or federal law, regulation or review procedure which would give any person a valid claim under any state or fedral environmental statute. (j)The Developer will obtain financing commitments to finance construction of the Minimum Improvements in amounts sufficient and on terms which will enable the Developer to timely and successfully complete the Minimum Improvements in conformance with the Construction Plans. (k) The Developer will cooperate fully with the EDA and the City in the resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Minimum Improvements. (1) The Developer understands that the EDA or the City may subsidize or encourage the development of other developments in the City, including properties that compete with the Development Property and the Project, and that such subsidies may be more favorable than the terms of this Agreement, and that neither the City nor the EDA has represented that development of the Development Property will be favored over the development of other properties. (m) The Developer expects that the construction of the Minimum Improvements will begin on or before [November 15], 2016 and, barring Unavoidable Delays, will be substantially completed not later than [April 30], 2018. 10 469017v4 BR291-353 ARTICLE III ES]iW&h[SJ s(S) J i] ai'i a S)2 I K1 2 2 DI Section 3.1 Conveyance of Development Property. Upon satisfaction of the conditions set forth in the Purchase Agreement and Section 5.2, including but not limited to a public hearing on the sale of the Development Property to the Developer, for use as provided in the approved site plan and the PUD and delivery of the Purchase Price Note and the Purchase Price Mortgage, the EDA will convey the Development Property to the Developer as provided in the Purchase Agreement. The EDA has provided, or will provide, all required statutory notices of and will hold the public hearing required by Minnesota Statutes, Section 469.105 on 2016; and if the EDA makes the determination required by Section 469.105, Subd. 1, the EDA will promptly direct its authorized officers to execute the Purchase Agreement. Section 3.2 Purchase Price. The purchase price to be paid by Developer to the EDA for the Development Property shall be $1,500,000. The purchase price shall be paid by delivering the Purchase Price Note on the Closing Date as further provided in Section 5.2. The Developer shall assume or pay all taxes, special assessments and similar governmental impacts due and payable in the year of Closing, as set forth in Section 11 of the Purchase Agreement, and all future years so long as the Developer owns the Development Property. Section 3.3 Conveyance Subject to Right of Re-entry. The EDA's conveyance of the Development Property to the Developer pursuant to the Purchase Agreement will be made subject to a right of re-entry for breach of a condition subsequent in favor of the EDA. The condition subsequent is that, barring any Unavoidable Delays, the Developer shall commence construction of improvements on the Development Property in accordance with an approved site plan beyond the point of site preparation within 12 months of the Closing Date. If Developer breaches such condition subsequent, the Developer shall re-convey the Development Property back to the EDA. If the Developer fails to re-convey the Development Property to the EDA, the EDA may elect to exercise its right of reentry by commencing an action in Hennepin County District Court to establish the breach of the condition subsequent. If the EDA establishes a breach of the condition subsequent, title to and the right to possession of the Development Property and title to all improvements located thereon reverts to the EDA, and the Developer is not entitled to any compensation from the EDA or the City for the value of any improvements the Developer has made to the Development Property. The Developer shall notify the EDA when the construction in accordance with an approved site plan on the Development Property has commenced beyond the point of site preparation. If the EDA determines construction in accordance with an approved site plan has commenced beyond the point of site preparation, the EDA will furnish to the Developer a Certificate of Release and Satisfaction, releasing the Development Property from the right-of-re-entry. The Developer must record the Certificate of Release and Satisfaction in the proper County land records. 11 469017v4 BR291-353 CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1 Planned Unit Development. Prior to the Closing Date, the Developer shall have obtained City approval of a planned unit development for the Development Property ("PUD") and on or before the Closing Date the Developer shall have entered into a separate development agreement with the City (the "PUD Agreement") that addresses planning and land use requirements. Section 4.2 Construction Plans. (a)Prior to the commencement of construction of any portion of the Minimum Improvements, the Developer will deliver to the EDA the Construction Plans and a sworn construction cost statement certified by the Developer and the general contractor (the "Sworn Construction Cost Statement") for such portion of the Minimum Improvements. Within 20 days after receipt of the Construction Plans and the Sworn Construction Cost Statement the EDA shall review the Construction Plans and deliver to the Developer a written statement approving the Construction Plans or a written statement rejecting the Construction Plans and specifying the deficiencies in the Construction Plans. The City's building official on behalf of the EDA shall approve the Construction Plans if: (i) the Construction Plans substantially conform to the terms and conditions of this Agreement and the PUD; (ii) the Construction Plans are consistent with the goals and objectives of the Redevelopment Plan; and (iii) the Construction Plans do not violate any applicable federal, State or local laws, ordinances, rules or regulations except as set forth in approved variances (provided, however, that a finding of no such violations does not necessarily constitute a finding that the Construction Plans meet all requirements of such federal, State or local laws, ordinances, rules or regulations). If the Construction Plans are not approved by the EDA, then the Developer shall make such changes as the EDA may reasonably require and resubmit the Construction Plans to the EDA for approval. If the EDA has not rejected the revised Construction Plans in writing within 15 calendar days of submission, such Construction Plans shall automatically be deemed approved by the EDA. (b)The approval of Construction Plans, or any proposed amendment to the Construction Plans, by the EDA for purposes of this Agreement does not constitute a representation or warranty by the EDA that any of the Construction Plans or the Minimum Improvements comply with any applicable building code, health or safety regulation, zoning regulation, environmental law or other law or regulation, or that the Minimum Improvements will meet the qualifications for issuance of a certificate of occupancy, or that the Minimum Improvements will meet the requirements of the Developer or any other users of the Minimum Improvements. Approval of the Construction Plans, or any proposed amendment to any of the Construction Plans, by the EDA will not constitute a waiver of an Event of Default. Nothing in this Agreement shall be construed to relieve the Developer of its obligations to receive approval of the Construction Plans and necessary construction permits from the City. Section 4.3 Construction of Minimum Improvements. Subject to the terms and conditions of this Agreement, the Developer agrees to construct, or cause to be constructed, the 12 469017v4 BR291-353 Minimum Improvements on the Development Property in substantial conformance with the approved Construction Plans for the Minimum Improvements. No changes shall be made to the Construction Plans for the Minimum Improvements without the EDA's prior written approval, unless the aggregate of such changes do not decrease the cost of the Minimum Improvements as set forth in the Sworn Construction Cost Statement by more than 10%. No changes (each a "Material Change") which in the aggregate would result in a decrease in the cost of the Minimum Improvements by more than 10% or which would materially alter, (a) the site plan, (b) exterior appearance, (c) quality, (d) facility amenities, or (e) exterior materials included in the PUD and Construction Plans shall be made without the EDA's prior written consent. For purposes of the elements set forth in clauses (c) or (e) of the preceding sentence, a Material Change shall mean a decrease in the line item(s) for such element as set forth in the Sworn Construction Costs Statement of more than 10%. The Developer shall submit a description of any Material Change to the EDA. The approval of the EDA will not be unreasonably withheld, unreasonably conditioned or unreasonably delayed. The EDA shall either approve the Material Change or provide to the Developer specific written comments on the basis for its failure to approve within 20 days following submission. If the EDA does not respond to the Developer within such 20 day period, the Material Change shall be deemed approved. Section 4.4 Commencement and Completion of Construction. (a)Subject to the terms and conditions of this Agreement, the Developer will commence construction of the Minimum Improvements by [November 15], 2016 and, barring Unavoidable Delays, will cause the Minimum Improvements to be substantially completed not later than [April 30], 2018. The term "commence" means the making of visible improvements, including without limitation asbestos abatement and subsurface excavation but excluding mere surface grading. (b)The Developer will construct, or cause to be constructed, the Minimum Improvements on the Development Property in substantial conformity with the Construction Plans approved by the EDA and the PUD. Prior to delivery of the Certificate of Completion referred to in Section 4.8 hereof, upon the request of the EDA, the Developer will provide the EDA reasonable access to the Development Property. "Reasonable access" means at least one site inspection per week during regular business hours. During construction of the Minimum Improvements, the Developer will deliver quarterly progress reports to the EDA Section 4.5 Effect of Delay. The Developer acknowledges that if construction of the Minimum Improvements is delayed or not completed, the effect of such delay or failure to complete may be to reduce the amount of the Tax Increment available to pay the TIF Note. Section 4.6 Compliance with Environmental Requirements. The Developer shall comply with all applicable local, State, and federal environmental laws and regulations, and will obtain, and maintain compliance under, any and all necessary environmental permits, licenses, approvals or reviews. As of the date of this Agreement, the Developer has received no notice or communication from any local, State, or federal official that the activities of the Developer or the EDA under this Agreement may be or will be in violation of any environmental law or regulation. After Closing and without limiting its obligations under Section 8.3 of this Agreement, the Developer further agrees that it will indemnify, defend, and hold harmless the 13 4690170 BR291-353 EDA, the City, and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of Hazardous Substances (as that term is defined below in paragraph 8.3(c) of this Agreement) existing on or in the Development Property. Nothing in this section will be construed to limit or affect any limitations on liability of the City or EDA under State or federal law, including without limitation Minnesota Statutes Sections 466.04 and 604.02. Section 4.7 Additional Responsibilities of the Developer. (a)The Developer will construct, operate and maintain, or cause to be constructed, operated and maintained, the Minimum Improvements substantially in accordance with the terms of this Agreement, the Redevelopment Plan, the PUD and all local, State, and Federal laws and regulations (including, but not limited to zoning, building code, public health laws and regulations, except for variances necessary to construct the Minimum Improvements contemplated in the Construction Plans approved by the EDA. (b)The Developer will obtain, or cause to be obtained, in a timely manner, all required permits, licenses, and approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. The EDA makes no representations or warranties that all permits or licenses that may be required by State and federal entities, other than the EDA, have been or will be approved. (c)The Developer will not construct any building or other structures on, over, or within the boundary lines of any public utility easement unless such construction is provided for in such easement or has been approved by the City. (d)Except as provided in the approved Construction Plans or any development plans attached to the PUD, the Developer, at its own expense, will replace any public facilities and public utilities damaged during the construction of the Minimum Improvements, in accordance with the technical specifications, standards and practices of the owner thereof. Section 4.8 Certificate of Completion. The Developer shall notify the EDA when the construction of the Minimum Improvements has been substantially completed. The EDA shall, within 14 days after such notification, inspect the Minimum Improvements in order to determine whether the Minimum Improvements have been constructed in substantial conformity with the approved Construction Plans. If the EDA determines that the Minimum Improvements have not been constructed in substantial conformity with the approved Construction Plans, the EDA shall, within 28 days after the Developer's notification of completion of construction, deliver a written statement to the Developer indicating in adequate detail the specific respects in which the Minimum Improvements have not been constructed in substantial conformity with the approved Construction Plans and the Developer shall promptly remedy such deficiencies, or cause such deficiencies to be remedied. If the EDA determines that the Minimum Improvements have been constructed in substantial conformity with the approved Construction Plans, the EDA shall furnish to the Developer a Certificate of Completion in the form attached hereto as Exhibit B certifying the completion of the Minimum Improvements. The Certificate of Completion issued for the Minimum Improvements shall conclusively satisfy and terminate the agreements 14 469017v4 BR291353 and covenants of the Developer in this Agreement to construct the Minimum Improvements only. The issuance of a Certificate of Completion shall not be construed to relieve the Developer of any approval required by any City department in connection with the construction, completion or occupancy of the Minimum Improvements nor shall it relieve the Developer of any other obligations under this Agreement. 15 469017v4 BR291-353 ARTICLE V Section 5.1 Creation of TIF District and Approval of Tax Increment Financing Plan. The EDA has taken all necessary actions to create and establish the TIF District. The Developer represents that the estimated market values, construction costs, acquisition costs, projected rentals, development costs and other information provided to the EDA' s fiscal consultant reflect the reasonable expectations of the Developer. The Developer has made its own projections of Tax Increment to be generated from the Development and the Developer has not relied on any assumptions, calculations, determinations or conclusions made by the City, the EDA, their governing body members, officers or agents, including the independent contractors, consultants and legal counsel, servants and employees thereof, with respect to the foregoing. Section 5.2 Purchase Agreement; Purchase Price Note and Purchase Price Mortgage. (a) The EDA shall lend the Developer an amount equal to the $1,500,000 purchase price of the Development Property (the "Purchase Price Forgivable Loan"). The Developer shall submit a settlement statement for the purchase price of the Development Property. The EDA shall have no obligation to make such loan unless and until: (i)the Developer has closed on the acquisition of the Development Property in accordance with the Purchase Agreement; (ii)the Developer has delivered the Declaration, the Purchase Price Note and the Purchase Price Mortgage, (iii)the City has approved the PUD; (iv)the Developer has closed on the Construction Loan in an amount sufficient to finance the cost of the Minimum Improvements; (v)in accordance with Section 4.2, the Developer has submitted the Construction Plans for all of the Minimum Improvements to the EDA, and the EDA shall have approved the same; (vi)the City has approved a building permit for the construction of the Minimum Improvements; (vii) the Developer has deposited in escrow with the EDA $300,000 toward the cost of the EDA to pay or reimburse itself for the costs of the acquisition of (A) the property located at 3600 61st Avenue N and described as Parcel ID No. 34.119.21.43.0051, Lot 3, Block 6, Wangstads Brooklyn Terrace, Hennepin County, MN and (B) the property located at 3606 61st Avenue N and described as Parcel ID No. 34.119.21.43.0052, Lot 4, Block 6, Wangstads Brooklyn Terrace, Hennepin County, MN; and if 469017v4 BR291-353 (viii) no Developer "Event of Default" exists. (b)The Developer shall pay and perform the Purchase Price Note and the Purchase Price Mortgage in accordance with their terms. (c)The Developer acknowledges that the EDA will credit TIF 4 Available Tax Increment to the payment of the Purchase Price Note pursuant to the Interfund Loan. Notwithstanding the application of TIF 4 Available Tax Increment to the payment of the Purchase Price Note, except as provided in Section 5.2(f), the Developer shall repay the principal amount of the Purchase Price Forgivable Loan and the Purchase Price Note (which the EDA will apply to the repayment of the Interfund Loan), as provided in 5.2(d), on any date prior to December 31, 2043 (the "Note Maturity Date") on which the Developer sells, assigns, conveys, leases or transfers in any other mode or manner (a "Sale") all or any portion of the Development Property or the Minimum Improvements thereon except: (i)to an Affiliate of the Developer; (ii)to a tenant renting, in the ordinary course, a unit of the senior housing facility to be located on the Development Property. (d)Any Sale shall be in an arms-length transaction for a sale price of not less than the fair market value of the Development Property, as improved, as determined by a qualified appraiser not affiliated with the Developer or the purchaser of the Development Property (the "Sale Price"). The principal amount of the Purchase Price Note shall be due and payable, without interest, in an amount equal to the lesser of $1,500,000 or the then outstanding principal balance of the Purchase Price Note or 50% of the proceeds remaining from the Sale Price after payment of closing costs and the payment in full of the Construction Loan as evidenced by a settlement statement prepared by a title company not affiliated with the Developer or the purchaser of the Development Property (the "Net Sale Proceeds"). If 50% of the Net Sale Proceeds is less than $1,500,000, the difference shall be deemed paid in full upon payment of 50% of the Net Sale Proceeds and delivery of the settlement statement to the EDA. (e)In addition, the principal amount of the Purchase Price Note shall be due and payable, without interest, in an amount equal to the lesser of $1,500,000 or 50% of the proceeds of any loan or other financing or refinancing in an amount exceeding the costs of the Minimum Improvements and any additional capital improvements thereto, plus reasonable transaction costs, as authorized pursuant to Article VI, as evidenced by a loan closing memorandum prepared by the lender. (f) The Purchase Price Forgivable Loan, the Purchase Price Note and the Interfund Loan shall be deemed paid in full on the Note Maturity Date if, as of such date, (i) the Developer continues to operate the Minimum Improvements and (ii) no Event of Default under this Agreement exists and remains uncured after the period allowed therein. Section 5.3 Issuance of TIF Note. The EDA shall reimburse the Developer for Eligible Costs in an amount equal to the lesser of [$1,800,000] or the Eligible Costs actually incurred and paid by the Developer and not previously reimbursed (the "Reimbursement 17 469017v4 BR291-353 Amount") exclusively through the issuance of the EDA's TIF Note in substantially the form attached to this Agreement as Exhibit D, subject to the following conditions: (a)The TIF Note shall be dated, issued in a principal amount equal to the Reimbursement Amount and delivered to the Developer when the Developer shall have demonstrated in writing to the reasonable satisfaction of the EDA that the Developer has satisfied all of the conditions set forth in Section 5.2(a). (b)Notwithstanding the foregoing clause (a), the principal amount of the TIF Note shall be deemed advanced (the "Advance") only as and to the extent the Developer provides the EDA with invoices or cancelled checks evidencing the payments due for any Eligible Costs not previously reimbursed in an amount not less than the Reimbursement Amount as evidenced by the EDA in the form of an Advance Certificate as set forth in the attached Exhibit B to the TIF Note. The principal amount of the TIF Note shall be Advanced in not more than 2 installments. (c)The Advanced and unpaid principal amount of the TIF Note shall bear simple, non-compounding interest, except during any period that the payment on the TIF Note has been suspended, from the date of the Advance, at a rate per annum equal to the lesser of 6.00% per annum or the effective rate of the long-term Construction Loan as determined on the date of issuance of the TIF Note. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. (d)The principal amount of the TIF Note and the interest thereon shall be payable solely and exclusively from the Available Tax Increment. (e)On each TIF Note Payment Date and subject to the provisions of the TIF Note, the EDA shall pay, solely from the Available Tax Increment received by the EDA during the preceding 6 months (or, with respect to the first TIF Note Payment Date, in the period commencing on the date of issuance of the TIF Note through the day prior to the first TIF Note Payment Date) to the extent of the outstanding principal and accrued interest on the TIF Note. All such payments shall be applied first to the payment of accrued interest and then to the payment of the principal of the TIF Note. (f)The TIF Note shall be a special and limited obligation of the EDA and not a general obligation of the EDA or the City, and only Available Tax Increment shall be used to pay the principal and interest on the TIF Note. If, on any TIF Note Payment Date, the Available Tax Increment for the payment of the accrued and unpaid interest on-the TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future TIF Note Payment Date there are Available Tax Increment to pay such accrued interest on the TIF Note. (g) The EDA's obligation to make payments on the TIF Note on any TIF Note Payment Date or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be a Developer Event of Default that has occurred and is continuing under this Agreement, the PUD Agreement or any issued permits for the Project, and (B) this Agreement shall not have been terminated pursuant to Section 9.4(c), and (C) a certificate of 18 469017v4 BR291-353 occupancy has been issued for the Minimum Improvements and (D) the Compliance Certificate shall have been delivered in accordance with Section 5.7(d). (h)The TIP Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit D. In the event of any conflict between the terms of the TIF Note and the terms of this Section 5.3, the terms of the TIF Note shall govern. The issuance of the TIP Note pursuant and subject to the terms of this Agreement, and the taking by the EDA of such additional actions as bond counsel for the TIF Note may require in connection therewith, are hereby authorized and approved by the EDA. (i)The Developer may 'assign this Agreement to a Construction Lender as collateral for a Construction Loan in accordance 'with the form of Collateral Assignment of TIF Development Agreement attached as Exhibit E. Section 5.4 Execution of Assessment Agreement. (a)The Developer and the EDA agree to execute an Assessment Agreement relating to the Development pursuant to the provisions of Minnesota Statutes, Section 469.177, Subdivision 8, specifying the minimum market value for the Development Property for calculation of real property taxes (as set forth in Section 1 thereof, the "Minimum Market Value"). (b)Nothing in the Assessment Agreement or this Agreement limits the discretion of the County AssessOr to assign a market value to the property in excess of the Minimum Market Value nor prohibits the Developer from seeking, through the exercise of legal or administrative remedies, a reduction in such market value for property tax purposes; provided however, the Developer shall not seek a reduction of such market value below the Minimum Market Value for any year so long as the Assessment Agreement remains in effect for that year. (c)The Assessment Agreement shall remain in effect until the earlier of (i) December 31, 20, (ii) the date on which the TIF District expires or is otherwise terminated, or (iii) the date the TIF Note is fully paid, defeased or terminated in accordance with its terms. (d)The Assessment Agreement shall be certified by the County Assessor as provided in Minnesota Statutes, Section 469.177, Subdivision 8, upon a finding by the County Assessor that the Minimum Market Value represents a reasonable estimate based upon the plans and specifications for the Minimum Improvements to be constructed on the Development Property and the market value previously assigned to the Development Property. (e) Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the Assessment Agreement shall be filed for record in the office of the county recorder or registrar of titles of the County, and such filing shall constitute notice to any subsequent encumbrancer or purchaser of the Development Property, whether voluntary or involuntary, and such Assessment Agreement shall be binding and enforceable in its entirety against any such subsequent purchaser or encumbrancer, including the Construction Lender and the holder of any mortgage on the Development Property. 19 469017v4 BR291353 (f) The Assessment Agreement shall be filed, at the sole cost of the Developer, against the Development Property prior to any Mortgage to a Construction Lender or, in the alternative, the Construction Lender shall consent to be bound by the terms of the Assessment Agreement. Section 5.5 Review of Taxes. The Developer acknowledges that the primary source of money to pay debt service on the TIF Note is the Available Tax Increment derived from the Development Property and any improvements thereon, including the Minimum Improvements. The Developer further acknowledges that any of the following actions taken by the Developer could reduce such Tax Increment below the amount necessary to pay a portion or all of the payments due on the TIF Note. (a)Initiation of administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to the Development Property and any improvements thereon, including the Minimum Improvements. (b)Initiation of administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to the Development Property and any improvements thereon, including the Minimum Improvements. (c)A reduction in the real property taxes paid with respect to the Development Property and any improvements thereon, including any reduction in the assessed Market Value of the Development Property and any improvements thereon, including the Minimum Improvements, that is made without a request or petition of the Developer, a reduction in the tax classification of the Development Property and any improvements thereon, including the Minimum Improvements, under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax rates applicable to the Development Property and any improvements thereon, including the Minimum Improvements, or any change to the method of taxing real property that has the effect of reducing the revenues derived from such taxes. (d)Any application for an abatement or deferral of real property taxes under any applicable statute of the State. (e)Other actions or events outside the control of the Developer or outside the control of the City or the EDA, including a reduction in the Market Value of the Development Property and the Minimum Improvements that are made without a request or petition of the Developer, a reduction in the tax classification of the Development Property and the Minimum Improvements under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax rates applicable to the Development Property and the Minimum Improvements, or any change to the method of taxing real property that has the effect of reducing the revenues derived from such taxes. (f)Failure of the Developer to commence and complete the Minimum Improvements by the times set forth in Section 4.4 hereof. Section 5.6 Use of Tax Increments. The EDA shall be free to use the Tax Increment, other than the Available Tax Increment herein pledged to the payment of the TIF Note, for any other purpose for which the Tax Increment may lawfully be used pursuant to applicable 20 4690170 BR291-353 provisions of the Minnesota law; including but not limited to repayment of the Interfund Loan of the assistance provided to the Developer from TIF District No. 4 as set forth herein. Section 5.7 Income and Rent Restrictions. The Developer hereby represents, covenants and agrees as follows: (a)The Minimum Improvements are intended for occupancy, in part, by persons or families of low and moderate income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, any other similar present or future federal, state or municipal legislation, or the regulations promulgated under any of those acts; and (b)No more than 20% of the square footage of the buildings of the Minimum Improvements financed with the proceeds of the TIF Note will consist of commercial, retail or other non-residential uses; and (c)Commencing on the Completion Date and continuing until the Final Payment Date, at least 40% of the housing units shall be available for rent to persons whose income does not exceed 60% of the area-wide median family income for the standard metropolitan statistical area which includes Minneapolis/St. Paul, Minnesota, as that figure is determined and announced from time to time by HUD, as adjusted for family size ("Median Income"); and (d)The Developer will provide the EDA an annual certification in the form attached hereto as Exhibit F (the "Compliance Certificate") evidencing compliance with the requirements of paragraph (c) above, and income verifications from tenants used to meet such requirements. The annual certification shall also include the vacancy rate for the preceding calendar year and the rents for all units broken down by unit type, size and rent per square foot. The annual certification shall be provided on or before February 1 of each year commencing February 1, 2018, and shall cover the preceding calendar year. (e)The provisions of this Section 5.7 shall be incorporated into a regulatory agreement to be entered into by the Developer and the EDA in connection with the issuance of any revenue bond (the "Regulatory Agreement") and recorded against the Development Property prior to the issuance of the revenue bond and the TIF Note. (f)All units in the Minimum Improvements are required to be occupied by at least one person who is at least 55 years of age at the time of initial occupancy as further provided in the Declaration. 21 469017A BR291353 ARTICLE VI I (WJk'4 I : i[II 5,) :1 au) ai'i ai i) I Mu tJ {I)iL 'd Section 6.1 Encumbrance of the Development Property. Other than the Declaration and the Purchase Price Mortgage, neither the Developer nor any successor in interest to the Developer will engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Development Property, or portion thereof, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Development Property except only for the purpose of obtaining funds to the extent necessary for financing the costs of the Minimum Improvements and any additional capital improvements thereto (including, but not limited to, land and building acquisition, labor and materials, professional fees, real estate taxes, construction interest, organization and other indirect costs of development, costs of constructing the Minimum Improvements, and an allowance for contingencies), plus reasonable transaction costs, unless the Purchase Price Note is prepaid as provided in Section 5.2(e). Section 6.2 Copy of Notice of Default to Financing Parties. If the EDA delivers any notice or demand to the Developer with respect to any Event of Default under this Agreement, the EDA will also deliver a copy of such notice or demand to any Financing Party at the address of such Financing Party provided to the EDA in a written notice from the Developer or such Financing Party. Section 6.3 Mortgagee's Option to Cure Events of Default. Upon the occurrence of an Event of Default, the mortgagee under any Mortgage will have the right, at its option, to cure or remedy such Event of Default. Section 6.4 Defaults Under Mortgage. The Developer will use its best efforts to obtain an agreement from any mortgagee under a Mortgage that, in the event the Developer is in default under any Mortgage, the mortgagee, within 10 days after it becomes aware of any default and prior to exercising any remedy available to it due to such default, will notify the EDA in writing of (i) the fact of default; (ii) the elements of default; and (iii) the actions required to cure the default. If, within the time period required by the Mortgage, the EDA cures any default under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based on such default. Section 6.5 Subordination. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the EDA agrees to execute a subordination agreement in form and substance mutually acceptable to the EDA and the applicable Construction Lender to subordinate (a) the provisions of this Agreement, other than the Assessment Agreement, the Declaration and the provisions of the Deed related to Section 3.3, and (b) the Purchase Price Mortgage, to the documents executed in connection with such financing. Notwithstanding the foregoing, in no event will any subordination agreement limit the exercise of the remedies by the EDA hereunder or under the TIF Note. 22 469017v4 BR291-353 ARTICLE VII INSURANCE AND MAINTENANCE Section 7.1 Insurance. (a) The Developer will cause to be maintained at all times during the process of constructing the Minimum Improvements the Developer owns, and, from time to time during that period, at the request of the EDA, furnish the EDA with proof of payment of premiums, on policies covering the following: (i)Builder's risk insurance, written on the so-called "Builder's Risk Completed Value Basis," in an amount equal to the replacement value of the relevant Improvements, and with coverage available in non-reporting form on the so-called "all risk" form of policy. The interest of the EDA, to the extent insurable, shall be protected in accordance with a clause in form and content satisfactory to the EDA, or in the alternative, provide similar coverage in a form .and content satisfactory to Developer's Construction Lender which provides substantially similar coverage to the EDA; (ii)Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, and contractual liability insurance) together with an Owner's Protective Liability Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence and $2,000,000 in the aggregate (to accomplish the above-required limits, an umbrella excess liability policy may be used). The EDA shall be listed as an additional insured on the policy; and (iii) Workers' compensation insurance, with statutory coverage, provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (b) Upon completion of construction of the Minimum Improvements the Developer owns and prior to the Maturity Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the EDA shall furnish proof of the payment of premiums on, insurance as follows: (i)Insurance against loss and/or damage to the Minimum Improvements the Developer owns under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii)Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount of $1,000,000 for each occurrence and $2,000,000 in the aggregate and shall be endorsed to show the City and EDA as additional insureds. 23 4690170 BR291-353 (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (c)All insurance required in Article VII of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually. with the EDA a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article VII of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the EDA at least 30 days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the EDA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements the Developer owns. (d)The Developer agrees to notify the EDA immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Developer will forthwith repair, reconstruct, and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction, and restoration, the Developer will apply the net proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. (e)The Developer shall complete the repair, reconstruction and restoration of the Minimum Improvements, regardless of whether the net proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction, and restoration shall be the property of the Developer. (f)In lieu of its obligation to reconstruct Minimum Improvements as set forth in this Section, the Developer shall have the option of cancelling the TIF Note and delivering the cancelled TIF Note to the EDA. (g) All insurance requirements set forth in this Article VII terminate upon the earlier of the final Payment Date of the TIF Note or termination of this Agreement. Section 7.2 Subordination. Notwithstanding anything to the contrary herein, the rights of the EDA with respect to the receipt and application of any insurance proceeds shall, in all respects, be subordinate and subject to the rights of any mortgagee under a Mortgage allowed pursuant to Article VI of this Agreement. 24 469017v4 BR291-353 Section 7.3 Maintenance and Operation of the Development. The Developer will at all times during the term of this Agreement operate and maintain the Development or cause the Development to be operated and maintained in a safe and secure way and in compliance with this Agreement and all federal, State and local laws, regulations, rulings and ordinances applicable thereto. Developer shall pay all of the reasonable and necessary expenses of the operation and maintenance of the Development, including all premiums for insurance insuring against loss or damage thereto and adequate insurance against liability for injury to persons or property arising from the Development as required pursuant to this Agreement. Developer shall not knowingly cause any person working in or attending the Development to be exposed to any hazardous or unsafe condition; provided that Developer shall not be in default hereunder if it has required the contractors employed by Developer to perform work on the Development to take such precautions as may be available to protect the persons in and around the Development from hazards arising from the work, and has further required each such contractor to obtain and maintain liability insurance protecting against liability to persons for injury arising from the work. The expenses of operation and maintenance of the Development shall be borne solely by Developer. 25 469017v4 BR291-353 ARTICLE VIII IN 3 al eu i wi V OJ1'VI 1 kl I] Dk'AiI 13 OJI V LOl Section 8.1 Representation as to Development. The Developer represents to the EDA that its purchase of the Development Property, and its other undertakings under this Agreement, are for the purpose of developing housing facilities, and not for the purpose of speculation in land holding. The Developer acknowledges that, in view of the importance of the development of the Development Property to the general welfare of the EDA and the City, and the substantial financing and other public aids that have been made available by the EDA for the purpose of making such development possible, the qualifications and identity of the Developer are of particular concern to the EDA. The Developer further acknowledges that the EDA is willing to enter into this Agreement with the Developer because of the qualifications and identity of the Developer. Section 8.2 Limitations on Transfer. (a)Except only by way of security for, and only for, a Construction Loan, and any refinancings of such Construction Loan or other financing as provided in Article VI and as further provided in this Section 8.2(a), or as provided in Section 8.2(e), the Developer will not sell, assign, convey, lease or transfer in any other mode or manner (collectively, "Transfer") this Agreement, the TIF Note, or the Development Property or the Minimum Improvements, or any interest therein, without the express written approval of the EDA, which consent will not be unreasonably withheld, conditioned or delayed. In case of a Transfer by way of security for a Construction Loan, or a refinancing of a Construction Loan, the Developer, the EDA and the Construction Lender will execute and deliver a collateral assignment in substantially the form of, or containing provisions substantially in accord with, the Collateral Assignment of TIF Development Agreement attached as Exhibit E to this Agreement. (b)Notwithstanding the foregoing, the EDA shall be entitled to require, in connection with any Transfer of the TIF Note that: (i)There shall be submitted to the EDA for review all instruments and other legal documents involved in effecting such transfer, and if approved by EDA, its approval shall be indicated to the Developer in writing; and (ii)Any proposed transferee of the TIF Note shall (A) execute and deliver to the EDA the Acknowledgment and Receipt of Note in the form included in Exhibit A to the TIF Note and (B) surrender the TIF Note to the EDA either in exchange for a new fully registered note or for transfer of the TIF Note on the registration records for the TIP Note maintained by the EDA. (c) Except as set forth in Section 8.2(a) and 8.2(b), and except in the case of a foreclosure or deed in lieu of foreclosure after completion of the Minimum Improvements in accordance with Article IV hereof in which case only clause (c)(iv) shall apply, the EDA shall be entitled to require, as conditions to any approval of any Transfer of this Agreement, the 26 469017v4 BR291-353 Development Property, the Minimum Improvements, or applicable portion thereof, or the TIP Note in connection therewith, that: (i)Any proposed transferee shall have the qualifications and financial responsibility, as reasonably determined by the EDA, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer; (ii)Any proposed transferee, by instrument in writing satisfactory to the EDA shall, for itself and its successors and assigns, and expressly for the benefit of the EDA have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject; (iii)There shall be submitted to the EDA for review all instruments and other legal documents involved in effecting transfer, and if approved by EDA, its approval shall be indicated to the Developer in writing; (iv)Any proposed transferee of the TIF Note shall (i) execute and deliver to the EDA the Acknowledgment and Receipt of Note in the form included in Exhibit A to the TIP Note and (ii) surrender the TIF Note to the EDA either in exchange for a new fully registered note or for transfer of the TIP Note on the registration records for the TIF Note maintained by the EDA; (v)The Developer and its transferees shall comply with such other conditions as the EDA may reasonably require in order to achieve and safeguard the purposes of the Act, the TIF Act and this Agreement; and (vi)The Purchase Price Note shall be repaid as provided therein. (d)The Developer agrees to pay all reasonable legal fees and expenses of the EDA, including fees of legal counsel retained by the EDA to review the documents submitted to the EDA in connection with any Transfer. (e)Nothing contained in this Section shall prohibit the Developer, without the consent or approval of the EDA, from (i) entering into leases with tenants in the ordinary course of business, (ii) entering into easement or other agreements necessary for the operation of the Minimum Improvements, (iii) making a Transfer of this Agreement, the TIF Note (subject to the requirements of (c)(iv) above), the Development Property, or the Minimum Improvements to an Affiliate or to a partnership whose general partner(s), or to a limited liability company whose managing member, includes Developer or the principals of Developer, (iv) admitting or removing limited partners or transferring limited partner interests in the Developer or admitting or removing members in accordance with the applicable organizational documents, (v) removing the general partner of the Developer for cause at the direction of its limited partner(s) (whether one or more, the "Tax Credit Investor") in accordance with the Developer's partnership agreement. 27 4690170 BR291-353 (f)Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the EDA. (g)In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned or otherwise conveyed. Section 8.3 Indemnification. (a)The Developer releases the EDA, the City, their governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the "Indemnified Parties") from any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Development to the extent not attributable to the gross negligence or intentional misconduct of the Indemnified Parties. (b)Except for gross negligence or intentional misconduct of the Indemnified Parties, the Developer agrees to indemnify the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including reasonable attorneys' fees) actions or other proceedings whatsoever (a "Claim") by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of, or any defect in, the Development; including, without limitation, any Claim by a land owner or tenant located on the Development Property to be entitled to relocation costs and expenses. (c) Neither the EDA nor the City makes any warranties or representations regarding, nor do they indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the TIF District of any toxic or hazardous substances or wastes, pollutants or contaminants (including, Without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"); 42 U.S.C. § 961-9657, as amended) (collectively, the "Hazardous Substances"). The foregoing disclaimer relates to any Hazardous Substance allegedly generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on or in the vicinity of the Development Property or within the TIF District, as well as any activity claimed to have been undertaken on or in the vicinity of the Development Property that would cause or contribute to causing (1) the Development Property to become a treatment, storage or disposal facility within the meaning of, or otherwise bring the Development Property within the ambit of, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. § 691 et M., or any similar state law or local ordinance, (2) a release or threatened release of toxic or hazardous wastes or substances, pollutants or contaminants, from the Development Property within the meaning of, or otherwise bring the Development Property within the ambit of, CERCLA, or any similar state law or local ordinance, or (3) the 28 469017v4 BR291-353 discharge of pollutants or effluents into any water source or system, the dredging or filling of any waters or the discharge into the air of any emissions, that would require a permit under the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et q., or any similar state law or local ordinance. Further, neither the EDA nor the City makes any warranties or representations regarding, nor does either the EDA or the City indenmify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the TIF District of any substances or conditions in or on the Development Property that may support a claim or cause of action under RCRA, CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements, including without limitation, the Minnesota Environmental Response and Liability Act, Minnesota Statutes, Chapter 11 SB. (d) The Developer waives any claims against the Indemnified Parties, for indemnification, contribution, reimbursement or other payments arising under federal and state law and the common law or relating to the environmental condition of the land comprising the Development Property. Section 8.4 Limitation. All covenants, stipulations, promises, agreements and obligations of the EDA or the Developer contained in this Agreement shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the EDA or the Developer, respectively, and not of any governing body member, officer, agent, servant or employee of the EDA, the City or the Developer in the individual capacity thereof. FM 469017v4 BR291-353 ARTICLE IX I a'jaIh1 Rull all Section 9.1 Events of Default Defined. Subject to applicable cure periods, the following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any one or more of the events set forth in Sections 9.2 and 9.3, as applicable. Section 9.2 Developer Events of Default. The following shall be Developer Events of Default: (a)the Developer shall fail to begin construction of the Minimum Improvements or, subject to Unavoidable Delays, to proceed with due diligence to complete the Minimum Improvements as provided in Section 4.4 and by the date set forth therein, or the Developer shall default in or violate its obligations with respect to the construction of the Minimum Improvements (including the nature thereof) and such failure, default, or violation, shall not be cured within 30 days after written notice to do so. Notwithstanding the foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the EDA well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days; (b)there is, in violation of Article VIII of this Agreement, any conveyance or other transfer of the Development Property or any part thereof, and such violation is not cured within 30 days after written demand by the EDA to the Developer; (c)failure by the Developer to timely pay any ad valorem real property taxes or special assessments assessed with respect to the Development Property; (d)subject to Unavoidable Delays, failure by Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or the PUD Agreement (taking into account the cure periods in the PUD Agreement), and the continuation of such failure for a period of thirty (30) days after written notice of such failure from the EDA. Notwithstanding the foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the EDA well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days; or 30 469017v4 BR291-353 (e) the Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar Federal or State law; or (ii) make an assignment for the benefit of its creditors; or (ii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudication of Developer, as a bankrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law shall be filed in any court and such petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of Developer, or of the Development, or part thereof, shall be appointed in any proceeding brought against Developer, and shall not be discharged within ninety (90) days after such appointed, or if Developer shall consent to or acquiesce in such appointment. Section 9.3 EPA Events of Default. Subject to Unavoidable Delays, the failure of the EDA to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, and the continuation of such failure for a period of thirty (30) days after written notice of such failure from any party hereto shall be an Event of Default for the EDA. Notwithstanding the foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the EDA of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that the EDA keeps the Developer well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days. Section 9.4 EDA Remedies on Default. Whenever any Developer Event of Default occurs, the EDA may take any one or more of the following actions: (a)Suspend performance under this Agreement and the TIF Note until it receives assurances from the Developer, deemed adequate by the EDA, that the Developer will cure its default and continue its performance under this Agreement. Interest on the TIF Note shall not accrue during the period of any suspension of payment. (b)Withhold the Certificate of Completion for the Minimum Improvements. (c)Cancel and terminate either or both this Agreement and the TIF Note. (d)Take whatever action at law or in equity may appear necessary or desirable to the EDA to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, any Financing Party or Financing Parties shall have the right, but not the obligation, to cure an Event of Default during the cure period provided for the Developer. Section 9.5 Developer Remedies on Default. Whenever any Event of Default occurs by the EDA, the Developer may suspend its performance under this Agreement and/or take whatever action at law or in equity may appear necessary or desirable to the Developer to 31 4690170 BR291-353 enforce performance and observance of any obligation, agreement, or covenant of the EDA under this Agreement. Nothing in this Agreement shall entitle the Developer to make any claim against the EDA for any damages whatsoever and the Developer's remedies are strictly limited to the foregoing. Section 9.6 No Remedy Exclusive. No remedy herein conferred upon or reserved to the EDA or the Developer, except as set forth in Section 9.5, is intended to be exclusive of any other available remedy or remedies unless otherwise expressly stated, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be. deemed expedient. In order to entitle the EDA or the Developer, to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.7 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by either Party and thereafter waived by the other Party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 32 4690170 BR291-353 ADDITIONAL PROVISIONS Section 10.1 Conflicts of Interest. No member of the EDA or other official of the EDA shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Minimum Improvements, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the EDA or the City shall be personally liable in the event of any default or breach by Developer or successor or on any obligations under the terms of this Agreement. Section 10.2 Titles of Articles and Sections. Any titles of the several parts, articles and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (a)in the case of Developer, is addressed to or delivered personally to Developer at in the case of the Developer is addressed to or delivered personally to: SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, Florida 34103 Attn: Garrett G. Carlson, Sr. (b)in the case of the EDA is addressed to or delivered personally to the EDA at: 6301 Shingle Creek Parkway Brooklyn Center, MN 55430-2199 Attn: Executive Director or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 10.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.5 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 33 4690170 BR291-353 Section 10.6 Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld. All consents or approvals shall be in writing in order to be effective. Section 10.7 Representatives. Except as otherwise provided herein, all approvals and other actions required of or taken by the EDA shall be effective upon action by the EDA Representative. All actions required of or taken by Developer shall be effective upon action by the Developer Representative. Section 10.8 Superseding Effect. This Agreement reflects the entire agreement of the Parties with respect to the matters covered herein, and supersedes in all respects all prior agreements of the Parties, whether written or otherwise, with respect to such matters. Section 10.9 Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. Section 10.10 Term. The term of this Agreement shall be effective from the day and year first above written and, except as provided in Section 10.12, shall continue in effect until the earlier of (a) the date this Agreement is terminated pursuant to Section 9.4(c), (b) the date that the TIF District is terminated or expires or EDA is no longer receiving Tax Increment from the TIF District, or (c) the date the TIF Note is paid in full, defeased, forgiven or terminated in accordance with its terms; provided that the Declaration and the Purchase Price Note shall terminate only in accordance with the respective terms thereof. Section 10.11 Venue. All matters, whether sounding in tort or in contract, relating to the validity, construction, performance, or enforcement of this Agreement shall be controlled by and determined in accordance with the laws of the State of Minnesota, and the Developer agrees that all legal actions initiated by the Developer or EDA with respect to Or arising from any provision contained in this Agreement shall be initiated, filed and venued exclusively in the State of Minnesota, Hennepin County, District Court and shall not be removed therefrom to any other federal or state court. Section 10.12 Provisions Surviving Rescission or Expiration. Sections 4.6, 8.3 and 8.4 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. 34 4690170 BR291-353 IN WITNESS WHEREOF, the EDA and Developer have caused this Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By President By Executive Director STATE OFMINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of____________ 2016 by the President of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016 by , the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public S-i 4690170 BR291-353 SCA PROPERTIES, LLC, a Florida limited liability company By: Its STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016, by the __ of SCA Properties, LLC, a Florida limited liability company on behalf of said limited liability company. Notary Public S-2 469017v4 BR291-353 EXHIBIT A I) 3I'[IJ U I 4 (I)LI] 1 I] aYiai) I ii u rJ ,) IJ I 11 The property located in the City of Brooklyn Center, Hennepin County, Minnesota identified as Parcel ID #34.119.21.43.0005 and legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 13 843 64. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property A-i 469017v4 BR291-353 *41II] ii i D U I i [i N (SJ LESA I U N N (IAl WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota, Minnesota (the "EDA"), a body corporate and politic subdivision of the State of Minnesota and SCA Properties, LLC, a Florida limited liability company (the "Developer") have entered into a TIF Development Agreement dated -, 2016 (the "TIF Development Agreement"); and WHEREAS, the TIF Development Agreement requires the Developer to construct certain Minimum Improvements (as that term is defined in the TIF Development Agreement); WHEREAS, the Developer has constructed the Minimum Improvements (as that term is defined in the TIF Development Agreement) in a manner deemed sufficient by the EDA to permit the execution of this certification and the release of the Development Property from the terms and conditions of the TIF Development Agreement; NOW, THEREFORE, this is to certify that the Developer has constructed the Minimum Improvements. Any remaining obligations under the TIF Development Agreement shall be solely contractual obligations of the Developer and parties to whom the Developer expressly assigns, and who expressly assume, the Developer's obligations under the TIF Development Agreement. The remaining covenants of the Developer under the TIF Development Agreement are not intended to run with title to the Development Property or bind successors in title to the Development Property. 2318733v2 B-i 469017v4 BR291353 IN WITNESS WHEREOF, the EDA has caused this Certificate of Completion to be executed with by its duly authorized officer as of the day of ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By President By Executive Director STATE OF MINNESOTA ) ) ssCOUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 20, by , the President and , the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, Minnesota, a municipal corporation and politic subdivision organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public 2318733v2 B-2 469017v4 BR291-353 10,14 ,411 : V I'M OIN1 ,13 m , (a)land acquisition; (b)utility improvements and relocation; (c)site improvements and grading; (d)construction of affordable housing; (e)landscaping; and (f)any other expenses incurred by the Developer in connection with the acquisition of the Development Property and the construction of the Minimum Improvements and eligible for payment from Tax Increment in accordance with the TIF Act. c-i 469017v4 BR291-353 i *:i :11 99 rii FTQ 4D]IJ[tU] No. R-1 [$1,800,000.00] UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEP1N ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER TAXABLE TAX INCREMENT REVENUE NOTE (THE SANCTUARY AT BROOKLYN CENTER PROJECT) The Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to SCA Properties, LLC (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The original principal amount of this Note shall equal the lesser of the principal amount stated above or the amount of Eligible Costs actually incurred and paid by the Developer and not previously reimbursed as determined in accordance with Section 5.3 of the TIF Development Agreement described herein, as evidenced by the EDA by the Advance Certificate delivered pursuant to Section 5.3(b) of the TIF Development Agreement and attached as Exhibit B to this Note. Such principal amount shall be reduced from time to time to the extent that principal shall have been repaid in whole or in part pursuant to the terms hereof; provided that the principal amount shall in no event exceed [$1,800,000] as provided in that certain TIF Development Agreement, dated as of , 2016, as the same may be amended from time to time (the "TIF Development Agreement"), by and between the EDA and the Developer. The advanced and unpaid principal amount hereof shall bear simple, non-compounding interest from the date of each Advance at the rate of and hundredths percent (_%) per annum [i.e. lesser of 6.00% per annum or the effective rate of the bonds]. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The amounts due under this Note shall be payable on each February 1 and August 1, commencing on the first February 1 or August 1 following the date hereof and thereafter to and including February 1, 20, or, if the first should not be a Business Day (as defined in the TIF Development Agreement) the next succeeding Business Day (the "Payment Dates"). On each Payment Date the EDA shall pay by check or draft mailed to the person that was the Registered Owner of this Note at the close of the last business day of the EDA preceding such Payment Date an amount equal to the Available Tax Increment (as defined in the TIF Development Agreement) received by the EDA during the six month period preceding such Payment Date (or, with respect to the first Note Payment Date, in the period commencing on the date of issuance of the TIF D-1 469017v4 BR291-353 Note through the day prior to the first Payment Date). All payments made by the EDA under this Note shall first be applied to accrued interest and then to principal. If, on any TIF Note Payment Date, the Available Tax Increment for the payment of the accrued and unpaid interest on the TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future TIF Note Payment Date there are Available Tax Increment to pay such accrued interest on the TIF Note. This Note is pre-payable by the EDA, without penalty, in whole or in part, on any date. This Note shall terminate and be of no further force and effect following the last Payment Date defined above, on any date upon which the EDA shall have terminated the TIF Development Agreement under Section 9.4(c) thereof, the date the TIF District is terminated, or on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The EDA makes no representation or covenant, express or implied, that the Available Tax Increment will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. In the event Available Tax Increment is not sufficient, the EDA is not responsible to further fund or reimburse the Developer (or its assigns or creditors) for any such shortfall. The EDA is not responsible to fund or reimburse any obligation of the Developer (or its assigns or creditors) unless expressly stated in the TIF Development Agreement. Subject to the terms of the TIF Development Agreement, the EDA's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the TIF Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder; and further, if pursuant to the occurrence of an Event of Default under the TIF Development Agreement the EDA elects to cancel and rescind the TIF Development Agreement, the EDA shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the TIF Development Agreement, including without limitation Section 5.3 thereof, for a.fuller statement of the rights and obligations of the EDA to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation of the EDA and is payable by the EDA only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the EDA or the City of Brooklyn Center, Minnesota (the "City"), and neither the full faith and credit nor the taxing powers of the EDA nor the City are pledged to the payment of the principal of this Note and no property or other asset of the EDA or the City, save and except the above-referenced Available Tax Increment, is or shall be a source of payment of the EDA's obligations hereunder. This Note is issued by the EDA in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the provisions of D-2 469017v4 BR291-353 Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "TIF Act"). This Note may be assigned only as provided in Section 8.2 of the TIF Development Agreement. In order to assign the Note, the assignee shall surrender the same to the EDA either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the EDA. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the EDA outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the EDA to exceed any constitutional or statutory -limitation thereon. IN WITNESS WHEREOF, Economic Development Authority of the City of Brooklyn Center, Minnesota, by its Board of Commissioners, has caused this Note to be executed by the manual signatures of its Chair and Secretary and has caused this Note to be dated as of President Executive Director D-3 4690170 BR291-353 SJ DI fa VI I (S]tI] U aei IiV III (IJI It is hereby certified that the foregoing Note Was registered in the name of SCA Properties, LLC, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNER SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, Florida 34103 DATE OF SIGNATURE OF EDA REGISTRATION EXECUTIVE DIRECTOR 469017v4 BR291-353 Exhibit A to TIF Note rt warn mIek' I V WhI ii i ii ai I d [0) i(I) H The undersigned, a ("Note Holder"), hereby certifies and acknowledges that:. A.On the date hereof the Note Holder has [acquired from]/[made a loan (the "Loan") [to/for the benefit] of] SCA Properties, LLC (the "Developer") [secured in part by the Developer's interest as payee in] the Taxable Tax Increment Revenue Note, Series 2016 (SCA Properties, LLC Senior Housing Project), a pay-as-you-go tax increment revenue note in the original principal amount of $1,800,000 dated , 20_ of the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA'!), .a copy of which is attached hereto, (the "Note"). The Note Holder has had the opportunity to ask questions of and receive all information and documents concerning the Note as it requested, and has had access to any additional information the Note Holder thought necessary to verify the accuracy of the information received. In determining to [acquire the Note]/[make the Loan], the Note Holder has made its own determinations and has not relied on the EDA or information provided by the EDA. B.The Note Holder represents and warrants that: 1.The Note Holder is acquiring [the Note]/[an interest in the Note as collateral for the Loan] for its own account, and without any view to resale or other distribution. 2.The Note Holder is [a bank or financial institution]/[a partnership whose general partner(s), or a limited liability company whose managing member, includes Developer or the principals of Developer] and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of receiving and holding the Note. 3.The Note Holder understands that the Note is a security which has not been registered under the Securities Act of 1933, as amended, or any state securities law, and must be held until its sale is registered or an exemption from registration becomes available. 4.The Note Holder is aware of the limited payment source for the Note and interest thereon and risks associated with the sufficiency of that limited payment source. C. The Note Holder understands that the Note is payable solely from certain tax increments derived from certain properties located in a tax increment financing district, if and as received by the EDA. The Note Holder acknowledges that the EDA has made no representation or covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to D-5 469017v4 BR291-353 pay, in whole or in part, the principal and interest due on the Note. Any amounts which have not been paid on the Note on or before the final maturity date of the Note shall no longer be payable, as if the Note had ceased to be an obligation of the EDA. The Note Holder understands that the Note will never represent or constitute a general obligation, debt or bonded indebtedness of the City of Brooklyn Center, Minnesota (the "City"), the EDA, the State of Minnesota, or any political subdivision thereof and that no right will exist to have taxes levied by the City, the EDA, the State of Minnesota or any political subdivision thereof for the payment of principal and interest on the Note. D. The Note Holder understands that the Note is payable solely from certain tax increments, which are taxes received on improvements made to certain property (the "Improvements") in a tax increment financing district from the increased taxable value of the property over its base value at the time that the tax increment financing district was created, which base value is called "original net tax capacity". There are risk factors in relying on tax increments to be received, which include, but are not limited to, the following: 1.Value of Improvements. If the contemplated Improvements constructed in the tax increment financing district are completed at a lesser level of value than originally contemplated, they will generate fewer taxes and .fewer tax increments than originally contemplated. 2.Damage or Destruction If the Improvements are damaged or destroyed after completion, their value will be reduced, and taxes and tax increments will be reduced. Repair, restoration or replacement of the Improvements may not occur, may occur after only a substantial time delay, or may involve property with a lower value than the Improvements, all of which would reduce taxes and tax increments. 3.Change in Use to Tax-Exempt. The Improvements could be acquired by a party that devotes them to a use which causes the property to be exempt from real property taxation. Taxes and tax increments would then cease. 4.Depreciation. The Improvements could decline in value due to changes in the market for such property or due to the decline in the physical condition of the property. Lower market valuation will lead to lower taxes and lower tax increments. 5.Non-payment of Taxes. If the property owner does not pay property taxes, either in whole or in part, the lack of taxes received will cause a lack of tax increments. The Minnesota system of collecting delinquent property taxes is a lengthy 'one that could result in substantial delays in the receipt of taxes and tax increments, and there is no assurance that the full amount of delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale following 'a tax forfeiture of the property are not tax increments. 6.Reductions in Taxes Levied. If property taxes are reduced due to decreased municipal levies, taxes and tax increments will be reduced. Reasons for such reduction could include lower local expenditures or changes in state aids to Elm 469017v4 BR291-353 municipalities. For instance, in 2001 the Minnesota Legislature enacted an education funding reform that involved the state increasing school aid in lieu of the local general education levy (a component of school district tax levies). 7.Reductions in Tax Capacity Rates. The taxable value of real property is determined by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by certain categories of property; for example, the tax capacity rates for residential homesteads are currently less than the tax capacity rates for commercial and industrial property. In 2001 the Minnesota Legislature enacted property tax reform that lowered various tax capacity rates to "compress" the difference between the tax capacity rates applicable to residential homestead properties and commercial and industrial properties. 8.Changes to Local Tax Rate. The local tax rate to be applied in the tax increment financing district is the lower of the current local tax rate or the original local tax rate for the tax increment financing district. In the event that the Current Local Tax Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes about after applying the lower Original Local Tax Rate instead of the Current Local Tax Rate is considered "excess" tax increment and is distributed by Hennepin County to the other taxing jurisdictions and such amount is not available to the EDA as tax increment. 9.Legislation. The Minnesota Legislature has frequently modified laws affecting real property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as affected by state aid to municipalities. 10.Multi-parcel TIF District. The Note Holder understands and acknowledges that the TIF District includes properties other than the Development Property, and the County remits Tax Increment to the EDA on the basis of the captured tax capacity of the entire TIF District. Consequently, the EDA will determine the amount of Tax Increment actually received by the EDA from the entire TIF District that is properly allocable, in the EDA's sole determination, to .the Development Property based on the ratio that the captured tax capacity of the Development Property bears to the total captured tax capacity of the TIF District, taking into account tax delinquencies and tax petitions. E.The Note Holder acknowledges that the Note was issued as part of a development agreement between the EDA and the Developer dated , 20_ ("Development Agreement"), and that the EDA has the right to suspend payments under this Note and/or terminate the Note upon an Event of Default under the Development Agreement. F.The Note Holder acknowledges that the EDA makes no representation about the tax treatment of, or tax consequences from, the Note Holder's acquisition of the Note. 4690170 BR291-353 WITNESS our hand this day of , 20 Note Holder: By:_ Name: Its: 4690170 BR291-353 D-8 Exhibit B To TIF Note ADVANCE CERTIFICATE ,201_ SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, Florida 34103 Attn: Garrett G. Carlson, Sr. Dear Mr. Carlson: This letter is to certify that as of , 201, the principal amount of $ been deemed advanced under the Taxable Tax Increment Revenue Note (The Sanctuary at Brooklyn Center Project), pursuant to Section 5.3(b) of the Development Agreement. SCA Properties, LLC has provided the Economic Development Authority of Brooklyn Center, Minnesota, Minnesota (the "EDA") with invoices or cancelled checks evidencing the payments due for any Eligible Costs not previously reimbursed in an amount equal to $_________ and, if applicable pursuant to Section 5.7 of the Development Agreement, a Compliance Certificate. Accordingly, interest on the principal amount of $________ began accruing on , 201_. Sincerely, Executive Director 4690170 BR291-353 FORM OF COLLATERAL ASSIGNMENT OF TIF DEVELOPMENT AGREEMENT COLLATERAL ASSIGNMENT OF TIF DEVELOPMENT AGREEMENT 1.Parties. The parties to this Collateral Assignment of TIP Development Agreement (the "Agreement") are SCA Properties, LLC, a Florida limited liability company (the "Developer") and ,a ("Lender"). The Economic Development Authority of Brooklyn Center, Minnesota (the "EDA") is executing this Collateral Assignment of TIP Development Agreement to confirm that this Collateral Assignment is a permitted assignment under Section 8.2 of the TIF Development Agreement, as defined below. 2.Recitals. 2.1 Recital One. The Developer and the EDA are parties to that certain TIF Development Agreement dated 2016 (the "TIP Development Agreement"). 2.2 Recital Two. The Developer and Lender are parties to that certain [DESCRIBE LOAN DOCUMENTS] pursuant to which Lender has loaned $ to the Developer (the "Loan"). The Developer intends to use a portion of the proceeds of the Loan to construct the "Minimum Improvements," as defined in the TIF Development Agreement. 2.3 Recital Three. As security for the Loan, the Developer has granted Lender a mortgage on the real property legally described on the attached Exhibit A (the "Mortgage Property"). 2.4 Recital Four. As a condition of the Loan, Lender has required that the Developer collaterally assign the Developer's rights under the TIF Development Agreement to Lender so that if Lender exercises Lender's remedies under the Loan Documents, forecloses the Mortgage and becomes the owner of the Development Property, as defined in the TIF Development Agreement, Lender may perform the Developer's obligations under the TIF Development Agreement and receive the benefits of the TIF Development Agreement from the EDA. 3. Assignment. In consideration of the Loan, the Developer hereby irrevocably transfers and assigns all of the Developer's rights and obligations under the TIP Development Agreement to Lender, and Lender, for the benefit of the EDA, assumes and agrees to perform all of the obligations of the Developer under the TIF Development Agreement; provided, however, the assignment and assumption set forth in this Section 3 shall not become effective until Lender acquires title to the Mortgage Property pursuant to either a conveyance in lieu of foreclosure from the Developer or the foreclosure of the mortgage and the expiration of all applicable redemption periods. Except as set forth in Section 6 below, the Developer is entitled to exercise all of the E-1 469017v4 BR291-353 Developer's rights and receive all of the benefits under the TIF Development Agreement until this assignment becomes effective as provided above. 4.Subordination and Right to Disclaim. Pursuant to Section 6.5 of the TIF Development Agreement, the EDA has agreed to execute a subordination agreement, in form and substance mutually acceptable to the EDA and Lender, to subordinate the provisions of (i) the TIF Development Agreement (excluding the provisions of the Declaration, as defined therein, and the provisions of the Deed, as defined therein, related to Section 3.3 of the TIF Development Agreement) and (ii) the Purchase Price Mortgage (as defined in the TIF Development Agreement) to the terms of the Loan Documents. Lender may, at any time prior to (a) the recording of a conveyance of the Mortgage Property from Developer to Lender in lieu of a foreclosure or (b) the recording of a sheriff's certificate of sale pursuant to which Lender has purchased all or any portion of the Mortgage Property at a Sheriff's Sale, notify the EDA, in writing, that Lender is terminating this Collateral Assignment and disclaiming any rights under the TIF Development Agreement in which case Lender will acquire title to the Mortgage Property free and clear of any rights or obligations under the TIF Development Agreement. Notwithstanding the foregoing, in no event will this Agreement limit the exercise of the remedies by the EDA under the TIF Development Agreement or under the TIF Note (as defined in the TIF Development Agreemen). 5.Assignment. Subject to Section 8 .2(c)(iv) of the TIF Development Agreement, Lender may assign its rights and obligations under this Agreement to (a) any assignee of the Mortgage; (b) any purchaser of all or any portion of the Mortgage Property at a Sheriff's Sale; or (c) any party acquiring title to the Mortgage Property from Developer pursuant to a deed in lieu of foreclosure. 6.Developer Default. If Developer defaults in the performance of one or more of Developer's obligations under one or more of the Loan Documents, Lender will give the EDA written notice of the default; provided, however, the Lender's failure to give the EDA notice of a Developer default under one or more of the Loan Documents will not extend any cure periods provided for Developer under any of the Loan Documents and will not invalidate or render ineffective, in any way, any notice of default provided by Lender to Developer. The EDA and Developer agree that from and after Lender's delivery of a Notice of Default to the EDA and until such time as Lender notifies the EDA, in writing, that Developer has cured the default referenced in the Notice of Default, the EDA will not deliver the TIF Note to Developer; provided, however that if, following such notice, this assignment becomes effective as a result of Lender's acquisition of title to all or any portion of the Mortgage Property, the EDA will issue the TIF Note in the name of Lender subject to the terms and conditions of the TIF Development Agreement. 7.Authorization to EDA. The Developer hereby irrevocably authorizes and directs the EDA to recognize the claims of the Lender without investigating the reason for any action taken or the validity of or the amount of indebtedness owing to the Lender or the existence of any Event of Default; and the Developer hereby irrevocably directs and authorizes the EDA to pay exclusively to the Lender or its assigns from and after the date of any notice as set forth in Section 6, all sums due under the TIF Development Agreement, subject to the terms thereof, without the necessity of any such investigation; and to the extent such sums are paid to the Lender, the Developer agrees that the EDA shall have no further liability to the Developer for the same. The sole signature of the Lender shall be sufficient for the exercise of any rights under this E-2 4690170 BR291-353 Assignment and the sole receipt by the Lender of any sum paid by the EDA shall be in discharge and release of that portion of any amount owed by the EDA. The Lender acknowledges that the EDA 's rights and remedies against the Developer under the TIF Development Agreement are unaffected by this Agreement. 8.Notices. All notices and communications given pursuant to this Agreement shall be deemed to have been given or made when personally delivered or three (3) days after being sent by United States Mail, postage prepaid, to the parties at the following addresses or at such other addresses as the parties may hereinafter designate in writing: To the Developer SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, Florida 34103 With a copy to: To Lender: With a copy to: To the EDA: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, Minnesota 55430-2199 Attn: Executive Director With a copy to: Kennedy & Graven Chartered 200 S. Sixth St. #470 Minneapolis, MN 55402-1458 Attention: Jenny Boulton 9.Titles of Articles and Sections. Any titles of the Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. E-3 469017v4 BR291-353 11.Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 12.Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. Dated: , 2016 SCA PROPERTIES, LLC, a Florida limited liability company By: Its STATE OF ) COUNTY OF_________ ) The foregoing instrument was acknowledged before me on this day of _________ 2016 by , the of SCA Properties, LLC, a Florida limited liability company on behalf of said limited liability company. Notary Public 4690170 BR291-353 LENDER: By Its STATE OF ) ss: COUNTY OF__________ ) The foregoing instrument was acknowledged before me on this day of 2016 by the of on behalf of the Notary Public E-5 469017v4 BR291-353 O 1:0) ii '*i.wi ixeiu swi XI]RJal To induce Lender to make advances pursuant to the Loan Agreement described in the foregoing Assignment, the undersigned EDA hereby acknowledges and consents to the foregoing Assignment to Lender, and further agrees to deliver to Lender a copy of any Default Notice given to Borrower with respect to any breach or default by Borrower under the TIF Development Agreement or the TIF Note within five (5) days of delivering any such notice to Borrower. Dated: ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By Its: President and by Its Executive Director STATE OF MINNESOTA ) ) ss: COUNTY OF HENNTEPIN ) The foregoing instrument was acknowledged before me on this day of 2016 by and , the President and Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic, on behalf of such Economic Development Authority. Notary Public Drafted by: KENNEDY & GRAVEN, CHARTERED 470 U. S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 4690170 BR291-353 Exhibit A I I) *!IJ .i I ai [I)(S) (S] .uerei UI J ,) 3I I The property located in the City of Brooklyn Center, Hennepin County, Minnesota identified as Parcel ID #34.119.21.43.0005 and legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 1384364. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property E-7 469017v4 BR291353 EXHIBIT F COMPLIANCE CERTIFICATE The undersigned does hereby certify as follows: at least 64 or 40% of the 158 housing units in the Sanctuary at Brooklyn Center Housing Project are occupied (or held open for occupancy) by individuals whose incomes are 60% or less of area median gross income. Attached hereto are income verifications of the tenants used to meet the above requirements. The vacancy rate of the preceding calendar year and the rents for all units broken down by unit type, size, total rent and rent per square foot is also attached. Dated this day of ,20 SCA PROPERTIES, LLC, a Florida limited liability company By Its F-i 469017v4 BR291-353 EXHIBIT G I O H] U SJ W I O1D i 1 il 1 Oil 1'A )ESIIA'i M1 THIS DECLARATION OF RESTRICTIVE COVENANTS (this "Declaration") dated as of , 2016 by SCA Properties, LLC, its successors and assigns (the "Owner") is given to the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA"). RECITALS WHEREAS, the EDA and the Owner entered into that TIF. Development Agreement, dated 2016 (the "Agreement"); and WHEREAS, pursuant to the Agreement, the Owner is obligated to construct an affordable senior assisted living facility consisting of approximately 158 total units, which will include approximately 86 one-bedroom and 44 efficiency apartment units for assisted living and approximately 28 studio apartment units for special needs residents (the "Project") on the property described in Exhibit A hereto (the "Property"), and to cause compliance with certain restrictive covenants, as described in Section 5.6 of the Agreement; and WHEREAS, the Owner intends, declares, and covenants that the restrictive covenants set forth herein shall be and are covenants running with the Property for the term described herein and binding upon all subsequent owners of the Property for such term, and are not merely personal covenants of the Owner; and WHEREAS, capitalized terms in this Declaration have the meaning provided in the Agreement unless otherwise defined herein. NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Owner agrees as follows: 1. Term of Restrictions. (a)Senior Occupancy Restrictions. The term of the Senior Occupancy Restriction set forth in Section 3 of this Declaration shall commence with the commencement of income and rent restrictions imposed under Section 42 of the Internal Revenue Code of 1986 (the "Code"). The period from commencement to termination is the "Qualified Project Period." (b)Termination of Declaration. This Declaration shall terminate upon the latest of (a) the date that is 15 years after the commencement of the Qualified Project Period, (b) the date the Purchase Price Note (as defined in the Agreement) is paid or deemed paid in full, or (c) the date the TIF Note is paid in full, defeased, forgiven or terminated in accordance with its terms. In addition, this Declaration shall terminate and be of no further force and effect in the event of foreclosure or transfer of title by deed in lieu of foreclosure upon completion of the foreclosure and expiration of the applicable redemption period, or recording of a deed in lieu of foreclosure; G-1 469017v4 BR291353 provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure, or the delivery of a deed in lieu of foreclosure, or a similar event, the Owner or any related person (within the meaning of Section 1.103-10(e) of the Treasury Regulations) obtains an ownership interest in the Project for federal income tax purposes. (c) Removal from Real Estate Records. Upon termination of this Declaration, the EDA shall, upon request by the Owner or its successors or assigns, file any document appropriate to remove, this Declaration from the real estate records of Hennepin County, Minnesota. 2. Project Restrictions. (a) The Owner represents, warrants, and covenants that: (i) All leases of units to Qualifying Tenants (as defined in Section 3(a) hereof) shall contain clauses, among others, wherein each individual lessee: (1)Certifies the accuracy of the statements made in its application and Eligibility Certification (as defined in Section 3(b) hereof); and (2)Agrees that the age of at least one occupant at the time the lease is executed shall be deemed a substantial and material obligation of the lessee's tenancy; that the lessee will comply promptly with all requests regarding the age of the occupants, and that the lessee's failure or refusal to comply with a request for information with respect thereto shall be deemed a violation of a substantial. obligation of the lessee's tenancy. (ii) The Owner shall permit any duly authorized -representative of the EDA to inspect the books and records of the Owner pertaining to the income of Qualifying Tenants residing in the Project. (b) The Owner represents, warrants, and covenants that during the Qualified Project Period, all units in the Project will have no more than three bedrooms. 3. Senior Occupancy Restrictions. The Owner represents, warrants, and covenants that: (a) Qualifying Tenants. From the commencement of the Qualified Project Period, all units shall be occupied by at least one person who is at least 55 years of age at the time of initial occupancy and otherwise administered in accordance with 42 USC §3607(b) and Minnesota Statutes, §363A.21, Subd. 2 Tenants who satisfy this paragraph are referred to as "Qualifying Tenants." . G-2 469017v4 BR291-353 (b)Certification of Tenant Eligibility. As a condition to initial and continuing occupancy, each person who is intended to be a Qualifying Tenant shall be required annually to sign and deliver to the Owner a Certification of Tenant Eligibility substantially in the form attached as EXHIBIT B hereto, or in such other form as may be approved by the EDA (the "Eligibility Certification"), in which the prospective Qualifying Tenant certifies as to qualifying as senior. Eligibility Certifications will be maintained on file by the Owner with respect to each Qualifying Tenant who resides in a Project unit or resided therein during the immediately preceding calendar year. (c)Lease. The form of lease to be utilized by the Owner in renting any units in the Project to any person who is intended to be a Qualifying Tenant shall provide for termination of the lease and consent by such person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by such person with respect to the Eligibility Certification. (d)Annual Report. The Owner covenants and agrees that during the term of this Declaration, it will prepare and submit to the EDA on or before July 1 of each year, a certificate substantially in the form of EXHIBIT C hereto, executed by the Owner, (i) identifying the tenancies and the dates of occupancy (or vacancy) for all Units in the Project; (ii) describing all transfers or other changes in ownership of the Project or any interest therein; and (iii) stating, that to the best knowledge of the person executing such certificate after due inquiry, all such units were rented or available for rental on a continuous basis during such year to members of the general public who were Qualifying Tenants and that the Owner was not otherwise in default under this Declaration during such year. (e)Notice of Non-Compliance. The Owner will immediately notify the EDA if at any time during the term of this Declaration the dwelling units in the Project are not occupied or available for occupancy as required by the terms of this Declaration. 4.Transfer Restrictions. The Owner covenants and agrees that the Owner will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the Project prior to the termination of the Occupancy Restrictions provided herein (the "Transfer") that the transferee of the Project pursuant to the Transfer assume in writing, in a form acceptable to the EDA, all duties and obligations of the Owner under this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the Senior Occupancy provided herein (the "Assumption Agreement"). The Owner shall deliver the Assumption Agreement to the EDA prior to the Transfer. 5.Enforcement. (a) The Owner shall permit, during normal business hours and upon reasonable written notice, any duly authorized representative of the EDA to inspect any books and records of the Owner regarding the Project with respect to the incomes of Qualifying Tenants. G-3 469017v4 BR291-353 (b)The Owner shall submit any other information, documents or certifications requested by the EDA which the EDA deems reasonably necessary to substantial the Owner's continuing compliance with the provisions specified in this Declaration. (c)The Owner acknowledges that the primary purpose for requiring compliance by the Owner with the restrictions provided in this Declaration is to ensure compliance of the property with the senior occupancy covenants set forth in Section 5.6 of the Agreement, and by reason thereof, the Owner, in consideration for assistance provided by the EDA under the Agreement that makes possible the construction of the Minimum Improvements (as defined in the Agreement) on the Property, hereby agrees and consents that the EDA shall be entitled, fOr any breach of the provisions of this Declaration, and in addition to all other remedies provided by law or in equity, to enforce specific performance by the Owner of its obligations under this Declaration in a state court of competent jurisdiction. The Owner hereby further specifically acknowledges that the EDA cannot be adequately compensated by monetary damages in the event of any default hereunder. (d)The Owner understands and acknowledges that, in addition to any remedy set forth herein for failure to comply with the restrictions set forth in this Declaration, the EDA may exercise any remedy available to it under Article IX of the Agreement. (e)Notwithstanding anything to the contrary set forth in this Declaration, any Financing Party (as such term is defined in the Agreement) shall have the right to receive notice of any default hereunder in the same manner as provided in Section 6.2 of the Agreement, and shall have the right, but not the obligation, to cure any default hereunder during the cure period provided for the Owner 7.Indemnification. The Owner hereby indemnifies, and agrees to defend and hold harmless, the EDA from and against all liabilities, losses, damages, costs, expenses (including attorneys' fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of any nature arising from the consequences of a legal or administrative proceeding or action brought against them, or any of them, on account of any failure by the Owner to comply with the terms of this Declaration, or on account of any representation or warranty of the Owner contained herein being untrue. 8.Agent of the EDA. The EDA shall have the right to appoint an agent to carry out any of its duties and obligations hereunder, and shall inform the Owner of any such agency appointment by written notice. 9.Severability. The invalidity of any clause, part or provision of this Declaration shall not affect the validity of the remaining portions thereof. 10.Notices. All notices to be given pursuant to this Declaration shall be in writing and shall be deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the addresses set forth below, or to such other place as a party may from time to time designate in writing. The Owner and the. EDA may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, or other communications shall be sent. The initial addresses for notices and other communications are as follows: G-4 4690170 BR291-353 To the EDA: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, Ivll\T 55430-2199 Attn: Executive Director The Owner: SCA Properties, LLC 4099 Tamiami Trail North, Suite 200 Naples, Florida 34103 with a copy to: 11.Governing Law. This Declaration shall be governed by the laws of the State of Minnesota and, where applicable, the laws of the United States of America. 12.Attorneys' Fees. In case any action at law or in equity, including an action for declaratory relief, is brought against the Owner to enforce the provisions of this Declaration, the Owner agrees to pay the reasonable attorneys' fees and other reasonable expenses paid or incurred by the EDA in connection with such action. 13. Declaration Binding. This Declaration and the covenants contained herein shall run with the real property comprising the Project and shall bind the Owner and its successors and assigns and all subsequent owners of the Project or any interest therein, and the benefits shall inure to the EDA and its successors and assigns for the term of this Declaration as provided in Section 1(b). Drafted by: Kennedy & Graven Charted (JSB) 470 U.S. Bank Plaza Minneapolis, MN 55406 G-5 469017v4 8R291-353 IN WITNESS WHEREOF, the Owner has caused this Declaration of Restrictive Covenants to be signed by its respective duly authorized representatives, as of the day and year first written above. SCA PROPERTIES, LLC, a Florida limited liability company By: Its STATE OF MINNESOTA ) )ss COUNTY OF________ The foregoing instrument was acknowledged before me this day of 2016, by , the __ of SCA Properties, LLC, a Florida limited liability company on behalf of said limited liability company. Notary Public (The remainder of this page is intentionally left blank.) G-6 469017v4 BR291-353 This Declaration is acknowledged and consented to by: ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By President By Executive Director STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016 by , the President of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016 by , the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public G-7 469017v4 BR291-353 EXHIBIT A Legal Description The property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 13 843 64. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property G-8 4690170 BR291-353 EXHIBIT B Certification of Tenant Eligibility (AGE CERTIFICATION) Project: The Sanctuary at Brooklyn Center Housing Project located at 6121 Brooklyn Boulevard, Brooklyn Center, Minnesota 55430 Owner: SCA Properties, LLC Unit: 1. I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully, frankly and personally each of the following questions for all persons (including minors) who are to occupy the unit in the above apartment building for which application is made, all of whom are listed below: Name of Relationship Members of the To Head of Household Household Age THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE CANCELLED UPON 10 DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION ABOVE IS NOT TRUE AND CORRECT. Head of Household Spouse G-9 4690170 BR291-353 EXHIBIT C. Certificate of Continuing Program Compliance Date: The following information with respect to the Project located at 6121 Brooklyn Boulevard, Brooklyn Center, Minnesota 55430 (the "Project"), is being provided by SCA Properties, LLC (the "Owner") to the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA"), pursuant to that certain Declaration of Restrictive Covenants dated as of 2016 (the "Declaration") and the TIF Development Agreement between the EDA and the Owner dated as of ___,2016 (the "Agreement") with respect to the Project: (A)The total number of residential units which are available for occupancy is 158. The total number of occupied units is (B)The following residential units are considered to be occupied by Qualifying Tenants based on the information set forth below: Unit Number Name of Tenant Number of ersons Residing in the Unit Date of Initial Occupancy Age of oldest person 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 G-1O 4690170 BR291-353 [expand to cover 158 units] (C)The Owner has obtained a "Certification of Tenant Eligibility," in the form provided as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each such Certificate is being maintained by the Owner in its records with respect to the Project. Attached hereto is the most recent "Certification of Tenant Eligibility" for each Tenant named in (D) above who signed such a Certification since the date on which the last "Certificate of Continuing Program Compliance" was filed with the EDA by the Owner. (D)In renting the residential units in the Project, the Owner has not given preference to any particular group or class of persons (except for persons who qualify as Qualifying Tenants, and except as providing in the marketing plan under Section 5.7 of the Agreement). All of the residential units in the Project have been rented pursuant to a written lease, and the term of each lease is at least months. (E)The information provided in this "Certificate of Continuing Program Compliance" is accurate and complete, and no matters have come to the attention of the Owner which would indicate that any of the information provided herein, or in any "Certification of Tenant Eligibility" obtained from the Tenants named herein, is inaccurate or incomplete in any respect. (F)The Project is in continuing compliance with the Declaration. G-ll 469017v4BR291-353 IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on ,20____ SCA PROPERTIES, LLC, a Florida limited liability company By: Its G-12 4690170 BR291-353 EXHIBIT H FORM OF MINIMUM ASSESSMENT AGREEMENT THIS AGREEMENT, dated as of this day of , 2016, is between the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA") and SCA Properties, LLC, a Florida limited liability company (the "Developer"). WITNESSETH WHEREAS, on or before the date hereof the EDA and Developer have entered into a TIF Development Agreement dated as of , 2016 (the "TIF Agreement") regarding certain real property the legal description of which is attached hereto as Exhibit A (the "Development Property"). WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will undertake the renovation and expansion of the existing structures located on the Development Property by the construction by the Developer of an affordable senior assisted living facility consisting of approximately 158 total units, which will include approximately 86 one-bedroom and 44 efficiency apartment units for assisted living and approximately 28 studio apartment units for special needs residents (the "Minimum Improvements"), in accordance with plans and specifications approved by the EDA. WHEREAS, the EDA and Developer desire to establish a minimum market value for the Development Property and the improvements constructed or to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177. WHEREAS, the Developer has acquired the Development Property. WHEREAS, the EDA and the Assessor have reviewed plans and specifications for the Minimum Improvements. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1.As of January 2, 201_, the minimum market value, which shall be assessed for the Development Property for taxes payable 201_, shall not be less than $__________ 2.The minimum market values herein established shall be of no further force and effect after assessment on January 2, 20_ for taxes payable in 20_; provided, however, this Agreement shall terminate on such earlier date as the TIF District (as defined in the TIF Agreement) is decertified or the TIF Note (as defined in the TIF Agreement) is fully paid, defeased or terminated in accordance with its terms (the "Termination Date"). If the Termination Date is earlier than January 2, 20. for taxes payable in 20_, the EDA shall duly execute and record a release of this Agreement upon the written request and sole expense of the then holder of fee title to the Developer Property. H-1 4690170 BR291-353 3.This Agreement shall be recorded by the EDA with the County Recorder of Hennepin County, Minnesota and in the Office of the Hennepin County Registrar of Titles. The Developer shall pay all cots of recording. 4.Neither the preambles nor provisions of this Agreement are intended to, or shall they be construed as, modifying the terms of the TIF Agreement between the EDA and the Developer. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. This Instrument Drafted By: Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 5 5402-1403 1-1-2 469017v4 BR291-353 IN WITNESS WHEREOF, the EDA and the Developer have caused this Minimum Assessment Agreement to be executed in their names and on their behalf all as of the date set forth above. ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By President By Executive Director STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016 by , the President of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2016 by , the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public H-3 469017v4 BR291-353 SCA PROPERTIES, LLC By Its STATE OF MINNESOTA ) ) ss. COUNTY OF The foregoing instrument was acknowledged before me this ____ day of 20 , by ,the of SCA Properties, LLC, a Florida limited liability company on behalf of said company. Notary Public Signature page for Minimum Assessment Agreement H-4 469017v4 BR291-353 EXHIBIT A TO MINIMUM ASSESSMENT AGREEMENT Legal Description of Development Property The property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as: Parcel 1: That part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Being registered land as is evidenced by Certificate of Title No. 1384364. Parcel 2: Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota. Abstract Property H-S 469017v4 BR291-353 CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the Minimum Assessment Agreement dated as of -5 2016 between the Economic Development Authority of Brooklyn Center, Minnesota and SCA Properties, LLC, a Florida limited liability company; the plans and specifications for the Minimum Improvements, as defined in the Minimum Assessment Agreement; and the market value currently assigned to land upon which the improvements are to be constructed and being of the opinion that the minimum market value of $________ contained in the Minimum Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the minimum market value of $ of January 2, 201, for taxes payable in 201 through and including the taxes payable year 20_ is reasonable and shall be assigned to such land and improvements. County Assessor for Hennepin County STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) This instrument was acknowledged before me on , 2016, by the County Assessor of Hennepin County. Notary Public H-6 469017v4 BR291-353 EDA I4. TEMA Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). March 9, 2015, the City Council/EDA discussed the potential sales and redevelopment of approx. 5.5 acres for an affordable assisted care senior apartment development. $1.5 million$1.5 million $150,000$150,000 $113,398$113,398 B: ACKGROUND March 23, 2015, the EDA entered into a Letter of  Intent with SCA Properties for the sales of 6101, 6107, & 6121 Brooklyn Boulevard. August 10, 2015, the City Council/EDA discussed  with SCA Properties the following funding strategy to address a $3M financial gap in funding the project: The developer defer 50% of its development fee to address  $1.5 M of the gap A TIF Housing District will be established for the  development with the EDA issuing a Pay-As-You-Go Note to SCA Properties for $1.8 M to address the remaining $1.5 M gap and provide $300,000 for the future acquisition of two adjacent properties. The site development plans limited the acquisition to the  4.5 acres within 6121 Brooklyn Boulevard The use of a Purchase Mortgage Note in the amount of  $1.5M to facilitate the conveyance of the land. October 26, 2015, the City Council approved the  establishment of a Housing Tax Increment District that included this project and adjacent properties. January 28, 2016, the City Council accepted the  Planning Commission recommendations and approved a PUD amendment and Site Development Plans for the development of The Sanctuary at Brooklyn Center Senior Living Project, 156 units of affordable assisted senior housing units. On January 28, 2016, the City Council/EDA Work  Session included an update by Jenny Boulton, Kennedy & Graven, on the EDA’s purchase agreement and draft tax increment agreement for the Sanctuary at Brooklyn Center Senior Living Project. PA6121 URCHASEGREEMENTFOR BB, L1, B1 ROOKLYNOULEVARDOTLOCK CMC2 ND HRYSLEROTORSORPORATION A DDITION The purchase agreement establishes the price at  $1,500,000 and provides for the following conditions that the buyer, SCA Properties, LLC, will need to complete and deliver to the City no later than September 30, 2016: A Purchase Price Promissory Note in the $1,500,000 and a  Purchase Price Mortgage as approved by the City Attorney. A title insurance policy  Approved plans, specifications, drawing and related  documents for the construction of the minimum improvements consistent with the PUD Evidence that they have closed on construction financing for  the project and certify that there are sufficient funds and equity commitments to complete the construction of the Project The Declaration of Restrictive Covenants as defined in the TIF  Development Agreement The PUD Agreement  The TIF Development Agreement  The Purchase Price Promissory Note has a 25 year term  which matches the life of the Tax Increment District and includes the following provisions to protect the EDA’s equity in the Promissory Note in the event of a sales or refinancing/restructuring debt: In the event the project is sold, 50% of the Net Sale Proceeds  would be applied to the repayment of the Note up to the $1,500,000 principal amountThe owner has indicated that upon satisfying the tax credit requirements of ownership (projected to be in the range of 12-15 years) they could sell the project. In the event of refinancing the project for any amount that  exceeds the Minimum Improvements and any additional capital improvements, 50% of the increase principal amount shall be used to repay the note up to the $1,500,000 principal amount. The required public notification and hearing relating to the  EDA’s conveyance of this parcel is proposed to occur later this Spring with the public hearing on the conduit bond financing (private placement sales of bonds) for this project. TIF DAB EVELOPMENTGREEMENTYAND BED ETWEENCONOMICEVELOPMENT ABC, UTHORITYOFROOKLYNENTER MSCA P, LLC INNESOTAANDROPERTIES A comprehensive document prepared by the EDA’s  legal counsel which: recites the purpose of creating this tax increment district;  defines the project and the minimum improvements to be  completed; includes provisions to assure that the purpose of creating  the District are achieved and the interests of the EDA are protected; identifies the tax increment assistance and provides the  financing tools to fund the approved tax increment assistance; and identifies the legal remedies and actions in the event  of a default in the agreement. The agreement includes the documents necessary to  implement the Tax Increment Assistance determined necessary for this 158 unit affordable senior housing project to proceed. Purchase Agreement with Purchase Price Promissory Note  and Purchase Price Mortgage Pay-As-You-Go Note  BI: UDGETSSUES There are no General Fund budget issues related  to these actions. The initial land acquisition was acquired with a  tax increment bond and any future repayments of the Purchase Price Promissory Note would be repaid to that Tax Increment Fund. The TIF Pay-As-Go-Note is only funded by Tax  Increment District No.6 from the tax increment to be received from this project. R: ECOMMENDATION It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). EDA Agenda Item No. 4b IMPLINMILUMk'A(IMUI1IA'AI DATE: February 8, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Approving an Administrative Amendment to Budget for Tax Increment Financing Plan for Tax Increment Financing District No. 4 in Connection with Pooling for Affordable Housing. Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Approving an Administrative Amendment to Budget for Tax Increment Financing Plan for Tax Increment Financing District No. 4 in Connection with Pooling for Affordable Housing Background: Tax Increment District No. 4 is a 20 year Soils District that was established in 1999 to assist in redevelopment costs associated with the development of Twin Lakes Business Park, an industrial park that created industrial sites for Wickes Furniture - now Wagner Spray Technology; Baker Furniture/Toro; and Caribou. The District is scheduled to be decertified on December 31, 2020. The EDA issued a Pay-As-You-Go Note in the amount of $2,424,199 to reimburse the developer for eligible site improvement and preparation costs with 97.5% of the annual tax increment revenue generated from this district to be used for debt service. This P.A.Y.G. Note is presently scheduled to be repaid on August 1, 2016. There are no other outstanding contractual obligations for this district. Tax increment received after the satisfaction of this P.A.Y.G. Note is considered to be excess tax increment and is required to be returned to Hennepin County for redistribution to the City, County, and School District. Additionally, the TIF 4 Tax Increment Financing Plan requires the early decertification of the District when its contractual obligations have been satisfied. It is projected that the remaining life of the district has the potential to generate $1,875,633 in additional tax increment. Mission: Ensuring an attractive, clean, safe, inclusive coinnzuni(y that enhances (he quality of life for all people and preserves the public trust I I I N M"A UYA I Mk"A (1) UI I1IJi Proposed Budget Amendment: The EDA has the statutory authority to administratively amend its TIF budget providing that the amendment does not increase the total estimate tax increment expenditures, the amount of bond indebtedness, capitalized interest or make other changes as described by the TIF statutes that would require a new public hearing. Additionally, the Minnesota State Legislature has authorized the use of tax increment from any tax increment district to be used exclusively to assist housing that meets the requirement for a qualified low-income building, as that term is used in section 42 of the Internal Revenue Code. The Brooklyn Boulevard affordable senior housing project meets these requirements and provides the FDA with an opportunity to use TIF 4 funds for the repayment of the 2013 Bonds used to acquire 6121 Brooklyn Boulevard and to reimburse the TIF 3 Housing Fund for other adjacent acquisitions that may become part of this eligible housing activity. Attached is a resolution prepared by Jenny Boulton, City Attorney's Office, which enables this budget amendment and adjusts the budget to reflect the tax increment projected for the remaining life of the district. Budget Issues: The use of tax increment revenue from TIF District No. 4 for the land acquisition costs associated with the Brooklyn Boulevard Affordable Senior Housing Project in lieu of Tax Increment District No. 3 Housing Funds provides the FDA with greater flexibility and opportunities to achieve the community's housing and redevelopment goals. The FDA does have the option to decertify this district early which would result in the following: - The 2016 2 d half tax increment is projected to be approximately $210,000 of which approximately 40% ($80,000) would be returned to the City as excess tax increment. - Currently, the captured net tax capacity of TIF 4 is 262,444 (after fiscal disparity deductions) which would be added to the City's overall tax capacity. The City Wide Tax Capacity of 21,599,516 was used in the calculating of the tax levy for 2016. The effect of adding the TIF 4 captured tax capacity to City's overall tax capacity would have resulted in an increase of approximately 1.2% and resulted in calculating a lower property tax rate. Strategic Priorities: • Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive conunuluty that enhances the quality of life for al/people and preserves the pu b/ic trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO._________ RESOLUTION APPROVING AN ADMINISTRATIVE AMENDMENT TO BUDGET FOR TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 4 IN CONNECTION WITH POOLING FOR AFFORDABLE HOUSING WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota ("EDA") has previously established Housing Development and Redevelopment Project No. 1 (the "Project Area") and adopted a Redevelopment Plan therefor, as amended (the "Redevelopment Plan"). The EDA has also established Tax Increment Financing (Soils Condition) District No. 4 (the "TIF District") within the Project Area, and adopted a Tax Increment Financing Plan therefor (the "TIF Plan"); WHEREAS, in connection with making an election to authorize certain expenditures for affordable housing pursuant to Minnesota Statutes 469.1763, Subdivision 2(d), the EDA desires to amend the TIF Plan as set forth in Exhibit A to provide for administrative changes to the budget set forth therein (the "Amendment"); WHEREAS, the Amendment does not increase the total estimate tax increment expenditures, the amount of bonded indebtedness, capitalized interest, or make any other changes described in Minnesota Statutes, Section 469.175, subd. 4, that would require a new public hearing. NOW, THEREFORE, BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic Development Authority of Brooklyn Center, Minnesota as follows: 1.Findings for the Adoption of the TIF Plan Amendment. The Board finds that the TIF Plan Amendment is intended and, in the judgment of the Board, the effect will be, to carry out the objectives of the redevelopment plan therefor (the "Redevelopment Plan"), to create an impetus for redevelopment activities associated with better utilizing blighted, polluted and underutilized land and enhancing the tax base of the City, in an effort to provide an ongoing benefit to residents in the City and to those who frequent the area in the City, to create an impetus for the construction of decent, safe and sanitary housing for persons of low and moderate income and to otherwise promote certain public purposes and accomplish certain objectives as specified in the Redevelopment Plan, as modified, and in the TIF Plan Amendment. The Board hereby ratifies and confirms the findings made in connection with the establishment of the TIF District. 2.Election to Authorize Certain Expenditures for Affordable Housing. In accordance with Minnesota Statutes 469.1763, Subdivision 2(d) the Board may elect to increase by up to 10%, the permitted amount of expenditures for activities located outside the geographic area of the district, provided that the expenditures (1) be used exclusively to assist housing that meets the requirement for a qualified low-income building, as that term is used in section 42 of the Internal Revenue Code; (2) not exceed the qualified basis of the housing, as defined under section 42(c) of the Internal Revenue Code, less the amount of any credit allowed under section 42 of the Internal Revenue Code; and (3) be used to: (i) acquire and prepare the site of the housing; (ii) acquire, construct, or rehabilitate the housing; or (iii) make public improvements directly related to the housing. The Board hereby elects to authorize utilizing up to 30% of the tax increment from the TIF District, less any amount utilized for administrative expenses, for such housing expenditures as set forth in the TIF Plan Amendment. 3. Approval of the TIF Plan Amendment. The TIF Plan Amendment as set forth in Exhibit A is hereby approved. The staff of the EDA and the EDA's advisors and legal counsel are authorized and directed to proceed with the implementation of the TIF Plan Amendment. The staff of the EDA is hereby directed to file a copy of the TIF Plan Amendment with the County Auditor of Hennepin County, the Office of the State Auditor and the Commissioner of Revenue. February 8, 2016 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. EXHBIT A Original Budget New Budget Soils/Environmental $3,207,950.00 Site improvements &$2,424,199.00 preparation Geotechnical 1,000,000.00 Pooling for 1,863,373.00 Affordable Housing Infrastructure 770,000.00 Administrative 120,000.00 Expenses Acquisition 4,540,000.00 Demolition 140,000.00 Contingency 466,902.00 Groundwater Pumping 3,450,000.00 Interest 2,145,000.00 and Monitoring Total $13,574,852.00 Total $6,552,572.00 TIF Revenues TIF Revenues $6,552,572.00 EDA AGENDA ITEM 4. B Resolution Approving an Administrative Amendment to Budget for Tax Increment Financing Plan for Tax Increment Financing District No. 4 in Connection with Pooling for Affordable Housing. Tax Increment District No.  4 is a 20 year Soils District that was established in 1999 to assist in redevelopment costs associated with the development of Twin Lakes Business Park, an industrial parkthat created industrial sites for Wickes Furniture –now Wagner Spray Technology;Baker Furniture/Toro; and Caribou. The District is scheduled  to be decertified on December 31, 2020. PBA ROPOSEDUDGETMENDMENT The EDA has the statutory authority to administratively  amend its TIF budget providing that the amendment does not increase the total estimate tax increment expenditures, the amount of bond indebtedness, capitalized interest or make other changes as described by the TIF statutes that would require a new public hearing. Additionally, the Minnesota State Legislature has authorized  the use of tax increment from any tax increment district to be used exclusively to assist housing that meets the requirement for a qualified low-income building, as that term is used in section 42 of the Internal Revenue Code. The Brooklyn Boulevard affordable senior housing project  meets these requirements and provides the EDA with an opportunity to use TIF 4 funds for the repayment of the 2013 Bonds used to acquire 6121 Brooklyn Boulevard and to reimburse the TIF 3 Housing Fund for other adjacent acquisitions that may become part of this eligible housing activity. $1,459,040 remaining on the debt service  $425,691 available for other eligible housing activities.  The EDA issued a Pay-As-You-Go Note in the amount of  $2,424,199 to reimburse the developer for eligible site improvement and preparation costs with 97.5% of the annual tax increment revenue generated from this district to be used for debt service. This P.A.Y.G. Note is presently scheduled to be repaid on  August 1, 2016 and there are no other outstanding contractual obligations for this district. Tax increment received after the satisfaction of this  P.A.Y.G. Note is considered to be excess tax increment and is required to be returned to Hennepin County for redistribution to the City, County, and School District. The TIF 4 Tax Increment Financing Plan requires the early  decertification of the District when its contractual obligations have been satisfied. It is projected that the remaining life of the district has the  potential to generate $1,875,633 in additional tax increment. BES UILDINGLEVATIONOFENIOR H OUSING BI UDGETSSUES The use of tax increment revenue from TIF District No. 4 for  the land acquisition costs associated with the Brooklyn Boulevard Affordable Senior Housing Project in lieu of Tax Increment District No. 3 Housing Funds provides the EDA with greater flexibility and opportunities to achieve the community’s housing and redevelopment goals. The EDA does have the option to decertify this district early  which would result in the following: Hennepin County would return approx. $80,000 of the Excess  Increment Collected in 2016 to the City. The TIF 4 captured tax capacity (262,444) would be added to the  City’s overall base tax capacity. (21,599,516 used to calculate the 2016 levy, approx.. 1.2% increase to this base value) R: ECOMMENDATION Motion to adopt Resolution Approving an  Administrative Amendment to Budget for Tax Increment Financing Plan for Tax Increment Financing District No. 4 in Connection with Pooling for Affordable Housing. EDA Agenda Item No. 4c I1flY'U V V k'J LU DkTA (0) UhI i1BI'A I DATE: February 8, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development jE SUBJECT: Resolution Authorizing Preparation of a Final Development Agreement Related to the Development of the Opportunity Site. Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Authorizing Preparation of a Final Development Agreement Related to the Development of the Opportunity Site. Background: On September 14, 2015, the City Council/EDA Work Session included a discussion on a preliminary development agreement (Contract for Exclusive Negotiations with Sand Development LLC) for the development of a market rate apartment and commercial Planned Unit Development within the southern portion of the Opportunity Site. The majority consensus of the City Council/EDA was to move forward with the development plan. On October 12, 2015, the EDA adopted Resolution No. 2015-22, a Resolution Approving Agreements Related to the Development of the Opportunity Site. On January 25, 2016, the City Council/EDA Work Session included a review of the Conceptual Master Plan illustrating the conceptual development of the southern 32 acres of the Opportunity site for the phased development of seven apartment buildings, comprising a total of 746 market rate apartment units; a two acre commons area with pool & activity building; a 50,000 sf. performing arts center with structure parking providing 160 stalls; public and private utility and street improvements to serve the development. The consensus of the City Council/EDA was that this Conceptual Master Plan provided by Sand Development and Solution Blue met the City's vision for the redevelopment of its 32 acres within the southern portion of the Opportunity Site and satisfactorily addressed the provisions of the Preliminary Development Agreement necessary to proceed with the preparation of a Final Development Agreement. Attached for your reference is a copy of the Conceptual Master Plan and a staff memo presented at the January 25th Work Session. Preliminary Development Agreement (Contract for Exclusive Negotiations) The Preliminary Development Agreement (Contract for Exclusive Negotiations) identified the roles and responsibilities of the EDA as the Master Developer of the Opportunity Site; Sand Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust MJI I Dk'A (I) hI WJ'A I Development, LLC as the Redeveloper (builder and manager) of the residential portion of the site; and the following preliminary development tasks to be completed before proceeding with a final development agreement: 1.The EDA finds the design schemes and planned improvements developed by Sand Development meet the City's vision for the redevelopment of the Opportunity Site. 2.The necessary findings and assurances that the project is feasible and marketable are made by Sand Development. 3. The EDA approves the necessary infrastructure improvements and determines that they are economically feasible to be funded through a Tax Increment Bond. Preparation of a Final Development Agreement The development issues that were identified in the Preliminary Development Agreement to be addressed within the Final Development Agreement include the following: a.Duration of the Contract b.Terms and Price of the Land Acquisition c.Plans and Schedule of Site Preparation Improvements to be completed by the EDA d.Plans and Schedule for the Public Improvements to be completed by the EDA e.Schedule for the Conveyance of Buildable Lots and the Redevelopers Schedule For Construction of the Private Improvements and Residential Portion of the PUD f.Affordability Requirements g.City Review and Approval Rights (Environmental Assessment Worksheet, Residential Planned Unit Development, Platting, and Site Plans) h.Other Financial Assistance that may be required to complete the improvements. With respect to these development issues, the following comments are intended to provide the EDA with insight into the negotiations with Sand Development and the drafting of provisions within the Final Development Agreement: Duration of the Contract It is projected that the project will be built in three or four phases over the next 8-10 years. The negotiations will focus on the percentage of occupied units necessary to proceed with the next phase of the development. Terms and Price of the Land Acquisition The proposed development concept provides for the EDA to retain ownership of all lots until the developer has obtained site plan approval, approved construction plans, and necessary financing to complete the building & site improvements. The lot price has been determined to be one dollar with the EDA retaining the Tax Increment generated from the development during the life of the tax increment district. Plans and Schedule of Site Preparation Improvements to be completed by the EDA The negotiations will address the site grading and improvements for the lots proposed to be conveyed with the 1st phase of the development and the interim improvements planned for Mission: Ensuring an attractive, clean, safe, inclusive community that ellll(IUCeS the quality of life for all people and preserves the public trust I ai tk'A LA F9 11 (I) iIPISJh!1I the lots proposed to be developed in subsequent phases. Plans and Schedule for the Public Improvements to be completed by the EDA As part of the PUD and Platting process, the EDA will have plans and specifications prepared for all of the public street improvements (extension of Earle Brown Drive), municipal water and sanitary sewer lateral lines to serve the development, storm sewer and storm water management plans for the development. The EDA will then proceed with the public advertisement of bid, financing and awarding of contracts to complete the necessary public improvements. Schedule for the Conveyance of Buildable Lots and the Redevelopers Schedule for Construction of the Private Improvements and Residential Portion of the PUD The negotiations with the developer will identify a schedule for the development of the apartment buildings and private improvements to be completed with each phase and strategize opportunities to enhance the overall project. The schedule for the conveyance of buildable lots will directly relate to the construction schedule of the individual lots. Affordability Requirements The funding used by the EDA to acquire this property and the proposed Tax Increment Financing District do not include an affordability requirement. City Review and Approval Rights (Environmental Assessment Worksheet, Residential Planned Unit Development, Platting, and Site Plans) The development agreement will recognize the above approvals necessary for this redevelopment project. The EDA will be the applicant for all of these entitlements, with the exception of the individual site plans which Sand Development will be the applicant. Other Financial Assistance that may be required to complete the improvements The preliminary projections of the revenue from the proposed tax increment district are sufficient to complete the public improvements of the development and the opportunity to consider other enhancements to the attractiveness and market receptiveness of the development. The EDA does reserve the option of seeking partnerships with other governmental units and agencies to complement the redevelopment of this area. Budget Issues: The initial development costs for planning, engineering, and legal fees are being funded by Tax Increment District No. 3. The planned improvement costs for this development are part of the financial planning and budgeting associated with the creation of Redevelopment Tax Increment Financing District that is scheduled to be created at the March 28, 2016 City Council and EDA meetings. Strategic Priorities: o Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive community that enhancesces (lie quality of life for all people and preserves the public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION AUTHORIZING PREPARATION OF A FINAL DEVELOPMENT AGREEMENT RELATED TO THE DEVELOPMENT OF THE OPPORTUNITY SITE WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota ("EDA") is working, in accordance with the strategic plan for the City of Brooklyn Center, to redevelop the former Brookdale Square and Brookdale Ford sites, which are now owned by the EDA (the "Opportunity Site"); and WHEREAS, the EDA is overseeing the development of the Opportunity Site and Sand Development, LLC, 366 South Tenth Avenue, Waite Park, Minnesota 56387 ("Redeveloper") is proposing to redevelop the southern portion of the Opportunity Site; and WHEREAS, at its October 12, 2015 meeting, the EDA adopted Resolution No. 2015-22 authorized entering into a Preliminary Development Agreement with the Redeveloper to set out certain responsibilities related to developing preliminary plans and determining feasibility for redeveloping the Opportunity Site and authorized hiring Solution Blue, Inc., 318 Cedar Street, St. Paul, MN 55101 to conduct the work to be performed by the EDA under the Preliminary Development Agreement; and • WHEREAS, the parties have substantially completed their work under the Preliminary Development Agreement and a concept and vision for the phased development of a market rate apartment development ("Apartment Development") within the southern portion of the Opportunity Site was presented to the EDA at its January 25, 2016 work session; and WHEREAS, the proposed Apartment Development meets the City of Brooklyn Center's vision for redevelopment of the Opportunity Site and the next step in the process is for the parties to negotiate and enter into a Final Development Agreement to facilitate construction of the Apartment Development; and WHEREAS, the understandings of the parties regarding the development that would be addressed in the Final Development Agreement include the following: a.Duration of the contract; b.Terms and price of the land acquisition costs; c.Plans and schedule of site preparation improvement to be completed by the EDA; d.Plans and schedule for the public improvements to be completed by the EDA; e.Schedule for the conveyance of buildable lots and the Redeveloper's schedule for construction of the private improvements and residential portion of the planned unit development; f.Affordability requirements; g.City review and approval rights (environmental assessment worksheet, residential planned unit development, platting, and site plans); and h.Other financial assistance that may be required to complete the improvements. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of Brooklyn Center, Minnesota as follows: 1.The EDA hereby authorizes the preparation of a Final Development Agreement with the Redeveloper concerning the Apartment Development within the Opportunity Site that reflects the general terms and understandings contained within this Resolution. 2.The negotiated Final Development Agreement must be submitted to the EDA for review and final approval. February 8, 2016 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. MEMORANDUM COUNCFL WORK SESSI{ON DATE: January 25, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development SUBJECT: Review of the conceptual development and vision proposed by Sand Development for a market rate apartment development within the southern portion of the Opportunity Site. Recommendation: It is recommended that the City Council consider providing direction to staff regarding the conceptual development and vision proposed by Sand Development for a market rate apartment development within the southern portion of the Opportunity Site. Background: On September 14, 2015, the City Council/EDA Work Session included a discussion on a preliminary development agreement (Contract for Exclusive Negotiations with Sand Development LLC) for the development of a market rate apartment and commercial Planned Unit Development within the southern portion of the Opportunity Site. The majority consensus of the City Council/EDA was to move forward with the development plan. On October 12, 2015, the EDA adopted Resolution No. 2015-22, a Resolution Approving Agreements Related to the Development of the Opportunity Site. Attached for your reference is a copy of Resolution 2015-22, a copy of the Preliminary Development Agreement, and the October 12th staff memorandum on this matter. Preliminary Development Agreement (Contract for Exclusive Negotiations) The Preliminary Development Agreement (Contract for Exclusive Negotiations) identified the roles and responsibilities of the EDA as the Master Developer of the Opportunity Site and Sand Development, LLC. as the Redeveloper (builder and manager) of the residential portion of the site. The Preliminary Development Agreement provided a 90 day period of time for each party to complete their preliminary development tasks, at which time the following actions needed to occur as a prerequisite to proceeding with a final development agreement: 1. The EDA finds the design schemes and planned improvements developed by Sand Development for the residential portion of the development meets the City's vision for the redevelopment of the Opportunity Site. Mission: Ensiiii;ig an attractive, clean, safe, inclusive co!nl000it3' that enhances the quality of life for all people aiulpieserves the public trust k'A I aI.YA (I] 1'Il I1Ik' iII1IJ[iJ I 'LI) 1 J *i (iJl Enclosed is a copy of the Conceptual Master Plan prepared by Solution Blue which illustrates Sand Developments vision of developing a multi phased market rate apartment development of 746 apartment units. The design concept is consistent with the guidelines established for the City's participation in Hennepin County's Active Living Program and the adopted Complete Streets Policy (June 24, 2013). Additionally, the concepts are consistent with the Active Living Guidelines for the Opportunity Site (October 12, 2015). 2.The feasibility analysis provides Sand Development with the necessary findings and assurances that the project is feasible and marketable. Sand Development has indicated that their market analysis supports the first phase of this development to include two buildings (308 units) and the central commons area. 3.The EDA approves the necessary infrastructure improvements and determines that they are economically feasible to be funded through a Tax Increment Bond. The EDA is proceeding with establishing a Redevelopment Tax Increment Financing District that will fund the necessary infrastructure improvements. 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B: ACKGROUND On September 14, 2015,  the City Council/EDA Work Session included a discussion on a preliminary development agreement (Contract for Exclusive Negotiations with Sand Development LLC) for the development of a market rate apartment and commercial Planned Unit Development within the southern portion of the Opportunity Site. On October 12, 2015, the EDA adopted Resolution No.  2015-22, a Resolution Approving Agreements Related to the Development of the Opportunity Site. The Preliminary Development Agreement (Contract  for Exclusive Negotiations) identified the roles and responsibilities of the EDA as the Master Developer of the Opportunity Site; Sand Development, LLC as the Redeveloper (builder and manager) of the residential portion of the site; and the following preliminary development tasks to be completed before proceeding with a final development agreement: The EDA finds the design schemes and planned  improvements developed by Sand Development meet the City’s vision for the redevelopment of the Opportunity Site. The necessary findings and assurances that the project is  feasible and marketable are made by Sand Development. The EDA approves the necessary infrastructure  improvements and determines that they are economically feasible to be funded through a Tax Increment Bond. On January 25, 2016, the City Council/EDA  reviewed the Conceptual Master Plan illustrating the conceptual development of the southern 32 acres of the Opportunity site for the phased development of seven apartment buildings, comprising a total of 746 market rate apartment units; a two acre commons area with pool & activity building; a 50,000 sf. performing arts center with structure parking providing 160 stalls; public and private utility and street improvements to serve the development. PF REPARATIONOFAINAL DA EVELOPMENTGREEMENT The development issues to be addressed within the Final Development Agreement include the following: Duration of the Contract  It is projected that the project will be built in three or four phases over the next 8- 10 years.The negotiations will focus on the percentage of occupied units necessary to proceed with the next phase of the development. Terms and Price of the Land Acquisition  The proposed development concept provides for the EDA to retain ownership of all lots until the developer has obtained site plan approval, approved construction plans, and necessary financing to complete the building & site improvements. The lot price has been determined to be one dollar with the EDA retaining the Tax Increment generated from the development during the life of the tax increment district. Plans and Schedule of Site Preparation Improvements to be completed by the  EDA The negotiations will address the site grading and improvements for the lots proposed to be conveyed with the 1phase of the development and the interim st improvements planned for the lots proposed to be developed in subsequent phases. Plans and Schedule for the Public Improvements to be completed by the  EDA As part of the PUD and Platting process, the EDA will have plans and specifications prepared for all of the public street improvements (extension of Earle Brown Drive), municipal water and sanitary sewer lateral lines to serve the development, storm sewer and storm water management plans for the development. The EDA will then proceed with the public advertisement of bid, financing and awarding of contracts to complete the necessary public improvements. Schedule for the Conveyance of Buildable Lots and the Redevelopers  Schedule for Construction of the Private Improvements and Residential Portion of the PUD The negotiations with the developer will identify a schedule for the development of the apartment buildings and private improvements to be completed with each phase and strategize opportunities to enhance the overall project.The schedule for the conveyance of buildable lots will directly relate to the construction schedule of the individual lots. Affordability Requirements  The funding used by the EDA to acquire this property and the proposed Tax Increment Financing District do not include an affordability requirement. City Review and Approval Rights (Environmental  Assessment Worksheet, Residential Planned Unit Development, Platting, and Site Plans) The development agreement will recognize the above approvals necessary for this redevelopment project.The EDA will be the applicant for all of these entitlements, with the exception of the individual site plans which Sand Development will be the applicant. Other Financial Assistance that may be required to  complete the improvements The preliminary projections of the revenue from the proposed tax increment district are sufficient to complete the public improvements of the development and the opportunity to consider other enhancements to the attractiveness and market receptiveness of the development.The EDA does reserve the option of seeking partnerships with other governmental units and agencies to complement the redevelopment of this area. BI: UDGETSSUES The initial development costs for planning,  engineering, and legal fees are being funded by Tax Increment District No. 3. The planned improvement costs for this  development are part of the financial planning and budgeting associated with the creation of Redevelopment Tax Increment Financing District that is scheduled to be created at the March 28, 2016 City Council and EDA meetings. R: ECOMMENDATION It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Authorizing Preparation of a Final Development Agreement Related to the Development of the Opportunity Site.