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06-20-23 HRA Agenda June 20, 2023 — 6:30 PM Golden Valley City Hall Hybrid Meeting 1.Call to Order 1A.Roll Call 2.Approval of Agenda 3.Consent Agenda Approval of Consent Agenda - All items listed under this heading are considered to be routine and will be enacted by one motion. There will be no discussion of these items unless a Commission Member so requests in which event the item will be removed from the general order of business and considered in its normal sequence on the agenda. 3A.Approval of HRA Minutes: 3A.1.Minutes from the Regular HRA Meeting of March 21, 2023 3A.2.Minutes from the Special HRA Meeting of May 16, 2023 3B.Receive and File the Second Quarter Financial Reports 4.Public Hearing 5.Old Business 6.New Business 6A.Adopt HRA Resolution No. 23-06 Approving a Tax Increment Financing Plan for Tax Increment Financing District within Valley Square Redevelopment Project Area HRA REGULAR MEETING AGENDA Housing and Redevelopment Authority meetings are being conducted in a hybrid format with in- person and remote options for attending, participating, and commenting. The public can make statements in this meeting during public comment sections, including the public forum beginning at 6:20 pm. Remote Attendance/Comment Options: Members of the public may attend this meeting by watching on cable channel 16, streaming on CCXmedia.org, streaming via Webex, or by calling 1-415-655-0001 and entering access code 2464 595 2288 and webinar password 1234. Members of the public wishing to address the Council remotely have two options: Via web stream - Stream via Webex and use the ‘raise hand’ feature during public comment sections. Via phone - Call 1-415-655-0001 and enter meeting code 2464 595 2288 and webinar password 1234. Press *3 to raise your hand during public comment sections. City of Golden Valley HRA Regular Meeting June 20, 2023 — 6:30 PM 1 6B.Approve Contract for Private Development with 640 Golden Valley, LLC (Sentinel Development) 7.Adjournment City of Golden Valley HRA Regular Meeting June 20, 2023 — 6:30 PM 2 March 21, 2023 —6:30 PM Council Chambers Hybrid Meeting HRA REGULAR MEETING MINUTES Housing and Redevelopment Authority meetings are being conducted in a hybrid format with in- person and remote options for attending, participating, and commenting. The public can make statements in this meeting during public comment sections, including the public forum beginning at 6:20 pm. 1.Call to Order The meeting was called to order at 6:31 pm by Housing and Redevelopment Authority Chair Rosenquist. 1A. Roll Call Commissioners present:Chair Maurice Harris, Commissioners Shep Harris, Denise La Mere- Anderson, Gillian Rosenquist, and Kimberly Sanberg Staff present: HRA Director Cruikshank, HRA Attorney Cisneros, Housing and Economic Development Manager Shoquist, Planning Manager Zimmerman, Planner Campbell, and City Clerk Schyma 1B. Election of Officers Motion by Sanberg, Second by S. Harris to approve a Chairperson Maurice Harris and Vice Chairperson Rosenquist for 2023. Motion carried 5-0. Chair Rosenquist turned the gavel and meeting over to Chair Maurice Harris. 2.Approval of Agenda Motion by Rosenquist, Second by Sanberg to approve the agenda as submitted. Motion carried 5-0. 3.Consent Agenda Motion by S. Harris, Second by Rosenquist to approve the Consent Agenda as submitted. Motion carried 5-0. 3 3A.Approval of HRA Minutes: 3A.1. Meeting Minutes from 2022 – March 15, June 21, August 16 (Special Meeting), September 20, and December 6 3A.2. Special Meeting Minutes from February 21, 2023 3B. Receive and File the First Quarter Financial Reports 3C. Approve 2023 Public Land Inventory 4.Public Hearing 5.Old Business 6.New Business 7.Adjournment The meeting was adjourned by unanimous consent at 6:38 pm. ________________________________ Maurice Harris, Chair ATTEST: _________________________ Theresa Schyma, City Clerk 4 May 16, 2023 —6:30 PM Golden Valley City Hall Hybrid Meeting HRA SPECIAL MEETING MINUTES Special Housing and Redevelopment Authority meetings are being conducted in a hybrid format with in-person and remote options for attending. The special meeting was called to order at 6:38 pm by Housing and Redevelopment Authority Chair Maurice Harris. Special Meeting Item(s): 1.Roll Call Commissioners present:Chair Maurice Harris; Commissioners Denise La Mere-Anderson, Shep Harris, Gillian Rosenquist, and Kimberly Sanberg Staff present: HRA Director Cruikshank, HRA Attorney Cisneros, Housing and Economic Development Manager Shoquist, and City Clerk Schyma 2.Adopt HRA Resolution No. 23-005 Approving Tax Increment Financing Term Sheet for Sentinel Development at 8200 Golden Valley Road and 8240 Golden Valley Drive Housing and Economic Development Manager Shoquist discussed the staff report and what projects the tax increment financing (TIF) proposal would apply to. Motion by S. Harris, Second by Sanberg to Adopt HRA Resolution No. 23-005 to Approve Tax Increment Financing Term Sheet for Sentinel Development at 8200 Golden Valley Road and 8240 Golden Valley Drive. Motion carried 5-0 with unanimous approval.(In Favor: M. Harris, S. Harris, La Mere-Anderson, Rosenquist, Sanberg. Opposed: N/A) 3.Adjournment The HRA special meeting was adjourned by unanimous consent at 6:45 p.m. Maurice Harris, Chair ATTEST: Theresa Schyma, City Clerk 5 EXECUTIVE SUMMARY Administrative Services 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Meeting June 20, 2023 Agenda Item 3B. Receive and File the Second Quarter Financial Reports Prepared By Sue Virnig, Finance Director Summary The following quarterly reports are attached. Financial or Budget Considerations Expenditures are shown on the following financials. The city check register would include any pay-go- note and expenditures. The Housing Fund includes salaries/benefits and expenses outlined in the HRA budget and are for the Housing and Economic Development Manager. Legal Considerations N/A Equity Considerations N/A Recommended Action Motion to receive and file second quarterly 2023 financial reports. Supporting Documents HRA Quarterly Financial Reports-June 6 HRA Of Golden Valley 2023 2ndt Quarter Financial Report 9000 9190 9300 9350 9400 9250 General Fund Housing Hwy 55/Cornerstone Winnetka North West TIF (4)Med Lk Rd Wirth #3 Cash Balance @ 03/16/2023 $135,902.41 $32,738.59 $614,198.89 $29,268.14 $1,177,371.01 $9,339.01 Add: Tax Levy (July, Dec, & Jan) Tax Increment (July, Dec & Jan) Receipts: Less: Deposit Return (3,514.00) Interfund Loan Salaries/Expenses (36,702.00) Debt Service Payment Pay Go Note $0.00 $0.00 $0.00 $0.00 Expenditures: Cash Balance @06/15/2023 $132,388.41 ($3,963.41)$614,198.89 $29,268.14 $1,177,371.01 $9,339.01 Payments for TIF notes will be made at the end of July. Capital Proejcts Special Revenue 7 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Meeting June 20, 2023 Agenda Item 6A. Adopt HRA Resolution No. 23-06 Approving a Tax Increment Financing Plan for Tax Increment Financing District within Valley Square Redevelopment Project Area Prepared By Cherie Shoquist, Housing and Economic Development Manager Alma Flores, Community Development Director Summary The HRA is requested to consider adopting, and to recommend the City Council consider adopting, the proposed Tax Increment Financing Plan for (Renovation and Renewal) Tax Increment Financing District within Valley Square Redevelopment Project Area to assist with financing a portion of the costs associated with the development of a multifamily rental project. The 303 unit project will provide 46 units affordable to occupants with incomes no greater than 60% of the area median income for 20 years under the City’s Mixed Income Housing Policy. The units are a mix of studio, 1, 2, and 3 bedroom apartments. The building will be wrapped around a 450 space parking ramp. The building will be five to six stories in height with ground level walk up units. Amenities will include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, and guest suites. In addition to the multifamily development, a new commercial bank building will be constructed on the southwest corner of the site. Minnesota Statutes, Section 469.001 through 469.047 and Minnesota Statutes, Section 469. 174 through 469. 1794, require the HRA and the City to consider the findings below: The TIF District qualifies as a renovation and renewal district; The TIF Plan conforms to general plans for development of the City as a whole; and The objectives of encouraging development and redevelopment within the Valley Square Redevelopment Project Area will be advanced by adoption of the TIF Plan. Multiple steps need to be followed in order to establish a tax increment financing district, including notifications to the County and School District provided on May 19, 2023, publication of a public hearing notice in the Sun Post June 8, 2023, and the holding of a public hearing June 20, 2023. The TIF Project Area and the TIF District were found consistent with the City's Comprehensive Plan by the Planning Commission on May 22, 2023. The TIF District was found to qualify as a renovation and renewal district based on the report prepared by LHB dated March 31, 2023. LHB found that the parcels consisting of 100 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar 8 structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard and 50 percent of the buildings were determined to be in need of substantial renovation or clearance to remove existing conditions. LHB also found that the substandard buildings are reasonably distributed. A TIF District must be established within a Project Area. The boundaries of the Tax Increment Financing Renewal and Redevelopment District are within the Valley Square Redevelopment Project Area. Tax increment revenues of the TIF District are generated from incremental growth within the district and are allowed to be spent within the boundaries of the TIF District and Project Area. There are significant costs associated with acquisition of the property and development of the project, including maintaining long-term affordability of the 46 housing units. The use of tax increment revenues to finance eligible costs associated with development of the project site may include acquisition, site improvements, parking, utilities and other necessary housing and public improvements, as well as related administrative expenses. Demolition of the existing blighted building is expected to start immediately after closing on the property in July 2023 and construction of the Wells Fargo Bank building will be substantially complete on June 30, 2024. The multifamily development will commence construction on July 1, 2024 and construction will be substantially complete on or around June 30, 2026. The project is expected to be fully constructed and assessed in 2026 for revenue in 2027. Financial or Budget Considerations Tax Increment Financing Request On September 6, 2022 the Developer, 640 Golden Valley, LLC submitted an application for Tax Increment Financing to the City. The Developer has estimated the total development cost applicable to the bank portion of the development is $4,869,480 and the multi-family building is $103,964,485, bringing the total cost of the combined development to $108,833,965. The Developer requests Tax Increment Financing to assist in providing 46 affordable units, acquiring the sites, demolishing the substandard structure, completing public improvements, and other eligible activities. The HRA would invest in the project by approving a Renewal and Renovation Tax Increment Financing District and a TIF PAY-AS-YOU-GO note with a principal amount of up to $11,243,000, generated by the Project based on an interest rate of 6%. All of the assistance being offered to the developer is related to the residential portion of the project. The Developer will be responsible for initially incurring the $11,243,000 in TIF eligible expenditures, and the PAYGO note will be payable from 90% of the tax increment generated from the Multi-Family Building and Wells Fargo Building, on a PAY-AS-YOU-GO basis until the principal amount of the TIF has been satisfied as determined by the HRA, or the District has reached its statutory maximum duration. The maximum duration of TIF District is 15 years from the first payment of increment received from Hennepin County. Legal Considerations The Tax Increment Financing Plan for Tax Increment Financing District was prepared by Baker Tilly, the City’s Municipal Advisor and reviewed by the City Attorney and Kennedy & Graven, the City’s TIF Counsel. 9 Equity Considerations This development meets the City’s goals to preserve and promote economically diverse housing options in our community by creating high quality housing in Golden Valley for households with a variety of income levels, ages, and sizes. Under Fair Housing Law, future residents will not face housing discrimination. The law is intended to prevent discrimination of the protected classes--race, color, creed, religion, national origin, sex, marital status, disability, public assistance, sexual orientation, gender identity or familial status. Lastly, by linking this incentive to affordable housing development provides much needed housing to economically disadvantaged people and households and provides an opportunity for the mixing of incomes to further future residents’ access to social networks and opportunities. Recommended Action Motion to Adopt HRA Resolution No. 23-06 Approving a Tax Increment Financing Plan for Tax Increment Financing District within Valley Square Redevelopment Project Area. Supporting Documents 06-20-23 GVHRA TIF Plan 06-20-23 GVHRA TIF Memo HRA Resolution No. 23-06 - TIF Plan 10 City of Golden Valley, Minnesota Golden Valley Housing and Redevelopment Authority Tax Increment Financing Plan for Tax Increment Financing (Renewal and Renovation) District Within Valley Square Redevelopment Project Area (Golden Valley Road & Wisconsin Ave Renewal and Redevelopment Project) Dated: May 16, 2023 (Draft) Public Hearing: June 20, 2023 Prepared by: BAKER TILLY MUNICIPAL ADVISORS, LLC 30 East Seventh Street, Suite 3025 St. Paul, MN 55101-2887 (651) 223-3000 WWW.BAKERTILLY.COM 11 TABLE OF CONTENTS Section Page(s) A. Definitions .............................................................................................................................................................. 1 B. Statutory Authorization .......................................................................................................................................... 1 C. Statement of Need and Public Purpose ................................................................................................................ 1 D. Statement of Objectives ........................................................................................................................................ 1 E. Designation of Tax Increment Financing District as a Renewal and Renovation District ...................................... 2 F. Duration of the TIF District ..................................................................................................................................... 3 G. Property to be Included in the TIF District ............................................................................................................. 3 H. Property to be Acquired in the TIF District ............................................................................................................. 3 I. Specific Development Expected to Occur Within the TIF District .......................................................................... 3 J. Findings and Need for Tax Increment Financing ................................................................................................... 4 K. Estimated Public Costs .......................................................................................................................................... 5 L. Estimated Sources of Revenue ............................................................................................................................. 6 M. Estimated Amount of Bonded Indebtedness ......................................................................................................... 6 N. Original Net Tax Capacity ...................................................................................................................................... 6 O. Original Local Tax Rate ......................................................................................................................................... 7 P. Projected Retained Captured Net Tax Capacity and Projected Tax Increment ..................................................... 7 Q. Use of Tax Increment ............................................................................................................................................ 8 R. Excess Tax Increment ........................................................................................................................................... 8 S. Tax Increment Pooling and the Five Year Rule ..................................................................................................... 9 T. Limitation on Administrative Expenses .................................................................................................................. 9 U. Limitation on Property Not Subject to Improvements - Four Year Rule ............................................................... 10 V. Estimated Impact on Other Taxing Jurisdictions ................................................................................................. 10 W. Prior Planned Improvements ............................................................................................................................... 10 X. Development Agreements ................................................................................................................................... 11 Y. Assessment Agreements ..................................................................................................................................... 11 Z. Modifications of the Tax Increment Financing Plan ............................................................................................. 11 AA. Administration of the Tax Increment Financing Plan ........................................................................................... 11 AB. Filing TIF Plan, Financial Reporting and Disclosure Requirements .................................................................... 12 Map of the Tax Increment Financing District within Project Area ............................................................ EXHIBIT I Assumptions Report ............................................................................................................................... EXHIBIT II Projected Tax Increment Report ............................................................................................................ EXHIBIT III Estimated Impact on Other Taxing Jurisdictions Report ....................................................................... EXHIBIT IV Market Value Analysis Report ............................................................................................................... EXHIBIT V Pay-As-You-Go Note Report ................................................................................................................ EXHIBIT VI Redevelopment District Findings ..........................................................................................................EXHIBIT VII 12 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 1 Section A Definitions The terms defined in this section have the meanings given herein, unless the context in which they are used indicates a different meaning: "Authority" means the Housing and Redevelopment Authority in and for the City of Golden Valley. "City" means the City of Golden Valley, Minnesota; also referred to as a "Municipality". "City Council" means the City Council of Golden Valley; also referred to as the ‘Governing Body”. "County" means Hennepin County, Minnesota. “HRA Act” means Minnesota Statutes, Sections 469.001 through 469.047, both inclusive. "Redevelopment Project Area" means the Valley Square Redevelopment Project Area in the City, which is described in the corresponding Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the Valley Square Project Area. "Project Area" means the geographic area of the Redevelopment Project Area. "School District" means Independent School District No. 270, Minnesota. "State" means the State of Minnesota. "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1799, both inclusive. "TIF District" means Tax Increment Financing (Renewal and Renovation) Golden Valley Road and Wisconsin Ave. District. "TIF Plan" means the tax increment financing plan for the TIF District (this document). Section B Statutory Authorization The HRA Act Authorizes the Authority to exercise all the powers relating to a housing and redevelopment authority granted under Minnesota Statutes, Sections 469.001 to 469.047, or other law. It is the intention of the Authority, that the Authority shall have and enjoy with respect to the Valley Square Redevelopment Project Area the full range of powers and duties conferred upon the Authority pursuant to the HRA Act, the TIF Act, municipal housing and redevelopment authority laws, and such other legal authority as the Authority may have or enjoy from time to time. Within the City areas exist where public involvement is necessary to cause redevelopment to occur. The Authority has certain statutory powers pursuant to the TIF Act to assist in financing eligible activities related to these redevelopment needs. Section C Statement of Need and Public Purpose See “Justification for Redevelopment Area” on page 4 of the Redevelopment Plan for the Project Area. Section D Statement of Objectives See “Redevelopment Goals and Objectives” on pages 5-6 of the of the Redevelopment Plan for the Project Area. 13 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 2 Section E Designation of Tax Increment Financing District as a Renewal and Renovation District Renewal and Renovation districts are a type of tax increment financing district in which the following conditions exists: 1) i) parcels comprising at least 70% of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; ii) 20 percent of the buildings are structurally substandard; and iii) 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community. 2) the conditions described in clause (1) are reasonably distributed throughout the geographic area of the district. For purposes of determining whether a building is structurally substandard, whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures, or whether noncontiguous areas qualify, the provisions of section 469.174, subdivision 10, paragraphs (b) through (f) of the TIF Act, apply. For districts consisting of two more noncontiguous areas, each area must individually qualify under the provisions listed above, as well as the entire area must also qualify as a whole. The TIF District qualifies as a renewal and renovation district in that it meets all of the criteria listed in (1) and (2) above. An executive summary of a report prepared by LHB Corporation that details the qualifications is included in Exhibit VII. A copy of the entire report with supporting facts and documentation for this determination is on file with the Authority and is available to the public upon request. The full report will be retained by the Authority for the life of the TIF District. "Structurally substandard" is defined as buildings containing defects or deficiencies in structural elements, essential utilities and facilities, light and ventilation, fire protection (including egress), layout and condition of interior partitions, or similar factors. Generally, a building is not structurally substandard if it is in compliance with the building code applicable to a new building, or could be modified to satisfy the existing code at a cost of less than 15% of the cost of constructing a new structure of the same size and type. A city may not find that a building is structurally substandard without an interior inspection, unless it cannot gain access to the property and there exists evidence which supports the structurally substandard finding. Such evidence includes recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained. A parcel is deemed to be occupied by a structurally substandard building if the following conditions are met: (1) the parcel was occupied by a substandard building within three years of the filing of the request for certification of the parcel as part of the district; (2) the demolition or removal of the substandard building was performed or financed by the Authority, or was performed by a developer under a development agreement with the Authority, (3) the Authority found by resolution before such demolition or removal occurred that the building was structurally substandard and that the Authority intended to include the parcel in the TIF district, and (4) the Authority notifies the county auditor that the original tax capacity of the parcel must be adjusted upon filing the request for certification of the tax capacity of the parcel as part of a district. In the case of (4) above, the County Auditor shall certify the original net tax capacity of the parcel to be the greater of (a) the current tax capacity of the parcel, or (b) a computed tax capacity of the parcel using the estimated market 14 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 3 value of the parcel for the year in which the demolition or removal occurred, and the appropriate classification rate(s) for the current year. A parcel is deemed "occupied" if at least 15% of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots; or other similar structures. At least 90 percent of the tax increment from a renewal and renovation district must be used to finance the cost of correcting conditions that allow designation as a redevelopment district. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of land, removal of hazardous substances or remediation necessary to develop the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the Authority may be included in the qualifying costs. Section F Duration of the TIF District Renewal and Renovation districts may remain in existence 15 years from the date of receipt of the first tax increment. The Authority anticipates that the TIF District will remain in existence the maximum duration allowed by law (projected to be through the year 2042). Modifications of this plan (see Section Z) shall not extend these limitations. All tax increments from taxes payable in the year the TIF District is decertified shall be paid to the Authority. The Authority has elected to delay receipt of increment for a period of four years; therefore, the anticipated first collection year will be 2027. The Authority reserves the right to allow the TIF District to remain in existence the maximum duration allowed by law (projected to be through the year 2042), and anticipates that the TIF District may be active for the maximum duration allowed (see Section P). However, the Authority will decertify the TIF District as early as possible should the projected increment be received in a shorter time period than originally projected. All tax increments from taxes payable in the year the TIF District is decertified shall be paid to the Authority. Section G Property to be Included in the TIF District The TIF District is an approximate 3.80-acre area of land located within the Project Area. A map showing the location of the TIF District is shown in Exhibit I. The boundaries and area encompassed by the TIF District are described below: Parcel Number* Legal Description* 31-118-21-14-0043 Lot 1 – Block 1 – VALLEY SQUARE 3RD ADDITION 31-118-21-14-0044 Lot 2 – Block 2 – VALLEY SQUARE 3RD ADDITION *The parcels within the District will be replatted as part of development. The parcel numbers and legal descriptions represent the property prior to replatting. The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent to the property described above. Section H Property to be Acquired in the TIF District The Authority may acquire and sell any or all of the property located within the TIF District; however, the Authority does not anticipate acquiring any such property at this time. Section I Specific Development Expected to Occur Within the TIF District The proposed project includes the redevelopment of a currently blighted site by the construction of a mixed-use development comprised of a 4,348 sq. ft. commercial building, a 303-unit apartment project, and a 450-parking space structured parking facility. Proposed to be constructed as a result of the apartment project are public improvements proposed for the area to include sidewalk and street improvements, street lighting relocation, and public utility improvements. Additionally, private improvement costs will be incurred associated with the redevelopment of the 15 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 4 site, including acquisition and demolition of obsolete and structurally substandard buildings, earthwork and onsite utility improvements, structured parking costs, and other eligible improvements associated with the project. These improvements are necessary to facilitate the redevelopment of the blighted site by removing costs prohibitive to the redevelopment of the Project Area. The Authority anticipates using tax increment revenues to finance a portion of the eligible public costs related to redevelopment of the Project Area. In addition, the Authority anticipates using available tax increment for related administrative expenses, pooling for affordable housing outside of the boundaries of the TIF District, and any other eligible expenditures associated with the redevelopment of the site. The Authority anticipates development commencing in 2023 for the commercial building portion of the project, and in 2024 for the apartment portion of the project. Completion of the project is anticipated for 2026. The TIF District’s first receipt of increment has been elected to be delayed until taxes payable 2027. Section J Findings and Need for Tax Increment Financing In establishing the TIF District, the Authority makes the following findings: (1) The TIF District qualifies as a renewal and renovation district; The City of Golden Valley retained the services of LHB to inspect and evaluate property within the proposed Tax Increment Financing District to be established by the Authority. The purpose of the evaluation was to determine if the proposed district met the statutory requirements for coverage and if the buildings met the qualifications required for a Renewal and Renovation District. These findings are described more completely in Section E and Exhibit VII. (2) The proposed development, in the opinion of the Authority, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the TIF Plan. Factual basis: Proposed development not expected to occur: The proposed redevelopment consists of the acquisition and demolition/renovation of substandard buildings, and the undertaking of necessary public and private improvements within the proposed TIF District boundaries in the City of Golden Valley for development of a new mixed-use development. The cost of acquisition and demolition/renovation of the existing buildings, private earthwork and utility improvement, construction of structure parking, and the cost of the public improvements, make the total cost of this effort significantly higher. A key component to the redevelopment is the reimbursement of TIF eligible expenses. The developer has indicated they would not undertake the proposed redevelopment without the financial assistance due to the increase cost associated with the redevelopment of the site. Based on a detailed financial review of the anticipated project costs and operating revenues of the project without assistance, the Authority has no reason to expect that significant reinvestment in the site would occur without assistance similar to that provided in this plan. Therefore, the Authority has no reason to believe the redevelopment would occur but-for the use of tax increment assistance. 16 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 5 To summarize the basis for the Authority’s findings regarding alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd. 3(d), the Authority makes the following determinations: a. The Authority's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. b. If the proposed development to be assisted with tax increment occurs in the TIF District, the total increase in market value would be approximately $110,977,091, including the value of the building (See Exhibit II). c. The present value of tax increments from the TIF District for the maximum duration of the district permitted by the TIF Plan is estimated to be $13,131,793 (See Exhibit V) d. Even if some development other than the proposed development were to occur, the Authority finds that no alternative would occur that would produce a market value increase greater than $97,845,298 (the amount in clause b less the amount in clause c) without tax increment assistance. (3) The TIF Plan will afford maximum opportunity, consistent with the sound needs of the Authority as a whole, for development of the Project Area by private enterprise. Factual basis: The anticipated redevelopment of the project site may include the construction of a new commercial building and a 303-unit apartment building, and the redevelopment of project area consistent with the City’s design goals. The redevelopment clearly meets the Authority’s housing and redevelopment goals of creating additional market and affordable housing; additionally, the redevelopment meets the Authority’s goal of the removal of blight. (4) The TIF Plan conforms to general plans for development of the City as a whole. Factual basis: The City Planning Commission has determined that the development proposed in the TIF Plan conforms to the City comprehensive plan. (5) The City does elect the method of tax increment computation set forth in Minnesota Statutes, Section 469.177, Subdivision 3(b); therefore, the original net tax capacity and the current net tax capacity shall be determined after the application of the fiscal disparity provisions (see method (b) in Section P). Section K Estimated Public Costs The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement from tax increments of the TIF District. Land/Building Acquisition $1,156,000 Public Improvements 1,015,000 Demolition, Site Improvements, and Structured Parking 9,072,000 Note Interest Payments 8,557,708 Administrative expenses 1,100,039 Pooling for Affordable Housing 1,100,039 Total $22,000,786 The Authority reserves the right to administratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. The estimated cost of 17 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 6 capitalized interest is included in the loan interest payment amount. The Authority reserves the right to spend available tax increment outside of the TIF District boundaries and within the Project Area. Section L Estimated Sources of Revenue Tax Increment revenue $22,000,786 Interest on invested funds - Bond proceeds - Loan proceeds - Grants - Other - Total $22,000,786 The Authority anticipates using future tax increments for reimbursement of public costs incurred from Section K. As increments are collected from the TIF District in future years, these taxes will be reserved by the Authority as reimbursement for public costs incurred, either through internal funding or general obligation or revenue debt. The Authority reserves the right to finance any or all public costs of the TIF District using pay-as-you-go assistance, internal funding, general obligation or revenue debt, or any other financing mechanism authorized by law. The Authority also reserves the right to use other sources of revenue legally applicable to the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues, federal or state funds, and investment income. Section M Estimated Amount of Bonded Indebtedness The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or in part with tax increment from the TIF District is $22,000,786. The City currently plans to finance the improvements and eligible reimbursable costs in the form of one or more pay-as-you-go revenue notes, but reserves the right to issue bonds in any form, including without limitation any interfund loan with interest not to exceed the maximum permitted under Section 469.178, subd. 7 of the TIF Act. Section N Original Net Tax Capacity The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the previous assessment year. For districts certified between July 1 and December 31, inclusive, this value is based on the current assessment year. The City intends to file the request for certification after June 30, 2022, but prior to July 1, 2023. Therefore, the original net tax capacity will be the net tax capacity as of January 2, 2022. The Estimated Market Value of all the land within the TIF District as of January 2, 2022, for taxes payable in 2023, is $4,394,000 and the original net tax capacity of the TIF District is $60,679. This assumes a portion of the property is reclassified to rental, and the remaining area continues to be classified commercial/industrial. Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as a result of: (1) changes in the tax-exempt status of property; (2) reductions or enlargements of the geographic area of the TIF District; (3) changes due to stipulation agreements or abatements; or (4) changes in property classification rates. 18 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 7 Section O Original Local Tax Rate The County Auditor shall also certify the original local tax rate of the TIF District. This rate shall be the sum of all local tax rates that apply to property in the TIF District. This rate shall be for the same taxes payable year as the original net tax capacity. In future years, the amount of tax increment generated by the TIF District will be calculated using the lesser of (a) the sum of the current local tax rates at that time or (b) the original local tax rate of the TIF District. As noted in Section M, the Authority intends to file the TIF District for certification after June 30, 2022 but prior to July 1, 2023; therefore, the Original Local Tax Rate will be the final rate that applies for taxes payable in 2023 which the County Auditor shall certify this amount as the Original Local Tax Rate. The sum of the final local tax rates that apply to property in the TIF District, for taxes levied in 2022 and payable in 2023, is 121.323% as shown below. 2022/2023 Taxing Jurisdiction Local Tax Rate City of Golden Valley 53.407% Hennepin County 34.542% ISD # 270 25.006% Other 8.368% Total 121.323% Section P Projected Retained Captured Net Tax Capacity and Projected Tax Increment The Authority anticipates that by December 31, 2025 the commercial building will be 100% completed and the apartment project will be 75% completed, creating an initial tax capacity for the TIF District of $775,574 as of January 2, 2026. The captured tax capacity as of that date is estimated to be $704,533 and the first-year of tax increment is estimated to be $854,761 payable in 2027. The first full year of increment is projected to be in $1,172,681 in taxes payable 2028. A complete schedule of estimated tax increment from the TIF District is shown in Exhibit III. The estimates shown in this TIF Plan assume that commercial class rates remain at 1.5% for the first $150,000 of estimated market value and 2.0% of the market value above $150,000; and that rental class rates remain at 1.25%. The projections also assume a 2.5% annual increase in market values. Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax capacity of the TIF District. For communities affected by the fiscal disparity provisions of Minnesota Statutes, Chapter 473F and Chapter 276A, the original net tax capacity of the TIF District shall be determined before the application of fiscal disparity. In subsequent years, the current net tax capacity shall either (a) be determined before the application of fiscal disparity or (b) exclude the product of any fiscal disparity increase in the TIF District (since the original net tax capacity was certified) times the appropriate fiscal disparity ratio. The method the Authority elects shall remain the same for the life of the TIF District, except that a single change may be made at any time from method (a) to method (b) above. »The Authority elects method (b), or M.S. Section 469.177, Subdivision 3(b). The County Auditor shall certify to the Authority the amount of captured net tax capacity each year. The Authority may choose to retain any or all of this amount. It is the Authority's intention to retain 100% of the captured net tax capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District. Exhibit II gives a listing of the various information and assumptions used in preparing a number of the exhibits contained in this TIF Plan, including Exhibit III which shows the projected tax increment generated over the anticipated life of the TIF District. 19 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 8 Section Q Use of Tax Increment Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF District and pay such amount to the State's General Fund. Such amounts will be appropriated to the State Auditor for the cost of financial reporting and auditing of tax increment financing information throughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of the TIF District. The Authority has determined that it will use 100% of the remaining tax increment generated by the TIF District for any of the following purposes: (1) pay for the estimated public costs of the TIF District (see Section K) and County administrative costs associated with the TIF District (see Section T); (2) pay principal and interest on tax increment bonds or other bonds issued to finance the estimated public costs of the TIF District; (3) accumulate a reserve securing the payment of tax increment bonds or other bonds issued to finance the estimated public costs of the TIF District; (4) pay all or a portion of the county road costs as may be required by the County Board under M.S. Section 469.175, Subdivision 1a; or (5) return excess tax increments to the County Auditor for redistribution to the City, County and School District. Tax increments from property located in one county must be expended for the direct and primary benefit of a project located within that county, unless both county boards involved waive this requirement. Tax increments shall not be used to circumvent levy limitations applicable to the Authority. Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the State or federal government, or for a commons area used as a public park, or a facility used for social, recreational, or conference purposes. This prohibition does not apply to the construction or renovation of a parking structure or of a privately owned facility for conference purposes. If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of assistance, to repay all or a portion of the assistance that was paid or financed with tax increments, such payments shall be subject to all of the restrictions imposed on the use of tax increments. Assistance includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other leases at less than fair market rent, interest rate subsidies, utility service connections, roads, or other similar assistance that would otherwise be paid for by the developer or beneficiary. Section R Excess Tax Increment In any year in which the tax increments from the TIF District exceed the amount necessary to pay the estimated public costs authorized by the TIF Plan, the Authority shall use the excess tax increments to: (1) prepay any outstanding tax increment bonds; (2) discharge the pledge of tax increments thereof; (3) pay amounts into an escrow account dedicated to the payment of the tax increment bonds; or 20 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 9 (4) return excess tax increments to the County Auditor for redistribution to the City, County and School District. The County Auditor must report to the Commissioner of Education the amount of any excess tax increment redistributed to the School District within 30 days of such redistribution. Section S Tax Increment Pooling and the Five Year Rule At least 75% of the tax increments from the TIF District must be expended on activities within the district or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for additional restrictions). No more than 25% of the tax increments may be spent on costs outside of the TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax increments are considered to have been spent within the TIF District if such amounts are: (1) actually paid to a third party for activities performed within the TIF District within five years after certification of the district; (2) used to pay bonds that were issued and sold to a third party, the proceeds of which are reasonably expected on the date of issuance to be spent within the later of the five-year period or a reasonable temporary period or are deposited in a reasonably required reserve or replacement fund. (3) used to make payments or reimbursements to a third party under binding contracts for activities performed within the TIF District, which were entered into within five years after certification of the district; or (4) used to reimburse a party for payment of eligible costs (including interest) incurred within five years from certification of the district. Beginning with the sixth year following certification of the TIF District, at least 75% of the tax increments must be used to pay outstanding bonds or make contractual payments obligated within the first five years. When outstanding bonds have been defeased and sufficient money has been set aside to pay for such contractual obligations, the TIF District must be decertified. The Authority does currently anticipate that tax increments will be spent outside the TIF District for affordable housing and for allowable administrative expenses, and such expenditures are expressly authorized in this TIF Plan. Section T Limitation on Administrative Expenses Administrative expenses are defined as all costs of the Authority other than: (1) amounts paid for the purchase of land; (2) amounts paid for materials and services, including architectural and engineering services directly connected with the physical development of the real property in the project; (3) relocation benefits paid to, or services provided for, persons residing or businesses located in the project; (4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to section 469.178; or (5) amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clause (1) to (3). Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, planning or economic development consultants, and actual costs incurred by the County in administering the TIF District. Tax 21 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 10 increments may be used to pay administrative expenses of the TIF District up to the lesser of (a) 10% of the total tax increment expenditures authorized by the TIF Plan or (b) 10% of the total tax increments received by the TIF District. Section U Limitation on Property Not Subject to Improvements - Four Year Rule If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified improvement of an adjacent street has commenced on a parcel located within the TIF District, then that parcel shall be excluded from the TIF District and the original net tax capacity shall be adjusted accordingly. Qualified improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial reconstruction or rebuilding of an existing street. The Authority must submit to the County Auditor, by February 1 of the fifth year, evidence that the required activity has taken place for each parcel in the TIF District. If a parcel is excluded from the TIF District and the Authority or owner of the parcel subsequently commences any of the above activities, the Authority shall certify to the County Auditor that such activity has commenced and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF District. Section V Estimated Impact on Other Taxing Jurisdictions Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The Authority believes that there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the proposed development would not have occurred without the establishment of the TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the development therein becomes part of the general tax base. The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota Statutes, Section 469.175, Subdivision 2, are listed below. 1. The total amount of tax increment that will be generated over the life of the district is estimated to be $22,080,275. 2. To the extent the project in the TIF District generates any public cost impacts on city-provided services such as police and fire protection, public infrastructure, and the impact of any general obligation tax increment bonds attributable to the district upon the ability to issue other debt for general fund purposes, such costs will be levied upon the taxable net tax capacity of the Authority, excluding that portion captured by the District. 3. The amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school district’s share of the total local tax rate for all taxing jurisdictions remained the same, is estimated to be $4,550,987. 4. The amount of tax increments over the life of the district that would be attributable to county levies, assuming the county’s share of the total local tax rate for all taxing jurisdictions remained the same is estimated to be $6,286,499. 5. No additional information has been requested by the county or school district that would enable it to determine additional costs that will accrue to it due to the development proposed for the district. Section W Prior Planned Improvements The Authority shall accompany its request for certification to the County Auditor (or notice of district enlargement), with a listing of all properties within the TIF District for which building permits have been issued during the 18 months 22 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 11 immediately preceding approval of the TIF Plan. The County Auditor shall increase the original net tax capacity of the TIF District by the net tax capacity of each improvement for which a building permit was issued. There have been no building permits issued in the last 18 months in conjunction with any of the properties within the TIF District. Section X Development Agreements If within a project containing a renewal and renovation district, more than 25% of the acreage of the property to be acquired by the Authority is purchased with tax increment bonds proceeds (to which tax increment from the property is pledged), then prior to such acquisition, the Authority must enter into an agreement for the development of the property. Such agreement must provide recourse for the Authority should the development not be completed. The Authority anticipates entering into an agreement for development, however the Authority does not anticipate acquiring property. Section Y Assessment Agreements The Authority may, upon entering into a development agreement, also enter into an assessment agreement with the developer, which establishes a minimum market value of the land and improvements for each year during the life of the TIF District. The assessment agreement shall be presented to the County or City Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land, and so long as the minimum market value contained in the assessment agreement appears to be an accurate estimate, shall certify the assessment agreement as reasonable. The assessment agreement shall be filed for record in the office of the County Recorder of each county where the property is located. Any modification or premature termination of this agreement must first be approved by the City, County and School District. The Authority does not anticipate entering into an assessment agreement; however, it does reserve the right to enter into an assessment agreement for future projects if deemed necessary. Section Z Modifications of the Tax Increment Financing Plan Any reduction or enlargement in the geographic area of the Project Area or the TIF District; a determination to capitalize interest on the debt if that determination was not part of the original TIF Plan, increase in the portion of the captured net tax capacity to be retained by the Authority; increase in the total estimated public costs; or designation of property to be acquired by the Authority shall be approved only after satisfying all the necessary requirements for approval of the original TIF Plan. This paragraph does not apply if: (1) the only modification is elimination of parcels from the TIF District; and (2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax capacity of those parcels in the TIF District's original net tax capacity, or the Authority agrees that the TIF District's original net tax capacity will be reduced by no more than the current net tax capacity of the parcels eliminated. The Authority must notify the County Auditor of any modification that reduces or enlarges the geographic area of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five years following the date of certification. Section AA Administration of the Tax Increment Financing Plan Upon adoption of the TIF Plan, the Authority shall submit a copy of such plan to the Minnesota Department of Revenue and the Office of the State Auditor. The Authority shall also request that the County Auditor certify the 23 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota BAKER TILLY Page 12 original net tax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in this process, the Authority shall submit copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing of any prior planned improvements. The Authority shall also send the County Assessor any assessment agreement establishing the minimum market value of land and improvements in the TIF District, and shall request that the County Assessor review and certify this assessment agreement as reasonable. The County shall distribute to the Authority the amount of tax increment as it becomes available. The amount of tax increment in any year represents the applicable property taxes generated by the retained captured net tax capacity of the TIF District. The amount of tax increment may change due to development anticipated by the TIF Plan, other development, inflation of property values, or changes in property classification rates or formulas. In administering and implementing the TIF Plan, the following actions should occur on an annual basis: (1) prior to July 1, the Authority shall notify the County Assessor of any new development that has occurred in the TIF District during the past year to insure that the new value will be recorded in a timely manner. (2) if the County Auditor receives the request for certification of a new TIF District, or for modification of an existing TIF District, before July 1, the request shall be recognized in determining local tax rates for the current and subsequent levy years. Requests received on or after July 1 shall be used to determine local tax rates in subsequent years. (3) each year the County Auditor shall certify the amount of the original net tax capacity of the TIF District. The amount certified shall reflect any changes that occur as a result of the following: (a) the value of property that changes from tax-exempt to taxable shall be added to the original net tax capacity of the TIF District. The reverse shall also apply; (b) the original net tax capacity may be modified by any approved enlargement or reduction of the TIF District; (c) if laws governing the classification of real property cause changes to the percentage of estimated market value to be applied for property tax purposes, then the resulting increase or decrease in net tax capacity shall be applied proportionately to the original net tax capacity and the retained captured net tax capacity of the TIF District. The County Auditor shall notify the Authority of all changes made to the original net tax capacity of the TIF District. Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements The Authority will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4A. The Authority will comply with all reporting requirements for the TIF District under Minnesota Statutes, Section 469.175, subdivisions 5 and 6. 24 Exhibit I MAP OF TAX INCREMENT FINANCING (Renewal and Renovation) DISTRICT Within Valley Square Redevelopment Project Area 25 Exhibit II Assumptions Report City of Golden Valley, Minnesota Tax Increment Renewal & Renovation District Golden Valley Rd & Wisconsin Ave Project TIF Projections - $80.1M EMV Type of Tax Increment Financing District Renewal & Renovation Maximum Duration of TIF District 15 years from 1st increment Projected Certification Request Date 06/30/23 Decertification Date 12/31/42 (16 Years of Increment) 2022/2023 Base Estimated Market Value $4,394,000 Original Net Tax Capacity $60,679 Assessment/Collection Year 2024/2025 2025/2026 2026/2027 2027/2028 Base Estimated Market Value $4,394,000 $4,394,000 $4,394,000 $4,394,000 Estimated Increase in Value - New Construction 0 0 56,296,336 77,257,258 Total Estimated Market Value 4,394,000 4,394,000 60,690,336 81,651,258 Total Net Tax Capacity $60,679 $60,679 $775,574 $1,038,028 City of Golden Valley 53.407% Hennepin County 34.542% ISD #270 25.006% Other 8.368% Local Tax Capacity Rate 121.323% 2022/2023 Fiscal Disparities Contribution From TIF District 34.7219% City Retainage Percent (maximum = 10%)10.00% Bonds Note (Pay-As-You-Go) Bonds Dated NA Note Dated 08/01/25 Bond Rate NA Note Rate 6.00% Bond Amount NA Note Amount $11,243,000 Present Value Date & Rate 06/30/24 5.00%PV Amount $13,131,793 Notes Projections assume no future changes to classification rates and current tax rates remain constant. Projections based on a base market value for the property of $4,394,000 as provided by the County. Projections based on a completed market value of $80,134,000 as provided by the County. Projections assume a completed M/F EMV of $75.5M + pro-rata share of land value for total of $77,774,658 Projections assume a completed commercial EMV of $1.8M + Pro-rata share of land value for a total of $2,359,342. Projections assume a 2.5% market value inflation assumption. Projections assume 100% completion in 2025 for commercial project. Projections assume 75% construction in 2025, and 100% completion in 2026 for multi-family project. Projections assume delay in first receipt of increment to taxes payable 2027. 26 Exhibit III Projected Tax Increment Report City of Golden Valley, Minnesota Tax Increment Renewal & Renovation District Golden Valley Rd & Wisconsin Ave Project TIF Projections - $80.1M EMV Less: Less: Retained Times:Less:Less: Annual Total Total Original Fiscal Captured Tax Annual State Aud.Subtotal City Annual Period Market Net Tax Net Tax Disp. @ Net Tax Capacity Gross Tax Deduction Net Tax Retainage Net Ending Value Capacity Capacity 34.7219% Capacity Rate Increment 0.360% Increment 10.00% Revenue (1)(2)(3)(4) (5) (5)(6)(7)(8)(9)(10)(11) 12/31/24 4,394,000 60,679 60,679 0 0 121.323%0 0 0 0 0 12/31/25 4,394,000 60,679 60,679 0 0 121.323%0 0 0 0 0 12/31/26 4,394,000 60,679 60,679 0 0 121.323%0 0 0 0 0 12/31/27 60,690,336 775,574 60,679 10,362 704,533 121.323% 854,761 3,077 851,684 85,168 766,516 12/31/28 81,651,258 1,038,028 60,679 10,771 966,578 121.323% 1,172,681 4,222 1,168,459 116,846 1,051,613 12/31/29 83,692,540 1,063,998 60,679 11,191 992,127 121.323% 1,203,679 4,333 1,199,346 119,935 1,079,411 12/31/30 85,784,853 1,090,616 60,679 11,622 1,018,315 121.323% 1,235,450 4,448 1,231,002 123,100 1,107,902 12/31/31 87,929,475 1,117,900 60,679 12,063 1,045,158 121.323% 1,268,017 4,565 1,263,452 126,345 1,137,107 12/31/32 90,127,712 1,145,867 60,679 12,515 1,072,672 121.323% 1,301,398 4,685 1,296,713 129,671 1,167,042 12/31/33 92,380,904 1,174,532 60,679 12,978 1,100,875 121.323% 1,335,614 4,808 1,330,806 133,081 1,197,725 12/31/34 94,690,427 1,203,914 60,679 13,453 1,129,782 121.323% 1,370,685 4,934 1,365,751 136,575 1,229,176 12/31/35 97,057,688 1,234,031 60,679 13,940 1,159,412 121.323% 1,406,633 5,064 1,401,569 140,157 1,261,412 12/31/36 99,484,130 1,264,900 60,679 14,439 1,189,782 121.323% 1,443,479 5,197 1,438,282 143,828 1,294,454 12/31/37 101,971,233 1,296,542 60,679 14,951 1,220,911 121.323% 1,481,246 5,332 1,475,914 147,591 1,328,323 12/31/38 104,520,514 1,328,974 60,679 15,475 1,252,820 121.323% 1,519,958 5,472 1,514,486 151,449 1,363,037 12/31/39 107,133,527 1,362,217 60,679 16,012 1,285,526 121.323% 1,559,638 5,615 1,554,023 155,402 1,398,621 12/31/40 109,811,865 1,396,291 60,679 16,563 1,319,049 121.323% 1,600,310 5,761 1,594,549 159,455 1,435,094 12/31/41 112,557,162 1,431,217 60,679 17,128 1,353,410 121.323% 1,641,998 5,911 1,636,087 163,609 1,472,478 12/31/42 115,371,091 1,467,016 60,679 17,707 1,388,630 121.323% 1,684,728 6,065 1,678,663 167,866 1,510,797 $22,080,275 $79,489 $22,000,786 $2,200,078 $19,800,708 27 Exhibit IV Estimated Impact on Other Taxing Jurisdictions Report City of Golden Valley, Minnesota Tax Increment Renewal & Renovation District Golden Valley Rd & Wisconsin Ave Project TIF Projections - $80.1M EMV Without Project or TIF District With Project and TIF District Final Projected Hypothetical 2022/2023 2022/2023 Retained New Hypothetical Hypothetical Tax Generated Taxable 2022/2023 Taxable Captured Taxable Adjusted Decrease In by Retained Taxing Net Tax Local Net Tax Net Tax Net Tax Local Local Captured Jurisdiction Capacity (1) Tax Rate Capacity (1) + Capacity = Capacity Tax Rate (*) Tax Rate (*)N.T.C. (*) City of Golden Valley 55,710,032 53.407% 55,710,032 $1,388,630 57,098,662 52.108% 1.299% 723,589 Hennepin County 2,478,633,845 34.542% 2,478,633,845 1,388,630 2,480,022,475 34.523% 0.019% 479,392 ISD #270 160,133,777 25.006% 160,133,777 1,388,630 161,522,407 24.791% 0.215% 344,256 Other -8.368%---8.368%-- Totals 121.323%119.790% 1.533% * Statement 1: If the projected Retained Captured Net Tax Capacity of the TIF District was hypothetically available to each of the taxing jurisdictions above, the result would be a lower local tax rate (see Hypothetical Adjusted Tax Rate above) which would produce the same amount of taxes for each taxing jurisdiction. In such a case, the total local tax rate would decrease by 1.533% (see Hypothetical Decrease in Local Tax Rate above). The hypothetical tax that the Retained Captured Net Tax Capacity of the TIF District would generate is also shown above. Statement 2: Since the projected Retained Captured Net Tax Capacity of the TIF District is not available to the taxing jurisdictions, then there is no impact on taxes levied or local tax rates. (1) Taxable net tax capacity = total net tax capacity - captured TIF - fiscal disparity contribution, if applicable. (2) The impact on these taxing jurisdictions is negligible since they represent only 6.90% of the total tax rate. 28 Exhibit V Market Value Analysis Report City of Golden Valley, Minnesota Tax Increment Renewal & Renovation District Golden Valley Rd & Wisconsin Ave Project TIF Projections - $80.1M EMV Assumptions Present Value Date 06/30/24 P.V. Rate - Gross T.I.5.00% Increase in EMV With TIF District $110,977,091 Less: P.V of Gross Tax Increment 13,131,793 Subtotal $97,845,298 Less: Increase in EMV Without TIF 0 Difference $97,845,298 Annual Present Gross Tax Value @ Year Increment 5.00% 1 2027 854,761 738,375 2 2028 1,172,681 964,768 3 2029 1,203,679 943,114 4 2030 1,235,450 921,912 5 2031 1,268,017 901,156 6 2032 1,301,398 880,837 7 2033 1,335,614 860,949 8 2034 1,370,685 841,482 9 2035 1,406,633 822,429 10 2036 1,443,479 803,783 11 2037 1,481,246 785,536 12 2038 1,519,958 767,682 13 2039 1,559,638 750,213 14 2040 1,600,310 733,120 15 2041 1,641,998 716,398 $22,080,275 $13,131,793 29 Exhibit VI PROJECTED PAY-AS-YOU-GO-NOTE REPORT City of Golden Valley, Minnesota Tax Increment Renewal & Renovation District Golden Valley Rd & Wisconsin Ave Project TIF Projections - $80.1M EMV Note Date:08/01/25 Note Rate:6.00% Amount: $11,243,000 Cumulative Unpaid Semi-Annual Loan Interest Accrued Net Balance Date Principal Interest P & I Due Interest Revenue Outstanding (1)(2)(3)(4)(5)(6)(7)(7) 11,243,000.00 02/01/26 0.00 0.00 0.00 337,290.00 337,290.00 0.00 11,243,000.00 08/01/26 0.00 0.00 0.00 674,580.00 674,580.00 0.00 11,243,000.00 02/01/27 0.00 0.00 0.00 1,011,870.00 1,011,870.00 0.00 11,243,000.00 08/01/27 0.00 383,258.00 383,258.00 1,349,160.00 965,902.00 383,258.00 11,243,000.00 02/01/28 0.00 383,258.00 383,258.00 1,303,192.00 919,934.00 383,258.00 11,243,000.00 08/01/28 0.00 525,806.50 525,806.50 1,257,224.00 731,417.50 525,806.50 11,243,000.00 02/01/29 0.00 525,806.50 525,806.50 1,068,707.50 542,901.00 525,806.50 11,243,000.00 08/01/29 0.00 539,705.50 539,705.50 880,191.00 340,485.50 539,705.50 11,243,000.00 02/01/30 0.00 539,705.50 539,705.50 677,775.50 138,070.00 539,705.50 11,243,000.00 08/01/30 78,591.00 475,360.00 553,951.00 475,360.00 0.00 553,951.00 11,164,409.00 02/01/31 219,018.73 334,932.27 553,951.00 334,932.27 0.00 553,951.00 10,945,390.27 08/01/31 240,191.79 328,361.71 568,553.50 328,361.71 0.00 568,553.50 10,705,198.48 02/01/32 247,397.55 321,155.95 568,553.50 321,155.95 0.00 568,553.50 10,457,800.93 08/01/32 269,786.97 313,734.03 583,521.00 313,734.03 0.00 583,521.00 10,188,013.96 02/01/33 277,880.58 305,640.42 583,521.00 305,640.42 0.00 583,521.00 9,910,133.38 08/01/33 301,558.50 297,304.00 598,862.50 297,304.00 0.00 598,862.50 9,608,574.88 02/01/34 310,605.25 288,257.25 598,862.50 288,257.25 0.00 598,862.50 9,297,969.63 08/01/34 335,648.91 278,939.09 614,588.00 278,939.09 0.00 614,588.00 8,962,320.72 02/01/35 345,718.38 268,869.62 614,588.00 268,869.62 0.00 614,588.00 8,616,602.34 08/01/35 372,207.93 258,498.07 630,706.00 258,498.07 0.00 630,706.00 8,244,394.41 02/01/36 383,374.17 247,331.83 630,706.00 247,331.83 0.00 630,706.00 7,861,020.24 08/01/36 411,396.39 235,830.61 647,227.00 235,830.61 0.00 647,227.00 7,449,623.85 02/01/37 423,738.28 223,488.72 647,227.00 223,488.72 0.00 647,227.00 7,025,885.57 08/01/37 453,384.93 210,776.57 664,161.50 210,776.57 0.00 664,161.50 6,572,500.64 02/01/38 466,986.48 197,175.02 664,161.50 197,175.02 0.00 664,161.50 6,105,514.16 08/01/38 498,353.08 183,165.42 681,518.50 183,165.42 0.00 681,518.50 5,607,161.08 02/01/39 513,303.67 168,214.83 681,518.50 168,214.83 0.00 681,518.50 5,093,857.41 08/01/39 546,494.78 152,815.72 699,310.50 152,815.72 0.00 699,310.50 4,547,362.63 02/01/40 562,889.62 136,420.88 699,310.50 136,420.88 0.00 699,310.50 3,984,473.01 08/01/40 598,012.81 119,534.19 717,547.00 119,534.19 0.00 717,547.00 3,386,460.20 02/01/41 615,953.19 101,593.81 717,547.00 101,593.81 0.00 717,547.00 2,770,507.01 08/01/41 653,123.79 83,115.21 736,239.00 83,115.21 0.00 736,239.00 2,117,383.22 02/01/42 672,717.50 63,521.50 736,239.00 63,521.50 0.00 736,239.00 1,444,665.72 08/01/42 712,058.53 43,339.97 755,398.50 43,339.97 0.00 755,398.50 732,607.19 02/01/43 732,607.19 21,978.22 754,585.41 21,978.22 0.00 754,585.41 0.00 $11,243,000 $8,556,894.91 $19,799,894.91 $19,799,894.91 Surplus Tax Increment 813 Total Net Revenue $19,800,708.00 30 Exhibit VII RENEWAL AND RENOVATION QUALIFICATIONS FOR THE DISTRICT 31 Exhibit VII 32 Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC MEMORANDUM TO: Ms. Cherie Shoquist-Henderson, City of Golden Valley FROM: Tom Denaway, Baker Tilly DATE: May 11, 2023 SUBJECT: TIF (Renewal & Renovation) District Summary Memo Project The Developer, Sentinel Management Company, is proposing the redevelopment of a site located at the southeast corner of the intersection of Wisconsin Avenue and Golden Valley Road. The Developer is proposing the demolition of the two existing commercial buildings located on the site, and the development of a new commercial bank building and an approximately 303-unit multi-family building. The multi-family building is approximately 397,610 square feet, including a structured parking facility with an anticipated 450 parking spaces. The building will contain a mix of units ranging in size from studio units to 3-bedroom units. In addition to the multi-family development the Developer is proposing the construction of a new bank building of approximately 4,348 sf on the southwest corner of the development site The Developer is proposing that demolition of the existing buildings will commence in 2023, along with construction of the bank building which will be initiated in 2023 and completed in 2024. Construction on the multi-family building is slated to begin in 2024 with completion projected in 2025. The Developer has estimated the total development cost applicable to the bank portion of the development is $4,869,480 and the multi-family building is $103,964,485, bringing the total cost of the combined development to $108,833,965. Based on the inclusionary zoning policy the multi-family building will be providing 46 units (15%) as affordable units at an income threshold of 60% of the Area Median Income for a period of 20-years. Proposed Project Costs Project Cost Amount Total Acquisition Cost $5,800,000 Public & Site Improvements $1,015,000 Bank Building Hard Costs $2,207,040 Multi-Family Building & Parking Structure Hard Costs $79,537,500 Total Hard Costs $82,759,540 Bank Building Soft Costs $366,776 Multi-Family Building Soft Costs $9,433,885 Bank – Financing Costs $186,964 Multi-Family – Financing Costs $4,984,700 Bank – Contingency $108,700 Multi-Family – Contingency $5,193,400 Total Soft Costs $20,274,425 Total Project Costs $108,833,965 Baker Tilly Municipal Advisors, LLC 30 East Seventh St., Ste 305 St. Paul, MN 55101 United States of America T: +1 (651) 223 3000 F: +1 (651) 223 3046 bakertilly.com 33 Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC Renewal & Renovation TIF District Eligibility The Developer is requesting that a Renewal and Renovation TIF District be created to provided assistance with the redevelopment of the site. The creation of a Renewal & Renovation TIF District is predicated on the existing condition of the project site, and the obsolescent nature of the buildings present on the redevelopment site. Renewal & Renovation Districts are eligible to be created to remove barriers to investment associated with the redevelopment of blighted sites. Renewal & Renovation TIF District’s do not require a specific type of new project to be developed on the site, and any future private use of the site is eligible (i.e., multi-family housing, commercial, office, etc.). State Statute provides the following requirements for qualifying a site as a Renewal & Renovation TIF District. A Renewal & Renovation district is a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that: (1) (i) parcels consisting of 70% percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 20 percent of the buildings are structurally substandard; and (iii) 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community; and (2) The conditions described in clause (1) are reasonably distributed throughout the geographic area of the District. For purposes of making the findings outlined above "Structurally substandard" is defined as buildings containing defects or deficiencies in structural elements, essential utilities and facilities, light and ventilation, fire protection (including egress), layout and condition of interior partitions, or similar factors. Generally, a building is not structurally substandard if it is in compliance with the building code applicable to a new building or could be modified to satisfy the existing code at a cost of less than 15% of the cost of constructing a new structure of the same size and type. A municipality may not find that a building is structurally substandard without an interior inspection, unless it can not gain access to the property and there exists evidence which supports the structurally substandard finding. Such evidence includes recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained. A parcel is deemed to be occupied by a structurally substandard building if all of the following conditions are met: (1) the parcel was occupied by a substandard building within three years of the filing of the request for certification of the parcel as part of the district; (2) the demolition or removal of the substandard building was performed or financed by the authority, or was performed by a developer under a development agreement with the authority, (3) the authority found by resolution before such demolition or removal occurred that the building was structurally substandard and that the authority intended to include the parcel in the TIF district, and (4) the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted upon filing the request for certification of the tax capacity of the parcel as part of a district. The qualifying information, facts and findings must be kept in written form for the life of the district and made available to the public upon request. The parcels and existing buildings within the TIF District have been found to qualify under the eligibility requirements for creation of a Renewal & Renovation TIF District, and are formalized and documented within a study prepared by LHB the findings of which will be incorporated within the TIF Plan. 34 Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC Limitation on use of TIF Revenue in Renewal & Renovation District At least 90 percent of the tax increment from a renewal & renovation district must be used to finance the cost of correcting conditions that allow designation of the districts. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of land, removal of hazardous substances or remediation necessary to develop the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority may be included in the qualifying costs. Renewal & Renovation TIF District Duration Renewal & Renovation Districts have the eligibility to be in place for a period of 16-total years, and the proposed District is expected to be active for the full duration. TIF Revenue Projections and Proposed TIF Assistance Budget In preparing the estimated TIF Revenue Projections we used the following assumptions • Total Estimated Market Value (EMV) post-development of $80,134,000 as based on potential valuation provided by Hennepin County. • Existing Base Market Value of the property $4,394,000 • 2.5% Annual Market Value inflation assumption • Assumed project is partially completed in 2025, assessed in 2026, with first TIF revenue in 2027 • Assumed project is 100% completed in 2026, and first full TIF revenue is received in 2028 • Final Pay2023 Tax Rates were used: 121.323% • 10% City Administrative Retainage • 16-Year TIF District Duration TIF Revenue Projections Amount First-Year Partial TIF Amount (Prior to Inflation) $851,684 Second-Year Full TIF Amount (Prior to Inflation) $1,168,459 16-Year Duration Total $22,000,786 We utilized the TIF revenue projections to prepare the following budget for TIF reimbursement related to the proposed project. The TIF assistance is proposed to be provided on a pay-as-you-go basis, and only to the extent that TIF revenue is generated with 90% of the annual TIF revenue available to reimburse Developer TIF eligible expenditures. Since the TIF revenue is provided on a pay-as-you-go basis, the Authority will have no obligation to satisfy any outstanding amount in the event that actual TIF revenue is less than projected. For purposes of this analysis, we have assumed the TIF Pay-Go note will have an issue date of 08/01/2024 and reimbursement will be made to the Developer in a principal amount of $11,243,000 along with interest expense based on an assumed interest rate of 6.0%. The table below illustrates the proposed preliminary Developer TIF reimbursable budget: TIF Uses (Principal Amounts) Amount Land/Building Acquisition $1,560,000 City Improvements $1,015,000 Demolition, Site Improvements, and Parking Costs $9,072,000 Affordable Housing Pooling (5%) $1,100,039 City Admin Retainage (5%) $1,100,039 Total TIF Project Costs $13,443,078 Interest on Developer Pay-Go Note $8,557,708 Total Proposed TIF District Budget $22,000,786 35 Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC The sum of the Developer incurred reimbursable TIF expenses identified above is $11,243,000, which is the anticipated principal amount of the Developer pay-as-you-go TIF Note. The Developer will be responsible for providing documentation that they incurred TIF eligible reimbursable expenses, in the categories identified above, in an amount up to $11,243,000. Once this amount is certified, they will be eligible to receive reimbursement of this principal amount of assistance, plus interest carrying cost, over the duration of the District until either this principal amount is satisfied or the District reaches its maximum statutory duration. The principal value of the TIF assistance received by the Developer will not exceed the identified $11,243,000 amount identified here and which will be incorporated into the TIF eligible use budget defined by the Tax Increment Financing Plan that will be created for the District. Need for Assistance In order to make the finding that the project would not be likely to proceed “but-for” the requested financial assistance we reviewed project cost and operating assumptions provide by the Developer. Using this information, we prepared a project pro forma and performed an unleveraged Internal Rate of Return (IRR) analysis which allowed us to estimate the potential return on investment to the Developer with and without the requested TIF assistance. For purposes of this analysis, we calculated the return based on a 10-year operating pro forma following a two-year construction and lease-up period and used this information to project the anticipated unleveraged IRR of the project both with and without assistance. The project pro forma includes a set-aside of 15% of the housing units (46 units) as affordable for incomes at 60% of the Area Median Income, for a period of 20-years. The incorporation of approximately 15% of the total units at levels of affordability at 60% AMI does result in a lower project Net Operating Income amount due to the limits on rental rates that will be placed on the affordable units. We projected the anticipated Net Present Value of the period of 20-years the lower NOI as a result of 15% of the units having affordable rent restriction, and found the impact of providing the affordable units to have a present value of approximately $5,885,293. This amount is the projected present value of the lost operating income due to the provision of the affordable units in comparison to if the project was 100% market rate. In reviewing the Developer’s proposed project cost budget and operating pro forma for purposes of calculating an unleveraged IRR, we made a couple of changes to the anticipated budget. These changes included adjustments to the anticipated Developer Fee and Contingency line-item amounts, and reduced the overall budget on which the return on investment calculation is based. The adjustments were made to illustrate the potential return on investment generated by the project in the highest potential manner. We utilized the IRR analysis to estimate the potential return on investment realized by the Developer if they were to undertake the project without assistance, as this financial measure can be used to illustrate the financial feasibility of the project and its likelihood of being undertaken without the requested financial assistance. By projecting the anticipated return generated by the project without assistance, and comparing it to industry benchmarks for project feasibility, we can draw conclusions about the likelihood of the project proceeding. If the projected rate of return realized by the project without assistance falls below industry benchmarks for project feasibility, we can make the conclusion that the project would be unlikely to occur but-for the requested TIF assistance. Additionally, by comparing the projected rate of return with-assistance to the same industry benchmarks we can provide comment on the reasonableness of the amount of TIF assistance being provided and ensure that the project is not being over-incentivized. The third-party benchmark we utilized for purposes of establishing a feasibility benchmark is the PriceWaterhouseCooper (PWC) Real Estate Developer Survey. This survey identifies the nationwide average of returns sought by developers of real estate projects, broken down by type. The PWC survey is a conservative, or low threshold, for purposes of setting a feasibility threshold. If a project’s anticipated Unleveraged Internal Rate of Return falls below this conservative benchmark, it allows for the finding to be made that the project would be unlikely to proceed due to inadequate financial return on investment and that project would be unlikely to proceed but-for the requested TIF assistance. The PWC Survey identified a range of returns sought by Developer of 4.75% to 10.00% with an average return threshold of 6.86%. The survey includes potential returns sought by developer in their investment of both new construction and existing operational facilities. Since there is a significantly different investment risk threshold for operational properties, we utilize the average return identified within the Survey of 6.86% as our feasibility benchmark for investment in a new construction project. 36 Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC The table below identifies the projected Unleveraged Rate of Return for the project without assistance and with the requested TIF assistance, based on the inclusion of 15% of the units as affordable at 60% of the AMI. This return calculation is also based on the project cost adjustments we made in regard to the Developer Fee and Contingency line-items, which resulted in a higher baseline IRR amount. Unleveraged IRR Analysis Calculations Return Without Assistance 5.39% With TIF Assistance (16-Years) 6.79% As a result of our analysis, including adjustments to the project costs mentioned above, we calculated a potential return on investment for the project without TIF assistance of 5.39%. This anticipated return without assistance falls below our third-party benchmark of 6.86%. Therefore, we conclude that the project would be unlikely to proceed but-for the requested TIF assistance. Additionally, by projecting the rate of return with the TIF assistance and determining the projected return as 6.79% an amount that is right in-line with our identified feasibility threshold of 6.86%, we are able to conclude that TIF assistance in the proposed principal amount of $11,243,000 will not result in an excessive rate of return being realized by the Developer. Therefore, we conclude that the projected TIF assistance amount is reasonable. Next Steps There is a statutorily defined process that is required to be followed for the creation of a Renewal & Renovation TIF District. This process includes the completion of an analysis of the eligibility of the stie for creation as a Renewal & Renovation District (completed by LHB) and the drafting of a TIF plan describing the proposed redevelopment and the associated TIF budget for eligible uses and revenues. The creation process also includes a number of required steps and notices that must be made. Ultimately this process will conclude at a public hearing, following which the City Council would have the ability to take action on the creation of the proposed District. The timeline proposes the public hearing could be held at the City Council meeting on June 20, 2023. Thank you for the opportunity to assist the City of Golden Valley. Please contact me at 651-223-3075 or tom.denaway@bakertilly.com with any questions or to discuss. 37 GL135-48-880700.v1 1 HRA RESOLUTION NO. 23-06 A RESOLUTION ADOPTING A TAX INCREMENT FINANCING PLAN FOR A TAX INCREMENT (RENEWAL AND RENOVATION) DISTRICT WITHIN VALLEY SQUARE REDEVELOPMENT PROJECT AREA WHEREAS, The Housing and Redevelopment Authority in and for the City of Golden Valley (the “HRA”) has been established by the city of Golden Valley (the “City”) to promote development and redevelopment within the community; and WHEREAS, The HRA has all the powers and authority of a housing and redevelopment authority under Minnesota Statutes, sections 469.001 through 469.047 (the “HRA Act”); and WHEREAS, The HRA’s goals include recognizing the practical impediments to development and redevelopment in areas of the community which are fully developed and offering public assistance when appropriate for projects which advance its goals; and WHEREAS To promote development and redevelopment of a portion of the community, the City previously established the Valley Square Redevelopment Project Area and adopted a Redevelopment Project Plan for same; and WHEREAS, In response to a redevelopment proposal regarding the properties generally located east of Wisconsin Avenue North, south and west of Golden Valley Road and north of Golden Valley Drive, the HRA authorized the preparation of a tax increment financing plan (the “TIF Plan”) for Tax Increment Financing (Renewal and Renovation) District within Valley Square Redevelopment Area (the “TIF District”), which is contained in a document with the same title, dated May 16, 2023, prepared by Baker Tilly Municipal Advisors, LLC and on file with the HRA. NOW, THEREFORE, the HRA finds and approves: Copies of the TIF Plan were transmitted to the board of Independent School District No. 270 and the board of commissioners of Hennepin County for review and comment and said public bodies were notified of the public hearing to be held on the TIF Plan by the City on June 20, 2023. The TIF District qualifies as a renewal and renovation tax increment financing district within the meaning of Minnesota Statutes, section 469.174, subd. 10a based on the report preparedby LHB dated March 31, 2023. The HRA objectives of encouraging development and redevelopment within the Valley Square Redevelopment Project Area will be advanced by adoption of the TIF Plan. The TIF Plan is consistent with the City’s comprehensive plan, based on the findings of the Golden Valley Planning Commission on May 22, 2023. 38 GL135-48-880700.v1 2 NOW THEREFORE, BE IT RESOLVED, BY THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF GOLDEN VALLEY, MINNESOTA that the TIF Plan is hereby adopted. NOW THEREFORE, BE IT FURTHER RESOLVED, BY THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF GOLDEN VALLEY, MINNESOTA that the HRA requests that the City hold a public hearing on the TIF Plan pursuant to Minnesota Statutes, section 469.175 and recommends that the TIF Plan be approved by the City. Upon approval of the TIF Plan by the City, the HRA’s executive director is authorized and directed to instruct Baker Tilly Municipal Advisors, LLC to request that the original tax capacity of the property within the TIF District be certified to the HRA by Hennepin County. Passed by the Housing and Redevelopment Authority of the City of Golden Valley, Minnesota this day of June 20, 2023. ____________________________ Maurice Harris, HRA Chair ATTEST: ______________________________ Timothy J. Cruikshank, HRA Director 39 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Meeting June 20, 2023 Agenda Item 6B. Approve Contract for Private Development with 640 Golden Valley, LLC (Sentinel Development) Prepared By Cherie Shoquist, Housing and Economic Development Manager Alma Flores. Community Development Director Summary Background On September 6, 2022 the Developer, 640 Golden Valley, LLC (Sentinel Development) submitted an application for Tax Increment Financing to the City. On May 9, 2023 the HRA reviewed the Preliminary Terms at a Work Session Meeting. On May 16, 2023 the Term Sheet was approved by the HRA at a Special Meeting. Proposed Development 640 Golden Valley, LLC proposes an estimated $109 Million mixed use housing and commercial development at 8200 Golden Valley Road and 8250 Golden Valley Drive. The 303-unit mixed income multifamily rental development (Multi-Family Building, Phase 2) includes 46 units affordable at 60% of Area Median Income for a period of twenty years, and 257 market rate units. The units are a mix of studio,1, 2, and 3 bedroom apartments. The building will be wrapped around a 450 space parking ramp. The building will be five to six stories in height with ground level walk up units. Amenities will include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, and guest suites. The commercial development will be the replacement and relocation of the Wells Fargo Bank on the southwest corner of the site (Wells Fargo Bank Building, Phase 1). Mixed Income Housing Policy and Other Requirements This is the first multifamily rental development proposed under the City’s Mixed Income Housing Policy. The policy is triggered when the multifamily rental development will create ten or more units, receives approvals under a Zoning Map Amendment and Comprehensive Plan Map Amendment, and requests finance assistance from the City. The Developer has submitted the Affordable Housing Plan regarding the Minimum Improvements required under the City’s Mixed Income Housing Policy. The Private Development Contract (Agreement) satisfies the requirement for an Affordable Housing Performance Agreement under the City’s Mixed Income Housing Policy. The location, number, type, and size of affordable housing units to be constructed: The 46 units affordable at 60% Area Median Income ($70,380 for a household of four) include 5 studio units 40 ($1,233 rent); 29 1-bedroom units ($1,320 rent) and 12 2-bedroom Units ($1,584 rent), with income as calculated by Minnesota Housing under the Low Income Housing Tax Credit program, and rents based on the Area Median Income for the metropolitan area that includes Golden Valley adjusted for bedroom size (2022). The affordable housing units range in size from 525- 1,100 square feet, and are located on every level of the development. Rental terms and occupancy requirements: 15% of the units will be affordable at 60% of Area Median Income and include requirements to maintain affordability for 20 years. Timetable for completion of the units: Construction is expected to be complete within 18-24 months of construction start; to begin in the spring of 2024 and completed by summer 2026. Restrictions to be placed on the units to ensure their affordability: The affordability requirements will be incorporated into the Affordable Housing Performance Agreement and/or Tax Increment Financing Agreement and a Declaration of Affordable Housing Covenants will be recorded with the title. Additionally, the developer must meet the requirements of the Agreement for the construction of minimum improvements and public improvements. The TIF note will not be issued until all the conditions precedent specified in the agreement have been satisfied and will not occur until all the improvements have been completed, which is anticipated to be mid-2026. Financial or Budget Considerations Tax Increment Financing Request On September 6, 2022 the Developer, 640 Golden Valley, LLC submitted an application for Tax Increment Financing to the City. The Developer has estimated the total development cost applicable to the bank portion of the development is $4,869,480 and the multi-family building is $103,964,485, bringing the total cost of the combined development to $108,833,965. The Developer requests Tax Increment Financing to assist in providing 46 affordable units, acquiring the sites, demolishing the substandard structure, completing public improvements, and other eligible activities. The HRA would invest in the project by approving a Renewal and Renovation Tax Increment Financing District and a TIF PAY-AS-YOU-GO note with a principal amount of up to $11,243,000, generated by the Project based on an interest rate of 6%. All of the assistance being offered to the developer is related to the residential portion of the project. The Developer will be responsible for initially incurring the $11,243,000 in TIF eligible expenditures, and the PAYGO note will be payable from 90% of the tax increment generated from the Multi-Family Building and Wells Fargo Building, on a PAY-AS-YOU-GO basis until the principal amount of the TIF has been satisfied as determined by the HRA, or the District has reached its statutory maximum duration. The maximum duration of TIF District is 15 years from the first payment of increment received from Hennepin County. Legal Considerations The Agreement was prepared by Kennedy & Graven, the City’s TIF and Bond Counsel and reviewed by our City Attorney. Equity Considerations This development meets the City’s goals to preserve and promote economically diverse housing options in our community by creating high quality housing in Golden Valley for households with a 41 variety of income levels, ages, and sizes. By linking this incentive to affordable housing development provides much needed housing to economically disadvantaged people and households and provides an opportunity for the mixing of incomes to further future residents’ access to social networks and opportunities. Recommended Action Motion to Approve Contract for Private Development with 640 Golden Valley, LLC (Sentinel Development). Supporting Documents 06-20-23 GVHRA Contract for Development 42 GL135-48-868513.v7 Execution Copy CONTRACT FOR PRIVATE DEVELOPMENT By and Between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY and 640 GOLDEN VALLEY, LLC This document drafted by: KENNEDY & GRAVEN, CHARTERED (RHB) 150 South Fifth Street Suite 700 Minneapolis, MN 55402 (612) 337-9300 43 i GL135-48-868513.v7 TABLE OF CONTENTS PAGE PREAMBLE....................................................................................................................................1 ARTICLE I Definitions Section 1.1.Definitions................................................................................................................2 Section 1.2.Exhibits ...................................................................................................................5 Section 1.3.Rules of Interpretation ............................................................................................5 ARTICLE II Representations and Warranties Section 2.1.Representations by the HRA....................................................................................6 Section 2.2.Representations and Warranties by the Developer..................................................7 ARTICLE III Acquisition of Development Property; Public Assistance Section 3.1.Acquisition of Development Property.....................................................................7 Section 3.2.Issuance of Pay-As-You-Go Note ...........................................................................7 Section 3.3.Conditions Precedent to Issuance of the Note.........................................................8 Section 3.4.Records ....................................................................................................................9 Section 3.5.No Business Subsidy................................................................................................9 ARTICLE IV Construction of Minimum Improvements; Public Improvements; Income Restrictions Section 4.1.Construction of Minimum Improvements ...............................................................9 Section 4.2.Preliminary Plans and Construction Plans.............................................................10 Section 4.3.Commencement and Completion of Construction.................................................10 Section 4.4.Certificate of Completion ......................................................................................11 Section 4.5 Public Improvements.............................................................................................12 Section 4.6 Letter of Credit.......................................................................................................12 Section 4.7.Declaration Regarding Income Restrictions..........................................................13 Section 4.8.Affordable Housing Plan.......................................................................................15 Section 4.9.Equal Opportunity Practices..................................................................................15 ARTICLE V Insurance Section 5.1.Insurance................................................................................................................15 Section 5.2.Evidence of Insurance ...........................................................................................15 44 ii GL135-48-868513.v7 PAGE ARTICLE VI Payment of Taxes; Use of Tax Increment Section 6.1.Taxes......................................................................................................................16 Section 6.2.Right to Collect Delinquent Taxes and Special Assessments................................16 Section 6.3.Use of Tax Increment.............................................................................................17 ARTICLE VII Restrictions on Sale of Minimum Improvements; Termination of Agreement Section 7.1.Prohibition Against Sale of Minimum Improvements...........................................17 Section 7.2.Termination of Agreement.....................................................................................18 ARTICLE VIII Events of Default Section 8.1.Events of Default Defined .....................................................................................18 Section 8.2.Remedies on Default..............................................................................................19 Section 8.3.Remedies after Certificate of Completion.............................................................20 Section 8.4.No Remedy Exclusive............................................................................................20 Section 8.5.No Additional Waiver Implied by One Waiver.....................................................20 ARTICLE IX Additional Provisions Section 9.1.Conflict of Interests; Representatives Not Individually Liable.............................21 Section 9.2.Equal Employment Opportunity............................................................................21 Section 9.3.Restrictions on Use................................................................................................21 Section 9.4.Notices and Demands ............................................................................................21 Section 9.5.Counterparts...........................................................................................................22 Section 9.6.Disclaimer of Relationships...................................................................................22 Section 9.7.Amendment............................................................................................................22 Section 9.8.Recording; Agreement Runs with the Land...........................................................22 Section 9.9.Release and Indemnification Covenants................................................................22 Section 9.10. Titles of Articles and Sections...............................................................................22 Section 9.11. Governing Law; Venue..........................................................................................22 Section 9.12. Fees and Charges...................................................................................................22 Section 9.13. Notice of Unavoidable Delays...............................................................................23 TESTIMONIUM............................................................................................................................24 SIGNATURES.........................................................................................................................24-25 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY EXHIBIT B LIST OF PRELIMINARY PLANS EXHIBIT C FORM OF CERTIFICATE OF COMPLETION EXHIBIT D FORM OF AUTHORIZING RESOLUTION WITH NOTE 45 iii GL135-48-868513.v7 EXHIBIT E FORM OF INVESTMENT LETTER EXHIBIT F FORM OF DECLARATION OF RESTRICTIVE COVENANTS EXHIBIT G LIST AND ESTIMATED COST OF PUBLIC IMPROVEMENTS 46 1 GL135-48-868513.v7 CONTRACT FOR PRIVATE DEVELOPMENT This Contract for Private Development (the “Agreement”) is made this _____ day of _____________, 2023, by and between the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, having its principal office at 7800 Golden Valley Road, Golden Valley, MN 55427 (the “HRA”), and 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota, having its principal office at 5215 Edina Industrial Blvd., Suite 100, Edina, MN 55439 (the “Developer”). WITNESSETH: WHEREAS, the HRA has established the Valley Square Redevelopment Project Area (the “Redevelopment Project Area”) and adopted a Redevelopment Project Plan pursuant to Minnesota Statutes, sections 469.001 through 469.047, as amended, to encourage development and redevelopment in the Redevelopment Project Area; and WHEREAS, the HRA finds that it is in the public interest, helpful for the tax base and beneficial for the health, safety and welfare of the community as a whole to promote mixed use redevelopment of the Redevelopment Project Area with, among other uses, market rate and affordable housing in locations where it is compatible with surrounding land uses; and WHEREAS, the HRA finds that, due to market conditions which exist today and are likely to persist for the foreseeable future, the private sector alone is not able to accomplish construction of affordable housing and, therefore, such will not occur without public intervention; and WHEREAS, to foster the redevelopment described above, the HRA has also established Tax Increment Financing (Renewal and Renovation) District within Valley Square Redevelopment Project Area (the “TIF District”), and adopted a tax increment financing plan related thereto (the “TIF Plan”), all pursuant to Minnesota Statutes, sections 469.174 through 469.1794, as amended (the “TIF Act”); and WHEREAS, the Developer has proposed to develop the property generally located east of Wisconsin Avenue North, south and west of Golden Valley Road and north of Golden Valley Drive, and defined in this Agreement as the Development Property, through construction of a project consisting of approximately 303 multifamily rental apartments, approximately 440 to 450 spaces of structured parking and a new commercial building (collectively, the “Minimum Improvements”), as more fully described herein; and WHEREAS, the HRA believes the Developer’s proposal is in the vital and best interests of Golden Valley and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of the applicable state and local laws and requirements for which the Redevelopment Project Area and the TIF District were established. NOW, THEREFORE, in consideration of the covenants and the mutual obligations of the parties hereto, each does hereby covenant and agree with the other as follows: 47 2 GL135-48-868513.v7 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement the following terms shall have the meanings given below unless a different meaning clearly appears from the context: “Administrative Costs” means the administrative expenses incurred by the HRA regarding the TIF District as defined in section 469.174, subd. 14 of the TIF Act. “Affordable Housing Plan” means the plan submitted by the Developer regarding the creation and maintenance of affordable housing and required by the City’s Mixed Income Housing Policy. “Agreement” means this Agreement, as the same may be from time to time modified, amended, or supplemented. “Assessor” means the Hennepin County assessor. “Authorizing Resolution” means the resolution, in substantially the form attached hereto as Exhibit D, which authorizes the issuance of the Note by the HRA Executive Director upon satisfaction of the conditions precedent specified in Section 3.3 of this Agreement. “Available Tax Increment” means 90 percent of the Tax Increment paid to the HRA by the County with respect to the Development Property and the Minimum Improvements. “Business Subsidy Act” means Minnesota Statutes, sections 116J.993 through 116J.995, as amended. “Certificate of Completion” means the certificates, in substantially the form attached hereto as Exhibit C, which will be provided by the HRA to the Developer pursuant to Article IV of this Agreement. “City” means the city of Golden Valley, a municipal corporation under the laws of Minnesota. “City Approvals” means, collectively, the comprehensive plan amendment, rezoning, final plat and any other land use approvals required by the City prior to the Developer being authorized to construct the Minimum Improvements. “Construction Plans” means the final plans for construction of the Minimum Improvements which will be submitted by the Developer pursuant to section 4.2 of this Agreement. “County” means Hennepin County, Minnesota. 48 3 GL135-48-868513.v7 “Declaration” means the Declaration of Restrictive Covenants substantially in the form attached hereto as Exhibit F. “Developer” means 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota. “Development Property” means the property generally located east of Wisconsin Avenue North, south and west of Golden Valley Road and north of Golden Valley Drive in Golden Valley. The property is legally described in Exhibit A attached hereto. “Event of Default” means an action by the Developer or the HRA listed in Article VIII of this Agreement. “Final Payment Date” means the earliest of (i) the date on which the entire principal of and accrued interest on the Note have been paid in full; or (ii) February 1, 2043 or (iii) the date this Agreement or the Note is terminated or cancelled in accordance with the terms hereof or deemed paid in full; or (iv) the February 1 following the date the TIF District is terminated in accordance with the TIF Act. “Housing and Redevelopment Authority” or “HRA” means the Housing and Redevelopment Authority in and for the City of Golden Valley. “Housing and Redevelopment Authority Act” or “HRA Act” means Minnesota Statutes, sections 469.001 through 469.047, as amended. “Letter of Credit” or “LOC” means the Letter of Credit to be delivered by or on behalf of the Developer to the City with regard to the Public Improvements. “Material Change” means a substantial change in the Construction Plans which requires new or revised City Approvals or one which will likely adversely affect the generation of Tax Increment from the Development Property or Minimum Improvements. Minor changes in the Construction Plans which do not change the building footprint, building materials, number of total units or parking spaces, or the number of affordable units will not constitute a Material Change. “Minimum Improvements” means the construction of approximately 303 units of market rate and affordable housing, a commercial building containing about 4,348 square feet and structured parking sufficient to meet City zoning requirements, which is approximately 440-450 spaces. After completion of the Minimum Improvements, the term shall mean the Development Property as improved by the Minimum Improvements. “Mixed Income Housing Policy” means the City of Golden Valley Mixed Income Housing Policy. “Note” means the taxable Tax Increment Revenue Note, in substantially the form set forth in the Authorizing Resolution, to be delivered by the HRA to the Developer to reimburse the Developer for the Qualifying Costs pursuant to Article III of this Agreement. 49 4 GL135-48-868513.v7 “Payment Date” means August 1, 2027 and each February 1 and August 1 thereafter to and including the Final Payment Date. “Phasing” means the phased opening of the Minimum Improvements, by approval of partial occupancy permits or otherwise provided that the building envelope is constructed consistent with the requirements of the City Code and all fire and life safety systems are fully operational. “Preliminary Plans” means the plans of the Minimum Improvements referenced in Exhibit B attached hereto. “Public Assistance” means the financial assistance to be offered by the HRA to the Developer through issuance of the Note. “Public Improvements” means the public infrastructure and related improvements to be constructed by the Developer and dedicated to the City. The elements and estimated cost of the Public Improvements are listed on Exhibit G attached hereto. “Qualifying Costs” means the actual cost, in an amount not exceeding $11,243,000, of site acquisition, demolition of existing structures, public infrastructure, site preparation, site improvements, utilities, structured parking and other qualifying expenditures made by the Developer related to completion of the residential component of the Minimum Improvements which the HRA intends to partially reimburse through the Note. “Qualifying Tenants” shall have the meaning given to it in the Declaration. “Redevelopment Project Area” means the HRA’s Valley Square Redevelopment Project Area. “Redevelopment Project Plan” means the redevelopment plan for the Redevelopment Project Area, which was adopted on July 10, 1978 and most recently revised in 1997. “Rental Housing Unit” means one of the 303 rental housing units constructed as part of the Minimum Improvements. “Sale” means any conveyance of fee simple title in and to the Minimum Improvements or the Development Property, as more fully defined in Article VII of this Agreement. “State” means the state of Minnesota. “Substantial Completion” means completion of the commercial and residential components of the Minimum Improvements to a degree allowing the issuance of a temporary certificate of occupancy for the respective element of the Minimum Improvements by the City’s building official. 50 5 GL135-48-868513.v7 “Tax Increment” means the tax increment, as that term is defined in Minnesota Statutes, section 469.174, subd. 25, which is paid to the HRA by the County with respect to the Minimum Improvements and the Development Property. “Tax Increment Financing Act” or “TIF Act” means Minnesota Statutes, sections 469.174 through 469.1794, as amended. “Tax Increment Financing District” or “TIF District” means Tax Increment Financing (Renewal and Renovation) District within Valley Square Redevelopment Project Area, a renewal and renovation district within the meaning of section 469.174, subd. 10a of the TIF Act. “Tax Increment Financing Plan” or “TIF Plan” means the tax increment plan for the TIF District which was approved by the HRA and the City on June 20, 2023. “Tax Official” means the Assessor, County auditor, County or state board of equalization, the commissioners of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. “Termination Date” means the earlier of: (i) the date the TIF District is terminated in accordance with the TIF Act; or (ii) the date the Note is paid in full. “Unavoidable Delays” means a failure or delay in a party’s performance of its obligations under this Agreement, or during any cure period specified in this Agreement which does not entail the mere payment of money, not within the party’s reasonable control including but not limited to acts of God; pandemic or other public health emergency; delays which are the direct result of adverse weather conditions; strikes or other labor troubles; problems with supply chain or materials pricing; fire or other casualty to the Minimum Improvements; litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays; or, except those of the HRA reasonably contemplated by this Agreement, any acts or omissions of any federal, State or local governmental unit, including delays in permitting not caused by the inaction of the Developer, which directly result in delays in construction of the Minimum Improvements; or any other cause beyond the reasonable control of a party. Section 1.2. Exhibits. The following exhibits are attached to and by reference made a part of this Agreement: Exhibit A.Legal Description of Development Property Exhibit B.List of Preliminary Plans Exhibit C.Form of Certificate of Completion Exhibit D.Form of Authorizing Resolution with Note Exhibit E.Form of Investment Letter Exhibit F.Form of Declaration of Restrictive Covenants Exhibit G.List and Estimated Cost of Public Improvements Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance with and governed by the laws of Minnesota. 51 6 GL135-48-868513.v7 (b)The words “herein” and “hereof” and words of similar import, without reference to any particular section or subdivision, refer to this Agreement as a whole rather than any particular section or subdivision hereof. (c)References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. (d)Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. ARTICLE II Representations and Warranties Section 2.1. Representations by the HRA. The HRA makes the following representations as the basis for the undertaking on its part herein contained: (a)The HRA is a public body corporate and politic under the laws of Minnesota. The HRA has the authority to enter into this Agreement and carry out its obligations hereunder. (b)The HRA has approved execution of this Agreement. The individuals executing this Agreement and related agreements and documents on behalf of the HRA have the authority to do so and to bind the HRA by their actions. (c)The Redevelopment Project Area is a redevelopment project which was created, adopted, approved and revised in accordance with the HRA Act. (d)The TIF District is a renewal and renovation tax increment financing district within the meaning of Section 469.174, Subd. 10a of the TIF Act and was created, adopted and approved in accordance with the TIF Act. (e)There are no previous agreements currently in effect to which the HRA is a party pertaining to the Development Property which would preclude the parties from entering into this Agreement or which would impede the fulfillment of the terms and conditions of this Agreement. (f)The activities of the HRA pursuant to this Agreement are undertaken pursuant to the Redevelopment Project Plan and the TIF Plan and are for the purpose of development of the Development Property with a housing and commercial project. (g)The HRA will act in a timely manner to consider all approvals required under this Agreement and will cooperate with the Developer in seeking consideration of any approvals which must be granted by other public entities. 52 7 GL135-48-868513.v7 Section 2.2. Representations and Warranties by the Developer. The Developer makes the following representations and warranties as the basis for the undertaking on its part herein contained: (a)The Developer is a limited liability company validly existing and in good standing under the laws of the state of Minnesota. The Developer has the authority to enter into this Agreement and carry out its obligations hereunder. (b)The persons executing this Agreement and related agreements and documents on behalf of the Developer have the authority to do so and to bind the Developer by their actions. (c)The Developer will construct the Minimum Improvements in substantial accordance with the terms of this Agreement, the Redevelopment Project Plan, the TIF Plan, the Construction Plans and all local, State and federal laws and regulations, including, but not limited to, environmental, zoning, building code and public health laws and regulations. (d)The Developer will apply for and use all reasonable efforts to obtain, in a timely manner, all other required permits, licenses and approvals from the City, and will meet, in a timely manner, the 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 or used for their intended purpose. (e)The Developer has analyzed the economics of acquisition of the Development Property, the cost of demolition of existing structures, public infrastructure improvements, site preparation, site improvements, utilities and construction of the Minimum Improvements and concluded that, absent the Public Assistance to be offered under this Agreement, it would not undertake this project. (f)Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any corporate organizational documents or any evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. ARTICLE III Acquisition of Development Property; Public Assistance Section 3.1. Acquisition of Development Property. The Development Property is owned by several third parties. The Developer agrees to acquire fee ownership of all of the Development Property on or around July 1, 2023. The HRA makes no representations to the Developer regarding the suitability of the Development Property for the use and purpose intended by the Developer. Section 3.2. Issuance of Pay-As-You-Go Note. (a) In consideration of the Developer incurring the Qualifying Costs while constructing the Minimum Improvements, the HRA will issue 53 8 GL135-48-868513.v7 to the Developer the Note in the principal amount up to $11,243,000 in substantially the form set forth in the Authorizing Resolution attached hereto as Exhibit D. The HRA and the Developer agree that the consideration from the Developer for the purchase of the Note will consist of the Developer’s payment of the Qualifying Costs which are eligible for reimbursement with Tax Increment and which are incurred by the Developer in at least the principal amount of the Note. The Authorizing Resolution will authorize delivery of the Note by the HRA’s Executive Director upon satisfaction by the Developer of all the conditions precedent specified in section 3.3 of this Agreement and interest will begin accruing on the date of delivery of the Note. Any statement or estimate of Qualifying Costs will not be treated as a limitation on reimbursement for any single category of Qualifying Costs provided the Qualifying Costs in total do not exceed the principal amount of the Note. (b)Subject to the provisions thereof, the Note shall bear simple, non-compounding interest at the rate of 6.0% per annum. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Principal and interest on the Note will be payable on each Payment Date; however, the sole source of funds required to be used for payment of the HRA’s obligations under this Agreement and under the Note shall be the Available Tax Increment received in the 6-month period preceding each Payment Date. On each Payment Date the Available Tax Increment shall be credited against the accrued interest then due on the Note and then applied to reduce the principal. In the event the Available Tax Increment is not sufficient to pay the accrued interest, the unpaid accrued interest shall be carried forward without interest. All Tax Increment in excess of the Available Tax Increment necessary to pay the principal and accrued interest on the Note is not subject to this Agreement, and the HRA retains full discretion as to any authorized application thereof. To the extent that the Available Tax Increment is insufficient through the Final Payment Date to pay all amounts otherwise due on the Note, said unpaid amounts shall then cease to be any debt or obligation of the HRA whatsoever. No interest will accrue during any period in which payments have been suspended pursuant to this Agreement unless it is determined that the suspension of payments was not warranted under this Agreement either by the HRA or by adjudication. (c)The Developer understands and acknowledges that the HRA makes no representations or warranties regarding the amount of Available Tax Increment or that revenues pledged to the Note will be sufficient to pay the Note. Any estimates of Tax Increment prepared by the HRA or its municipal advisors in connection with the TIF District or this Agreement are for the benefit of the HRA and are not intended as representations on which the Developer may rely. Section 3.3. Conditions Precedent to Issuance of the Note. Notwithstanding anything in this Agreement to the contrary, the HRA’s Executive Director is authorized to issue the Note to the Developer only after all of the following conditions precedent have been satisfied: (a)The Developer has acquired all of the Development Property in fee; (b)The Developer has executed this Agreement and it has been recorded against the Development Property; (c)The Developer has executed the Declaration of Restrictive Covenants and it has been recorded against the Development Property; 54 9 GL135-48-868513.v7 (d)The Developer has paid the fees provided for in section 9.12 of this Agreement and all other fees due to the HRA and the City; (e)The Developer has achieved Substantial Completion of all elements the Minimum Improvements and the HRA has issued the Certificates of Completion; (f)The Developer has submitted evidence, including paid receipts and lien waivers, it has incurred and paid for the Qualifying Costs in an amount not less than the principal amount of the Note; (g)The Developer has constructed the Public Improvements and has submitted the required warranty bond related thereto and the Public Improvements have been accepted by the City; (h)The Developer has made the certification regarding labor payments required under section 4.3(b) of this Agreement; (i)The Developer has submitted the Investment Letter in the general form attached hereto as Exhibit E; (j)The HRA has adopted the Authorizing Resolution; and (k)There has been no Event of Default on the part of the Developer which has not been cured. Section 3.4. Records. The HRA and its representatives will have the right at all reasonable times after reasonable notice to inspect, examine and copy invoices paid by the Developer and/or its general contractor relating to the Minimum Improvements and the Qualifying Costs for which the Developer will be reimbursed under the Note. Section 3.5. No Business Subsidy. All of the Public Assistance offered by the HRA to the Developer under this Agreement is with regard to the residential component of the Minimum Improvements. In addition, the Developer’s acquisition cost of the Development Property and site preparation exceeds 70% of the assessor’s current year’s estimated market value of the property. Accordingly, this project qualifies for exceptions under Minnesota Statutes, section 116J.993, subd. 3(7) and (17) and the Public Assistance is not a business subsidy within the meaning of the Business Subsidy Act. ARTICLE IV Construction of Minimum Improvements; Public Improvements; Income Restrictions Section 4.1. Construction of Minimum Improvements. The Developer agrees that it will construct the Minimum Improvements on the Development Property substantially in accordance with the Preliminary Plans and the Construction Plans. The Developer acknowledges that, in addition to the requirements of this Agreement, construction of the Minimum Improvements will 55 10 GL135-48-868513.v7 necessitate compliance with the City Approvals and possible approvals by other governmental agencies. To the extent such approvals have not already been obtained, the Developer agrees to submit in a timely manner all applications for and pursue to their conclusion all other approvals needed prior to constructing the Minimum Improvements. Section 4.2. Preliminary Plans and Construction Plans. (a) The Developer has submitted and the HRA has approved the Preliminary Plans listed in Exhibit B attached hereto. Prior to beginning construction on the Minimum Improvements, the Developer shall submit dated Construction Plans to the City. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in substantial conformity with the Preliminary Plans and this Agreement. The City will approve the Construction Plans, including plans for Phasing, if they (1) are substantially consistent with the Preliminary Plans; (2) conform to all applicable federal, State and local laws, ordinances, rules and regulations; (3) are adequate to provide for the construction of the Minimum Improvements; (4) conform to the State building code; and (5) if there has occurred no uncured Event of Default on the part of the Developer. Except as otherwise set forth herein, no approval by the City shall relieve the Developer of the obligation to comply with the terms of this Agreement and the terms of all applicable federal, State and local laws, ordinances, rules and regulations in the construction of the Minimum Improvements. Except as otherwise set forth herein, no approval by the City shall constitute a waiver of an Event of Default. The City shall use good faith efforts to review the Construction Plans and either approve or reject them in writing within 15 business days after receipt. Any rejection, in whole or in part, shall set forth in detail the reasons for rejection. (b)The Plans for Phasing shall be approved at the time of issuance of the building permit for the residential component of the Minimum Improvements based on the provisions for fire, life safety, mechanical, ingress/egress and parking for each portion of building for which a partial Certificate of Completion is sought. Notwithstanding the above, the building envelop of the residential component of the Minimum Improvements must be completed in compliance with section 103-10 of City code. (c)If the Developer desires to make any Material Change in the Construction Plans after approval, the Developer shall submit the proposed change to the City for its approval on behalf of the HRA. If the proposed change is consistent with the Preliminary Plans or is otherwise acceptable to the City and meets all other requirements of section 4.2(a) above, the City shall approve the proposed change. Such change in the Construction Plans shall be deemed approved by the City unless rejected, in whole or in part, by written notice by the City to the Developer, setting forth in detail the reasons for rejection. Such rejection shall be made within 15 business days after receipt by the City of the written notice of such change from the Developer. Section 4.3. Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, the Developer agrees to commence construction of the commercial portion of the Minimum Improvements on or around July 31, 2023 and the residential portion no later than July 31, 2024. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in substantial conformity with the Construction Plans. The Developer shall make such periodic reports to the HRA regarding construction of the Minimum Improvements as the HRA deems necessary or helpful in order to 56 11 GL135-48-868513.v7 monitor progress on construction of the Minimum Improvements. Subject to Unavoidable Delays, the Developer agrees to have achieved Substantial Completion of the commercial portion of the Minimum Improvements on or around August 31, 2024 and of the residential portion by December 31, 2026. The structured parking facility is a component of the residential portion of the Minimum Improvements and will be completed on or around December 31, 2026. (b)The Developer agrees to utilize in its contract with its general contractor and all subcontractors a subcontractor addendum, in a form acceptable to the HRA, which allows the general contractor to withhold payment or cancel the contract if violations occur (the “Subcontract Addendum”). The Developer shall prohibit the use of all contractors appearing on the State “disqualified” list of contractors. The Developer and all contractors and subcontractors shall comply with all federal, State and local labor laws and regulations. If a claim is filed with the State Department of Labor regarding any contractor or subcontractor working on the Minimum Improvements, the Developer agrees to cooperate with the State and cause the subcontractors to do the same and take all reasonable actions required by the State. The Developer agrees to fully enforce the contract with its general contractor and the subcontractors, including requiring the general contractor to enforce the Subcontract Addendum. The Developer shall certify to the HRA prior to issuance of the Certificate of Completion that property payments have been made to all contractors, subcontractors and laborers. Section 4.4. Certificate of Completion. (a) After Substantial Completion of the commercial and residential components of the Minimum Improvements in accordance with the Construction Plans and at the written request of the Developer, the HRA will, within 20 days thereafter, furnish the Developer with an appropriate Certificate of Completion regarding the respective element so certifying in the form of Exhibit C attached hereto. Such Certificate of Completion by the HRA shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligations of the Developer to construct the respective element of the Minimum Improvements and the dates for the beginning and completion thereof. (b)Each Certificate of Completion shall be in such form set forth in Exhibit C and as will enable it to be recorded in the proper County office for the recordation of deeds and other instruments pertaining to the Development Property. If the HRA shall refuse to provide a Certificate of Completion in accordance with the provisions of this section 4.4, the HRA shall promptly notify Developer within the same 20 day period following receipt of request by the Developer for the Certificate of Completion, and such notification from the HRA shall include a written statement, indicating in clear detail in what respects the Developer has failed to complete the relevant portion of the Minimum Improvements substantially in accordance with the Construction Plans and what measures or acts will be necessary, in the opinion of the HRA, for the Developer to take or perform in order to obtain such certification. If the HRA fails to issue such a written statement within such 20-day period, the HRA shall be deemed to have waived its right to do so and shall be deemed to have issued a Certificate of Completion to the Developer. The Developer shall have 90 days following receipt of the HRA’s written response to cure or agree to terms with the HRA regarding issues to be resolved prior to the Developer obtaining a Certification of Completion from the HRA. 57 12 GL135-48-868513.v7 Section 4.5. Public Improvements. (a) Redevelopment of the Development Property and construction of the Minimum Improvements requires the construction of certain Public Improvements which will primarily benefit the Development Property. The list of Public Improvements, the estimated cost of each element and a map of the improvements is included in Exhibit G attached hereto. The Developer will construct the Public Improvements at its expense. The Developer has submitted preliminary plans and specifications and must submit final construction plans for the Public Improvements prepared and signed by a registered professional engineer. The final construction plans must be approved by the City prior to start of work by the Developer. The City shall inspect all work on the Public Improvements at the Developer’s expense. The Developer, its contractors and subcontractors, shall follow all reasonable instructions received from the City’s inspectors regarding construction of the Public Improvements. Prior to beginning construction of the Public Improvements, the Developer or the Developer’s engineer shall schedule a preconstruction meeting with all parties concerned, including the City staff and engineers, to review the program for the construction work. (b)Within 45 days after the completion of all of the Public Improvements, the Developer shall supply the City with a complete set of reproducible “as constructed” plans and three complete sets of paper “as constructed” plans, each prepared in accordance with City standards and in AutoCAD format based on Hennepin County coordinates. All Public Improvements shall be completed on or around December 31, 2026. (c)The Developer agrees to require its contractor to provide to the City a warranty bond against defects in labor and materials for the Public Improvements for a period of two years from the date of their acceptance by the City. During such period, the Developer agrees to repair or replace any Public Improvement, or portion or element thereof, which shows signs of failure, normal wear and tear excepted. A decision regarding whether a Public Improvement shows signs of failure shall be made by the City in the reasonable exercise of its judgment. If the Developer fails to repair or replace a defective Public Improvement during the warranty period, the City may repair or replace the defective portion and may use the Letter of Credit to reimburse itself for such costs. The Developer agrees to reimburse the City fully for the cost of all Public Improvement repairs or replacement if the cost thereof exceeds the remaining amount of the Letter of Credit. Such reimbursement must be made within 45 days of the date upon which the City notifies the Developer of the cost due under this section. If the Developer fails to make required payments to the City, the Developer hereby consents to the City levying special assessments for any unreimbursed amount associated with such costs against the Development Property. The Developer, on behalf of itself and its successors and assigns, acknowledges the benefit to the Development Property of the repair or replacement of the Public Improvements and hereby consents to such assessment and waives the right to a hearing or notice of hearing or any appeal thereon under Minnesota Statutes, Chapter 429. Section 4.6.Letter of Credit. (a) To ensure completion of the Public Improvements required under this Agreement, the Developer agrees to deliver to the City prior to beginning any construction or work on the Public Improvements a letter of credit (the “Letter of Credit”), or cash in the amount of $1,482,416.50. This amount required represents 125 percent of the estimated cost of the Public Improvements as detailed in Exhibit G attached hereto. The Letter of Credit shall be delivered to the City prior to beginning any work on the Public Improvements and shall 58 13 GL135-48-868513.v7 renew automatically thereafter until released by the City. The Letter of Credit shall be issued by a bank licensed to do business in the United States determined by the City to be solvent and creditworthy and shall be in a form acceptable to the City. The Letter of Credit shall allow the City to draw upon the instrument, in whole or part, to complete construction of any or all of the Public Improvements. (b)The City agrees that prior to drawing on the Letter of Credit it will provide notice to the Developer and a period of no less than 30 days for the Developer to cure the default. Notwithstanding the above, the City shall not be obligated to allow a cure period which extends beyond the expiration date of the Letter of Credit. (c)The amount of the Letter of Credit may be reduced as the Public Improvements are completed upon written request from the Developer. Upon such request, the City agrees to reduce the Letter of Credit to an amount roughly equal to 150 percent of the cost of the remaining work. The Letter of Credit shall be released in full and returned to the Developer within 60 days following completion and acceptance of all Public Improvements. Prior to releasing any portion of the Letter of Credit or accepting another letter of credit in replacement, the City shall first be satisfied regarding the quality and completeness of the work and that the Developer has taken such steps as may be necessary to ensure that no liens will attach to public property. Notwithstanding anything herein to the contrary, the Letter of Credit shall not be reduced to less than $50,000, until such time as the City releases the entire Letter of Credit and subject to delivery of the required warranty bond to the City. (d)It is the intention of the parties that the City at all times have available to it a Letter of Credit in an amount adequate to ensure completion of all elements of the Public Improvements. To that end and notwithstanding anything herein to the contrary, all requests by the Developer for a reduction or release of the Letter of Credit shall be evaluated by the City in light of that principle. (e)If at any time the City reasonably determines that the bank issuing the Letter of Credit no longer satisfies the City’s requirements regarding solvency and creditworthiness, the City shall notify the Developer and the Developer shall provide to the City within 60 days a substitute Letter of Credit from another bank meeting the City’s requirements. If within 60 days of notice the Developer fails to provide the City with a substitute Letter of Credit from an issuing bank satisfactory to the City, the City may draw under the existing Letter of Credit. Section 4.7. Declaration Regarding Income Restrictions. The Developer agrees that the residential portion of the Minimum Improvements will be subject to the following tenant income restrictions: (a)The Developer will cause at least 15 percent (46 units) of the Rental Housing Units in the Minimum Improvements to be occupied by Qualifying Tenants whose household income is 60 percent or less of the area median gross income, all as further described in the Declaration attached hereto as Exhibit F. The Rental Housing Units which will be made available to Qualifying Tenants will include five studios, 29 one-bedroom units and 12 2-bedroom units and will be interspersed with the market rate Rental Housing Units and not concentrated in one or more portions of the Minimum Improvements. Prior to any payment under the Note, the Developer 59 14 GL135-48-868513.v7 will deliver the executed Declaration to the HRA in recordable form. The Declaration shall be in effect for a minimum of 20 years from the date of issuance of Certificate of Completion for the residential Minimum Improvements. (b)As a condition to initial and continuing occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver to the Developer a certification in which the prospective Qualifying Tenant certifies as to his or her income. In addition, the person will be required to provide whatever other information, documents, or certifications are reasonably deemed necessary by the HRA’s Executive Director to substantiate his or her income, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant. Certifications will be maintained on file by the Developer with respect to each Qualifying Tenant who resides in a Rental Housing Unit or resided therein during the immediately preceding calendar year. (c)The form of lease to be utilized by the Developer in renting any Rental Housing Unit to any person who is intended to be a Qualifying Tenant must provide for termination of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to income. (d)On or before April 15 of each year during the term of the Declaration, commencing on the first April 15 after issuance of the Certificate of Completion for the residential Minimum Improvements, the Developer must submit evidence of tenant incomes, showing that tenants of at least 46 of the Rental Housing Units meet the income restrictions set forth in the Declaration. (e)While the covenants in this Section 4.7 are in effect, the HRA and its representatives will have the right at all reasonable times, and after reasonable notice, to inspect and to examine and copy all books and records of the Developer and its successors and assigns relating to the covenants described in this Section 4.7 and in the Declaration. (f)The Developer acknowledges that the primary purpose for requiring compliance by the Developer with the rental restrictions provided in this Agreement and the Declaration is to ensure compliance of the Minimum Improvements with the income covenants set forth herein and the City’s Mixed Income Housing Policy. If prior to the Termination Date the HRA reasonably determines, based on the reports submitted by the Developer or otherwise that the residential portion of the project no longer meets the requirements of the City’s Mixed Income Housing Policy, such event will be deemed an Event of Default by the Developer under this Agreement; provided, however, that the HRA may not terminate this Agreement so long as the determination is being contested in good faith and has not been finally adjudicated. (g)The Developer covenants and agrees that the Developer will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the Minimum Improvements prior to the Termination Date that the transferee assume in writing, in a form acceptable to the HRA, all duties and obligations of the Developer under this section 4.7 and the Declaration regarding income restrictions and verification of Qualified Tenants by means of an assumption agreement acceptable to the HRA. The Developer will deliver an executed copy of the assumption agreement to the HRA prior to the transfer. 60 15 GL135-48-868513.v7 Section 4.8. Affordable Housing Plan. The Developer has submitted the Affordable Housing Plan regarding the Minimum Improvements required under the City’s Mixed Income Housing Policy. This Agreement satisfies the requirement for an Affordable Housing Performance Agreement under the City’s Mixed Income Housing Policy. Section 4.9. Equal Opportunity Practices. The Developer agrees to comply with all Equal Opportunity, Affirmative Marketing and Fair Housing practices with regard to marketing and renting all Rental Housing Units. The Equal Housing Opportunity statement (“We do business in accordance with the Federal Fair Housing Law. It is illegal to discriminate against any person because of race, color, religion, sex, handicap, familial status or national origin.” must be used in all advertising of Rental Housing Units. ARTICLE V Insurance Section 5.1. Insurance. The Developer or its general contractor will provide and maintain, at all times during the process of constructing the Minimum Improvements, a Special Form Basis Insurance Policy and, from time to time during that period, at the request of the HRA no more frequently than once annually, furnish the HRA with proof of payment of premiums on policies covering the following: (1)Builder’s risk insurance, written on the so-called “Builder’s Risk – Completed Value Basis,” in an amount equal to one hundred percent (100%) of the insurable value of the applicable portion of the Minimum Improvements at the date of completion, and with coverage available in reporting form on the so-called “special” form of policy; (2)Commercial general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and (3)Workers’ compensation insurance, with statutory coverage. Section 5.2. Evidence of Insurance. All insurance required in this Article V of this Agreement must be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of Minnesota to assume the risks covered thereby. 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. Upon written request by the HRA, the Developer agrees to deposit with the HRA a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. 61 16 GL135-48-868513.v7 ARTICLE VI Payment of Taxes; Use of Tax Increment Section 6.1. Taxes. The Developer agrees that prior to the Termination Date: (i) it will not seek administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to the Minimum Improvements or the Development Property or raise the inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; (ii) it will not seek administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to the Minimum Improvements or the Development Property or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; and (iii) except as described in paragraph (e) below, it will not cause a reduction in the assessed value of the Minimum Improvements or the Development Property through: (a)willful destruction of the Minimum Improvements or any part thereof; (b)an application to the commissioner of revenue of the State or to any local taxing jurisdiction requesting an abatement or deferral of real estate taxes on the Minimum Improvements or the Development Property; (c)a transfer of the Minimum Improvements or the Development Property, or any part thereof, to an entity exempt from the payment of real estate taxes under State law and that entity applies for tax exemption; or (d)any other proceedings, whether administrative, legal or equitable, with any administrative body within the County or the State or with any court of the State or the federal government. (e)The Developer may seek through petition or other means to have the market value for the Development Property or Minimum Improvements reduced. Until the Note is fully paid, such activity must be preceded by written notice from the Developer to the HRA. Upon receiving such notice, or otherwise learning of the Developer's intentions, the HRA may suspend payments due under the Note until the actual amount of the reduction is determined, whereupon the HRA will make the suspended payments less any amount that the HRA is required to repay the County as a result of any reduction in market value of the Development Property or the Minimum Improvements. During the period that the payments are subject to suspension, the HRA may make partial payments on the Note if it determines, in its reasonable discretion, that the amount retained will be sufficient to cover any repayment which the County may require. The HRA’s suspension of payments on the Note pursuant to this section shall not be considered a default under this Agreement. Section 6.2. Right to Collect Delinquent Taxes and Special Assessments. The Developer acknowledges that at all times prior to the Termination Date the HRA shall have the right to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and special assessments due on the Development Property or the Minimum 62 17 GL135-48-868513.v7 Improvements and to pay over the same as a tax payment to the County auditor. In any such suit in which the HRA prevails, the HRA shall also be entitled to recover its reasonable out-of-pocket costs and expenses, including attorney fees. Section 6.3. Use of Tax Increment. The TIF District is a renewal and renovation tax increment financing district within the meaning of section 469.174, subd. 10a of the TIF Act. Except for payments to the Developer as provided for in this Agreement and the Note, the HRA shall be free to use any Tax Increment it receives from the County with respect to the TIF District for any purpose for which such increment may lawfully be used under the TIF Act and the HRA shall have no obligations to the Developer with respect to the use of such Tax Increment. ARTICLE VII Restrictions on Sale of Minimum Improvements; Termination of Agreement Section 7.1. Prohibition Against Sale of Minimum Improvements. (a)The Developer represents and agrees that its use of the Development Property and its other undertakings pursuant to the Agreement, are, and will be, used for the purpose of construction of the Minimum Improvements on the Development Property and not for speculation in land holding. The Developer represents and agrees that, prior to the issuance of a Certificate of Completion regarding both portions of the Minimum Improvements, there shall be no Sale of all or any portion of the Development Property or the Minimum Improvements constructed thereon nor shall the Developer suffer any such Sale to be made, without the prior written approval of the HRA, which approval shall not be unreasonably withheld; provided however, notwithstanding the foregoing, the Developer shall be entitled to lease Rental Housing Units to third parties or transfer or assign the that portion of the Development Property that contains the commercial (nonresidential) use without the prior written approval of the HRA. As a condition of approval of any such sale, the HRA shall require, at a minimum, that the proposed transferee shall have entered into an agreement whereby the transferee expressly assumes all of the Developer’s obligations under this Agreement. Any such agreement shall include the HRA as a party and otherwise be in form and substance reasonably acceptable to the HRA. (b)Notwithstanding anything in this Agreement to the contrary, Developer is authorized, without the approval of HRA, to obtain construction and permanent financing for the Minimum Improvements and to mortgage the Development Property and collaterally assign payments under the Note to provide security for the construction and permanent financing, and the HRA shall subordinate this Agreement to such mortgage. (c)After a Certificate of Completion has been issued, Developer or other transferor may freely, without the approval of HRA, sell or transfer the respective portion of the Minimum Improvements or the Development Property to any person at any time. In connection with such a sale or transfer, Developer may assign its interest in this Agreement and the Note to the buyer or transferee, provided that such buyer or transferee assumes and agrees to perform the obligations of Developer hereunder. In the event that the Developer or other transferor enters into an agreement to sell or transfer the Minimum Improvements or the Development Property or any 63 18 GL135-48-868513.v7 portion to any person, then, within 15 days after request, the HRA shall acknowledge and certify certain facts in connection with this Agreement and the status of obligations of Developer/transferor under this Agreement. The HRA shall provide this certification to Developer/transferor and any potential buyer or transferee of the Minimum Improvements or the Development Property or any portion thereof. The certification shall reference the following: (1) that the Developer/transferor and transferee may rely on the representations and agreements made by the HRA in the certification; (2) the status of the completion of the construction obligations of the Minimum Improvements; (3) the amount of payments made under the Note and the outstanding principal balance of the Note, if any, and that any amounts owed under the Note will be paid to Developer and not the transferee unless the rights under the Note are specifically assigned to the transferee; (4) that the Developer and not the transferee remains responsible for construction obligations under this Agreement, and that transferee and any subsequent owners of the Minimum Improvements or the Development Property are released from all construction obligations under this Agreement; (5) that the transferee and not the Developer/transferor shall be responsible for all non-construction obligations under this Agreement arising subsequent to the sale or transfer of the Minimum Improvements or the Development Property for the portion of the Development Property owned by the transferee so long as the transferee has assumed such obligations by written instrument, and that the Developer/transferor is released from all such non-construction obligations under this Agreement; (6) whether or not there exists any defaults, events of default, or conditions which with the passage of time or giving of notice would constitute a default under this Agreement and (7) such other matters as may be reasonably requested by the Developer or the transferee. Notwithstanding the foregoing, prior written approval from the HRA shall not be required for any transfer or assignment prior to or after issuance of a Certificate of Completion: (i) to any entity controlling, controlled by or under common control with the Developer; (ii) to any entity in which the majority equity interest is owned by the parties that have a majority equity interest in the Developer; (iii) that after giving effect to such transfer or assignment does not result in a change in control of the Developer; or (iv) that portion of the Development Property that contains the commercial (nonresidential) use. Section 7.2. Termination of Agreement. Upon the occurrence of the Termination Date, the parties agree to execute and record a document terminating this Agreement. ARTICLE VIII Events of Default Section 8.1. Events of Default Defined. Each and every one of the following shall be an Event of Default under this Agreement: (a)Failure by the Developer to seek such approvals or permits from the HRA and the City and other entities which are necessary to construct the Minimum Improvements; provided that if a Certificate of Completion is issued by the HRA, such failure shall no longer be an Event of Default; 64 19 GL135-48-868513.v7 (b)Failure by the Developer to pay real estate taxes or special assessments on the Minimum Improvements or the Development Property as they become due; (c)Failure by the Developer to commence and complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement, including the timing thereof, unless such failure is caused by an Unavoidable Delay or waived by the Developer and the HRA; (d)Failure by the Developer to comply with the contract requirements of section 4.3(b) of this Agreement; (e)If the Developer shall file a petition in bankruptcy, or shall make an assignment for the benefit of its creditors or shall consent to the appointment of a receiver; (f)If there is a violation by the Developer of the Declaration with regard to the required income limitations or if the Developer fails to deliver the annual rent and income reports required by the Declaration; (g)If the Developer shall fail to construct the Public Improvements, provide the required warranty bond related thereto or submit the Letter of Credit; (h)Sale of the Minimum Improvements or the Development Property, or any portion thereof, by the Developer in violation of Article VII of this Agreement; or (i)Failure by either party to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, including but not limited to any action necessary for the establishment of the TIF District. Section 8.2. Remedies on Default. Whenever any Event of Default referred to in section 8.1 of this Agreement occurs, the non-defaulting party may take any one or more of the following actions after providing 30 days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said 30 days from the receipt of Notice or, if the Event of Default is by its nature incurable within 30 days, the defaulting party does not provide assurances to the non-defaulting party reasonably satisfactory to the non- defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a)Suspend its performance under this Agreement until it receives assurances from the defaulting party, deemed adequate by the non-defaulting party, that the defaulting party will cure its default and continue its performance under this Agreement; (b)Prior to issuance of the Certificate of Completion, cancel and rescind or terminate this Agreement, provided however, the remedy in this Section 8.2(b) will not apply to an Event of Default described in Sections 8.1(a) 8.1(f), or 8.1(i); 65 20 GL135-48-868513.v7 (c)If the default occurs after issuance of a Certificate of Completion, the HRA may suspend payments under the Note, subject to the provisions of section 8.3 of this Agreement; and (d)Take whatever action, including legal or administrative action, which may appear necessary or desirable to the non-defaulting party to collect any payments due under this Agreement, including reimbursement of the Public Assistance previously granted, or to enforce performance and observance of any obligation, agreement, or covenant of the defaulting party under this Agreement. The HRA recognizes and agrees that any lender who is the beneficiary of a mortgage recorded against the Development Property, shall have the opportunity, but not the obligation, to cure any default by the Developer under the same terms as the Developer, and any cure by such lender shall be accepted or rejected as if made by the Developer. Section 8.3. Remedies after Certificate of Completion. The HRA may exercise its rights under Section 8.2(c) only for the following Events of Default: (1)the Developer fails to pay real estate taxes or special assessments on the Minimum Improvements or the Development Property or any part thereof when due and the taxes or special assessments have not been paid, or provision satisfactory to the HRA made for their payment, within 45 days after written demand by the HRA to do so; or (2)the Developer takes or permits an action prohibited by section 6.1 of this Agreement; or (3)the Developer transfers the Minimum Improvements or the Development Property, or any part thereof, to an entity exempt from the payment of real estate taxes under State law. Section 8.4. No Remedy Exclusive. No remedy conferred herein or reserved to the parties is intended to be exclusive of any other available remedy or remedies, but each and every 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. 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 HRA 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 under this Agreement. Section 8.5. No Additional Waiver Implied by One Waiver. In the event any covenant or 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. 66 21 GL135-48-868513.v7 ARTICLE IX Additional Provisions Section 9.1. Conflict of Interests; Representatives Not Individually Liable. No member, official, or employee of the HRA shall have any personal financial interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his or her personal financial 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 HRA shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach or for any amount which may become due or on any obligations under the terms of this Agreement. Section 9.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement, it will comply with all applicable equal employment and nondiscrimination laws and regulations. Section 9.3.Restrictions on Use. The Developer agrees that through the Termination Date it will use the Minimum Improvements for only such uses as permitted under the City’s land use regulations and in compliance with the City Approvals. Section 9.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, any notice, demand, or other communication under the Agreement or any related document by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified United States mail, postage prepaid, return receipt requested, or delivered personally to: (a)in the case of the Developer:640 Golden Valley, LLC c/o Sentinel Management Company, LLC 5215 Edina Industrial Blvd., Suite 100 Edina, MN 55439 Attn: Fabrizio Montermini (b)in the case of the HRA:Housing and Redevelopment Authority of the City of Golden Valley 7800 Golden Valley Road Golden Valley, MN 55427 Attn: Executive Director and with a copy to:Kennedy & Graven, Chartered 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 Attn: Ronald H. Batty 67 22 GL135-48-868513.v7 or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this section 9.4. Section 9.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.6. Disclaimer of Relationships. The Developer acknowledges that nothing contained in this Agreement nor any act by the HRA or the Developer shall be deemed or construed by the Developer or by any third person to create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint venture between the HRA and the Developer. Section 9.7. Amendment. This Agreement may be amended only by the written agreement of the parties. Section 9.8.Recording; Agreement Runs with the Land. The HRA intends to record this Agreement among the County land records and the Developer agrees to pay for the cost of recording same. This Agreement runs with the Development Property and shall bind the successors and assigns of the HRA and the Developer. Section 9.9.Release and Indemnification Covenants. a) Except for any negligent act of the following named parties, the Developer hereby releases from and covenants and agrees that the HRA, and its governing body members, officers, agents, servants, and employees (the “Indemnified Parties”) shall not be liable for, and hereby agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements. b)The aforesaid indemnification shall not apply to willful misrepresentation or any willful or wanton misconduct or negligence of the HRA. c)Except for any negligent or willful act of the HRA, the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Developer or its partners, officers, agents, servants or employees or any other person who may be about the Minimum Improvements or the Minimum Improvements due to any act of negligence of any person. Section 9.10. Titles of Articles and Sections. Any titles of the several parts, articles, and sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 9.11. Governing Law; Venue. This Agreement shall be construed in accordance with the laws of Minnesota. Any dispute arising from this Agreement shall be heard in the State or federal courts of Minnesota, and all parties waive any objection to the jurisdiction thereof, whether based on convenience or otherwise. Section 9.12. Fees and Charges. The Developer agrees to reimburse the HRA for all reasonablefees or costs for legal, municipal advisory, engineering, planning or other staff time for 68 23 GL135-48-868513.v7 preparation of the TIF Plan and related documents; the analysis, drafting or negotiating this Agreement and related documents and the recording thereof; and for reviewingany plans regarding the Minimum Improvements submitted in satisfaction of this Agreement. The Developer also agrees to reimburse the City for all reasonable fees and costs incurred by the City in connection with construction of the Public Improvements and the City Approvals. The Developer and its representatives will have the right at all reasonable times after reasonable notice to inspect, examine and copy invoices and supporting documents relating to the fees and charges to be reimbursed pursuant to this Section. Section 9.13. Notice of Unavoidable Delays. Within ten (10) days after a party impaired by an Unavoidable Delay has knowledge of the delay it shall give the other party notice of the delay and the estimated length of the delay, and shall give the other party notice of the actual length of the delay within ten (10) days after the cause of the delay has ceased to exist. The parties shall pursue with reasonable diligence the avoidance and removal of any such delay. Unavoidable Delay shall not extend performance of any obligation required under this Agreement unless the notices required in this section are given as herein required. * * * * ** * * 69 24 GL135-48-868513.v7 IN WITNESS WHEREOF, the HRA and the Developer have caused this Agreement to be duly executed in their names and behalves on or as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: _________, Chair By: _________, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF _________) The foregoing instrument as acknowledged before me this _____ day of ____________, 2023, by __________________, the Chair of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. ____________________________________ Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF _________) The foregoing instrument as acknowledged before me this _____ day of ____________, 2023, by __________________, the Executive Director of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. ____________________________________ Notary Public 70 25 GL135-48-868513.v7 640 GOLDEN VALLEY, LLC By:___________________________ _________, __________ STATE OF MINNESOTA ) ) ss. COUNTY OF _________) The foregoing instrument was executed before me this _____ day of _______________, 2023, by _______________, the _______ of 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota, on behalf of the company. ____________________________________ Notary Public 71 A-1 GL135-48-868513.v7 EXHIBIT A TO CONTRACT FOR PRIVATE DEVELOPMENT LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY The Development Property is legally described as follows: Lot 1, Block 1 and Lot 2, Block 2, Valley Square 3rd Addition, Hennepin County, Minnesota. (substitute new platted description prior to recording) 72 B-1 GL135-48-868513.v7 EXHIBIT B TO CONTRACT FOR PRIVATE DEVELOPMENT LIST OF PRELIMINARY PLANS The following constitute the Preliminary Plans of the Minimum Improvements: 73 B-2 GL135-48-868513.v7 74 B-3 GL135-48-868513.v7 75 B-4 GL135-48-868513.v7 76 B-5 GL135-48-868513.v7 77 B-6 GL135-48-868513.v7 78 B-7 GL135-48-868513.v7 79 B-8 GL135-48-868513.v7 80 B-9 GL135-48-868513.v7 81 B-10 GL135-48-868513.v7 82 B-11 GL135-48-868513.v7 83 B-12 GL135-48-868513.v7 84 C-1 GL135-48-868513.v7 EXHIBIT C TO CONTRACT FOR PRIVATE DEVELOPMENT FORM OF CERTIFICATE OF COMPLETION WHEREAS, the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota (the “HRA”), and 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota (the “Developer”), have entered into a certain Contract for Private Development (the “Agreement”) dated the ____ day of ____________, 2023, and recorded in the office of the ____________ in Hennepin County, Minnesota, as Document No. __________, which Agreement contained certain covenants and restrictions regarding completion of the Minimum Improvements, as defined in the Agreement; and WHEREAS, the Developer has performed said covenants and conditions in a manner deemed sufficient by the HRA to permit the execution and recording of this certification. NOW, THEREFORE, this is to certify that all construction of the _______ portion of the Minimum Improvements specified to be done and made by the Developer has been completed and the ___________ in Hennepin County,Minnesota, is hereby authorized to accept for recording and to record the filing of this instrument, to be a conclusive determination of the satisfactory termination of the covenants and conditions relating to completion of the _____ portion of the Minimum Improvements. Dated: _______________. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: _________, Chair By: _________, Executive Director 85 C-2 GL135-48-868513.v7 STATE OF MINNESOTA ) ) ss. COUNTY OF _________) The foregoing instrument as acknowledged before me this _____ day of ____________, 202__, by __________________, the Chair of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. ____________________________________ Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF _________) The foregoing instrument as acknowledged before me this _____ day of ____________, 202__, by __________________, the Executive Director of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. ____________________________________ Notary Public This Instrument was Drafted by: KENNEDY & GRAVEN, CHARTERED (RHB) 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300 86 D-1 GL135-48-868513.v7 EXHIBIT D TO CONTRACT FOR PRIVATE DEVELOPMENT FORM OF AUTHORIZING RESOLUTION WITH NOTE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY RESOLUTION NO. ______ RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 202__ IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $11,243,000 BE IT RESOLVED BY the Housing and Redevelopment Authority in and for the City of Golden Valley, (the “HRA”), as follows: Section 1. Authorization; Award of Sale. 1.01.Authorization. The HRA has heretofore approved the establishment of Tax Increment Financing (Renewal and Renovation) District within Valley Square Redevelopment Project Area (the “TIF District”), located in the Valley Square Redevelopment Project Area (the “Redevelopment Project Area”), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project Area. Pursuant to Minnesota Statutes, Section 469.178, the HRA is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Minimum Improvements and Development Property in the Redevelopment Project Area. The bonds are payable from all or any portion of revenues derived from the Minimum Improvements and the Development Property in the TIF District and pledged to the payment of the bonds. The HRA hereby finds and determines that it is in the best interests of Golden Valley that it issue and sell its taxable Tax Increment Revenue Note, Series 202__ (the “Note”), in the aggregate principal amount up to $11,243,000, for the purpose of financing certain public costs of the Redevelopment Project Area. 1.02.Agreement Approved; Issuance, Sale and Terms of the Note. The HRA has previously approved the Contract for Private Development (the “Agreement”) between the HRA and 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota (the “Owner”), and authorized the Chair and Executive Director to execute the Agreement. Pursuant to the Agreement, the Note will be issued to the Owner. The Note will be dated as of the date of delivery and will bear interest at the rate of 6.0% per annum. In exchange for the HRA’s issuance of the Note to the Owner, the Owner will pay certain costs related to the Minimum Improvements 87 D-2 GL135-48-868513.v7 (the Qualifying Costs, as defined in the Agreement) pursuant to Section 3.2 of the Agreement. The Note will be delivered in the principal amount up to $11,243,000for reimbursement of the Owner’s costs in accordance with the terms of Sections 3.2 and 3.3 of the Agreement. Section 2.Form of Note. The Note will be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA HENNEPIN COUNTY HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY No. R-1 $11,243,000 TAXABLE TAX INCREMENT REVENUE NOTE SERIES 202__ Date Rate of Original Issue 6.0 percent __________ The Housing and Redevelopment Authority in and for the City of Golden Valley (the “HRA”), for value received, certifies that it is indebted and hereby promises to pay to 640 Golden Valley, LLC, or registered assigns (the “Owner”), the principal sum of $11,243,000 with interest thereon at the rate of 6.0% per annum, as and to the extent set forth herein. 1.Payments. Principal and interest payments (“Payments”) will be paid on August 1, 2027, and each February 1 and August 1 thereafter until the earlier of payment in full or February 1, 2043 (“Payment Dates”), in the amounts and from the sources set forth in Section 3 herein. Payments are payable by mail to the address of the Owner or any other address as the Owner may designate upon 30 days written notice to the HRA. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2.Interest. Interest shall be simple, non-compounding interest at a rate of 6.0% per annum. Interest shall be computed on the basis of a 360-day year consisting of 12 30-day months. 3.Available Tax Increment. Payments on this Note are payable on each Payment Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on each Payment Date, 90 percent of the Tax Increment attributable to the Development Property and Minimum Improvements (as defined in the Agreement) and paid to the HRA by Hennepin County, Minnesota in the six months preceding the Payment Date, all as the terms are defined in the 88 D-3 GL135-48-868513.v7 Contract for Private Development between the HRA and Owner dated as of ______________, 2023 (the “Agreement”). Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default by the Owner under the Agreement. The HRA will have no obligation to pay principal or interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the HRA to pay the entire amount of principal and interest on this Note on any Payment Date will not constitute a default hereunder as long as the HRA pays principal and interest to the extent of Available Tax Increment. The HRA will have no obligation to pay any unpaid balance of principal or interest that may remain after the Final Payment Date of February 1, 2043. 4.Optional Prepayment. The principal sum and accrued interest payable under this Note is pre-payable in whole or in part at any time by the HRA without premium or penalty. No partial prepayment will affect the amount or timing of any other regular payment otherwise required to be made under this Note. 5.Suspension of Payment. At the HRA’s option, the HRA’s obligation to make any payments under this Note will be suspended upon the occurrence of an Event of Default on the part of the Developer as defined in Section 8.1 of the Agreement, but only if the Event of Default has not been cured in accordance with Section 8.2 of the Agreement. The HRA may also suspend payments under this Note in accordance with Section 6.1(e) of the Agreement. 6.Nature of Obligation. This Note is a single note in the total principal amount of $11,243,000 issued to aid in financing certain public costs of a Redevelopment Project Area undertaken by the HRA pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution (the “Resolution”) duly adopted by the HRA on ______________, 202__, pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.1794, as amended. This Note is a limited obligation of the HRA which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note will not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Housing and Redevelopment Authority in and for the City of Golden Valley or the City of Golden Valley. Neither the State of Minnesota, nor any political subdivision thereof will be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of and interest on this Note or other costs incident hereto. 7.Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the HRA or its municipal advisors in connection with the TIF District or the Agreement are for the benefit of the HRA, and are not intended as representations on which the Owner may rely. THE HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF OR INTEREST ON THIS NOTE. 89 D-4 GL135-48-868513.v7 8.Registration and Transfer; Assignment. As provided in the Resolution, and subject to certain limitations set forth herein, this Note is issuable only as a fully registered note without coupons. This Note is transferable upon the books of the HRA kept for that purpose at the principal office of the HRA’s Executive Director as Registrar, by the Owner hereof in person or by the Owner’s attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the HRA, duly executed by the Owner. Upon the transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the HRA with respect to the transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount and interest rate and maturing on the same dates. This Note may be transferred without the approval of the HRA; provided that this Note will not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the HRA has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the HRA, that the transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. This Note may be assigned with the consent of the HRA, which will not be unreasonably withheld or delayed. Notwithstanding anything to the contrary in this Note, in no event will a lender providing funds to the Developer and taking an assignment of the Note as security for such funds be required to sign an investment letter at either the time of execution of an assignment or transfer of the Note as a result of the assignment. 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 exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the HRA according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the board of commissioners of the Housing and Redevelopment Authority in and for the City of Golden Valley, has caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY Chair Executive Director 90 D-5 GL135-48-868513.v7 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the HRA’s Executive Director, in the name of the person last listed below. Date of Registration Registered Owner Signature of Executive Director 640 Golden Valley, LLC c/o Sentinel Management Company, LLC 5215 Edina Industrial Blvd., Suite 100 Edina, MN 55439 Attn: Fabrizio Montermini Federal Tax ID #__________ [End of Form of Note] Section 3.Terms, Execution and Delivery. 3.01.Denomination, Payment. The Note will be issued as a single typewritten note numbered R-1. The Note will be issuable only in fully registered form. Principal and interest of the Note will be payable by check or draft issued by the Registrar described herein. 3.02.Dates. Principal and interest of the Note will be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not the day is a business day. 3.03.Registration. The HRA hereby appoints the Executive Director to perform the functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the HRA and the Registrar with respect thereto will be as follows: (a)Register. The Registrar will keep at his office a bond register in which the Registrar will provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b)Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount, interest rate and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note will not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the HRA has been provided with an investment letter in a form substantially similar to the 91 D-6 GL135-48-868513.v7 investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the HRA, that the transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until the Payment Date. (c)Cancellation. The Note surrendered upon any transfer will be promptly cancelled by the Registrar and thereafter disposed of as directed by the HRA. (d)Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until he is satisfied that the endorsement on the Note or separate instrument of transfer is legally authorized. The Registrar will incur no liability for his refusal, in good faith, to make transfers which he, in his judgment, deems improper or unauthorized. (e)Persons Deemed Owners. The HRA and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Note and for all other purposes, and all the payments so made to any registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability of the HRA upon the Note to the extent of the sum or sums so paid. (f)Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to the transfer or exchange. (g)Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, interest rate, maturity dates and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the HRA and the Registrar will be named as obligees. The Note so surrendered to the Registrar will be cancelled by him and evidence of the cancellation will be given to the HRA. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it will not be necessary to issue a new Note prior to payment. 3.04.Preparation and Delivery. The Note will be prepared under the direction of the Executive Director and will be executed on behalf of the HRA by the signatures of its Chair and Executive Director. In case any officer whose signature appears on the Note ceases to be the officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. When the Note has been so executed, it will be delivered by the HRA to the Owner following the delivery of the necessary items delineated in Section 3.3 of the Agreement. 92 D-7 GL135-48-868513.v7 Section 4. Security Provisions. 4.01.Pledge. The HRA hereby pledges to the payment of the principal and interest of the Note all Available Tax Increment as defined in the Note. Available Tax Increment will be applied to payment of accrued interest first, then the principal of the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02.Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the HRA will maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of the principal of and interest on the Note. The HRA irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund will be transferred to the HRA’s account for the TIF District upon the payment of all principal and interest to be paid with respect to the Note. Section 5.Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the HRA are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the HRA, and the other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all the certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed representations of the City as to the facts recited therein. Section 6. Effective Date. This resolution will be effective upon execution by the Chair and Executive Director following authorization by the board of commissioners of the Housing and Redevelopment Authority in and for the City of Golden Valley. Adopted by the Housing and Redevelopment Authority in and for the City of Golden Valley, this ____ day of ________, 202___. Chair Executive Director 93 E-1 GL135-48-868513.v7 EXHIBIT E TO CONTRACT FOR PRIVATE DEVELOPMENT FORM OF INVESTMENT LETTER To the Housing and Redevelopment Authority in and for the City of Golden Valley (the “HRA”) Attention: Executive Director Dated: __________________, 202__ Re:$11,243,000 Tax Increment Revenue Note (640 Golden Valley Project) The undersigned, as Purchaser of $11,243,000 in principal amount of the above-captioned Tax Increment Revenue Note (640 Golden Valley Project) (the “Note”), approved by the Housing and Redevelopment Authority in and for the City of Golden Valley on ______________, 202__, hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, as legal counsel to the HRA, as follows: 1.We understand and acknowledge that the Note is delivered to the Purchaser on this date pursuant to the Contract for Private Development by and between the HRA and the Purchaser dated __________________, 2023 (the “Agreement”). 2.The Note is payable solely from Available Tax Increment pledged to the Note, as defined therein. 3.We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above-stated principal amount of the Note. 4.We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering document or disclosure containing material information with respect to the HRA and the Note has been issued or prepared by the HRA, and that, in due diligence, we have made our own inquiry and analysis with respect to the HRA, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 5.We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the HRA, the Note and the security therefor, and that as reasonable investors we have been able to make our decision to purchase the above-stated principal amount of the Note. 94 E-2 GL135-48-868513.v7 6.We have been informed that the Note (i) is not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, or under federal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. 7.We acknowledge that the HRA and Kennedy & Graven, Chartered, as legal counsel to the HRA, have not made any representations or warranties as to the status of payments on the Note for the purpose of federal or state income taxation. 8.We represent to you that we are purchasing the Note for our own account and not for resale or other distribution thereof, except to the extent otherwise provided in the Note or as otherwise approved in writing by the HRA. 9.All capitalized terms used herein have the meaning provided in the Agreement unless the context clearly requires otherwise. 10.The Purchaser’s federal tax identification number is #_________. 11.We acknowledge receipt of the Note on the date hereof. IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the date and year first written above. 640 Golden Valley, LLC By:___________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF___________ ) The foregoing instrument was executed before me this _____ day of _______________, 2023, by ______________, the _________________ of 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota, on behalf of the company. ____________________________________ Notary Public 95 F-1 GL135-48-868513.v7 EXHIBIT F TO CONTRACT FOR PRIVATE DEVELOPMENT FORM OF DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTIVE COVENANTS, dated this ___ day of _____________, 202__ (the “Declaration”), by 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota (the “Developer”), is given for the benefit of the Housing and Redevelopment Authority in and for the City of Golden Valley, a body corporate and politic under the laws of Minnesota (the “HRA”). RECITALS WHEREAS, the HRA and the Developer entered into that certain Contract for Private Development, dated __________, 2023, (the “Agreement”); and WHEREAS, pursuant to the Agreement, the Developer is obligated to cause construction of approximately 303 units of market rate and affordable housing, and all related amenities and improvements (the “Project”) to be located on the property described in Exhibit A attached hereto (the “Development Property”), and to cause compliance with certain affordability covenants described in Section 4.7 of the Agreement; and WHEREAS, Section 4.7of the Agreement requires that the Developer cause to be executed an instrument in recordable form substantially reflecting the covenants set forth in that section of the Agreement; and WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set forth herein will be and are covenants running with the Development Property for the term described herein and binding upon all subsequent owners of the Development Property for the term described herein, and are not merely personal covenants of the Developer; 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 Developer agrees as follows: 1.Term of Restrictions. (a)Occupancy and Rental Restrictions. The term of the Occupancy Restrictions set forth in Section 3 of this Declaration will commence on the date a permanent certificate of occupancy is received from the City for the residential portion of the Minimum Improvements on the Development Property and continue for 20 years thereafter (the “Qualified Project Period”). 96 F-2 GL135-48-868513.v7 (b)Termination of Declaration. This Declaration shall terminate upon expiration of the Qualified Project Period. 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 mortgagee redemption period, or recording of a deed in lieu of foreclosure, any mortgagee (or any assignee of the mortgagee) or any purchasers at or after foreclosure thereof, by the successful bidder at the sale, to the title to the Development Property, may terminate this Declaration, by providing written notice to the HRA by filing a termination document in the applicable real property records in Hennepin, Minnesota and thereafter this Declaration shall be of no further force and effect; 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 this Declaration as the result of the foreclosure, or the delivery of a deed in lieu of foreclosure, or a similar event, the Developer 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. The events set forth in this Section 1(b) are referred to individually and collectively herein as the “Declaration Termination Date.” The HRA will terminate the Note if this Declaration is terminated prior to expiration of the Qualified Project Period. (c)Removal from Real Estate Records. After the Declaration Termination Date of this Declaration, the HRA will, upon request by the Developer or its assigns, file any document appropriate to remove this Declaration from the real estate records of Hennepin County, Minnesota. 2.Project Restrictions. (a)The Developer represents, warrants, and covenants that: (i)All leases of Rental Housing Units to Qualifying Tenants (as defined in Section 3(a) hereof) will 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 family income at the time the lease is executed will be deemed a substantial and material obligation of the lessee’s tenancy; that the lessee will comply promptly with all requests for income and other information relevant to determining income status from the Developer or the HRA, and that the lessee’s failure or refusal to comply with a request for information with respect thereto will be deemed a violation of a substantial obligation of the lessee’s tenancy. (b)The Developer will permit any duly authorized representative of the HRAto inspect the books and records of the Developer pertaining to the income of Qualifying Tenants residing in the Project. 3.Occupancy Restrictions. The Developer represents, warrants, and covenants that: 97 F-3 GL135-48-868513.v7 (a)Qualifying Tenants and Rent. Throughout the Qualified Project Period, 15 percent (46) of the Rental Housing Units shall be administered in accordance with 42 USC Section 3607(b) and Minnesota Statutes, Section 363A.21, subdivision 2 and shall be occupied (or treated as occupied as provided herein) or held vacant and available for occupancy by Qualifying Tenants. “Qualifying Tenants” means those persons and families who are determined from time to time by the Developer to have combined adjusted income that does not exceed 60% of the median income for the standard metropolitan statistical area which includes Golden Valley, Minnesota, as that figure is determined and announced from time to time by HUD, as adjusted for family size (the “Median Income”) for the applicable calendar year. For purposes of this definition, the occupants of a Rental Housing Unit will not be deemed to be Qualifying Tenants if all the occupants of such Rental Housing Unit at any time are “students,” as defined in Section 152(f)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), not entitled to an exemption under the Code. The determination of whether an individual or family is a Qualifying Tenant will be made at the time the tenancy commences and on an ongoing basis thereafter, determined at least annually. If during their tenancy a Qualifying Tenant’s income exceeds 140% of the Median Income, the next available Rental Housing Unit (determined in accordance with the Code and applicable regulations) (the “Next Available Unit Rule”) must be leased to a Qualifying Tenant or held vacant and available for occupancy by a Qualifying Tenant. If the Next Available Unit Rule is violated, the Rental Housing Unit will not continue to be treated as a Qualifying Unit. (b)Certification of Tenant Eligibility. As a condition to initial and continuing occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign and deliver to the Developer a Certification of Tenant Eligibility substantially in the form attached as Exhibit B hereto, or in any other form as may be approved by the HRA (the “Eligibility Certification”), in which the prospective Qualifying Tenant certifies as to having a qualifying low or moderate income. The Qualifying Tenant will be required to provide whatever other information, documents, or certifications are deemed necessary by the HRA to substantiate the Eligibility Certification, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained for the duration of the Qualified Project Period on file by the Developer with respect to each Qualifying Tenant who resides in a Rental Housing Unit or resided therein during the Qualified Project Period. (c)Lease. The form of lease to be utilized by the Developer in renting any Rental Housing Units in the Project to any person who is intended to be a Qualifying Tenant will provide for termination of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to the Eligibility Certification. (d)Annual Report. The Developer covenants and agrees that during the term of this Declaration, it will prepare and submit to the City on or before July 1 of each year, a certificate substantially in the form of Exhibit C attached hereto, executed by the Developer, (a) identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including the number and percentage of the Rental Housing Units of the Project which were occupied by Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding the date of the certificate; (b) describing all transfers 98 F-4 GL135-48-868513.v7 or other changes in ownership of the Project or any interest therein; and (c) stating, that to the best knowledge of the person executing the certificate after due inquiry, all the Rental Housing Units were rented or available for rental on a continuous basis during the year to members of the general public and that the Developer was not otherwise in default under this Declaration during the year. (e)Notice of Non-Compliance. The Developer will immediately notify the City if at any time during the term of this Declaration fewer than 15 percent (46) of the Rental Housing Units in the Project are occupied or available for occupancy by Qualifying Tenants as required by the terms of this Declaration. The 46 Rental Housing Units reserved for Qualifying Tenants will include five studios, 29 one-bedroom units and 12 two-bedroom units and will be interspersed with the market rate Rental Housing Units and will not be concentrated in one or more portions of the Project. 4.Transfer Restrictions. The Developer covenants and agrees that the Developer 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 HRA, all duties and obligations of the Developer under this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the Rental Restrictions and Occupancy Restrictions provided herein (the “Assumption Agreement”). The Developer will deliver the Assumption Agreement to the HRA prior to the Transfer. 5.Enforcement. (a)The Developer will permit, during normal business hours and upon reasonable notice, any duly authorized representative of the HRA to inspect any books and records of the Developer regarding the Project with respect to the incomes of Qualifying Tenants. (b)The Developer will submit any other information, documents or certifications requested by the HRA which the HRA deems reasonably necessary to substantiate the Developer’s continuing compliance with the provisions specified in this Declaration. (c)The Developer acknowledges that the primary purpose for requiring compliance by the Developer with the restrictions provided in this Declaration is to ensure compliance of the property with the housing affordability covenants set forth in Section 4.7 of the Agreement and the City of Golden Valley’s Mixed Income Housing Policy, and by reason thereof, the Developer, in consideration for assistance provided by the HRA under the Agreement that makes possible the construction of the Project (as defined in the Agreement) on the Development Property, hereby agrees and consents that the HRA will 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 Developer of its obligations under this Declaration in a state court of competent jurisdiction. The Developer hereby further specifically acknowledges that the HRA cannot be adequately compensated by monetary damages in the event of any default hereunder. 99 F-5 GL135-48-868513.v7 (d)The Developer 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 HRA may exercise any remedy available to it under Article VIII of the Agreement. 6.Indemnification. The Developer hereby indemnifies, and agrees to defend and hold harmless, the HRA 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 Developer to comply with the terms of this Declaration, or on account of any representation or warranty of the Developer contained herein being untrue. 7.Agent of the City. The HRA will have the right to appoint an agent to carry out any of its duties and obligations hereunder, and will inform the Developer of any agency appointment by written notice. 8.Severability. The invalidity of any clause, part or provision of this Declaration will not affect the validity of the remaining portions thereof. 9.Notices. All notices to be given pursuant to this Declaration must be in writing and will 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 any other place as a party may from time to time designate in writing. The Developer and the HRA may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, or other communications are sent. The initial addresses for notices and other communications are as follows: To the HRA:Housing and Redevelopment Authority in and for the City of Golden Valley 7800 Golden Valley Road Golden Valley, MN 55427 Attn: Executive Director and with a copy to:Kennedy & Graven, Chartered 150 South Fifth Street Suite 700 Minneapolis, MN 55402 Attn: Ronald H. Batty To the Developer:640 Golden Valley, LLC 5215 Edina Industrial Blvd., Suite 100 Edina, MN 55439 Attn: _________________ 10.Governing Law. This Declaration is governed by the laws of the State of Minnesota and, where applicable, the laws of the United States of America. 100 F-6 GL135-48-868513.v7 11.Attorneys’ Fees. In case any action at law or in equity in which the HRA prevails, including an action for declaratory relief, is brought against the Developer to enforce the provisions of this Declaration, the Developer agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred by the HRA in connection with the action. 12.Declaration Binding. This Declaration and the covenants contained herein will run with the Development Property and will bind the Developer and its successors and assigns and all subsequent owners of the Development Property or any interest therein, and the benefits will inure to the HRA and its successors and assigns until the Declaration Termination Date of this Declaration as provided in Section 1(b) hereof. * * * * * * 101 F-7 GL135-48-868513.v7 IN WITNESS WHEREOF, the Developer 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. 640 GOLDEN VALLEY, LLC, a limited liability company under the laws of Minnesota By: Its:______________________________ STATE OF MINNESOTA ) ) SS. COUNTY OF ________) The foregoing instrument was executed before me this _____ day of _______________, 202__, by ________________, the ______________ of 640 Golden Valley, LLC, a limited liability company under the laws of Minnesota, on behalf of the company. Notary Public THIS INSTRUMENT WAS DRAFTED BY: Kennedy & Graven, Chartered (RHB) 150 South Fifth Street Suite 700 Minneapolis, MN 55402 (612) 337-9300 102 F-8 GL135-48-868513.v7 This Declaration is acknowledged and consented to by: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: Its:Chair By: Its:Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of _____________, 202_, by _____________, the Chair, of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of _____________, 202_, by _____________, the Executive Director, of the Housing and Redevelopment Authority in and for the City of Golden Valley, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public 103 F-A-1 GL135-48-868513.v7 Exhibit A to Declaration of Restrictive Covenants Description The land subject to the foregoing Restrictive Covenants is legally described as follows: The Development Property is legally described as follows: Lot 1, Block 1 and Lot 2, Block 2, Valley Square 3rd Addition, Hennepin County, Minnesota. (substitute new platted description of housing improvements only prior to recording) 104 F-B-1 GL135-48-868513.v7 Exhibit B to Declaration of Restrictive Covenants Certification of Tenant Eligibility TENANT INCOME CERTIFICATION Initial Certification Recertification Other _______________ Effective Date: _________________________ Move-in Date: __________________________ (MM/DD/YY): _________________________ PART I. DEVELOPMENT DATA Property Name: ____________ Apartments Address: ______________, Golden Valley, Minnesota County: Hennepin Unit Number: ________________ BIN #: _______________ # Bedrooms: ___________ PART II. HOUSEHOLD COMPOSITION HH Br #Last Name First Name & Middle Initial Relationship to Head of Household Date of Birth (MM/DD/YY) F/T Student (Y or N) Social Security or Alien Reg. No. 1 HEAD 2 3 4 5 6 PART III. GROSS ANNUAL INCOME (USE ANNUAL AMOUNTS) HH Br # (A) Employment or Wages (B) Soc. Security / Pensions (C) Public Assistance (D) Other Income TOTAL $$$$ Add totals from (A) through (D) above TOTAL INCOME (E):$ 105 F-B-2 GL135-48-868513.v7 PART IV. INCOME FROM ASSETS HH Mbr# (F) Type of Asset (G) C/I (H) Cash Value of Asset (I) Annual Income from Asset TOTALS:$$ Enter Column (H) Total Passbook Rate if over $5,000 $________________ x 2.00 % = (J) Imputed Income Enter the greater of the total column I, or J: imputed income TOTAL INCOME FROM ASSETS (K) $ $ (L) Total Annual Household Income from all sources [Add (E) + (K)]$ HOUSEHOLD CERTIFICATION & SIGNATURES The information on this form will be used to determine maximum income eligibility. I/we have provided for each person(s) set forth in Part II acceptable verification of current anticipated annual income. I/we agree to notify the landlord immediately upon any member of the household moving out of the unit or any new member moving in. I/we agree to notify the landlord immediately upon any member becoming a full-time student. Under penalties of perjury, I/we certify that the information presented in this Certification is true and accurate to the best of my/our knowledge and belief. The undersigned further understands that providing false representations herein constitutes an act of fraud. False, misleading or incomplete information may result in the termination of the lease agreement. _________________________ Signature ____________________ (Date) _________________________ Signature ____________________ (Date) _________________________ Signature ____________________ (Date) _________________________ Signature ____________________ (Date) PART V. DETERMINATION OF INCOME ELIGIBILITY TOTAL ANNUAL HOUSEHOLD INCOME FROM ALL SOURCES From Item (L) on page 1 Current Income Limit per Family Size: $ _________________ Household Income at Move-in $__________________ Household Meets Income Restriction at: 60% 50% 40% 30% ___% RECERTIFICATION ONLY: Current Income Limit x 140% $ __________________________________ Household income exceeds 140% at recertification: Yes No Household Size at Move-in: _____________ $ 106 F-B-3 GL135-48-868513.v7 PART VI. RENT Not Applicable PART VII. STUDENT STATUS ARE ALL OCCUPANTS FULL-TIME STUDENTS? yes no If yes, enter student explanation** (also attach documentation) Student explanation: 1. TANF assistance 2. Job training program 3. Single parent/dependent child 4. Married/joint return* *Exception for married/joint return is the only exception available for units necessary to qualify tax-exempt bonds. PART VIII. PROGRAM TYPE Mark the program(s) listed below (a. through e.) for which this household’s unit will be counted toward the property’s occupancy requirements. Under each program marked, indicate the household’s income status as established by this certification/recertification a. Tax Credit b. HOME c. Tax Exempt d. AHDP e. ____________ (Name of Program) See Part V above.Income Status Income Status Income Status Income Status ≤ 50% AMGI ≤ 60% AMGI ≤ 80% AMGI ≤ 0I ** 50% AMGI 60% AMGI 80% AMGI 0I ** ≤ 50% AMGI ≤ 80% AMGI ≤ 0I ** __________ __________ ≤ 0I ** ** Upon recertification, household was determined over income (OI) according to eligibility requirements of the program(s) marked above. SIGNATURE OF OWNER / REPRESENTATIVE Based on the representations herein and upon the proofs and documentation required to be submitted, the individual(s) named in Part II of this Tenant Income Certification is/are eligible under the provisions of Section 42 of the Internal Revenue Code, as amended, and the Regulatory Agreement (if applicable), to live in a unit in this Project. ________________________________________________________________ SIGNATURE OF OWNER / REPRESENTATIVE DATE Enter 1-4 107 F-B-4 GL135-48-868513.v7 INSTRUCTIONS FOR COMPLETING TENANT INCOME CERTIFICATION This form is to be completed by the owner or an authorized representative. Part I – Development Data Check the appropriate box for Initial Certification (move-in), Recertification (annual recertification), or Other. If Other, designate the purpose of the recertification (i.e., a unit transfer, a change in household composition, or other state-required recertification). Move-in Date Enter the date the tenant has or will take occupancy of the unit. Effective Date Enter the effective date of the certification. For move-in, this should be the move-in date. For annual recertification, this effective date should be no later than one year from the effective date of the previous (re)certification. Property Name Enter the name of the development. County Enter the county (or equivalent) in which the building is located. BIN #Enter the Building Identification Number (BIN) assigned to the building (from IRS Form 8609). Address Enter the street address. Unit Number Enter the unit number. # Bedrooms Enter the number of bedrooms in the unit. Part II – Household Composition List all occupants of the unit. State each household member’s relationship to the head of the household by using one of the following coded definitions: H Head of household S Spouse A Adult co-tenant O Other family member C Child F Foster child L Live-in caretaker N None of the above Enter the date of birth, student status, and Social Security number or alien registration number for each occupant. If there are more than seven occupants, use an additional sheet of paper to list the remaining household members and attach it to the certification. 108 F-B-5 GL135-48-868513.v7 Part III – Annual Income See HUD Handbook 4350.3 for complete instructions on verifying and calculating income, including acceptable forms of verification. From the third-party verification forms obtained from each income source, enter the gross amount anticipated to be received for the 12 months from the effective date of the (re)certification. Complete a separate line for each income-earning member. List the respective household member number from Part II. Column (A)Enter the annual amount of wages, salaries, tips, commissions, bonuses, and other income from employment; distributed profits and/or net income from a business. Column (B)Enter the annual amount of Social Security, Supplemental Security Income, pensions, military retirement, etc. Column (C)Enter the annual amount of income received from public assistance (i.e., TANF, general assistance, disability, etc.) Column (D)Enter the annual amount of alimony, child support, unemployment benefits, or any other income regularly received by the household. Row (E)Add the totals from columns (A) through (D) above. Enter this amount. Part IV – Income from Assets See HUD Handbook 4350.3 for complete instructions on verifying and calculating income from assets, including acceptable forms of verification. From the third party verification forms obtained from each asset source, list the gross amount anticipated to be received during the 12 months from the effective date of the certification. List the respective household member number from Part II and complete a separate line for each member. Column (F)List the type of asset (i.e., checking account, savings account, etc.) Column (G)Enter C (for current, if the family currently owns or holds the asset), or I (for imputed, if the family has disposed of the asset for less than fair market value within two years of the effective date of (re)certification). Column (H)Enter the cash value of the respective asset. Column (I)Enter the anticipated annual income from the asset (i.e., savings account balance multiplied by the annual interest rate). 109 F-B-6 GL135-48-868513.v7 TOTALS Add the total of Column (H) and Column (I), respectively. If the total in Column (H) is greater than $5,000, you must do an imputed calculation of asset income. Enter the Total Cash Value, multiply by 2% and enter the amount in (J), Imputed Income. Row (K)Enter the Greater of the total in Column (I) or (J) Row (L)Total Annual Household Income from All Sources Add (E) and (K) and enter the total 110 F-C-7 GL135-48-868513.v7 Exhibit C to Declaration of Restrictive Covenants Certificate of Continuing Program Compliance Date: ___________________ The following information with respect to the Project located at ____________________, Golden Valley, Minnesota (the “Project”), is being provided by 640 Golden Valley, LLC (the “Owner”) to the Housing and Redevelopment Authority in and for the city of Golden Valley (the “HRA”), pursuant to that certain Declaration of Restrictive Covenants, dated the ____ day of ____________, 202_ (the “Declaration”), with respect to the Project: (A)The total number of Rental Housing Units which are available for occupancy is 303. The total number of these units occupied is _________________. (B)The following Rental Housing Units (identified by unit number) are currently occupied by “Qualifying Tenants” as the term is defined in the Declaration (for a total of 46 units): Studio apartment One bedroom apartment Two bedroom apartment Three bedroom apartment (C)The following Rental Housing Units which are included in (B) above, have been re-designated as Rental Housing Units for Qualifying Tenants since _______________, 202_, the date on which the last “Certificate of Continuing Program Compliance” was filed with the HRA by the Owner: Unit Number Previous Designation of Unit (if any) Replacing Unit Number _____________________________________________ _____________________________________________ 111 F-C-8 GL135-48-868513.v7 (D)The following Rental Housing Units are considered to be occupied by “Qualifying Tenants”, as the term is defined in the Declaration based on the information set forth below (for a total of at least 46units): Unit Number Last Name of Tenant Number of Persons Residing in the Unit Number of Bedrooms Total Adjusted Gross Income Date of Initial Occupancy Age Date Vacated and Held for Qualifying Tenants, if Applicable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 (E)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 ______________, 202__, the date on 112 F-C-9 GL135-48-868513.v7 which the last “Certificate of Continuing Program Compliance” was filed with the HRA by the Owner. (F)In renting the Rental Housing 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 Tenantsand persons meeting the minimum age restrictions); and none of the units listed in (D) above has been rented for occupancy entirely by students, no one of which is entitled to file a joint return for federal income tax purposes. All of the Rental Housing Units in the Project have been rented pursuant to a written lease, and the term of each lease is at least 12 months. (G)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. (H)The Project is in continuing compliance with the Declaration. (I)The Owner certifies that as of the date hereof at least 15 percent (46) of the residential dwelling units in the Project are occupied or held open for occupancy by Qualifying Tenants, as defined and provided in the Declaration. (J)The Project is in continuing compliance with the Declaration. IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on ____________________, 202__. 640 GOLDEN VALLEY, LLC By: ____________________________ Its:____________________________ 113 G-1 GL135-48-868513.v7 EXHIBIT G TO CONTRACT FOR PRIVATE DEVELOPMENT LIST AND ESTIMATED COST OF PUBLIC IMPROVEMENTS Improvement Estimated Cost Remove unused water and sewer services within street right-of- way $48,750 Remove abandoned public and private mains within development site $31,590 Remove existing retaining walls in public right of way $50,000 Construct cul-de-sac on Golden Valley Drive $250,000 Construct sidewalks and trails, including ADA ramps, at the following locations around the perimeter of the site: Wisconsin Avenue - Bituminous trail 10 feet wide with 2- foot concrete safety buffer located at back of curb Golden Valley Road – Concrete walk 8 feet wide with 2-foot concrete safety buffer located at back of curb Golden Valley Drive – Concrete walk 8 feet wide located at back of curb Golden Valley Drive unimproved right of way (west of cul- de-sac) – Concrete walk 6 feet wide located within public green space $355,725.14 Remove and replace commercial driveway aprons and surrounding curb and gutter $65,000 Extend center median in Golden Valley Road at closed driveway $24,129.44 Mill and overlay Golden Valley Drive following completion of improvements $94,148.89 Install new public street signs and pavement markings $19,500 Storm Sewer extension from Golden Valley Drive cul-de-sac to Wisconsin Avenue $41,535 Relocate city storm sewer catch basin on Golden Valley Road adjacent to northeast site entrance $39,000 Relocate watermain in Golden Valley Road $76,570 114 G-2 GL135-48-868513.v7 Line sanitary sewer mains impacted by service removals $22,035 New relocated public street/pedestrian lights $27,950 Install public benches and concrete bench pads along sidewalks/trails in location approved by City $40,000 TOTAL $1,185,933.47 Enter into the following agreements with the City: Stormwater Maintenance Agreement (includes chloride management plan) Sewer and Water (Utility) Maintenance Agreement (for hydrants, etc.) Right-of-Way Obstruction Agreement for permanent obstructions/encroachments (walls, stoops, steps, footings, benches, electric/lights, irrigation and other items in ROW or easements that are owned by the developer Easements Agreement for public sidewalks, trails, benches 115 G-3 GL135-48-868513.v7 4871-7051-7353, v. 5 116