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10-13-15 HRA Agenda Packet AGENDA Regular Meeting of the Housing and Redevelopment Authority Golden Valley City Hall 7800 Golden Valley Road Council Chamber October 13, 2015 6:30 pm Paqes 1. Roll Call 2. Approval of Agenda 3. Approval of Minutes: Regular Meeting - July 14, 2015, and 2-7 Special Meeting - September 1 and September 16, 2015 4. Approval of Bills: Reimbursement of City Expenditures $ City of Golden Valley $47,393,05 TOTAL 47 39 . 5 Bill Summarv: General Fund $13,778.75 North Wirth Capital Project Fund $0 Golden Hills Capital Project Fund $21,349.00 Hwy 55-West Capital Project Fund $9,000.30 Winnetka-Medicine Lake Road Capital Project Fund 3 265.00 TOTAL $47,393.05 5. Receipt of September 2015 Financial Reports 9-11 6. Highway 55 West Redevelopment Area: 12-57 A. Development Agreement with Cornerstone Creek Limited Partnership 7. Adjournment This document is available in alternate formats upon a 72-hour request. Please call 763-593-8006 (TTY: 763-593-3968}to rnake a request. Examples of aiternate formats ' may include large print, electronic, Braille,audiaeassette, etc. REGULAR MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY July 13, 2015 Pursuant to due call and notice thereof, a regular meeting of the Housing and Redevelopment Authority of the City of Golden Valley, Hennepin County, Minnesota, was held at 7800 Golden Valley Road in said City on July 13, 2015 at 6:30 pm. The following members were present: Chair Steve Schmidgall, Commissioners Joanie Clausen, Larry Fonnest, Shep Harris and Andy Snope. Also present were HRA Director Thomas Burt and Administrative Assistant Judy Nally. Approval of Apenda MOVED by Harris, seconded by Clausen and motion carried unanimously to approve the agenda as submitted. Approval of Minutes: ReQular Meetinq - April 14, 2015 and Special Meetinq - April 21, 2015 MOVED by Snope, seconded by Clausen and motion carried unanimously to approve the Housing and Redevelopment Authority minutes of April 14, 2015 and April 21, 2015 as submitted. Approval of Bills MOVED by Snope, seconded by Harris and motion carried unanimously to approve the bills as submitted. Receipt of June 2015 Financial Reports MOVED by Harris, seconded by Clausen and motion carried unanimously to receive and file the June 2015 Financial Reports. Appointment of Assistant Director MOVED by Harris, seconded by Clausen and motion carried unanimously to appoint Marc Nevinski as Assistant Director. Winnetka and Medicine Lake Road Area: Adoption of Redevelopment Plan for the Winnetka and Medicine Lake Road Proiect Area and Libertv Crossins� Redevelopment Proiect Status Marc Nevinski, Assistant Director, gave a PowerPoint presentation on the agenda items and answered questions from the HRA. Housing and Redevelopment Authority July 13, 2015 Page 2 Winnetka and Medicine Lake Road Area: Adoption of Redevelopment Plan for the Winnetka and Medicine Lake Road Proiect Area and Libertv Crossinq Redevelopment Proiect Status - Continued Commissioner Harris introduced the following resolution and moved its adoption: RESOLUTION 15-3 RESOLUTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY, HENNEPIN COUNTY, MINNESOTA ADOPTING THE REDEVELOPMENT PLAN FOR THE WINNETKA AND MEDICINE LAKE ROAD PROJECT AREA The motion for the adoption of the foregoing resolution was seconded by Commissioner Snope and upon a vote being taken thereon, the following voted in favor thereof: Clausen, Fonnest, Harris, Schmidgall and Snope, and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Assistant Director. MOVED by Snope, seconded by Clausen and motion carried to receive and file the report on the Liberty Crossing Redevelopment Project Status. Hiqhwav 55 West Redevelopment Area: Cornerstone Creek Redevelopment Proiect Status Marc Nevinski, Assistant Director, gave a PowerPoint presentation on the agenda item and answered questions from the HRA. MOVED by Fonnest, seconded by Clausen and motion carried to receive and file the report on the Cornerstone Creek Redevelopment Project Status. Adiournment MOVED by Snope, seconded by Clausen and motion carried unanimously to adjourn the meeting at 6:50 pm. Steven T Schmidgall, Chair ATTEST: Judy Nally, Administrative Assistant SPECIAL MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY September 1, 2015 Pursuant to due call and notice thereof, a special meeting of the Housing and Redevelopment Authority of the City of Golden Valley, Hennepin County, Minnesota, was held at 7800 Golden Valley Road in said City on September 1, 2015, at 5:30 pm. The following members were present: Chair Steve Schmidgall, Commissioners Larry Fonnest, Shep Harris, and Andy Snope. Also, present were Assistant City Manager Knauss, Assistant HRA Director Nevinski, HRA Attorney Barnard, and City Clerk Luedke. Commissioner Clausen arrived at 5:57 pm. Approval of Aqenda MOVED by Commissioner Harris, seconded by Commissioner Snope and motion carried unanimously to approve the agenda of September 1, 2015, as submitted. MOVED by Commissioner Snope, seconded by Commissioner Fonnest to add Cornerstone Creek Redevelopment Update under Other Business and the motion carried. Approval af Tax Increment Financinq District, Libertv Crossinq, and Tax Increment Financinq Rlan Marc Nevinski, Assistant HRA Director introduced the agenda item and answered questions from the C�ommissioners. Commissioner Snope introduced the following resolution and moved its adoption: RESOLUTION 15-4 RESOLUTION APPROVING TAX INCREMENT FINANCING DISTRICT (REDEVELOPMENT), LIBERTY CROSSING AND THE TAX INCREMENT FINANCING PLAN THEREFOR The motion for the adoption of the foregoing resolution was seconded by Commissioner Fonnest �nd upon a vote being taken thereon, the following voted in favor thereof: Fonnest, Harris, Schmidgall and Snope, and the following was absent: Clausen; and the following voted against the same: none, whereupon said resolution was deGlared duly passed and adopted, signed by the Chair and his signature attested by the Assistant Director. Approval of Modification to Redevelopment Plan, Tax Increment Financina District (Housina), Cornerstone Creek, and Tax Increment Financinq Plan Marc Nevin�ki, Assistant HRA Director introduced the agenda item and answered questions from the Commissioners. Special Meeting of the Housing and Redevelopment Authority September 1, 2015 Page 2 � Commissioner Fonnest introduced the following resolution and moved its adoption: RESOLUTION 15-5 RESOLUTION APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FdR HI�HWAY 55 WEST REDEVELOPMENT PROJECT AREA, AND TAX INCREMENT FINANCING DISTRICT (HOUSING), CORNERSTONE CREEK, 1/VITHIN HIGHWAY 55 WEST REDEVELOPMENT PROJECT AREA AND THE TAX INCREMENT FINANCING PLAN THEREFOR The motion for the adoption of the foregoing resolution was seconded by Commissioner Harris and upon a vote being taken thereon, the following voted in favor thereof: Fonnest, Harris, Schmidgall and Snope, and the following was absent: Clausen; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Assistant Director. Other Business Cornerstone Creek Redevelopment Update Marc Nevinski, Assistant HRA Director introduced the agenda item and answered questions from the Commissioners. Finance Director Virnig and City Attorney Barnard answered questions from the Commissioners. Heidi Rathmann, Community Housing Development Corporation, answered questions from the Commissioners regarding the Cornerstone Creek Redevelopment project. Adiournment MOVED by Commissioner Snope, seconded by Commissioner Harris and motion carried unanimously to adjourn the meeting at 6:22 pm. Steven T Schmidgall, Chair ATTEST: Kristine A. Luedke, City Clerk SPECIAL MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY September 16, 2015 Pursuant to due call and notice thereof, a special meeting of the Housing and Redevelopment Authority of the City of Golden Valley, Hennepin County, Minnesota, was held at 7800 Golden Valley Road in said City on September 16, 2015, at 5:45 pm. The following members were present: Chair Steve Schmidgall, Commissioners Joanie Clausen, Larry Fonnest, Shep Harris, and Andy Snope. Also, present were City Manager Cruikshank, Assistant HRA Director Nevinski, HRA Attorney Barnard, and City Clerk Luedke. Aapointment of HRA Director MOVED by Commissioner Harris, seconded by Commissioner Snope to appoint Timothy J. Cruikshank as HRA Director and the motion carried. Public Hearinq - Sale of Land to Global One Golden Vallev, LLC, and Amendment to Private Development Aareement (The Three•Nine•Four Apartments) Jason Zimmerman, Planning Manager introduced the agenda item and answered questions from the Commissioners. Mr. Mark Globus, Global One Golden Valley, explained the usage of the project and stated there are two components the apartment and the senior building. He explained the project timeline of the project and the features of the apartments. He answered questions from the Commissioners. Chair Schmidgall opened the Public Hearing. No one came forward. Chair Schmidgall closed the Public Hearing. Commissioner Harris introduced the following resolution and moved its adoption: RESOLUTION 15-5 RESOLUTION APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR HIGHWAY 55 WEST REDEVELOPMENT PROJECT AREA, AND TAX INCREMENT FINANCING DISTRICT (HOUSING), CORNERSTONE CREEK, WITHIN HIGHWAY 55 WEST REDEVELOPMENT PROJECT AREA AND THE TAX INCREMENT FINANCING PLAN THEREFOR The motion for the adoption of the foregoing resolution was seconded by Commissioner Clausen and upon a vote being taken thereon, the following voted in favor thereof: Clausen, Fonnest, Harris, Schmidgall and Snope, and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Director. Special Meeting of the Housing and Redevelopment Authority September 16, 2015 Page 2 Approval of Partial Assianment and Assumption of Private Development Aqreement and Consent (for the Three•Nine•Four Development) Jason Zimmerman, Planning Manager introduced the agenda item and answered questions from the Commissioners. MOVED by Commissioner Clausen, seconded by Commissioner Fonnest to authorize the Chair and Director of the Housing and Redevelopment Authority to sign the Partial Assignment and Assumption of Private Development Agreement and Consent for the Three•Nine•Four Development and the motion carried. Adiournment MOVED by Commissioner Harris, seconded by Commissioner Clausen and motion carried unanimousiy to adjourn the meeting at 6:09 pm. Steven T Schmidgall, Chair ATTEST: Kristine A. Luedke, City Clerk city of ,��� �� � b ����� � E � � � � � �,�, �,.'� Housing and Redevelopment Authority 763 593 8002/763 593 8109(fax) Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting October 13, 2015 Agenda Item 4. Reimbursement of City Expenditures Prepared By Sue Virnig, Finance Director Summary As of September 30, 2015 the following expenditures were paid by the City on various check registers and need to be reimbursed by the HRA: City Expenditures: Amount 1000 Best & Flanagan (June,July, August)* $33,328.05 1000 Springsted (Liberty Crossing)* 2,065.00 1000 City of Golden Valley (Audit Fees)* 12,000.00 $47,393.05 HRA Expenditures: 9000 General Fund $13,778.75 9280 Golden Hills 21,349.00 9300 Highway 55 West 9,000.30 9400 Winnetka-Medicine Lake Road 3,265.00 --------------------------------- $47,393.05 *Asterisk items are reimbursed by deposits held for developers. Recommended Action Motion to approve reimbursing the City of Golden Valley$47,393.05(check#4071). C1�� C f _���,, � 0��+��'2 � � Housin and Redevelo ment Authorit ��.. ��l g p Y 763-593-8002/763-593-8109(fax) Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting October 13, 2015 Agenda Item 5. Receipt of September 2015 (unaudited) Financial Reports Prepared By Sue Virnig, Finance Director Summary Attached is the September 2015 Financial Reports for Housing and Redevelopment Authority (HRA) review. Staff will address questions from the HRA before or at the meeting. Attachments • HRA General Fund Budget Report (1 page) • HRA Capital Project Funds Report (1 page) Recommended Action Motion to receive and file the September 2015 HRA Financial Reports. HRA of Golden Valley General Fund September 2015 Budget Report(unaudited) Percentage Of Year Completed 50% Over % Of 2015 July-Sept YTD (Under) Budget Revenue Budget Actual Actual Budget Received Transfer from TIF Funds: Golden Hills 0 0.00 0.00 0.00 Interest Earnings (2) 0 0.00 0.00 0.00 Fund Balance 18,000 0.00 0.00 (18,000.00) Totals $18,000 0.00 0.00 (18,000.00) 0.00% Over % Of 2015 July-Sept YTD (Under) Budget Expenditures Budget Actual Actual Budget Expended Legal Services (1) $6,000 1,778.75 2,120.75 (3,879.25) 35.35% Audit 12,000 12,000.00 12,000.00 0.00 100.00% City Overhead 0 0.00 0.00 0.00 Miscellaneous 0 0.00 0.00 0.00 Totals $18,000 13,778.75 14,120.75 (3,879.25) 78.45% Notes: (1) Includes August to date billings from Best & Flanagan. (2) Interest will be allocated at year end. HRA Of Golden Valley Capital Pro'ect Funds 2015 Financial Report 9300 9400 9250 Hwy 55/ Winnetka North West Med Lk Rd Wirth #3 Cash Balance @ 04/01/15 $0.00 $0.00 $0.00 Add: Receipts: I nterest Lease revenue Increment on Deposit 0.00 Less: Expenditures: City of Golden Valley (1) TIF Payment-Hennepin County 0.00 0.00 Cash Balance @ 6/30/15 $0.00 $0.00 $0.00 (1) Breakdown on City Expenditures Memo e1��1 Cl f »��� , D�t��'�t � 1� Housin and Redevelo ment Authorit .V�. �� - - g - - p y 763 593 8002/763 593 8109(fax) Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting October 13, 2015 Agenda Item 6. Consider Development Agreement with Cornerstone Creek Limited Partnership Prepared By Marc Nevinski, Physical Development Director Summary Cornerstone Creek Limited Partnership proposes to construct 45 units of supportive, affordable housing for adults with developmental disabilities, on parcels currently addressed as 9310 and 9300 Golden Valley Road. Residents will be required to pay no more than 30% of income in rent. Providing for the construction of affordable housing is an eligible use of TIF and helps meet a City objective of providing a variety of housing options within the community. Additionally, the project is proposed to include a community building, which will be attached to the housing structure, but which will be located on a separate parcel. Cross access, maintenance, and other necessary agreements will entered into and recorded against the properties to ensure the two parcels function as one. The City Council approved the PUD on August 18, 2015. The Council will consider the PUD permit, PUD development agreement, and final plat at a future meeting. In order make construction of the project feasible however, Tax Increment Financing has been requested. TIF is not being used to finance the construction of the community building. The City Council approved the creation of a Housing TIF District on September 1, 2015. The HRA is now asked to consider approval of the development agreement. Highlights of the agreement include the following: 1. TIF will be available on a pay-as-go basis. The district will run for 25 years from the date of first receipt of increment (estimated to end in 2043). The TIF Note has a projected value of $687,975. 2. The developer will provide a $250,000 letter of credit guarantying construction of the housing component. 3. The property cannot be transferred until the project is complete without the consent of the HRA.-However, the community building property may be transferred to JHAP, who is then restricted from transferring the property until completion of the project. The developer, however, will be released from its obligations under the agreement regarding the community building parcel. Until the district expires, any transfer of either parcel may only occur with the consent of the HRA. 4. The development agreement includes a minimum assessment agreement whereby the developer agrees to a minimum valuation of the housing component and the community building. The developer agrees to not seek a reduction in property taxes or apply for tax exempt status for the housing component of the project. The owner of the community building property may seek such an application only with the HRA's consent. Additionally, the owner will be obligated to the assessment agreement. At this time the development agreement is substantially complete and agreed upon. However, there are several details that the development partnership's lender is still reviewing, and it is possible that minor and technical modifications could yet be made to the agreement. Staff requests the HRA authorize its attorney and director to make such changes prior to the execution of the document. Any significant changes to the agreement would require the review and approval of the HRA. Attachments • Cornerstone Creek Private Development Agreement (44 pages) Recommended Action Motion to approve the private development agreement with Cornerstone Creek Limited Partnership, authorizing the Attorney and Director to make minor and technical changes to said agreement, and authorize the Chair and Director to sign the Cornerstone Creek Private Development Agreement. CORNERSTONE CREEK PRIVATE DEVELOPMENT AGREEMENT TABLE OF CONTENTS Pa�e ArticleI - Definitions..................................................................................................................1 1.1 Definitions............................................................................................................................1 Article II - Representations and Warranties................................................................................4 2.1 Representations and Warranties by the HRA.......................................................................4 2.2 Representations and Warranties by Developer.....................................................................5 Article III—Approvals and Other Matters..................................................................................6 3.1 P.U.D. and Tax Increment Approvals ..................................................................................6 3.2 Development Plans...............................................................................................................6 3.3 Approval Deliveries..............................................................................................................7 3.4 Recording..............................................................................................................................7 3.5 Use........................................................................................................................................7 3.6 Condemnation.......................................................................................................................7 Article IV - Construction of Improvements................................................................................8 4.1 Development Plans and Construction of Improvements......................................................8 4.2 Commencement and Completion of Construction...............................................................8 4.3 Certificate of Completion.....................................................................................................8 4.4 Deposit and Reimbursement of HRA Expenses...................................................................9 4.5 Letter of Credit .....................................................................................................................9 ArticleV - Insurance.................................................................................................................10 5.1 Insurance.............................................................................................................................10 Article VI - Undertakings of the HRA......................................................................................12 6.1 Undertaking........................................................................................................................12 6.2 Tax Increment Note............................................................................................................12 6.3 Limitations on Financial Undertakings of the HRA...........................................................13 ArticleVII - Mortgage Financing..............................................................................................13 7.1 Approval of Mortgage ........................................................................................................13 7.2 Notice of Default; Copy to Mortgagee...............................................................................14 7.3 Mortgagee's Option to Cure Defaults.................................................................................14 7.4 HRA's Option to Cure Default on Mortgage .....................................................................15 7.5 Subordinate Liens...............................................................................................................15 Article VIII - Restrictions on Transfer; Indemnification...........................................................16 8.1 Restrictions on Transfer......................................................................................................16 8.2 Transfer of Tax Increment Note .........................................................................................17 8.3 Indemni fication...................................................................................................................17 Article IX—Developer Events of Default.................................................................................17 9.1 Events of Default Defined..................................................................................................17 9.2 Remedies on Default ..........................................................................................................18 9.3 No Remedy Exclusive ........................................................................................................18 9.4 No Additional Waiver Implied by One Waiver..................................................................19 Article X - Additional Provisions .............................................................................................19 10.1 Equal Employment Opportunity.......................................................................................19 i US.70097781.07 10.2 Not for Speculation...........................................................................................................19 10.3 Titles of Articles and Sections..........................................................................................19 10.4 Notices and Demands.......................................................................................................19 10.5 Counterparts......................................................................................................................20 10.6 Modification .....................................................................................................................20 10.7 Interpretation and Amendment.........................................................................................20 1�.8 Severability.......................................................................................................................20 10.9 Duration............................................................................................................................20 10.10 Binding Effect.................................................................................................................20 10.11 Consents..........................................................................................................................20 10.12 Certificates......................................................................................................................20 10.13 Time of the Essence........................................................................................................20 Article XI - Termination of Agreement ....................................................................................21 I 1.1 Developer's Options to Terminate....................................................................................21 11.2 Effect of Termination ........................................................................................................21 ExhibitA - Legal Description......................................................................................................l Exhibit B - Assessment Agreement.............................................................................................l Exhibit C - Certificate of Completion.........................................................................................1 ExhibitD - Preliminary Plans......................................................................................................l Exhibit E - Tax Increment Note...................................................................................................1 ExhibitF - Guaranty....................................................................................................................1 Exhibit G - Acknowledgment and Receipt for Note ...................................................................1 ii US.70097781.07 CORNERSTONE CREEK PRIVATE DEVELOPMENT AGREEMENT THIS AGREEMENT,effective as of ,2015, is made and entered into by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY, a public body corporate established and existing under Minnesota Statutes, Section 469.001 et se�., with its principal offices at 7800 Golden Valley Road, Golden Valley, Minnesota 55427 (the "HRA"), and CORNERSTONE CREEK LIMITED PARTNERSHIP, a Minnesota limited partnership,with its offices at 614 North First Street,Suite 100,Minneapolis,MN 55401 ("Developer"). WHEREAS, the Redevelopment Plan for Highway 55 West Redevelopment Area (the "Plan")was adopted by the HRA on October 9,2012,and by the City of Golden Valley(the"City") on December 18, 2012, for the purpose of redeveloping approximately 26.28 acres located in the City of Golden Valley (the "Redevelopment Area"); and WHEREAS, the Tax Increment Financing Plan for Tax Increment Financing District (Housing)Cornerstone Creek, Within Highway 55 West Redevelopment Project Area was adopted by the HRA on September 1, 2015 and by the City on September 1, 2015 for the purpose of financing affordable housing in an area of approximately 2.2 acres within the Redevelopment Area; and WHEREAS, Developer has submitted to the HRA a proposal for the construction on two parcels in the Redevelopment Area legally described in attached Exhibit A (the "Development Property")of approximately 45 units of affordable housing primarily for disabled adults which will include space for services, together with administrative office space, a community building, and underground and surface parking that meets City zoning requirements, and certain other improvements (the "Project"); and WHEREAS,the HRA,after public hearing,has approved the Project as being consistent with the provisions of the Plan; and WHEREAS, Minnesota Statutes, Section 469.029, requires the adoption of a development agreement between the parties setting forth the mutual rights and obligations of the parties in accordance with the provisions of the Plan; and NOW,THEREFORE, in consideration of the foregoing, and in consideration of the mutual terms and conditions contained herein, the parties hereby agree as follows: ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: 1 US.70097781.07 "Affiliate" means a corporation, partnership, joint venture, association, business trust or similar entity organized under the laws of the United States of America or a state thereof which is directly controlled by or under common control with the Developer or any other Affiliate. For purposes of this definition,control means the power to direct management and policies through the ownership of at least a majority of its voting securities, or the right to designate or elect at least a majority of the members of its governing body by contract or otherwise. "Agreement"means this Cornerstone Creek Private Development Agreement by and between the Housing and Redevelopment Authority in and for the City of Golden Valley, Minnesota, and Cornerstone Creek Limited Partnership, a Minnesota limited partnership, as the same may be from time to time modified, amended or supplemented. "Assessment A�reement"means the Assessment Agreement attached as Exhibit B,in which Developer shall agree to certain minimum assessed values for the Project. "Certificate of Completion"means a certification,in the form of the certificate contained in Exhibit C attached to and made a part of this Agreement,provided to Developer pursuant to Section 4.3 of this Agreement upon satisfactory completion of the shell of the Improvements without interior finishing. "C�" means the City of Golden Valley, Minnesota. "Communitv Building" has the meaning set forth in the definition of Improvements. "Community Buildin�Property" means that portion of the Development Property to be replatted as Lot 1, Block 1, Cornerstone Creek P.U.D. No. 124, Hennepin County, Minnesota. "County" means the County of Hennepin, Minnesota. "Developer"means Cornerstone Creek Limited Partnership,a Minnesota limited partnership, and its successors and assigns under this Agreement. "Development Plans"means the plans,specifications,drawings,and related documents on all construction work to be performed by Developer on the Development Property,including all on-site improvements to be performed,installed or constructed pursuant to this Agreement. Such plans shall include, for each building or other structure to be constructed on the Development Property,at least the following: (i) site plan; (ii) sample elevations and exterior materials; and (iii) landscape plan. The Development Plans are attached as Exhibit D, and are hereby approved. "Development Propertv" means the real property described in Exhibit A. "Event of DefaulY' means an action by Developer listed in Section 9.1 of this Agreement. 2 US.70097781.07 "Guarantor"means Community Housing Development Corporation,a Minnesota non-profit corporation. "Holder" means the owner of Mortgage. "Housing Buildin�" has the meaning set forth in the definition of Improvements. "Housin�Propertv"means that portion of the Development Property to be replatted as Lot 2, Block 1, Cornerstone Creek P.U.D. No. 124, Hennepin County, Minnesota. "HRA" means the Housing and Redevelopment Authority in and for the City of Golden Valley. "Improved Parcel"means the Development Property and the completed Improvements on the Development Property. "Improvements" means a three-story apartment building with approximately 45 units of affordable housing primarily for disabled adults with related common areas and office space and underground parking(the"Housing Building")and a community building with approximately 5,000 square feet (the "Community Building"), and all other improvements, including fixtures and equipment, to be constructed by Developer upon the Development Property pursuant to this Agreement, as such improvements are defined in the Development Plans and this Agreement. The Improvements shall include parking that meets City zoning requirements. "JHAP"means Jewish Housing and Programming, a Minnesota non-profit corporation, its successors and assigns. "Limited Partner"means U.S.Bancorp Community Development Corporation,its successors and assigns, as limited partner of the Developer. "Master Lease"means the Master Lease of the Community Building to JHAP or its wholly- owned subsidiary. "Mortga�e" means any priority mortgage which is secured, in whole or in part, by Developer's interest in the Development Properiy, or any portion or parcel thereof, or any Improvements constructed thereon,and which is a permitted encumbrance pursuant to the provisions of Article VII of this Agreement. "Net Proceeds" means any proceeds paid by an insurer to Developer, the Holder of the Mortgage, or the HRA under a policy or policies of insurance to be provided and maintained by Developer pursuant to Article V of this Agreement and remaining after deducting all expenses (including reasonable fees and disbursements of counsel)incurred in the collection of such proceeds. "Parties" means the HRA and Developer. 3 US.70097781.07 "Party" means either the HRA or Developer. "Plan" means the Redevelopment Plan for Highway 55 West Redevelopment Area, as hereafter amended. "Project" means the construction and operation of the Improvements by Developer on the Development Property pursuant to the terms of this Agreement. "Redevelopment Area" means the approximately 26.28 acres located in Golden Valley, Minnesota that are subject to the Plan. "State" means the State of Minnesota. "Tax Increment Financin�n"means the Tax Increment Financing Plan for Tax Increment Financing District(Housing)Cornerstone Creek,Within Highway 55 West Redevelopment Project Area(Cornerstone Creek Project). "Tax Increment Financing Act" means Minnesota Statutes, Sections 469.174 through 469.179, inclusive, as amended. "Tax Increment Note"means the promissory note attached as Exhibit E, in which the HRA agrees to make payments to Developer of a portion of the tax increment received by the HRA on the Project. "Tax Official"means any City or County Assessor; County Auditor; County or State Board of Equalization; the Commissioner of Revenue of the State; or any State or Federal District Court, the Tax Court of the State or the State Supreme Court. "Unavoidable Delavs"means actual delays due to events directly affecting the Project which are beyond the reasonable control of the Party which is to perform,including but not limited to labor disputes, unusually severe or prolonged bad weather, acts of God, acts of war or terrorism, fire or other casualty, injunctions, or other court or administrative orders. Unavoidable delays shall also include subsurface soil conditions but only until the date when the HRA first offers bonds relating to the Project. ARTICLE II Representations and Warranties Section 2.1. Re�resentations and Warranties by the HRA. The HRA represents and warrants that: (a) The HRA has the power to enter into this Agreement and carry out its obligations hereunder. 4 US.70097781.07 (b) The Redevelopment Area constitutes a Redevelopment Project pursuant to Minnesota Statutes, Section 469.002, and the Tax Increment District constitutes a housing district pursuant to Minnesota Statutes, Section 469.174. (c) The HRA has examined this Agreement, and has determined that its terms and provisions are in accordance with the objectives embodied in the Plan, and are in the best interests of the City and its residents. (d) The Project,as defined and described in this Agreement,is in conformance with the Plan. (e) 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 or limited by,or in conflict with or will result in a breach of, the terms, conditions or provisions of any indenture, mortgage, agreement or instrument of whatever nature to which the HRA is now a party or by which it is bound, or will constitute a default under any of the foregoing. (� There are no legal proceedings pending, or known to be threatened or contemplated,to which the HRA is a party, or to which any property of the HRA is subject, which, if determined adversely, would individually or in the aggregate have a material adverse effect on the HRA's financial position, or prevent or impair the HRA's ability to perform any covenants or obligations under this Agreement. The above representations and warranties are true and complete as of the date hereof, and shall survive the date hereof. Section 2.2. Re�resentations and Warranties by Developer. Developer represents and warrants that: (a) Developer is a limited partnership duly organized and in good standing under the laws of the State. (b) Developer is not in violation of any provisions in its organizational documents,has power to enter into this Agreement and to perform its obligations hereunder and has duly authorized the execution,delivery and performance of this Agreement by proper action, such that this Agreement is and shall remain binding and enforceable against Developer according to its terms,subject to laws affecting the rights of creditors generally or principles of equity. (c) Developer shall construct,operate and maintain the Improvements upon the Development Property in accordance with the terms of this Agreement,the Plan and all local, state and federal laws and regulations. 5 US.70097781.07 (d) 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 or limited by, or in conflict with or results in a breach of, the terms, conditions or provisions of Developer's organizational documents, or any indenture,mortgage,agreement or instrument of whatever nature to which Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (e) There are no legal proceedings pending, or known to be threatened or contemplated, to which Developer is a party, or to which any property of Developer is subject, which, if determined adversely, would individually or in the aggregate have a material adverse effect on Developer's financial position, or prevent or impair Developer's ability to perform any covenants or obligations under this Agreement. (� Developer has no significant assets or liabilities at this time,and there are no conditions which would have a material adverse effect on Developer, or which would prevent or impair Developer's ability to perform any covenants or obligations under this Agreement. The above representations and warranties are true and complete as of the date hereof, and shall survive the date hereof. ARTICLE III Approvals and Other Matters Section 3.1. P.U.D. and Tax Increment Approvals. Developer has received P.U.D. approval for the Project from the City,and shall comply with all reasonable requirements imposed as conditions for such approval even if such requirements involve changes to the Development Plans (so long as such changes are not substantial). Developer hereby waives its rights to a public hearing and/or appeal relating to assessments for sidewalks, streets, street lights and other public improvements that arise from the Project, in an amount not to exceed $13,630.38 for the Community Building Property and $59,064.99 for the Housing Property. Developer agrees that such amounts may be increased due to requests made by Developer,or if approved by Developer in a subsequent written document.Developer agrees to pay, when due,all approved assessments and all real estate taxes payable with respect to the Development Property, except to the extent paid by a transferee of the Community Building Property. Section 3.2. Development Plans. Developer has submitted the Development Plans to the HRA for approval. Developer shall make any changes reasonably requested by the HRA,provided the requested changes are consistent with the Plan, the Preliminary Plans, and the City's P.U.D. approval process. The HRA shall approve the final Development Plans within 30 days after submission by Developer, or if later, within 30 days after any final revisions. The Developer shall not make any material changes in the Development Plans without the consent of the HRA, which consent shall not be unreasonably withheld, conditioned, or delayed. 6 US.70097781.07 Section 3.3. Additional Deliveries. Upon execution of this Agreement by both parties, the HRA shall execute and deliver to Developer the Tax Increment Note, and the parties shall execute and deliver the Assessment Agreement. Also, upon execution of this Agreement by both parties, the Guaranty attached as Exhibit F shall be executed and delivered to the HRA by the Guarantor, and Developer shall deliver the letter of credit referred to in Section 4.5. As a condition to receipt of any payment under the Tax Increment Note, Developer shall deliver to the HRA an itemized statement,together with copies of invoices or receipts,showing that it has incurred eligible expenses described in Minnesota Statutes,Section 469.176 equal to or greater than the amount of the payment then due on the Tax Increment Note, and that have not previously been reimbursed by payment under the Tax Increment Note. Section 3.4. Recordin�. Developer shall cause the title insurance company to file this Agreement and the Assessment Agreement in the office of the Hennepin County Recorder immediately after the execution date. Developer shall pay all costs of recording. At its option, Developer may record a Memorandum of Development Agreement, in lieu of this Agreement, in a form approved by the HRA. Section 3.5. Use. Until December 31, 2043, or the date when this Agreement has been terminated, if earlier, Developer shall devote the Development Property only to use as affordable housing focused on providing services for adults with disabilities plus administrative offices as specified in this Agreement, or other uses consistent with the Plan, and there shall be no unlawful discrimination in the use of the Development Property on account of race,color,religion, sex, age, national origin, or political affiliation. If the Plan is subsequently amended in a material respect, such amendment shall not bind Developer or the Development Property without Developer's consent,which consent shall not be unreasonably withheld or delayed. To the extent that there are any conflicts between this Agreement and the Plan,the provisions of this Agreement shall govern, and the approval by the HRA of this Agreement shall constitute an amendment of the Plan. Section 3.6. Condemnation. In the event that title to and possession of the building Improvements or any material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or other person (except the HRA) prior to December 31,2043,Developer shall,with reasonable promptness after such taking,notify the HRA as to the nature and extent of such taking. Upon receipt of any condemnation award, subject to the rights of the Holder of a Mortgage, Developer shall use the entire condemnation award first to pay the reasonable costs and expenses of such taking, including but not limited to reasonable attorneys' fees and appraisers' fees, and second to reconstruct the building Improvements to the extent practicable (or, in the event only a part of the building Improvements have been taken, then to reconstruct such part) upon the Development Property. If the condemnation renders building the Improvements impracticable, Developer shall have no further obligations under this Agreement. 7 US.70097781.07 ARTICLE IV Construction of Improvements Section 4.1. Development Plans and Construction of Improvements. Developer agrees that it shall construct the Improvements on the Development Property in substantial conformance with the approved Development Plans for the Improvements and in conformance with all applicable City requirements. Developer agrees that the scope and scale of the Improvements to be constructed and all related work shall not be significantly less than the scope and scale of the Improvements as detailed and outlined in the Development Plans. Section 4.2. Commencement and Completion of Construction. Developer shall commence construction of the Improvements by March 31, 2016, and shall diligently prosecute construction to completion no later than March 31,2017. Developer shall complete construction of 66.67 percent of the shell of the Improvements on or before December 3 l,2016,and 100 percent of the shell of the Improvements without interior finishing on or before March 31, 2017. The times provided herein for commencement and completion of construction shall also be extended as needed because of any Unavoidable Delays. Subsequent to execution of this Agreement,and until final certification of the Improvements pursuant to Section 4.3,Developer shall make reports to the HRA,in such detail and at such times as may reasonably be requested by the HRA,but not more often than monthly,as to the actual progress of Developer with respect to construction of the Improvements. Developer also agrees that designated representatives of the HRA may enter upon the Development Property during the construction of the Improvements to inspect such construction. The Holder of a Mortgage shall not have any obligation to construct or complete construction of the Improvements while in possession of the Development Property pursuant to foreclosure, or conveyance by Developer to the Holder of the Mortgage in lieu of foreclosure,except as provided in Section 7.3. Section 4.3. Certificate of Completion. (a) Promptly after completion in accordance with this Agreement of the Improvements, the HRA will furnish Developer with a Certificate of Completion, in substantially the form set forth in Exhibit C attached hereto. The Certificate of Completion shall be (and it shall be so provided in the Certificate of Completion itsel� a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligations of Developer to construct the applicable portion of the Improvements. (b) If the HRA shall refuse or fail to provide the Certificate of Completion in accordance with the provisions of this Section, the HRA shall, within 10 days after written request by Developer, provide Developer with a written statement, indicating in adequate detail in what respects Developer has failed to complete the Improvements in accordance 8 US.70097781.07 with the provisions of this Agreement, or is otherwise in default under the terms of this Agreement, and what measures or acts will be necessary, in the opinion of the HRA, for Developer to take or perform in order to obtain the Certificate of Completion. (c) If Developer transfers the Community Building Property to JHAP, and JHAP completes the Community Building in accordance with this Agreement, JHAP shall be entitled to receive a separate Certificate of Completion for that portion of the Improvements, and Developer shall be entitled to receive a separate Certificate of Completion for the Housing Building. Section 4.4 Deposit and Reimbursement of HRA Expenses. Developer has deposited $15,000 with the HRA for the reimbursement of certain out-of-pocket expenses incurred by the HRA in connection with the Project (the "Deposit"). Each time the amount in the Deposit is reduced to $1,000 or less, the HRA shall give Developer written notice and Developer shall immediately contribute an additional $5,000 to the Deposit. The HRA shall treat the Deposit as a separate account on its books,but the HRA may commingle the Deposit with its other funds for purposes of investment and reinvestment. All interest earned on the Deposit shall accrue to the HRA. The Deposit shall be applied by the HRA for the payment of out-of-pocket legal,appraisal,engineering, financial consultant,environmental,surveying,platting,and other costs and expenses incurred by the HRA in connection with the Proj ect until the earlier of: (a)the date of termination of this Agreement, or (b) issuance of the Certificate of Completion. The HRA shall provide Developer with a reasonably detailed itemization for any amounts spent from the Deposit. After payment to the HRA of all amounts reimbursable to it under this Agreement, the HRA shall refund to Developer the amount then in the Deposit, if any, without interest. If this Agreement terminates prior to the issuance of the Certificate of Completion as the result of an Event of Default by Developer, Developer shall forfeit its right to the return of any funds from the Deposit. The HRA's rights under this Section 4.4 shall not limit any other remedy to which it is entitled under this Agreement or at law or equity due to an Event of Default by Developer,except to the extent that the HRA's damages are reduced by any amounts received under this Section 4.4. Section 4.5. Letter of Credit.Upon execution of this Agreement by both parties,Developer shall deliver to the HRA,at Developer's sole cost and expense, an irrevocable letter of credit in the amount of$250,000, in a form and issued by a bank previously approved by the HRA, which shall secure all of Developer's obligations under this Agreement. Any letter of credit provided under this Section shall provide for expiration in not less than one year. At least 30 days prior to the expiration of any letter of credit provided under this Section, Developer shall provide the HRA with a replacement letter of credit which shall extend at least one year beyond the expiration date of the letter of credit then in effect or, if earlier, until a date which is 60 days beyond the contractor's written estimated date for completion of the shell of the Improvements, or Developer shall be in default hereunder with no opportunity to cure and the HRA may immediately draw upon the letter of credit then in effect. Any letter of credit delivered under this Section shall guarantee completion of the Improvements by Developer in accordance with the Development Plans,and in accordance with Section 4.2. 9 US.70097781.07 ARTICLE V Insurance. Section 5.1. Insurance. (a) Developer shall provide and maintain,or cause to be maintained,at all times during the process of constructing the Improvements, at its sole cost and expense,and from time to time at the request of the HRA,furnish the HRA with proof of payment of premiums on: (i) 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 or one hundred percent (100%) of the full replacement cost of the Improvements at the date of completion,with a deductible amount of not more than $25,000, and with coverage available in non-reporting form on the so-called "all risk" form of policy; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance)together with an Owner's and Contractor's Protective Policy with limits against bodily injury and property damage of not less than $2,000,000 for each occurrence(to accomplish the above-required limits,an umbrella excess liability policy may be used). The interest of the HRA shall be protected in accordance with a clause in form and content reasonably satisfactory to the HRA;and (iii) Worker's compensation insurance, with statutory coverage. The policies of insurance required pursuant to clauses (i) and (ii) above shall be placed with financially sound and reputable insurers licensed to transact business in the State. The policy of insurance required pursuant to clause (i)above shall contain an agreement of the insurer to give not less than 30 days' advance written notice to the HRA and Developer in the event of cancellation of such policy or change affecting the coverage thereunder. (b) Upon completion of construction of the Improvements and prior to December 31,2043,or when this Agreement has been terminated,if earlier,Developer shall maintain,or cause to be maintained,at its sole cost and expense,and from time to time at the request of the HRA shall furnish proof of the payment of premiums on insurance as follows: (i) Insurance against loss and/or damage to the Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses,including(without limiting the generality of the foregoing)fire,extended coverage, vandalism and malicious mischief, explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than 90 percent of the full replacement cost of the Improvements, but any such policy may have a deductible 10 US.70097781.07 amount of not more than$25,000. No policy of insurance shall be written so that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the HRA. The term "full insurable replacement value" shall mean the actual replacement cost of the Improvements (excluding foundation and excavation costs and other uninsurable items) and equipment. (ii) Comprehensive general public liability insurance, including personal injury liability for injuries to persons and/or property,including any injuries resulting from the operation of automobiles or other motorized vehicles on or about the Development Property,in the minimum amount for each occurrence of$2,000,000. (iii) Worker's compensation insurance with statutory coverage. (c) All insurance required in this Article V shall be taken out and maintained in responsible insurance companies selected by Developer which are authorized under the laws of the State to assume the risks covered thereby. At the first time that any insurance is required to be in effect hereunder, Developer will deposit with the HRA a certificate or certificates or binders of the respective insurers evidencing that such insurance is in force and effect. Unless otherwise provided in this Article V,each policy shall contain a provision that the insurer shall not cancel or modify it without giving written notice to Developer and the HRA at least 30 days before the cancellation or modification which reduces coverage becomes effective. Upon the HRA's request, Developer shall furnish the HR.A evidence reasonably satisfactory to the HRA that any policy required hereunder is in effect. In lieu of separate policies,Developer may maintain a single policy,or blanket or umbrella policies,or a combination thereof, which provide the total coverage required herein, in which event Developer shall deposit with the HRA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Improvements. (d) In the event the Improvements or any portion thereof is destroyed by fire or other casualty, then Developer shall within 60 days after such damage or destruction, or as soon thereafter as is reasonably possible, commence to repair, reconstruct and restore the damaged Improvements to substantially the same or improved condition or utility value as they existed prior to the event causing such damage or destruction and, to the extent necessary to accomplish such repair,reconstruction and restoration,Developer shall,subject to the rights of the Holder of a Mortgage,apply the Net Proceeds of any insurance relating to such damage or destruction to the payment or reimbursement of the costs thereof.Developer shall complete the repair and reconstruction of the Improvements, whether or not the Net Proceeds of insurance received by Developer for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of construction shall be disbursed to Developer, subject to the rights of the Holder of the Mortgage. The HRA agrees to subordinate its rights under this paragraph to the Holder of a Mortgage,but only to the extent of amounts owing to the Holder under the Mortgage. 11 US.70097781.07 ARTICLE VI Undertakin�s of the HRA Section 6.1. Undertakin�. As consideration for the construction of the Improvements by Developer,the HRA agrees,subject to the provisions of Section 6.2 below,to do or cause to be done all things within its statutory powers necessary to preserve and keep in full force and effect its existence, or to assure the assumption of its obligations under this Agreement by any public body succeeding to its powers. Section 6.2. Tax Increment Note. (a) The Tax Increment Note will be issued to the Developer in a principal amount equal to $687,975 and shall be dated as of its date of issuance. The principal of the Tax Increment Note and interest thereon shall be payable solely from the Pledged Ta�c Increments as provided below. (b) The Tax Increment Note shall be issued, in substantially the form attached hereto as Exhibit E, subject to satisfaction of the following preconditions: (i) The Developer must provide the Authority with the architect's and general contractor's contracts, and a sworn construction cost statement all in form and substance acceptable to the Authority; (ii) The Developer shall have paid the Authority all amounts due under this Agreement. (c) The principal amount of the Tax Increment Note shall bear simple interest,at a rate per annum set forth in the T� Increment Note. (d) On each note payment date,subject to the satisfaction by the Developer of the requirements of clause (b) above, the Authority shall pay the Developer (or any assignee approved by the Authority)the Pledged Ta�c Increments received by the Authority during the preceding 6 months. All such payments to be applied first to accrued interest and then to reduce the principal amount of the Ta�c Increment Note. (e) The Tax Increment Note shall be a special and limited obligation of the Authority and not a general obligation of the Authority, and only Pledged Tax Increments shall be used to pay the principal of and interest on the Tax Increment Note. (� The Authority's obligation to make payments on the Tax Increment Note on any Note Payment Date or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement that has not been cured during the applicable cure period,and(B)this Agreement shall not have been terminated, and (C) a certificate of occupancy has been issued. 12 US.70097781.07 (g) The Tax Increment Note shall be governed by and payable pursuant to the additional terms thereof. In the event of any conflict between the terms of the Tax Increment Note and the terms of this Section 6.2, the terms of the Tax Increment Note shall govern. The issuance of the Tax Increment Note is pursuant and subject to the terms of this Agreement. Section 6.3. Limitations on Financial Undertakin�s of the HRA. The HRA shall have no obligation to Developer under this Agreement to take any action provided for in this Agreement except upon existence of the following conditions: (a) Developer has satisfied all conditions precedent under this Agreement; (b) No Event of Default has occurred and is then continuing beyond the cure period provided in Section 9.2; (c) The HRA and Developer have received all necessary approvals from the City,the County Assessor and other authorities to implement this Agreement; and (d) The HRA is not the subject of any court or administrative proceeding seeking to enjoin or otherwise prevent the HRA from taking any action under this Agreement; ARTICLE VII Mortgage Financing Section 7.1. Approval of Mort�a�e. Any Mortgage prior to issuance of the Certificate of Completion shall require the prior written approval of the HRA's Director. Thereafter, Developer may grant any mortgage without the HRA's consent. Developer and Holder may rely upon any approval granted hereunder by the HRA's Director without additional action by the HRA. Approval shall not be unreasonably withheld or delayed, and shall be given if: (a) the HRA's Director first receives a copy of all mortgage documents; and (b) the HRA's Director determines that the terms of the Mortgage conform and are subject to the terms of this Agreement, except to the extent the HRA agrees to subordinate its interest to the terms of the Mortgage. The Holder of the Mortgage(or any nominee or agent controlled by the Holder)shall not be obligated to undertake or continue construction or completion of the Improvements while in possession of the Development Property pursuant to the foreclosure,or conveyance by Developer to the Holder in lieu of foreclosure,except upon express assumption of such obligation as provided in Section 7.3, provided that nothing in this section or in any other section of this Agreement shall be deemed or construed to permit any Holder to devote the Development Property or any portion thereof to any use, or to construct any improvement, other than those uses or improvements permitted by this Agreement. Further,any party who obtains any interest in all or any portion of the 13 US.70097781.07 Development Property from or through any Holder, except for any nominee or agent controlled by the Holder,whether through foreclosure sale or otherwise, shall be strictly subject to the terms and conditions of this Agreement,as such are binding on Developer,and such party shall not be entitled to any additional rights or privileges granted a Holder hereunder. The HRA acknowledges that the Partnership intends that the Housing Building will be subject to the following Mortgages: (a) a construction mortgage in favor of US Bank in the amount of approximately $6,100,000; (b) a permanent mortgage in the original principal amount of approximately $500,000 to be paid from the payments under the Tax Increment Note; (c) a permanent mortgage in the original principal amount of$325,000 in favor of the Hennepin County Housing and Redevelopment Authority; (d) a mortgage in the original principal amount not to exceed $300,000 in favor of the Community Housing Development Corporation which will be assigned to Bremer Bank. The HRA retains the right to approve each of the above mortgages in accordance with this Section 7.1. Section 7.2. Notice of Default;Copy to Mort�a�ee. Whenever the HRA shall deliver any notice or demand to Developer with respect to any breach or default by Developer in its obligations or covenants under this Agreement,the HRA shall at the same time forward a copy of such notice or demand to each known Holder of any Mortgage at the last address of such Holder shown in the records of the HRA. Section 7.3. Mortgagee's Option to Cure Defaults. After any breach or default referred to in Section 7.2 hereof, each such Holder shall (insofar as the rights of the HRA are concerned and subject to any rights of the Mortgagor under such Mortgage)have the right,at its option,for a period of 90 days after notice of such default pursuant to Section 7.2 hereof,to cure or remedy such breach or default and to add the cost thereof to the Mortgage debt and the lien of its Mortgage. If a default is not susceptible of cure within such 90-day period,the Holder shall have such period of time as is necessary to cure such default provided the Holder promptly commences the cure and thereafter proceeds to cure such default as soon as reasonably possible and provided such failure to cure within 90 days does not jeopardize the purposes of this Agreement or the Plan. However, if the breach or default is with respect to construction of the Improvements,nothing contained in this Section or any other Section of this Agreement shall be deemed to permit or authorize such Holder,either before or after foreclosure or action in lieu thereof,to undertake or continue the construction or completion of the Improvements(beyond the extent necessary to conserve or protect Improvements or construction already made)for more than 90 days after the Holder has received notice of such default pursuant to Section 7.2 hereof, without first having expressly assumed the obligation to the HRA, by written agreement reasonably satisfactory to the HRA, to complete, in the manner provided in this 14 US.70097781.07 Agreement and in conformance with the Development Plans,the Improvements on the Development Property. If the Holder enters into an agreement assuming the obligations of Developer under this Agreement,such agreement shall provide that all obligations of the Holder thereunder shall terminate at such time as this Agreement is assigned by the Holder in accordance with the provisions of Section 8.1 of this Agreement or in accordance with the following paragraph. Any Holder who shall properly complete the Improvements relating to the Development Property shall be entitled, upon written request made to the HRA,to a certification by the HRA to such effect in the manner provided in Section 4.3 of this Agreement. In addition to the assignments permitted pursuant to Section 8.1 of this Agreement, if the Holder of a Mortgage acquires the interest of Developer under the terms of this Agreement, the Holder shall be permitted to assign its interest in this Agreement with the consent of HRA, which consent shall not be unreasonably withheld,delayed or conditioned. In exercising its judgment as to whether or not to grant such consent, the HRA shall take into account only the financial condition and experience of the proposed assignee and its capacity to perform the obligations remaining to be performed under this Agreement at the time of such assignment;provided that, after the Certificate of Completion for the Improvements has been issued,the experience of the proposed assignee shall no longer be a factor considered by the HRA as to whether or not grant such consent. In addition,the Holder may assign its interest at any time without the consent of the HRA to a person with a verifiable net worth in excess of$5,000,000. Any such assignee shall agree in writing with the HR.A, for itself and its successors and assigns, to be bound by the terms and conditions of this Agreement,the Deed,and the Plan,and not to transfer,mortgage or otherwise convey any portion of the Development Property, except as permitted in this Agreement. Section 7.4. HRA's Option to Cure Default on Mort�a�e. Any Mortgage executed by Developer with respect to the Development Property, or any Improvements thereon, shall provide that,in the event that Developer is in default under any Mortgage authorized pursuant to this Article VII,the Holder, within 10 days after it has declared or given notice to Developer of a default, shall notify the HRA in writing of the default. The HRA shall have the right to cure any such default,which occurs prior to issuance of the Certificate of Completion for the Improvements. The HRA shall have a period of 45 days after notice from a Holder to effect a cure,provided that the HRA gives the Holder advance written notice of its intent to cure, and provided such default is capable of cure by the HRA. In the event of such cure prior to the issuance of the Certificate of Completion for the Improvements, the HRA shall thereupon be entitled, in addition to and without limitation upon any other rights or remedies to which it may be entitled,to reimbursement from Developer or any successor or assignee of any costs and expenses incurred by the HRA in curing such default. Interest shall accrue on any amounts due the HRA under this paragraph at the reference rate of interest then in effect at U.S. Bank National Association until such amounts are paid,and such amounts shall result in the creation of a lien on the Development Property in favor of the HRA, subordinate to the lien of any Mortgage. Section 7.5. Subordinate Liens. Until the Certificate of Completion has been issued, Developer agrees that it will not create, incur, assume or suffer any security interest, mortgage, pledge, lien, charge, or encumbrance upon the Development Property except for a Mortgage 15 US.70097781.07 permitted under this Article. Developer may,at its own expense,in its own name and in good faith, contest any involuntary lien, charge or encumbrance and not be in default hereunder provided Developer first posts a bond or provides other security to the HRA or to the Holder,or to an agent of the Holder, including, without limitation, a title insurance company, which the HRA reasonably determines is adequate to protect the interest of the HRA. ARTICLE VIII Restrictions on Transfer; Indemnification Section 8.1. Restrictions on Transfer. (a) Until the Certificate of Completion has been issued by the HRA, this Agreement and Developer's interest in the Development Property (or any part thereo� may not be sold, transferred or assigned by Developer without the prior written consent of the HRA, which consent may be granted or withheld by the HRA in its sole discretion. Notwithstanding the foregoing, the Developer may transfer the Community Building Property on which the Community Building will be constructed to JHAP prior to issuance of the Certificate of Compliance, provided that the Developer and JHAP enter into a Reciprocal Maintenance, Use and Easement Agreement, and an Assignment and Assumption Agreement, each in a form approved by the HRA, which approval shall not be unreasonably withheld, conditioned or delayed. If the Community Building Property is transferred to JHAP, JHAP may not transfer the Community Building Property prior to issuance of a Certificate of Completion therefor without the prior written consent of the HRA, which may be withheld by the HRA in its sole discretion. The Assignment and Assumption Agreement shall provide, among other things, that JHAP consents to the waiver in Section 3.1 of any and all hearing and appeal rights with respect to assessments for the Community Building Property, that JHAP agrees not to apply for tax exemption for the Community Building Property without the written consent of the HRA, and that Developer shall be released from its obligations under this Agreement relating to the Community Building Property. (b) After the Certificate of Completion has been issued by the HRA, but prior to December 31, 2043, this Agreement and Developer's interest in the Housing Properly (or any part thereo� may be sold, transferred or assigned by Developer, provided that the purchaser, as of the date of such transfer, is reasonably determined by the HRA to be of sufficient financial condition, experience, and reputation to perform fully under this Agreement, and the purchaser first agrees in writing with the HRA, for himself, his heirs, representatives, successors and assigns, to be bound by the terms and conditions of this Agreement, and not to sell, transfer, mortgage or otherwise assign any portion of the Housing Property except as permitted herein. In that event, Developer shall be released from any obligation or liability hereunder to the extent of the interest purchased and the guarantor shall be released from his or its guaranty. After the Certificate of Completion 16 US.70097781.07 has been issued by the HRA, but prior to December 31, 2043, this Agreement and Developer's interest in the Housing Property (or any part thereo� may be sold, transferred or conveyed by Developer free of the foregoing conditions, but, in such event, Developer shall remain primarily liable for performance of the terms and conditions of this Agreement for the remainder of its term. (c) Developer or JHAP may transfer the Community Building Property after issuance of a Certificate of Completion therefor, provided the transferor and the transferee enter into a Reciprocal Maintenance, Use and Easement Agreement in a form approved by the HRA, which approval shall not be unreasonably withheld, conditioned or delayed. Section 8.2. Transfer of Tax Increment Note. The Developer may transfer the Tax Increment Note to US Bank National Association as collateral for its permanent Mortgage provided that the Bank executes and delivers to the HRA the Acknowledgment and Receipt of Tax Increment Note in the form attached hereto as Exhibit F. Section 8.3. Indemnification. Developer hereby agrees to indemnify, defend and hold harmless the HRA, and its officials, employees and agents, against any and all claims, demands, lawsuits,judgments, damages, penalties, costs and expenses, including reasonable attorneys' fees, arising out of wrongful actions or omissions by Developer, its employees and agents, in connection with the Project. This provision shall continue for six (6) years after the termination of this Agreement. ARTICLE IX Developer Events of Default Section 9.1. Events of Default Defined. The following shall be"Events of Default"under this Agreement and the term"Event of DefaulY' shall mean,whenever it is used in this Agreement, any one or more of the following events: (a) Until December 31, 2043, failure by Developer to observe or perform any material covenant,condition,obligation or agreement on its part to be observed or performed under this Agreement. (b) Until the Certificate of Completion has been issued, filing by Developer in any court,pursuant to any federal or State statute, of a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a portion of Developer's property, or an assignment by Developer for the benefit of creditors. (c) Until the Certificate of Completion has been issued,filing against Developer in any court, pursuant to any federal or State statute, of a petition in bankruptcy or insolvency, or for reorganization, or for appointment of a receiver or trustee of all or a 17 US.70097781.07 portion of Developer's properties,if such proceeding is not dismissed within 120 days after commencement thereof. (d) Until the Certificate of Completion has been issued, commencement by the Holder of any Mortgage of foreclosure in the event of a default in any of the terms or conditions of the Mortgage. (e) Until the Certificate of Completion has been issued, any merger, consolidation, liquidation,reorganization, transfer of all or substantially all of Developer's assets,or transfer of a controlling interest in Developer,unless the remaining entity satisfies Section 8.1(b) of this Agreement. Transfers of limited partnership interests in Developer shall not be deemed to be a default. Section 9.2. Remedies on Default. Whenever any Event of Default occurs, the HRA, subject to any rights of the Holder of a Mortgage which has been approved by the HRA pursuant to Section 7.1 of this Agreement, may take any one or more of the following actions (but only if the HRA is not then in default and only after provision of 60 days' written notice which sets forth the nature of the default to Developer in the case of an Event of Default under Section 9.1(a),(b),or(c), and then only if such an Event of Default has not been cured within said 60 days or,if such an Event of Default cannot be cured within 60 days, Developer does not provide assurances to the HRA reasonably satisfactory to the HRA that such an Event of Default will be cured as soon as reasonably possible and that it will not jeopardize the purposes of this Agreement and of the Plan): (a) The HRA may suspend its performance under this Agreement until it receives assurances from Developer, deemed adequate by the HRA, that Developer will cure its default and continue its performance under this Agreement. (b) The HRA may initiate such action,including legal or administrative action,as is necessary for the HRA to secure performance of any provision of this Agreement or recover any amounts due under this Agreement from Developer or under any security provided by Developer. (c) Sue for damages,provided that any damages for the HRA shall be reduced to the extent of any amount recovered by the HRA under any security provided by Developer. Notwithstanding anything to the contrary in this Agreement, any lender holding a Mortgage, the Guarantor and the Limited Partner shall have the right, but not the obligation, to cure an Event of Default during the cure period for the Developer. Section 9.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the HRA is intended to be exclusive of any other available remedy or remedies,but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall 18 US.70097781.07 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. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by any 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 ARTICLE X Additional Provisions Section 10.1. Equal Employment Opportunity. Developer agrees that during the construction of the Project neither it nor any of the contractors will unlawfully discriminate against any employee or applicant for employment because of race,color,religion,sex,age,national origin, or political affiliation. Section 10.2. Not for Speculation. Developer's purchase of the Development Property,and its undertakings pursuant to this Agreement,axe and will be used for the sole and express purpose of redevelopment of the Development Property and not for speculation in land holdings. Section 10.3. 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 10.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is in writing dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and, (a) in the case of Developer, is addressed to or delivered personally to Developer at 614 North First Street,Suite 100,Minneapolis,Minnesota 55401,Attn: Elizabeth Flannery, with copies to Faegre Baker Daniels LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, Attn: Angela M. Christy and U.S. Bancorp Community Development Corporation, 1307 Washington Avenue, Suite 300, St. Louis, Missouri 63103, Attn: Director of LIHTC Asset Management; and (b) in the case of the HR.A, is addressed to or delivered personally to the HRA to Housing and Redevelopment Authority In and For the City of Golden Valley, 7800 Golden Valley Road,Golden Valley,Minnesota 55427,Attention: Director,with copies to Allen D. Barnard,Best&Flanagan LLP,225 South Sixth Street,Suite 4000,Minneapolis,Minnesota 5 5402; 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. 19 US.70097781.07 Section 14.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.6. Modification. If the HRA is requested by the Holder of a Mortgage or by a prospective Holder of a prospective Mortgage to amend or supplement this Agreement, or to subordinate its interest therein, the HRA will, in good faith, consider the request with a view to granting the same,provided that such request is consistent with the terms and conditions of the Plan. Section 10.7. Interpretation and Amendment. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. This Agreement constitutes the entire agreement of the Parties on the subject matter hereof, superseding any prior oral or written agreements. This Agreement can be modified only by a writing signed by both Parties. Section 10.8. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction,such holding shall not invalidate or render unenforceable any other provisions hereof. Section 10.9. Duration. This Agreement shall be effective as of the date hereof and shall continue in full force and effect until December 31, 2043. Upon Developer's request after termination of this Agreement,the HRA shall execute a written termination agreement in recordable form. Section 10.10. Bindin E� ffect. Subject to the provisions of Article VIII, this Agreement is binding upon, and shall inure to the benefit of, the successors and permitted assigns of the Parties. The Parties agree that the terms and conditions of this Agreement run with the land. Section 10.11. Consents. Any consent or approval required of a Party under this Agreement shall not be unreasonably withheld or delayed. Section 10.12. Certificates. Upon reasonable request from time to time, the HRA shall execute and deliver written certificates to parties designated by Developer concerning whether the Agreement is in effect, whether any defaults exist under the Agreement and other similar matters. Section 10.13. Time of the Essence. Time is of the essence in the performance by each Party of its obligations under this Agreement. 20 US.70097781.07 ARTICLE XI Termination of Agreement Section 11.1. Developer's Options to Terminate. This Agreement may be terminated by Developer by written notice to the HRA in the event of the following,unless Developer's failure to comply with all material terms of this Agreement,or Developer's then existing Event of Default,has caused such event or condition subject to Section 6.2, the HRA fails to comply with any material term of this Agreement,and,after written notice by Developer of such failure,the HRA has failed to cure such non-compliance within 60 days of receipt of such notice, or, if such non-compliance cannot reasonably be cured by the HRA within 60 days,the HR.A has not,within 60 days of receipt of such notice,provided assurances,reasonably satisfactory to Developer,that such non-compliance will be cured as soon as reasonably possible. Section 11.2. Effect of Termination. Termination of this Agreement pursuant to this Article XI shall not affect the rights of Developer to institute any action, claim or demand for damages suffered as a result of breach or default of the terms of this Agreement by the HRA,and termination of this Agreement shall not terminate any provision contained herein which is clearly intended by its meaning to continue thereafter. {signatures appear on following page} 21 US.7009778 I.07 IN WITNESS WHEREOF,the HRA has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and Developer has caused this Agreement to be duly executed in its name and behalf, on or as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: Steven Schmidgall, Chair By: Timothy J. Cruikshank, Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this_day of , 2015, by Steven Schmidgall, Chair, and Timothy J. Cruikshank, Director, of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY,on behalf of the organization. Notary Public 22 US.70097781.07 CORNERSTONE CREEK LIMITED PARTNERSHIP By: CHDC Cornerstone Creek LLC, General Partner By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this_day of , 2015,by ,the of CHDC Cornerstone Creek LLC, a Minnesota limited liability company,as General Partner of Cornerstone Creek Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. Notary Public DRAFTED BY: Best & Flanagan LLP (ADB) 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 23 US J0097781.07 EXHIBIT A LEGAL DESCRIPTION The Abstract portion is described as follows: That part of the Northwest '/4 of the Southwest '/4 of Section 31, Township 118,North Range 21 West of the Sth Principal Meridian described as follows: Commencing on the North line of the Southwest '/4 of said Section 31, 585 East of the Northwest corner of said Southwest '/4; thence East along said North line of said Southwest '/4 a distance of 150.05 feet; thence South and parallel with the West line of said Southwest '/4 a distance of 394.49 feet, more or less to the center line of Watertown Road, so called; thence Westerly along center line of said road a distance of 150.43 feet; more or less, to a point therein distant 585 feet East of the West line of said Southwest '/4 of said Section 31, Township 118, Range 21; thence North and parallel with the West line of said Southwest '/4 to point of beginning. And That part of the South 16.50 feet of the West 735 feet of the Southwest '/4 of the Northwest '/4 of Section 31, Township 118, Range 21, Hennepin County, Minnesota, lying east of a line drawn north, parallel with the west line of said Southwest Quarter, from a point on the south line of said Southwest Quarter, distant 585.00 feet east of the Southwest corner thereof. The Registered portion is described as follows: That part of the Northwest Quarter of the Southwest Quarter, Section 31, Township 118, Range 21 described as follows: Beginning at a point of the North line of the Southwest Quarter of said Section 31 distant 484 feet East from the Northwest corner of said Southwest Quarter; thence East along said North line a distance of 101 feet; thence South parallel with the West line of said Southwest Quarter to the center line of 6th Avenue North (old County Road No. 6) as described in County Commissioners Proceedings dated Apri127, 1925; thence Westerly along said center line to a line drawn South, parallel with the West line of said Southwest Quarter, from the point of beginning; thence North along the last described parallel line to the point of beginning. The West line of the above described tract of land is marked by Judicial Landmarks set pursuant to Torrens Case No. 12495. That part of the Southwest Quarter of the Northwest Quarter, Section 31, Township 118, Range 21 described as follows: Beginning at a point of the South line of said Southwest Quarter of the Northwest Quarter distant 585 feet East from the Southwest corner of said Southwest Quarter of the Northwest Quarter; thence North, parallel with the West line of said Southwest Quarter of the Northwest Quarter to the North line of the South 16.50 feet of said Southwest Quarter of the Northwest Quarter; thence West along said North line to a point 836 feet West, measured along said North line, from the East line of said Southwest Quarter of the Northwest Quarter; thence South, parallel with said East line to said South line; thence East along said South line 110.75 feet, more or less, to a point of beginning. A-1 US.70097781.07 To be replatted as: Lot 1, Block 1, CORNERSTONE CREEK P.U.D. NO. 124, Hennepin County, Minnesota. And: Lot 2, Block l, CORNERSTONE CREEK P.U.D. NO. 124, Hennepin County, Minnesota. A-2 US.70097781.07 EXHIBIT B ASSESSMENT AGREEMENT FOR VALUABLE CONSIDERATION,The Housing and Redevelopment Authority in and for the City of Golden Valley,Minnesota,a public body corporate established pursuant to Minnesota Statutes, Section 469.001 et seg. (the "HRA"), and Cornerstone Creek Limited Partnership, a Minnesota limited partnership("Developer"),hereby covenant and agree that the property described in Exhibit 1 attached hereto and made a part hereof (the "Development Property") and the improvements to be made thereto pursuant to the Private Development Agreement (the "Development Agreement")between the parties dated as of ,2015(the"Improved Parcel"), with respect to which any real estate taxes, or ta�ces in lieu thereof which are levied or assessed and payable by Developer, shall be assessed to be of a market value of not less than $514,000 as of January 2, 2016, and not less than$5,980,000 on January 2, 2017, and January 2 of every year thereafter until December 31, 2043 (for taxes payable in 2017 and subsequent years), increased in 2017 and in any year thereafter by $100,000 for each apartment unit in excess of 45 units constructed thereon by Developer, and decreased in any year by the fair market value of any portion of the improvements taken in condemnation or by the power of eminent domain for which reconstruction is impracticable as provided in the Development Agreement, and by the fair market value for any portion of the unimproved Improved Parcel taken in condemnation or by the power of eminent domain (the "Assessor's Minimum Market Value"). Any capitalized term not defined herein shall have the meaning set forth in the Development Agreement. During the term of this Assessment Agreement, Developer shall not seek a reduction of the market value of the Improved Parcel for property tax purposes below the Assessor's Minimum Market Value stated above, regardless of actual market values which may result from incomplete construction of improvements to the Improved Parcel,or from destruction or diminution thereof by any cause, insured or uninsured, except in the case of acquisition or reacquisition of any portion of the Improved Parcel by a public entity. The Developer may apply to have the Housing Building classified under the Low-Income Rental Classification pursuant to Minnesota Statutes§ 273.128,but shall not apply for tax exemption for the Housing Building. The Developer and its successors and assigns shall not apply for a tax exemption for the Community Building without the written consent of the HRA. Upon execution by the parties,this Assessment Agreement shall be presented to the Hennepin County Assessor pursuant to Minnesota Statutes § 469.177, Subd. 8, as hereafter amended. If this Assessment Agreement is approved and certified by such Assessor in the form attached as Exhibit 2, this Assessment Agreement shall be filed in the office of the Hennepin County Recorder or in the office of the Hennepin County Registrar of Titles. The parties hereby covenant and agree that the obligations imposed hereunder shall be deemed with respect to the Development Property to be covenants and restrictions running with the land,and shall constitute burdens and benefits to the HRA and Developer,their successors,assigns, grantees and all other parties hereafter owning or holding any interest in the Development Property or any portions thereof. B-1 US.70097781.07 This Assessment Agreement is effective as of the date hereof and shall remain in force and effect until December 31, 2043. B-2 US.70097781.07 IN WITNESS WHEREOF, the parties have caused the execution of this Assessment Agreement as of this day of , 2015. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: Steven Schmidgall, Chair By: Timothy J. Cruikshank, Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this_day of ,2015, by Steven Schmidgall, Chair, and Timothy J. Cruikshank, Director, of THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY,on behalf of the organization. Notary Public B-3 US.70097781.07 CORNERSTONE CREEK LIMITED PARTNERSHIP By: CHDC Cornerstone Creek LLC, General Partner By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this_day of , 2015,by ,the of CHDC Cornerstone Creek LLC, a Minnesota limited liability company,as General Partner of Cornerstone Creek Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. DRAFTED BY: Best & Flanagan LLP (ADB) 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 B-4 US.70097781.07 EXHIBIT 1 LEGAL DESCRIPTION To be replatted as: Lot 2, Block 1, CORNERSTONE CREEK P.U.D. NO. 124, Hennepin County, Minnesota. B-5 USJ0097781.07 EXHIBIT 2 ASSESSOR CERTIFICATION FORM The undersigned, being the duly qualified and acting Hennepin County Assessor, hereby certifies that: 1. He is the assessor responsible for the assessment of the Development Property described in the foregoing Assessment Agreement; 2. He has read the foregoing Assessment Agreement; 3. He has received and read a copy of the Private Development Agreement; 4. He has received and reviewed the architectural and engineering plans and specifications for the improvements agreed to be constructed on the Development Property by CHDC Cornerstone Creek, LLC pursuant to the Private Development Agreement; 5. He has reviewed the market value previously assigned to the Development Property upon which such improvements are to be constructed; and 6. The undersigned assessor, being legally responsible for the assessment of the above � described Development Property upon completion of the improvements to be constructed thereon, hereby certifies that the market value assigned to the Improved Parcel(as defined in the Assessment Agreement) and the improvements thereto upon completion shall be not less than $514,000 as of January 1, 2016, and not less than $5,980,000 on January 2, 2017, and January 2 of every year thereafter until December 31, 2043 (for taYes payable in 2017 and subsequent years), increased in 2017 and any thereafter year by$100,000 for each apartment unit in excess of 45 units constructed thereon by Developer, and decreased in any year by the fair market value of any portion of the improvements taken in condemnation or by the power of eminent domain for which reconstruction is impracticable as provided in the Development Agreement, and by the fair market value for any portion of the unimproved Improved Parcel taken in condemnation or by the power of eminent domain. Dated: , 20 Hennepin County Assessor Hennepin County, Minnesota B-6 US.70097781.07 EXHIBIT C CERTICATE OF COMPLETION HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY,a public body corporate(the"HRA"),and CHDC CORNERSTONE CREEK, LLC, a Minnesota limited liability company ("Developer"), previously entered into the CHDC Cornerstone Creek Private Development Agreement(the"Agreement"),recorded in the Office of the County Recorder in and for the County of Hennepin and State of Minnesota,as Document Number , for the following described property: Lot 2, Block 1, CORNERSTONE CREEK P.U.D. NO. 124, Hennepin County, Minnesota. As of the date hereof,Developer has performed all of its agreements and covenants contained in the Agreement to the satisfaction of the HRA, including the covenants in Article IV of the Agreement requiring completion of the construction of the improvements. NOW, THEREFORE, it is hereby certified that all of the covenants in the Agreement, including the covenants in Article IV requiring completion of the construction of the Improvements, have been duly and fully performed by Developer as of the date hereof and that the letter of credit securing performance thereof, are hereby released absolutely and forever insofar as apply to the property described above. The County Recorder in and for the County of Hennepin and State of Minnesota is hereby authorized to accept for recording and to record the filing of this instrument. This instrument shall be conclusive determination of the satisfactory termination of the covenants of Article IV of the Agreement requiring completion of the construction of the improvements. Notwithstanding the foregoing,those covenants contained in the Agreement which are to remain in full force and effect until December 31,2043, shall remain in force and effect until that date,unless earlier terminated in accordance with the Agreement. Dated: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY By: Steven Schmidgall, Chair And: Timothy J. Cruikshank, Director G1 us.�oo9��a�.o� STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this_day of , 20_,by Steven Schmidgall and Timothy J. Cruikshank,respectively the Chair and Director of the Housing and Redevelopment Authority in and for the City of Golden Valley, on behalf of the Authority. Notary Public THIS INSTRUMENT WAS DRAFTED BY: Best& Flanagan LLP (ADB) 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 G2 US.70097781.07 EXHIBIT D DEVELOPMENT PLANS D-1 US.70097781.07 EXHIBIT E TAX INCREMENT NOTE The Golden Valley Housing and Redevelopment Authority in and for the City of Golden Valley(the"HRA"),promises to pay to Cornerstone Creek Limited Partnership("Developer"),and its permitted assigns, solely to the extent and in the manner hereinafter provided, the principal amount of Six Hundred and Eighty-seven Thousand Nine Hundred and Seventy-five and no/100th Dollars($687,975.00),together with interest which shall accrue as provided herein,on the Payment Dates as hereinafter defined. This Note is a special and limited obligation and not a general obligation of the HRA,and has been issued by the HRA pursuant to the Cornerstone Creek Private Development Agreement,dated ,2015,between the HRA and Developer(the"Development Agreement"),to aid in financing costs incurred and to be incurred by the Developer within and for the benefit of Tax Increment Financing District (Housing) Cornerstone Creek, Within Highway 55 West Redevelopment Project Area (the "Tax Increment Financing District"). Capitalized terms used herein and not otherwise defined herein shall have the meaning given to them in the Development Agreement. Interest shall accrue at the rate of 5.50%per annum on the unpaid principal until paid in full. Interest shall begin to accrue when the Certificate of Completion for the Improvements has been issued. Each payment on this Note shall be by check made payable to Developer and mailed to Developer at its postal address within the United States which shall be designated from time to time by Developer. Principal and interest on this Note shall be payable solely from Net Tax Increment, as hereinafter defined, on each August 1 and February 1 commencing August, 2018,to and including February 1, 2044 (the"Payment Dates"). On each Payment Date,the HRA shall apply all Net Tax Increment to the payment of this Note. All such payments shall be applied first to accrued interest and then to the principal amount of this Note. "Net Tax Increment"is defined as the tax increment actually received by the HRA from the Tax Increment Financing District solely with respect to the Project in any calendar year,after:(a)the deduction taken by the Minnesota State Auditor, and (b) a 10% deduction by the HRA from the amount remaining after the deduction by the State Auditor for administrative costs. In the event that Net Tax Increment is not sufficient to pay the principal of and interest on this Note,the failure of the HRA to pay such principal and interest shall not constitute a default hereunder. As a condition to receipt of any payment under this Note,Developer shall deliver to the HRA an itemized statement, together with copies of invoices or receipts, showing that it has incurred eligible expenses described in Minnesota Statutes, Section 469.176 equal to or greater than the amount of the payment then due on the Note, and that have not previously been reimbursed by payment under this Note. E-1 US.70097781.07 THE HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE NET TAX 1NCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND 1NTEREST ON THIS NOTE. This Note and the HRA's obligation to make any payments under this Note shall terminate upon the earlier of: (a)occurrence of an Event of Default by the Developer under the Development Agreement, which is not cured within the time permitted by the Development Agreement, or (b) February 1, 2044. Any unpaid principal and interest remaining at the time of termination of this Note shall be considered satisfied and discharged. EXCEPT AS TO THE OBLIGATION TO MAKE PAYMENTS FROM THE NET TAX INCREMENT,THE NOTE IS NOT A DEBT OF THE HRA,THE CITY OF GOLDEN VALLEY, OR THE STATE OF MINNESOTA(THE"STATE"),AND NEITHER THE HRA,THE CITY OF GOLDEN VALLEY,THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE,NOR SHALL THE NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN NET TAX 1NCREMENT. Developer shall never have or be deemed to have the right to compel any exercise of any taxing power of the HRA or the City of Golden Valley or of any other public body, and neither the HRA nor the City of Golden Valley nor any director,commissioner,council member,board member, officer, employee or agent of the HRA or the City of Golden Valley, nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. This Note may not be assigned by Developer prior to issuance by the HRA of the Certificate of Completion for the Improvements, except that Developer may assign and pledge this Note to secure any loan to finance the costs of the Project,and may also assign this Note to an assignee of the Development Agreement in an assignment which meets the requirements of Article VIII of the Development Agreement. No assignment shall be valid unless the HRA has been notified in writing at least 10 business days in advance. IN WITNESS WHEREOF,the HR.A has caused this Note to be executed by the Chair and Director of the HRA as of this day of , 2015. Steven Schmidgall, Chair Timothy J. Cruikshank, Director E-2 US.70097781.07 EXHIBIT F GUARANTY FOR VALUABLE CONSIDERATION, and to induce THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY (the "HRA") to extend credit and other accommodations to CORNERSTONE CREEK LIMITED PARTNERSHIP, a Minnesota limited partnership ("Developer"), the undersigned ("Guarantor"), hereby guarantees to the HRA the full and prompt performance, when due, of all covenants, agreements,and obligations of Developer under the CORNERSTONE CREEK Private Development Agreement dated as of , 2015, and any amendments thereto (the "Development Agreement"). This Guaranty is absolute,unconditional,continuing and inevocable unless released pursuant to the Development Agreement. This Guaranty is effective upon delivery to the HRA without acceptance by the HRA and without any further act or condition. Guarantor's liability under this Guaranty is joint and several with any other guarantors. Guarantor waives notice,demand and opportunity to cure any default by Developer,and any and all defenses,claims and setoffs of Developer. The liability of Guarantor hereunder shall not be affected by any extensions,renewals,modifications,waivers,or releases granted to Developer,or by any other act or thing other than performance in full by Developer under the Development Agreement. Guarantor shall pay or reimburse the HRA for all costs and expenses(including reasonable attorneys' fees and expenses)incurred by the HRA in enforcement of this Guaranty. Guarantor shall not exercise or enforce any right of payment, reimbursement or subrogation available to it against Developer during any period in which there is a default under the Development Agreement. This Guaranty shall be binding upon Guarantor and his or its heirs, representatives, successors and assigns, and shall inure to the benefit of the HRA and its successors and assigns. This Guaranty may not be waived, modified, terminated or otherwise changed except by a writing signed by the HRA. This Guaranty shall be governed by the laws of the State of Minnesota. Any dispute or claim arising under this Guaranty shall be venued exclusively in Minnesota District Court, Hennepin County, and Guarantor hereby consents to the jurisdiction of such court for all such matters. Guarantor also agrees that process may be served on Guarantor by service on any officer of Developer, in addition to any other method permitted by law. This Guaranty shall terminate at such time as the Certificate of Completion for the Improvements has been issued as provided in Section 4.3 of the Development Agreement. F-1 US.70097781.07 Guarantor represents and warrants to the HRA that the personal financial statement he or it delivered to the HRA is substantially true and complete as of the date hereof. IN WITNESS WHEREOF, Guarantor has caused the execution of this Guaranty this day of , 2015. COMMUNITY HOUSING DEVELOPMENT CORPORATION By: Its: THIS INSTRUMENT WAS DRAFTED BY: Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 F-2 US.70097781.07 EXHIBIT G ACKNOWLEDGMENT AND RECEIPT FOR NOTE The undersigned, a ("Purchaser"), hereby certifies and acknowledges that on the date hereof the Purchaser received from CORNERSTONE CREEK LIMITED PARTNERSHIP,a Minnesota limited partnership(the"Developer") the Ta�c Increment Note,a pay-as-you-go tax increment revenue note in the original principal amount of$743,059 dated , 2015 ("Note"), a copy of which is attached hereto, of the Housing and Redevelopment Authority in and for the City of Golden Valley, Minnesota(the "Authority"). A. The Purchaser has had the opportunity to ask questions of and receive all information and documents concerning the Note as it requested,and has had access to any additional information the Purchaser thought necessary to verify the accuracy of the information received. In determining to acquire the Note,the Purchaser has made its own determinations and has not relied on the Authority or information provided by the Authority. B. The Purchaser represents and warrants that: 1. The Purchaser is acquiring the Note for investment and for its own account, and without any view to resale or other distribution. 2. The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of receiving and holding the Note. 3. The Purchaser understands that the Note is a security which has not been registered under the Securities Act of 1933, as amended, or any state securities law, and must be held until its sale is registered or an exemption from registration becomes available. 4. The Purchaser is aware of the limited payment source for the Note and interest thereon and risks associated with the sufficiency of that limited payment source. 5. The Purchaser is aware that the Note is subject to restrictions on transfer by the Purchaser. C. The Purchaser understands that the Note is payable solely from certain tax increments derived from certain properties located in a Tax Increment District, if and as received by the Authority. The Purchaser acknowledges that the Authority has made no representation or covenant, express or implied,that the revenues pledged to pay the Note will be sufficient to pay,in whole or in part,the principal and interest due on the Note. Any amounts which have not been paid on the Note on or before the final maturity date of the Note shall no longer be payable,as if the Note had ceased to be an obligation of the Authority. The Purchaser understands that the Note will never represent or constitute a general obligation, debt or bonded indebtedness of the City of Golden Valley, the Authority,the State of Minnesota, or any political subdivision thereof and that no right will exist to G-1 have taxes levied by the City of Golden Valley,the Authority,the State of Minnesota or any political subdivision thereof for the payment of principal and interest on the Note. D. The Purchaser understands that the Note is payable solely from certain tax increment, which are taxes received on improvements made to certain property(the"Improvements") in a tax increment district from the increased taxable value of the property over its base value at the time that the tax increment district was created,which base value is called"original net tax capacity". There are risk factors in relying on tax increments to be received,which include,but are not limited to,the following: 1. V alue of Improvements. If the contemplated Improvements constructed in the tax increment district are completed at a lesser level of value than originally contemplated, they will generate fewer taxes and fewer tax increments than originally contemplated. 2. Damage or Destruction. If the Improvements are damaged or destroyed after completion, their value will be reduced, and taxes and tax increments will be reduced. Repair,restoration or replacement of the Improvements may not occur,may occur after only a substantial time delay,or may involve property with a lower value than the Improvements, all of which would reduce taxes and tax increments. 3. Change in Use to Tax-Exempt. The Improvements could be acquired by a party that devotes them to a use which causes the property to be exempt from real property taxation. Taxes and tax increments would then cease. 4. Depreciation. The Improvements could decline in value due to changes in the market for such property or due to the decline in the physical condition of the property. Lower market valuation will lead to lower taxes and lower tax increments. 5. Non_pavment of Taxes. If the property owner does not pay property taxes, either in whole or in part,the lack of taxes received will cause a lack of tax increments. The Minnesota system of collecting delinquent property taxes is a lengthy one that could result in substantial delays in the receipt of taxes and tax increments,and there is no assurance that the full amount of delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax increments. 6. Reductions in Taxes Levied. If property taxes are reduced due to decreased municipal levies,taxes and tax increments will be reduced. Reasons for such reduction could include lower local expenditures or changes in state aids to municipalities. For instance, in 2001 the Minnesota Legislature enacted an education funding reform that involved the state increasing school aid in lieu of the local general education levy (a component of school district tax levies). 7. Reductions in Tax Capacity Rates. The taxable value of real property is determined by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by certain categories of property; for example, the tax capacity rates for G-2 residential homesteads are currently less than the tax capacity rates for commercial and industrial property. In 2001 the Minnesota Legislature enacted property tax reform that lowered various taac capacity rates to "compress" the difference between the tax capacity rates applicable to residential homestead properties and commercial and industrial properties. 8. Chan�es to Local Tax Rate. The local tax rate to be applied in the tax increment district is the lower of the current local tax rate or the original local tax rate for the tax increment district. In the event that the Current Local Ta�c Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes about after applying the lower Original Local Tax Rate instead of the Current Local Tax Rate is considered"excess" tax increment and is distributed by Ramsey County to the other ta�cing jurisdictions and such amount is not available to the Authority as tax increment. 9. Le isl� ation. The Minnesota Legislature has frequently modified laws affecting real property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as affected by state aid to municipalities. 10. Hennepin Countv's Sharing Factor. In determining the amount of tax increment generated by the development property, Hennepin County uses a Sharing Factor when there are multiple parcels of land in the tax increment financing district. This may result in a lower amount of tax increment attributable to the development property than if the development property was the only parcel in the district. E. The Purchaser acknowledges that the Note was issued as part of a development agreement between the Authority and the Developer dated ,2015("Development Agreement"), and that the Authority has the right to suspend payments under this Note and/or terminate the Note upon an Event of Default under the Development Agreement. F. The Purchaser acknowledges that the Authority makes no representation about the t� treatment of, or tax consequences from, the Purchaser's acquisition of the Note. WIT`NESS our hand this_day of , 2015. Purchaser: U.S. BANK NATIONAL ASSOCIATION By Name: Its 011800/312001/2153175_11 G-3