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HomeMy WebLinkAboutEDA AGN 09-23-08 AGENDA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Tuesday, September 23, 2008 7:00 p.m., City Hall, Conference Room 1 1. Call to Order/Roll Call Gary L. Peterson, President Marlaine Szurek, Vice President Bruce Kelzenberg, SecretarylTreasurer Tammera Diehm Bobby Williams Bruce Nawrocki Gerry Herringer 2. Pledge of Allegiance CONSENT AGENDA 3. Approve Minutes of August 26 and September 15, 2008 Approve financial report and payment of bills for August 2008 on Res. 2008-15. Motion: Move to Approve the Consent agenda items as listed. BUSINESS ITEMS 4. Resolution 2008-12 and 13, Fourth Amendment to Contract for Private Redevelopment-Grand Central Lofts and Contract for Private Redevelopment- 4707 Central Avenue Motion: Move to waive the reading of Resolution 2008-12, there being an ample amount of copies available to the public. Motion: Move to Adopt Resolution 2008-12, a Resolution Approving the 4th Amendment to Contract for Private Redevelopment and awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its taxable tax increment Revenue Notes, Series 2008A; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Motion: Move to waive the reading of Resolution 2008-13, there being an ample amount of copies available to the public. Motion: Move to Adopt Resolution 2008-13, a Resolution Approving the Contract for Private Redevelopment and Resolution Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its $440,000 Taxable Tax Increment Revenue Note, Series 2008B; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. 5. Other Business The next regular EDA meeting will be Tuesday, October 28, 2008 at Parkview Villa. ECONOMIC DEVELOPMENT AUTHORITY (EDA) REGULAR MEETING MINUTES August26,2008 CALL TO ORDERIROLL CALL President, Gary L. Peterson called the meeting to order at 7:02 p.m. Present: Gary L. Peterson, Bobby Williams, Bruce Nawrocki, Tammera Diehm, Marlaine Szurek, Gerry Herringer and Bruce Kelzenberg Staff Present: Scott Clark, Walter R. Fehst, Sheila Cartney, Cheryl Bakken PLEDGE OF ALLEGIANCE CONSENT AGENDA Approve Minutes of June 16th, July 28th and August 11, 2008 and Financial Report and Payment of Bills for the months of May, June, and July on Resolution 2008-11. Nawrocki asked a few questions on line items in the financial report. Staff clarified each item for him. Motion by Szurek, second by Williams, to waive the reading of resolution 2008-11, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Szurek, second by Kelzenberg, to approve the consent agenda. All ayes. Motion Carried. EDA RESOLUTION 2008-11 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STA TEMENT FOR MA Y, JUNE, AND JUL Y 2008 AND PA YMENT OF BILLS FOR THE MONTHS OF MA Y, JUNE AND JUL Y 2008. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detai/ed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the months of May, June and July 2008 and the list of biffs for the months of May, June and July of 2008 are attached hereto and made a part of this resolution; and WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW, THEREFORE BE IT RESOL VED by file Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of biffs, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOL VED the financial statements are acknowledged and received and the fist of bills as presented in writing are approved for payment out of proper funds; and BE IT FURTHER RESOL VED this resolution and attachments are to be made a part of the permanent records of the Columbia Heights Economic Development Authority. Economic Development Authority Meeting Minutes August 26, 2008 Page 2 of6 BUSINESS ITEMS General Discussion on 4th Amendment to Contract for Private Redevelopment and Contract for Private Redevelopment. 4707 Central Avenue Clark stated on August 11, 2008 the EDA reviewed draft proposals of the two agreements and had two primary concerns: 1) relinquishing the housing developer from having to complete Phases /I and /II in order for the T1F note to be issued; and 2) the need to establish a "site clean-up" plan for the vacant areas of the housing development. Clark then asked all of the parties involved in this project to introduce themselves. Present was Steve Bubul, EDA Attorney, Pete Nelson, Nelson Building and Development, Jacob Ullery, Project Manager, Ehtesham Khoyratty, owner of the commercial piece, and Dave Kloeber, owner of Grand Central Lofts. Clark stated staff is recommending two compromises, which includes the site clean up actions. The first one is that the redeveloper would be required to undertake the site/landscaping improvements to be completed sometime in the fall of 2009/201 0 or they would be in default of the contract. The site/landscaping improvements are: a) re- establish ground cover by removing all bituminous coverage from phase /I and III, removing all gravel areas, and replacing them with seeded landscaping and complete the original grading plan; b) fill in existing excavation pit; c) establish permanent catch basin lids; d) complete service drive around perimeter of the south and east end of the site; e) remove existing sign frame adjacent to Grand Avenue; and f) establish sod turf on all City right-of-way areas. The second action would be regarding the building phase out, which consists of: a) the EDA would withhold 20% of available T1F on each payment under the note given to Grand Central Properties and keep those funds in an escrow account; b) if the redeveloper builds at least 70 additional units by the last payment date on the TIF note of February 1,2014, the EDA would pay the entire amount accumulated in the escrow, including interest earnings; and c) if the redeveloper fails to build the required 70 units by February 1,2014, the EDA would retain all withheld amounts and the note is deemed paid. What makes this deal complicated is that we need the sewer expansion along Central A venue completed. If you pass the agreement, the T1F note would be split with half going to the commercial developer and half to the housing developer. Because of the sewer expansion needed, the developers would like to construct before winter. If there is an agreement, staff would come back to the EDA at a special meeting in two weeks. Nawrocki asked how much TIF funds have been collected to date and are they paying any taxes at this time. Clark stated, the housing note is estimated at $150,000 per year and taxes are being paid. To date the district has approximately $300,000 in the fund balance. Nawrocki asked after the Met Council grant funds are used, who would be paying for Economic Development Authority Meeting Minutes August 26, 2008 Page 3 of6 the rest of the ramp. Clark stated the developer would be. Diehm stated the $750,000, is proposed to be split up and the commercial developer would receive $440,000 that will be generated from T1F. Steve Bubul stated the $440,000 is the present value number using today's dollars. Clark stated in summary, that the commercial developer is getting $440,000 over a period of 10 years, plus the given interest rate. In addition, he would receive $350,000 from the housing developer and $950,000 from the Met Council grant for the ramp. Diehm asked Kloeber what the status of the housing portion was. Kloiber stated there are 34 or 35 units left. The townhouses are not moving, as they need the sewer in place first before they can build anymore. Herringer stated in the Fourth Amendment, Page 2, Housing Improvements, it states "builds at least 70 additional condominium units", that should be changed to read: "completes construction on at least 70 additional condominium units" and to insert our owner-occupied position as that is our original preference. Bubul agreed to make the changes. Diehm asked staff for an update on how we are going deal with the upcoming Met Council grant deadline for the ramp. Clark stated Cartney has been working with Deb Jensen at Met Council on this issue. The developer views they would like an extension, but feel they are going to be done with that portion if they can start in September. Met Council seems to be in agreement to extending the funds, due to the situation. Establishment of Special Meetinq Date to Consider Aqenda Item No.4 Motion by Szurek, second by Williams! to set a Special Meeting Date of September 8, 2008 at 6: 15 pm for consideration of 4 h Amendment to Contract for Private Redevelopment and Contract for Private Redevelopment, 4707 Central Avenue. All ayes. Motion Carried. Diehm told the developers the City is excited to get started on this development and is looking forward to working with them. Resolution 2008-09 and 2008-10. 2009 Budaet and Special Benefit Levv Clark stated this item is carried over from a previous meeting. Clark stated each year the EDA has to approve both an EDA Levy and a Special Benefits Levy as part of the overall Community Development Budget. Staff is proposing a budget total of $347, 561, which is raised by: 1) EDA levy of $80, 000, which is the same as 2008; and 2) a Special Benefit Levy authorized under the HRA Statutes in the amount of $267,561. The HRA levy is an increase of $71,000 from 2008 and represents an increase in the new levy amount authorized by State Statutes, at 100%. The reason this increase is necessary is because the EDA's budgeted revenue is combined with the Community Development Departments' other revenue sources (permits and licensing) to make up the total department budget. The HRA increase is necessary to balance the overall Economic Development Authority Meeting Minutes August 26, 2008 Page 4 of6 departments' budget due to a projected $60,000 to $70,000 decrease in building permit fees for 2009. Nawrocki asked what the $35,792 under revenue was from. Clark stated this is revenue received from Parkview Villa staff administrative time spent on Parkview issues and HUD document processing. Szurek stated she felt we shouldn't be in the rental housing business. We wouldn't need the HRA if we didn't own the building. If we let the County take over the building, that would free up funds for us to do other things in our City. Herringer stated we could possibly sell the building and use the funds for redeveloping the City. Clark stated two or three years ago staff obtained appraisals for Parkview Villa. Herringer stated with the budget the concern is the drop in permit fees based on the projects that are coming down the line. Clark stated that much of the Department's inspection work in 2009 would be from permits deposited in 2008. For example, with the Public Safety building, we are receiving no funds from the project. The 4ih and Central, New Perspectives, and 3ih and Central permit funds will be permitted in 2008. Nawrocki stated he intends to vote against the motion as he objects to the increase. Motion by Szurek, second by Kelzenberg, to waive the reading of Resolution 2008-09, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Szurek, second by Kelzenberg, to Adopt Resolution 2008-09, a Resolution of the Economic Development Authority in and for Columbia Heights (EDA) Adopting the 2009 Budget and Setting the EDA Levy. Upon Vote: Szurek-aye, Herringer-aye, Nawrocki-nay, Williams-abstained, Diehm-aye, Kelzenberg-aye, Peterson-aye. Motion carried. Motion by Szurek, second by Diehm, to waive the reading of Resolution 2008-10, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Szurek, second by Kelzenberg, to Adopt Resolution 2008-10, a Resolution Authorizing the Levy of a Special Benefit Levy pursuant to Minnesota Statutes, Section 469.033, Subdivision 6, and Approval of a Budget for Fiscal Year, 2009. Upon Vote: Szurek-aye, Herringer-aye, Nawrocki-nay, Diehm-aye, Williams-abstained, Kelzenberg-aye, Peterson-aye. Motion Carried. EDA RESOLUTION 2008-09 RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR COLUMBIA HEIGHTS (EDA) ADOPTING THE 2009 BUDGET AND SETTING THE EDA LEVY. BE IT RESOL VED By the Columbia Heights Economic Development Authority (EDA) of Columbia Heights, Minnesota as follows: WHEREAS, the Columbia Heights City Council established the Columbia Heights Economic Development AutlJority January 8, 1996 pursuant to Minnesota Statutes 469.090 to 469.1081; and Economic Development Authority Meeting Minutes August 26, 2008 Page 5 of6 WHEREAS, the City Council has given to the EDA the responsibility for all development and redevelopment projects and programs; and WHEREAS, the EDA is authorized under State Statutes, Section 469.107 to levy a tax on its area of operation {or the purposes authorized under State Statues 469.090 to 469.1081, subject to consent by the City Council. NOW, THEREFORE BE IT RESOL VED BY THE EDA FOR THE CITY OF COLUMBIA HEIGHTS, MINNESOTA THA T: 1. The EDA adopts and recommends to the City Council for approval a budget of $347561 for year 2009. 2. The EDA adopts and recommends to the City Council for approval a levy of $80. 000 for year 2009. The Executive Director is instructed to transmit a copy of this resolution to the City Manager and Finance Director/City Clerk of the City of Columbia Heights, Minnesota RESOLUTION NO. 2008.10 AUTHORIZING THE LEVY OF A SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES, SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A BUDGET FOR FISCAL YEAR 2009 WHEREAS, pursuanllo Minnesola Slatutes, Section 469.090 to 469.1081 ("EDA Act') the City of Columbia Heights ("City') created the Columbia Heights Economic Development Authority (the "EDA''); and WHEREAS, pursuant to City Resolution 2001-62 and Ordinance No. 1442, the City Council granted to the EDA all powers and duties of a housing and redevelopment authority under the provisions of Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act''), except cerlain powers that are allocated to the Housing and Redevelopment Authority in and for the City of Columbia Heights (the "HRA'); and WHEREAS, Section 469.033, Subdivision 6, of Ihe HRA Act permits the EDA and HRA, together, to levy and collect a special benefit levy of up to .0185 percent of taxable market value in the City upon all taxable real properly within the City; and WHEREAS, the EDA desires to levy a special benefit levy in the amount of. 0185 percent of taxable market value in the Cily; and WHEREAS, the EDA understands that the HRA does not expect to levy a special benefit tax for fiscal year 2009; and WHEREAS, the EDA has before it for its consideration a copy of a budget for its operations for the fiscal year 2009 and the amount of the levy for collection in 2009 shall be based on this budget. NOW; THEREFORE, Be It Resolved by the Board of Commissioners of the Columbia Heights Economic Development Authority: 1. The budget of $347 561 for the operations of the EDA presented for consideration by the Board of Commissioners of the EDA is hereby in all respects approved. Such budget includes the amount the EDA requests (by separate resolution) to be levied by the City under Minnesota Statutes, Section 469. 107, together with the amount to be levied hereunder by the EDA under Minnesota Statutes, Section 469.033, subdivision 6. 2. Staff of the EDA are hereby authorized and directed to file the budgetwifh the City in accordance with Minnesota Statutes, Section 469.033, Subdivision 6. 3. There is hereby levied, subject to the approval of the City Council of the City, a special benefit levy pursuant to Minnesota Statutes, Section 469.033, Subdivision 6, in the amount equal to the lesser of a levy at a rate of .0185 percent of taxable market value in City, or $267561 with respect to taxes payable in calendar year 2009. 4. Staff of the EDA are hereby authorized and directed to seek the approval by resolution of the City Council of the Cityofthe levy of special benefit taxes in 2009 and to take such other actions as are necessary to levy and cerlify such levy. Other Business The next Reqular EDA meetinq will be Tuesday, September 23, 2008 at City Hall, with the Special meeting to be held at 6: 15 pm on Monday, September 8, 2008. Economic Development Authority Meeting Minutes August 26, 2008 Page 6 of6 ADJOURNMENT President, Peterson, adjourned the meeting at 8:24 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary/CAP H :\EDAm inutes2008\8-26-2008 ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING MINUTES September 15, 2008 CALL TO ORDERIROLL CALL President, Gary L. Peterson called the meeting to order at 6: 19 p.m. Present: Gary L. Peterson, Bobby Williams, Bruce Nawrocki, Tammera Diehm, Gerry Herringer and Bruce Kelzenberg Absent: Marlaine Szurek Staff Present: Scott Clark, Walter R. Fehst, and Cher Bakken PLEDGE OF ALLEGIANCE Nawrocki stated he objected to the way this meeting was called. Members should have been called. Fehst stated it was voted at the last meeting to have a special meeting on the 8th, which staff called to change to tonight. BUSINESS ITEMS Res.2008-12 and 13. 4th Amendment to Contract for Private Redevelopment-Grand Central Lofts and Contract for Private Redevelopment-4707 Central Avenue Clark stated both documents before you have been discussed at two previous meetings. Clark stated the first document is the Fourth Amendment to the Contract for Private Redevelopment. This document amends the original contract from September 2003. It essentially does two things: 1) splits the already agreed upon tax increment in half, between the commercial developer and the housing developer; and 2) it passes on the obligation to the commercial developer to do the sanitary sewer work necessary on Central Avenue. The concerns the Board had was that the original staff recommendation was that there was no penalty back to the housing developer if Phase " and 11/ was not completed. Essentially, what staff brought back to the EDA at the last meeting and was agreed to, is that we will be holding back 20% of the money from the housing developer and he will have until 2014 to build Phase" and if he doesn't, the 20% would be forfeited. In addition to that the other obligation was that the temporary site improvements, listed as Schedule E; the re-establishment of ground cover and filling in and seeding of the excavation pit would also have to be done by May of 2009. Clark stated the second development is the Contract for Private Redevelopment between the EDA and Grand Central Commons. In 2003 there was the understanding that the commercial property would come in as a separate phase and would seek tax increment financing. Staff has gone through the "but for analysis" and has completely analyzed the performa. This document provides a tax increment financing note of a net present value of $440, 000 and the rest of the agreement is all of the standard language that goes along with this type of deal, e.g., the building permit process, mortgage financing, $4.6 million minimum assessment agreement etc.. Economic Development Authority Meeting Minutes September 15, 2008 Special Meeting Page 2 of4 Clark stated the last piece is identifying the Metropolitan Council Grant for the parking ramp in the amount of $974,369. In our discussion with Metropolitan Council, they verbally stated they are willing to extend this past December 31st of this year. They would allow the ramp to be in private ownership and there would have to be a public use easement in place. Clark stated in the last 6 hours we have learned that Buffalo Wild Wings is uncommitted to the project, their lease is necessary to trigger the financing for this project. According to Mr. Khoratty his bank stated they would need a copy of both of these agreements and the lease. Khoyratty stated that a main issue is the ground freezing up for the sewer project that needs to go in. From staff's standpoint, it is imporlant to act on the agreement if work is to commence in 2008. Staff noted a number of changes that would have to occur. For example, the temporary improvements would have to be held up until spring. Mr. Khoratty would not receive any of the funds until all of the minimum improvements are done. If the EDA is willing to proceed, staff would recommend the following Agreement modifications: 1) EDA directs staff to add language to both the Met Council grant and the financing section, explicitly stating understand that this project will be built in two phases; and 2) that all T1F money be held up until the minimum improvements are completed Clark stated the EDA could potentially act on the Fourlh Amendment and not act upon the other amendment. The Fourlh Amendment gets into the issue of splitting the $700,000 and the obligations as far as the $350,000 is concerned on the housing development. There are no other contract issues associated with the commercial developers obligations, except for the assumption that the commercial developer is going to construct the sewer improvements. Resident, Lee Stauch asked what if Buffalo Wild Wings decides to back out of the deal. Nawrocki stated we already discussed this and they have backed out of the deal. Clark then updated Mr. Stauch on the overall proposal discussion. Diehm stated she wasn't comforlable having changes made after we have approved the agreement tonight. She would prefer we approve the agreement as is, or consider it in a week. The pipe bursting wouldn't occur this week Khoyratty stated that is correct, it will probably be next week Herringer stated he would be more comforlable in seeing the final draft of the contract, before approving it. Then he asked Khoyratty what would be the problem with him starling in the spring, and when would he be meeting with the bank. Khoyratty stated he would like to starl the sewer project this year with construction starling next year and that he would be meeting the bank tomorrow. Clark stated the questions are: 1) do we wait until next spring; or 2) do we wait and sign these next week after the modifications have been made. The window before the ground freezes to get the sanitary sewer in is six to eight weeks. Herringer told Khoyratty that we really want this development and will work with him to Economic Development Authority Meeting Mi1mles September 15,2008 Special Meeting Page3of4 get this approved, but felt we really need to have this in the correct wording and that he would be willing to come to a special meeting to get this going. Clark stated he could have Bubul make the changes and have a special meeting on Monday night prior to the City Council meeting if the board would like to. (Bobby Williams left the meeting at 7:01 P. M.) Herringer stated he asked our attorney at the last meeting to put in owner-occupied text as much as possible. He also would like to see the verbiage changed under Section 4.3 (a) and (c), on page 5 and 6; "subject to unavoidable delays, must use best efforts, as market conditions allow and substantially complete". The words create controversy. Diehm stated we should give them a deadline. We should say the redeveloper must complete Phase /I by February 1,2014. Motion by Nawrocki, second by Kelzenberg, to table approval of the 4th Amendment to Contract for Private Redevelopment and the Contract for Private Redevelopment until our Regular Meeting on Tuesday, September 23, 2008. Upon Vote: Diehm-aye, Kelzenberg-aye, Nawrocki-aye, Herringer-aye, Peterson-aye. All ayes. Motion carried. Resolution 2008-14. Approvina Fundinq for the Rehab Incentive Proqram Clark stated the reason he brought this to the board is because some of our residents have called him to say they want to get their home projects done before winter and that the funding has been expended. Essentially, what we want to do tonight is to see if the EDA wants to approve a small allocation tonight to help residents finish up their projects before winter. Nawrocki stated he felt we should use GMHC, but did not know where the funds came from, as he could not find fund 207. Clark stated the City Council and EDA passed a resolution to correct that fund number to 408. Motion by Nawrocki, second by Herringer, to waive the reading of Resolution 2008-14, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Nawrocki, second by Herringer, to Adopt Resolution 2008-14, a Resolution Approving Funding for the Rehab Incentive Program in the amount of $5,000 to the Greater Metropolitan Housing Corporation (GMHC) from Fund 408-Housing Maintenance Programs. All ayes. Motion carried. EDA RESOLUTION NO. 2008-14 A RESOLUTION APPROVING FUNDING FOR THE REHAB INCENTIVE PROGRAM TO THE GREA TER METROPOLITAN HOUSING CORPORA TION (GMHC) WHEREAS, the Columbia Heights Economic Development Authority (EDA) through its Comprehensive Plan has established as a goal the preservation of the single-famify housing stock. Economic Development Authority Meeting Minutes September 15,2008 Special Meeting Page 4 01'4 WHEREAS, the EDA approved the Hal/sing Maintenance Plan 2008~2017 to improve and maintain the residential homestead housing stock. WHEREAS, the Greater Metropolitan Housing Corporation has agreed to provide consulting se/Vices. WHEREAS, the Greater Metropolitan Housing Corporation has provided housing prese/Vafion services since 2002. THEREFORE, BE IT RESOL VED, Ihat tI,e EDA atlocates $5,000 for the Rehab tncentlve Program to the Greater Metropolitan Housing Corporation from Fund 408 - Housing Maintenance Programs and that the "Rehab Incentive Rebate Program Agreement", signed by the EDA on November 30, 2007, shall be considered amended to include the additional funding. Discussion Reaarding Reaular Meetina of September 23. 2008 It was decided that the meeting would be held at its regular time and date. ADJOURNMENT President, Peterson, adjourned the meeting at 7:32 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary H:\EDAminutes2008\9-15-2008 Special COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: September 23, 2008 AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE NO: 3 DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY: DATE: Seotember 17, 2008 BACKGROUND: The bound Financial Report for the month of August draft Resolution 2008-15 is attached for review. The enclosed Financial Report lists the Summary (white), the Check History (Green), the Expenditure Guideline with Detail (blue) and Revenue Guideline with detail (yellow) for each fund. The reports cover the activity in the calendar (fiscal) year from January 1 through August, 2008. RECOMMENDATION: Staff will be available to answer specific questions. If the report is satisfactorily complete, we recommend the Board take affirmative action to receive the Financial Report and approve the payment of bills. RECOMMENDED MOTION: Move to approve Resolution 2008-15, Resolution of the Columbia Heights Economic Development Authority (EDA) approving the Financial Statement and Payment of Bills for the month of August 2008. EDA ACTION: H:\EDAConsent2008\August Fin Rep 2008 EDA RESOLUTION 2008-15 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR AUGUST 2008 AND PAYMENT OF BILLS FOR THE MONTH OF AUGUST 2008. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the month of August 2008 and the list of bills for the month of August 2008 are attached hereto and made a part of this resolution; and WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of bills, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the list of bills as presented in writing are approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the permanent records of the Columbia Heights Economic Development Authority. Passed this _ day of ,2008. MOTION BY: SECONDED BY: AYES: NAYS: President- Gary L. Peterson Attest by: Cheryl Bakken, Assistant Secretary COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: September 23,2008 AGENDA SECTION: Business Items ORIGINATING EXECUTIVE NO: 4 DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Resolution 2008-12 and 13, Fourth BY: Seott Clark BY: Amendment to Contract for Private DATE: September 17, 2008 Redevelopment-Grand Central Lofts and Contract for Private Redevelopment-4707 Central Avenue BACKGROUND: At the September 15,2008 EDA meeting staffinfonned the Commissioner's that the development under consideration suffered a setback due to not being able to secure a lease with Buffalo Wild Wings, and in turn, the project may not commence until spring of2009. Staff has revised the Agreements so that it covers three possible development scenarios: I) The developer constructs immediately, the sanitary sewer expansion, the Aldi's building and the parking ramp (this is Phase I) and the foundation for the eommercial Phase II building (this Phase is approximately 19,000 square foot and would be eonstrueted in the spring of2009). Attached is a map illustrating the same. 2) This fall, the developer eonstructs only the building foundations for both Phases, induding the parking ramp. This would allow spring eonstruction to commenee in Mareh of2009. 3) No work commencing until the spring of2009, this possibility ereates the change in the Agreement that work must commenee by May I, 2009 but holding the eompletion date at December 31, 2009. It is important to note that what doesn't change is that the pay-as-you-go tax increment of $440,000 is not issued until the entire project is eomplete (51,000 square feet of offiee and eommercial spaee plus the parking ramp). If the developer did build under seenario # I, it is possible that the grant eould be given for the eompletion of only 32,000 sq f1. (this is the Aldi's space plus the seeond floor) and the parking ramp but that Phase II eould be delayed past 2009 if market eonditions make leasing dif1ieult. If the aforementioned scenario developed the contraet would have to be formally amended. However, it seems important that the construetion of the ramp, which is neeessary to construet as part of the Aldi's building, needs to completed in 2009 to protect the City's Metropolitan Couneil's grant. Due to not having an extension letter in hand, language was also added to the Agreement stating that the City will use "best efforts" to extend the grant until Deeember 31, 2009 but does not warrant or represent that this will oceur. In addition, staff has induded in the new Agreement that the parking ramps' public use easement must be signed within 30 days of the Board's aetion, as this signed easement agreement is the eondition that the Metropolitan Council is requiring in order to give a grant extension until Deeember 31, 2009. Staff has given the EDA the blaek lined eopy of the Agreement so that the ehanges from the previous meeting are apparent. RECOMMENDATION: Staff recommends Adoption of Resolution 2008-12 and 2008-13 Approving the Fourth Amendment to Contract for Private Redevelopment and the Contract for Private Redevelopment. RECOMMENDED MOTION: Move to waive the reading of Rcsolution 2008-12, there being an ample amount of copies available to the public. Move to Adopt Resolution 2008-12, a Resolution Approving the Fourth Amendment to Contract for Private Redevelopment and Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its Taxablc Tax Increment Financing Revenuc Notes, Series 2008A; and furthcrmore, to authorize the President and Executive Director to enter into an agreement for the same. Move to waive thc reading of Resolution 2008-13, thcre being an ample amount of copies available to the public. Move to Adopt Resolution 2008-13, a Resolution Approving the Contract for Private Redevelopment and Resolution A warding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its $440,000 Taxable Tax Increment Revenue Note, Series 2008B; and furthermore, to authorize the President and Executive Director to entcr into an agreement for the same. Attachments: Resolution 2008-/2 and 13, Fourth Amendment to Contract/or Private Redevelopment, Contract for Private Redevelopment, Grand Central Com1110ns Map EDA ACTION: 1-1:\EDA\Khorrutty September 23, 2008 meeting Section 6.3. Assessment Agreement. (a) Prior to commencement of construction of Phase I of the Commercial Improvements, the Redeveloper shall, with the Authority, execute an Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd. 8, specifying an assessor's minimum Market Value for Phase I and an allocable portion of the Commercial Property. The amount ofthe minimum Market Value shall be $4,000,000 ofJanuary 2, 2010 and each January 2 thereafter, notwithstanding the status of construction by such Elatesdate. but subject to the adjustment desCl'ibed in naragranh eb) ofthis Section. (b) Prior to commencement of any work on Phase II of the Commercial Improvements beyond footings and foundations, but in any event promptly upon the Authority's approval of financing for Phase II in accordance with Article VII hereof: the Redeveloper shall, with the Authority, execute an addendum to the Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd. 8, ~ecifying anadding the assessor's minimum Market Value for Phase II of the Commercial Improvements !lfld an allocable portion of the Commercial Propertyto the minimum marl{et value snecified in the original Assessment Agreement. The amount of tfleadditional minimum Market Value shall be $2,400,000,2.400.000 effective as of Januarv 2. 2010. such that the total minimum market value for Phase I and Phase II together wjth the Commercial Pl"OlIertv shall be $6.400.000 as of January 2, 2010 and each January 2 thereafter, notwithstanding the status of construction by such Elates.!l.a.k. (c) Eaefl~ Assessment Agreement shall be substantially in the form attached hereto as Schedule E. subiect to the addendum described in lIaragranh (b) of this Section. The Redevelonel' shall obtain the signature of the County Assessor on the Certificate to the ol'iginal Assessment Agreement and the addendum. and shall at its cost I'ecord the original Assessment Agreement and the addendum in the office of the County recm'del' and/or registrar of titles. Nothing in eae-lt--Assessment Agreement shall limit the discretion of the assessor to assign a market valuc to the property in excess of suehthe assessor's minimum Market Value. Eaefl~ Assessment Agrecment shall remain in force for the period specified in the Assessment Agreement. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2008-12 RESOLUTION APPROVING FOURTH AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT AND A W AIillING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTES, SERIES 2008A BE IT RESOLVED BY the Board of Commissioners ("Board") ofthe Columbia Heights Economic Development Authority, Columbia Heights, Minnesota (the "Authority") as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority and the City of Columbia Heights have heretofore approved the establishment of the KmartlCentral A venue Tax Increment Financing District (the "TIF District") the Downtown CBD Redevelopment Project (the "Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. In connection with the TIF District, the Authority entered into a Contract for Private Redevelopment between the Authority and New Heights Development, LLC (now known as Grand Central Properties, LLC) dated as of September 22, 2004, as amended by a First Amendment thereto dated as of April 26, 2005, a second amendment thereto dated as of November 22, 2005, a Third Amendment thereto dated as of August 28, 2007 and intends to enter into a Fourth Amendment thereto referenced below (collectively, the "Agreement"). Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable fl'Om all or any portion ohevenues derived fi'om the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Taxable Tax Increment Revenue Notes in the principal amount of $700,000 (the "Notes") for the purpose of financing certain public redevelopment costs ofthe Project. 1.02. Approval of Contract Amendment. The Fourth Amendment to Contract for Private Redevelopment between the Authority Grand Central Properties, LLC ("Grand Central Properties") is approved in substantially the form on file in City Hall, subject to modifications that do not alter the substance of the transaction that are approved by the President and Executive Director, provided that execution of the amendment by such officials is conelusive evidence of and their approval. 1.03. Issuance, Sale, and Terms of the Notes. The Authority hereby delegates to the Executive Director the determination of the date on which the Notes are to be delivered, in accordance with the Agreement. The Notes shall be issued as follows: one Note in the original principal amount of the I-lousing Redeveloper Portion issued to Grand Central Properties; and one Note in the original principal amount of the Commercial Redeveloper Portion issued to Grand Central Commons, LLC ("Grand Central Commons"), as such terms are defined in, and all in accordance with, the Agrecment (Grand Central Properties and Grand Central Commons being referred to as the "Owner" or "Owners"). The Notes shall be dated August I, 2008, shall mature no later than February 1,2014, and shall bear intercst at the rate of 6.0 % per annum from the date of original issue of the Note. The Notes are issued in consideration of payment by Grand Central Propcrties of the Public Redevelopment Costs in at least the principal amount of the Notes, in accordance with the Agreement. Section 2. Form of Note. The Notes shall be in substantially the following form, numbered R-I and R-2, with the blanks to be properly filled in as ofthe date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY No.R- $ TAXABLE TAX INCREMENT REVENUE NOTE SERIES 2007 Rate Date of Original Issue 6.0% August 1,2008 The Columbia Heights Economic Development Authority ("Authority") for value received, certifies that it is indebted and hercby promises to pay to or registered assigns (the "Owner"), the principal sum of $ (the "Principal Amount"), as provided in the Agreement defined hereafter, together with interest on the unpaid balance thereof accrued from the datc of original issue hereof at thc rate of 6.0 percent per annum (the "Stated Rate"). This Note is given in accordance with that certain Contract for Private Redevelopment between the Issuer and New Heights Development, LLC dated as of September 22, 2004, as amended by a First Amendment thereto dated as of April 26, 2005, a Second Amendment thereto dated as of November 22, 2005, a Third Amendment thereto dated as of August 28, 2007 and a Fourth Amendment thereto dated as of , 2008 (the "Agrecment") and the authorizing resolution (the "Resolution") duly adoptcd by thc Authority on August , 2008. Capitalized terms used and not otherwisc defined herein have thc meaning provided for such terms in the Agreement unless the contcxt clearly requires otherwise. I. Payments. Principal and intcrest ("Paymcnts") shall be paid in installments commencing February 1, 2009 and continuing on each February I and August 1 thercafter to and including February 1, 2014 ("Payment Datcs"), in the amounts and from the sources set forth in Section 3 hercin. Payments shall be applied first to accrued interest, and then to unpaid principal. Notwithstanding anything to the contrary herein, the balance of [Housing Redeveloper Available Tax Increment] [Commercial Redeveloper Available Tax Increment] on hand as of the date of issuance of the Note shall be paid on the date of issuance. Payments are payable by mail to the address of the Owner or such other addrcss as the Owner may dcsignate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the paymcnt of public and private debts. 2. Interest. Simple interest shall accrue from the datc of original issue of this Note and shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Incrcment. [All payments on this Note are payable on each Payment Date solely fi'om and in the amount of the "Housing Redevcloper Available Tax Incrcment" as detined in the Agreement that has been paid to the Authority by Anoka County in the six months preceding the Payment Date, subject to the withholding and contingent pledge of certain Tax Increment held in escrow by the Authority in accordance with Section 3.4(c)(i) of the Agreement.] [All payments on this Note are payable on each Payment Date solely from and in the amount of the "Commercial Redeveloper Available Tax Increment" as detined in the Agreement that has been paid to the Authority by Anoka County in the six months preccding thc Payment Date.] The Authority shall have no obligation to pay principal of and interest on this Note on each Payment Datc fi'om any source other than [Housing Redeveloper Available Tax Increment] [Commercial Redeveloper Available Tax Increment] and thc failure of the Authority to pay the entire amount of principal or interest on this Notc on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extcnt of such plcdged rcvenues. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after thc final Payment on February 1,2014. 4. Default. Upon an Event of Default by the Redeveloper under the Agreement, the Authority may exercise the remedies with respect to this Note described in Section 9.2 ofthe Agreement, the terms of which arc incorporated herein by reference. 5. Optional Prepayment. (a) The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall atfect the amount or timing of any other regular payment otherwise required to be made under this Note. (b) Upon receipt by Redeveloper of the Authority's written statement of the Excess Amount as defIned in Section 3 A( c) of the Agreement, one-half of such Excess Amount will be deemed to constitute, and will be applied to, prepayment of the principal amount of this Note. Such deemed prepayment is effective as of the Final Closing Date as defined in Section 3A(c) ofthe Agreement, and will be recorded by the Registrar in its records for the Note. Upon request of the Owner, the Authority will deliver to the Owner a statement of the outstanding principal balance of the Note after application of the deemed prepayment under this paragraph. 6. Nature of Obligation. This Note is one of an issue in the total principal amount of $700,000 issued to aid in tInancing certain public redevelopment costs and administrative costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, and is issued pursuant to the Resolution, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from the revenues pledged to the payment hereof under the Resolution, each Note issued under the Resolution being on parity with the other. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereot; including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except from and to the extent of the revenues pledged hereto, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Finance Director, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transter or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Notc shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of thc transfcror, in a form satisfactory to the Authority, that such transfer is cxempt from registration and prospectus delivery requirements offederal and applicable statc securities laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minncsota to bc done, to exist, to happen, and to be performed in order to makc this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do cxist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Columbia IIeights Economic Development Authority havc causcd this Note to bc executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Executive Director-Walter R. Fehst President-Gary 1" Peterson REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Notc is registered in the bond register of the City Finance Director, in the name ofthe pcrson last listed below. Date of Signature of Registration Director Registered Owner _ City Finance Federal Tax J.D. No. Section 3. Terms, Execution and Dclivery. 3.0 I. Denomination, Payment. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by chcck or draft issued by the Registrar described herein. 3.02. Dates: Interest Pavment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Finance Director to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The efleet of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt fl'om registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. ( c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its rctusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account ot: the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and efTectual to satisfy and dischargc the liability ofthe Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, thc Registrar may impose a chargc upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with rcspect to such transfer or exchangc. (g) Mutilated, Lost, Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or dcstroyed, the Registrar shall deliver a new Notc of like amount, maturity dates and tenor in exchangc and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of thc reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisf~lCtory to it that such Note was lost, stolen, or destroyed, and of the ownership thcreof: and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and thc Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall bc given to the Authority. If the mutilated, lost, stolen, or destroyed Note has alrcady matured or bccn callcd for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the dircction of the Executive Dircctor and shall bc executed on bchalf of the Authority by the signatures of its President and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer bcfore thc delivery of the Note, such signature shall nevertheless be valid and sufficicnt for all purposes, the same as if such officcr had remained in office until delivery. Whcn the Note has been so exccuted, it shall be delivcred by the Executive Director to the Owncr thereof in accordance with the Agrccment. Section 4. Security Provisions. 4.0 I. Pledge. The Authority hereby pledges to the payment of the principal of and interest on thc Notes all I-lousing Redeveloper Available Tax Increment and Commercial Redeveloper Available Tax Increment, as the casc may be, under the terms and as defined in the Notes. Such revenues shall be applicd to payment of the principal of and intercst on the Notes, cach Notc being on parity with the other, in accordance with the terms of the form of Note sct forth in Section 2 of this resolution. 4.02. Bond fund. Until the date the Note is no longcr outstanding and no principal thercof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of thc principal of and interest on the Notc. The Authority irrevocably agrees to appropriate to the Bond Fund in cach year all I-lousing Redeveloper Available Tax Increment and Commercial Redeveloper Available Tax Increment; and agrees with respect to the Note issued to Grand Central Properties, to maintain and apply the escrowed Tax Increment in accordance with Section 3.4(c)(i) of the Agreement. Any amount remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon termination of the Note in accordance with its terms. 4.03. Additional Bonds. If the Authority issues any bonds or notes secured by Available Tax Increment, such additional bonds or notes are subordinate to the Notes in all respects. Section 5. Certification of Procccdings. 5.01. Certification of Proceedings. The oilicers of the Authority arc hereby authorized and directed to prepare and furnish to the Owner of the Note certitied copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may bc required to show thc facts relating to the legality and marketability of thc Note as the samc appear from the books and records under their custody and control or as otherwise known to thcm, and all such certified copies, certiticates, and affidavits, including any heretofore furnished, shall be dcemed representations of the Authority as to the facts rccited thercin. Section 6. Effective Date. This resolution shall be effective upon execution of the Fourth Amendment to the Agreement. Adopted this _ day of September, 2008. OFFERED BY: SECOND BY: ROLL CALL: President -Gary L. Peterson Attest: Executive Director- Walter R. F ehst COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2008-13 RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT AND RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS $440,000 TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2008B BE IT RESOLVED BY the Board of Commissioners ("Board") of the Columbia Heights Economic Development Authority, Columbia Heights, Minnesota (the "Authority") as follows: Section I. Authorization. 1.01. Authorization. The Authority and thc City of Columbia Heights have heretofore approved thc establishment of the Kmart/Central Avenue Tax Increment Financing District (the "TIF District") the Downtown CBD Redevelopment Project (the "Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable il'om all or any portion of revenues derived il'om the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Taxable Tax Increment Revenue Note in the maximum principal amount of $440,000 (the "Note") for the purpose of financing certain public redevelopment costs of the Proj ect. 1.02. Approval of Agreement. The Contract for Private Redevelopment (the "Agreement") between the Authority Grand Central Commons, LLC ("Grand Central Properties") is approved in substantially the form on file in City Hall, subject to modifications that do not alter the substance of the transaction that are approved by the President and Executive Director, provided that execution of the amendment by such officials is conclusive evidence of and their approval. 1.03. Issuance. Sale. and Terms of the Note. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with the Agreement. The Note shall be issued to Grand Central Commons LLC ("Owner"). The Note shall be dated as of the date of delivery, shall mature no later than February 1,2018 and shall bear interest at the rate of7.0% per annum from the date of original issue of the Note. The Note is issued in consideration of payment by Owner of certain Public Redevelopment Costs in at least the principal amount of the Note, in accordance with the Agreement. RI'I'IlI'! Unlmowll document Pl'oJlcrty nnmc. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE or MINNESOTA COUNTY OF ANOKA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY No.R-l $ TAXABLE TAX INCREMENT REVENUE NOTE SERIES 20 Date Rate Issue of Original 7.0% ,20 The Columbia Heights Economic Development Authority ("Authority") for value received, certifies that it is indebted and hereby promises to pay to Grand Central Commons LLC or registered assigns (the "Owner"), the principal sum of $ or so much thereof as has been from time to time advanced (the "Principal Amount"), as provided in the Agreement defined hereafter, together with interest on the unpaid balance thereof accrued fi'om the date of original issue hereof at the rate of ~ percent per annum (the "Stated Rate"). This Note is given in accordance with that certain Contract for Private Redevelopment between the Issuer and the Owner dated as of , 2008 (the "Agreement") and the authorizing resolution (the "Resolution") duly adopted by the Authority on , 2008. Capitalized terms used and not otherwise defined herein have the meaning provided for such terms in the Agreement unless the context clearly requires otherwise. 1. Payments. Principal and interest ("Payments") shall be paid on August 1, 2010 and each February I and August 1 thereafter to and including February I, 2021 ("Payment Dates") in the amounts and fi'om the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest accruing from the date of original issue through and including February 1, 2010 (and not otherwise paid from Available Tax Increment) will be compounded semiannually on February 1 and August 1 of each year and added to Enol'! Unknown document )JI'Opcl'ty name. principal. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. All payments on this Note are payable on each Payment Date solely from and in the amount of the "Available Tax Increment," which means, on each Payment Date, 90 perccnt of the Tax Increment attributable to thc Commercial Property as defined in the Agrecment that is paid to the Authority by Anoka County in the six months preceding the Payment Date. The Authority shall have no obligation to pay principal of and interest on this Note on cach Payment Date from any source other than Availablc Tax Incrcment and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hercon to the extent of such pledged revenucs. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February I, 2021. 4. Dcfault. Upon an Event of Default by the Redevcloper under the Agreemcnt, the Authority may excrcise the rcmedies with respcct to this Note described in Section 9.2 of the Agreement, the tcrms of which are incorporated herein by refercnce. 5. Optional Prepayment. (a) The principal sum and all accrued interest payable under this Note is prcpayable in whole or in part at any timc by the Authority without premium or pcnalty. No partial prcpayment shall affect the amount or timing of any other regular payment otherwise rcquired to be made under this Note. (b) Upon receipt by Redeveloper of the Authority's written statement of the Excess Amount as defined in Section 3.4( e) of the Agreemcnt, one-half of such Excess Amount will be deemed to constitute, and will be applied to, prepayment of the principal amount of this Note. Such deemed prepayment is effective as of the Calculation Date as defincd in Section 3.4( e) of the Agreemcnt, and will be rccorded by the Registrar in its records for the Notc. Upon requcst of the Owner, the Authority will deliver to the Owner a statement of the outstanding principal balance of the Notc after application of the dcemed prepayment undcr this paragraph. 6. Nature of Obligation. This Note is one of an issue in the total principal amount of $ issued to aid in financing certain public redevelopment costs and administrative costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, and is issued pursuant to the Rcsolution, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from the revenues pledged to the paymcnt hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a gcneral obligation of the State of Minncsota or any political subdivision thereot: including, without limitation, the Authority. Ncither thc State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto exccpt from and to the extent of the revenues pledged hereto, and neither the full faith and credit nor the taxing power of the Error! UnlmowlI document property Jlllllle. State of Minnesota or any political subdivision thcreof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a tully rcgistered note without coupons. As providcd in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office ofthe City Chief Financial Officer, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owncr. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issucd in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt ti'om registration and prospectus delivery requirements of fcderal and applicable state sccuritics laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to bc performed in ordcr to make this Note a valid and binding limited obligation of the Authority according to its tcrms, have been donc, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Columbia Heights Economic Development Authority have caused this Note to be executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. COLUMBIA HElGI-ITS ECONOMIC DEVELOPMENT AUTHORITY Executive Director-Walter R. Fehst President -Gary L. Peterson REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is rcgistered in the bond register of the City Chief Financial Officer, in the name ofthc person last listed below. El'l'or! tJnkllowll dOClllllcnt property 1I11IllC. Date of Signature of Registration Officer Registered Owner _ City Chief Financial Grand Central Commons LLC Fcderal Tax J.D. No. Section 3. Terms. Execution and Delivery. 3.01. Denomination. Payment. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registcred form. Principal of and interest on the Note shall be payable by check or draft issued by the Rcgistrar described herein. 3.02. Dates; Interest Pavment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Chief Financial Otlicer to perform the functions of registrar, transfer agent and paying agcnt (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registcred owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the forcgoing, the Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requiremcnts of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding cach Payment Date and until such Payment Date. ( c) Cancellation. The Note surrendercd upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. Errol'! Unknown document properly IUlIllC. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers, which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of: the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Deliverv. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any oflicer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner thereof in accordance with the Agreement. Section 4. Seeuritv Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment under the terms and as defined in the Note. Available Tax Increment shall be applied to payment of the principal of and Erl'or! UnlUlOWII dOCUlllent propcl'ty lIame. interest on the Note in accordancc with the tcrms of the form of Note sct forth in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority irrevocably agrces to appropriate to the Bond Fund in each year all Available Tax Increment. Any Availablc Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon termination of thc Note in accordance with its terms. 4.03. Additional Bonds. If the Authority issues any bonds or notes secured by Available Tax Increment, such additional bonds or notes are subordinate to the Note in all respects. Section 5. Ccrtilication of Proceedings. 5.01. Certitication of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certitied copies of all proceedings and records of the Authority, and such other aftidavits, certificates, and information as may be required to show the facts relating to thc legality and marketability of the Note as the samc appear from the books and records under their custody and control or as othcrwise known to them, and all such certitied copics, certillcates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. of the Agreement. Etlective Date. This resolution shall be effective upon execution Adopted this _ day of ,2008. MOTION BY: SECOND BY: ROLL CALL: President -Gary L. Peterson Attest: Executive Director-Walter R. Fehst Error! Unknown document property name. FifthSixth Draft September -1+,Jl, 2008 FOURTH AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT nIlS AGREEMENT, made on or as of the _ day of 2008, by and between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, COLUMBIA HEIGHTS, MINNESOTA, a public body corporate and politic (the "Authority"), established pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (hcreinafter referred to as the "Act"), and GRAND CENTRAL PROPERTIES, LLC, a Minnesota limited liability company (the "Redevelopcr"). WHEREAS, the Authority and New Heights Development, LLC entered into that certain Contract for Private Redevclopment dated as of September 22, 2003, as amended by a First Amendment thereto dated April 26, 2005 and by a Second Amendment thereto dated November 22, 2005 and a Third Amendment thereto dated August 28, 2007 (the "Contract") providing for the redevelopment of certain property described as the Redevelopment Property in the Contract and described in Schedule A attached hereto; and WHEREAS, New Heights Development, LLC has changed its legal name to Grand Central Properties, LLC but in all respects remains the Redeveloper under the Contract; and WHEREAS, Redeveloper sold a portion of the Redevelopment Property defined as Outlot C, Grand Central Lofts, Anoka County, Mitmesota (which property constitutes the Commercial Property as originally defined in the Contract); and WHEREAS, Redeveloper also assigned to Grand Central Commons, LLC (the "Commercial Redeveloper") certain obligations under the original Contract relating to construction of the Commercial Improvements as defined therein, pursuant to an Assignment and Assumption Agreement between Redeveloper and Commercial Redeveloper dated as of October 23,2007 (the "Assignment"); and WHEREAS, the Authority has determined to enter into a separate Contract for Private Redevelopment with the Commercial Redeveloper (the "Commercial Contract") regarding the Commercial Improvements, and has further determined to modify the obligations of Redeveloper regarding the Housing Improvements under the Contract. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: !. Section!'1 of the Contract is amended to revise certain definitions as follows: "Commercial Redeveloper Available Tax Increment" means 90 percent of the Tax Increment that is (a) attributable to the Housing Property received by the Authority in the six- month period before any scheduled payment date on the Housing Notes through February I, 2014, or received prior to the first payment date on the Housing Notes--te-the OJetent so provided 336927v7 8m CL205-20 I in tho resolation approving the Housing Notes, and (b) allocable to the Commcreial Redevelopcr Portion. That is, total Tax Increment on any payment date is first allocated to Commercial Redeveloper Portion pro rata, then 90 pcrcent of such allocated Tax Increment is applied to pay principal and interest then due on the Commercial Redeveloper I-lousing Note. "Commercial Contract" means the Contract for Private Redevelopment between the Authority and Grand Central Commons, LLC dated September _,2008. "Commercial Improvements" has the meaning provided in the Commercial Contract "Commercial Note" has the meaning provided in the Commercial Contract. "Commercial Property" means as Outlot C, Grand Central Lofts, Anoka County, Minnesota. "Commercial Redeveloper Portion" means the original principal amount of the Housing Notes allocated to the Commercial Redeveloper I-lousing Note as described in Section 3.4(b) hereof. "Contract" means the Contract for Private Redevelopment between the Authority and Redeveloper dated as of September 22, 2003, as amended by a First Amendment thereto dated April 26, 2005 and by a Second Amendment thereto dated November 22, 2005 and by a Third Amendment thereto dated August 28, 2007, and by this Fourth Amendment. "Fourth Amendment" means this Fourth Amendment to the Contract. "Housing Improvements" means the construction by the Redeveloper on the I-lousing Property of the following owner-occupied housing units: at least 67 condominium units and 10 town homes ("Phase I"), at least 70 additional condominium units ("Phase II"); and at least 70 additional condominium units and at least II additional town homes ("Phase JII"). "Housing Notes" means the Housing Redeveloper Housing Note and the Commercial Redeveloper Housing Note, as described in Section 3.4 of the Contract. "Housing Property" means the property described in Schedule A hereto, which supersedes Schedule A in the original Contract. "Housing Redeveloper Available Tax Increment" means 70 percent of the Tax Increment that is (a) attributable to the Housing Property received by the Authority in the six-month period before any scheduled payment date on the Housing Notes through February 1,2014, or received prior to the first payment date on the Housing Notes-4e-tho oxtent so provided in the resolution approving the Housillg Notes, and (b) allocable to the Housing Redeveloper Portion. That is, total Tax Increment on any payment date is first alloeatod to the Housing Redeveloper Portion pro rata, then 70 percent of such allocated Tax Increment is applied to principal and interest then due on the Housing Redeveloper Housing Note, subject to the provisions of Section 3.4(e)(i) hereof. 336927v7 sm CL205-20 2 "Housing Redeveloper Portion" means the original principal amount of the Housing Notes allocated to the Housing Rcdeveloper Housing Note as described in Section 3.4(b) hereof. "Minimum Improvements" means the Housing Improvements and the Temnorarv Site Improvements. "Phase" means a nhase of the Housin!! Imllrovements as described ill the definition of Housin!! Imnrovements hereunder. "Sewer Improvements" means the portion ofthe Public Improvements described in Section 5 of this Fourth Amendment. "Temporary Site Improvements" means the work on the Housing Property described in Schedule E. 2. Section 3.4 is modified to read as follows: Section 3.4. Issuance of Housing Notes. (a) Terms. In order to reimburse the Redeveloper for a portion of the Public Redcvelopment Costs incurred by Redeveloper in connection with the Housing Improvements, the Authority shall issue the Housing Notes in the principal amount of $700,000. The terms of the Housing Notes, including maturity, payment dates and interest rate, will be substantially those set forth in the form of the Housing Note shown in Schedule B hereto (which supersedes Schedule B to the Third Amendment to the Contract). The Housing Notes will be dated as of August 1,2008, and interest will accrue from such date. (b) Issuance. The parties acknowledge that Redeveloper has submitted and Authority has approved Redeveloper's Public Redevelopment Costs in the amount of at least $700,000 in accordance with Section 3.4(b)ofthe original Contract, but that the Housing Notes have not been issued and delivered. The parties further agree that, in consideration of assumption by Commercial Redeveloper of the obligation to construct the Sewer Improvements described in Section 5 of this Fourth Amendment, Redeveloper hereby assigns it right, title and interests in a portion of the principal amount of the Housing Notes to Commercial Redeveloper. The portion assigned to Commercial Redeveloper (referred to as the "Commercial Redeveloper Portion) equals the lesser of (1) 50% of the total cost of the Sewer Improvements (including design, engineering, construction costs and the cost of all bonds and security required by the City), and (2) $350,000. The portion retained by the Redeveloper (referred to as the Housing Redeveloper Portion) is $700,000 less the Commercial Redeveloper Portion. Accordingly, the Housing Notes shall be issued as two notes, one issued to the Redeveloper in the principal amount of the Housing Redeveloper Portion (referred to as the "Housing Redeveloper Housing Note"), and one issued to the Commercial Redeveloper in the principal amount of the Commercial Redeveloper Portion (referred to as the "Commercial Redeveloper Housing Note"). The Housing Notes shall be issued as soon as reasonably practicable after approval of the authorizing resolution set forth in Schedule B, and upon Redeveloper and Commercial Redeveloper having delivered to the Authority an investment letter in substantially the form attached as Schedule D hereto. 336927v7 8m CL205-20 3 (c) Security. The Housing Notes shall be payable in accordance with the following terms: (i) The I-lousing Redeveloper Housing Note is payable solely ii'om and to the extent of the Housing Redeveloper Available Tax Increment, provided during the term of thc Housing Redeveloper Housing Notc, the Authority shall retain 20 percent of the Tax Incrcment otherwise allocable to the Housing Redeveloper Portion, and shall deposit such retained Tax Increment in an cscrow account held by the Authority for the purposes described in this paragraph. Moreover, when the outstanding principal balance of the Housing Redeveloper Note reaches 20% of the original Housing Redeveloper Portion, all further Housing Redeveloper Available Tax Increment will be crcdited to the cscrow under this paragraph. The Authority will invest funds in the escrow account in accordancc with its usual practices and Minncsota Statutes, Chapter I 18A, and will credit interest earnings to such account. If Redevelopcr timely completes Phase II of thc Housing Improvements in accordancc with the Section 4.3(a) hcreoC then upon such completion (evidenced by a Certificate of Completion), the Authority shall apply the outstanding balance in the escrow account as an additional payments on thc Housing Redeveloper Housing Note. That is, if Redeveloper timely completes Phase II, the Housing Redevelopcr Housing Note will be paid from 90 percent of the Tax Incremcnt allocablc to the Housing Rcdeveloper Portion. If Redevelopcr fails to timely complete Phase II, then on February 1, 2014, the Rcdeveloper has no further right, title or interest in the balance on hand in thc cscrow account. (ii) Thc Commercial Redeveloper Housing Notc is payable solcly from and to the extent of the Commercial Redeveloper Available Tax Increment. (iii) The Authority warrants and represcnts that, as of the date of this agreement, it has on hand Tax Increment in the amount of $370,952 which amount will be allocated to the two Housing Notes and adjusted as defined in the definitions of Housing Redeveloper Available Tax Increment and Commercial Redeveloper Available Tax Increment, and paid to the holder of each Housing Note on the date of issuancc of such notes. (c) Prepaymentji-om Gross Profit. Within 60 days after closing on Redeveloper's sale to third parties of the final unit of completed Phases I and II of the Housing Improvcments, or February I, 2014, whichever is earlier (the "Final Closing Date"), the Redeveloper must deliver to the Authority cvidence of its Gross Profit on construction and sale of Phase I and Phase II under this Agreement. For the purposes of this Agreement, the term "Gross Profit" is a percentage calculated as the aggregate proceeds from sales of each unit sold to third parties ("Sale Proceeds"), less the total Development Cost, divided by total Sale Proceeds. The term Development Cost means the sum of the following costs incurred by the Redeveloper in connection with the Minimum Improvements: (1) the total purchasc price paid or payable by the Redeveloper for acquisition of the Rcdevelopment Property (without regard to reimbursement thereof under the Note), including closing costs paid by the Redeveloper; (2) the 336927v7 8m CL205.20 4 cost of constructing Phase I and Phase II, including without limitation engineering, architect fees, surveying, Icgal and similar soft costs; (3) costs of construction financing for Phasc I and Phasc II, including loan fccs, interest paid during construction, attorney fees, and any costs paid by Redeveloper under Section 3.9 of this Agrcement; and (4) closing costs on sale of lots to third parties, including broker fees and commissions paid to third parties or to Redeveloper's sales associates, all to the extent paid by the Redevcloper. The Authority or its agents shall be entitled to review and audit the calculation of Gross Profit. The amount by which Gross Profit exceeds fifteen percent is a percentage referred as "Excess Profit." The Excess Profit, multiplied by the total Sale Proceeds, is the Excess Amount. One half of the Excess Amount will be applicd as prepayment of the outstanding principal amount of thc Housing Notes in accordance with the terms of Section 5(b) of the cach Housing Note. Such event must bc evidenced by delivery by the Authority to thc Redeveloper of a written noticc stating the Excess Amount. The one-half share of Excess Amount will be deemed prepaid as of the Final Closing Date. 3. Sections 3.5, 3.6 and 3.7 of the Contract are deleted. 4. In accordance with Scction 3.9 of the Contract, Rcdeveloper acknowledges its continued responsibility to pay Administrative Costs reasonably allocated to the Housing Property and the Housing Improvements, including without limitation all Administrative Costs related to this Fourth Amendmcnt and to issuance of both Housing Notes. The Authority acknowledges that Redeveloper has no liability for Administrative Costs reasonably allocated to the Commercial Propcrty and the Commercial Improvements, including without limitation costs related to the Commercial Contract and issuancc of the Commercial Note. 5. The Authority acknowlcdges that Commercial Redevcloper will assume the obligation to construct, at its cost, the Sewer Improvements described in the Commercial Contract, and that such Sewer Improvements represent a portion of the Public Improvements as defined in Section 4.1 of the original Contract and in the Planning Contract. The Redeveloper will be released from all further obligations regarding the Sewer Improvements under this Agreement upon (a) execution in full of the Commercial Contract, and (b) receipt by the City from the Commercial Redeveloper of a letter of crcdit, in a form reasonably satisfactory to the City, in the amount required by the City to secure construction of thc Sewer Improvements and the Other Infrastructure as defined in the Commercial Contract, and ( c) Commercial Redeveloper having entercd into a new planning contract with the City regarding construction of the Sewer Improvement and the Other Infrastructure under the Commercial Contract. Upon satisfaction of these condition for release, the Authority will causc the City to release the outstanding letter of credit held by the City to secure Redevelopcr's obligations under the original Planning Contract, except that the City will be entitled to retain any portions of the letter of credit needed to secure Public Improvements other than the Sewer Improvements that are not completed as of the date of this Agreement. 6. Section 4.3 ofthe Contract is revised to read as follows: 336927v7 sm CL20S-20 5 Section 4.3. Completion of Construction. (a) As of the date of this +ftifflFourth Amendmcnt, the parties agree and understand that Phase I of the Housing Improvements has been substantially completed. Subject to Unavoidable Delays, the Redevcloper must use best efforts to commence Phase II of the Housing Improvements as market conditions allow, and in any event. Suhiect to Unavoidahle Delavs. RedeveIoner must substantially complete Phase II by February 1,2014. Notwithstanding anything to the contrary herein, an Event of Default under this paragraph is subject only to the remedy described in Section 3.4(e)(i) hereof. (b) Because of the delay in completion of Phases II and III, Redeveloper must complete the Temporary Site Improvements described in Schedule E by May 3 1,2009; provided that after Temporary Site Improvements are completed, relevant portions thereof may be removed to the extent required in order to construct housing units as part of Phase II and Phase III. An Event of Default under this paragraph is subject to any remedies available to the Authority under Article IX hereof, including without limitation withholding of any payments otherwise due on the Housing Notes. ( c) Redeveloper shall also use best etTorts to commence and substantially complete construction of the Phase III Housing Improvements as market conditions allow, provided that failure to commence 01' complete those improvements is not an Event of Default hereunder so long as Redeveloper demonstrates good faith efforts to accomplish that goal. (d) All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in substantial conformity with the Construction Plans as submitted by the Redeveloper and approved by the Authority, and with he Planning Contract. If the Redeveloper is making substantial progress with respect to the redevelopment project, and is unable to meet one or more of the above-referenced deadlines, the Authority and the Redeveloper shall negotiate in good faith for a reasonable period to extend the time in which necessary action(s) must be taken or occur, the lapse of which time would otherwise constitute a default under this Agreement. (e) The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and such successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Section 4.3 of this Agreement. Subsequent to conveyance of the Redevelopment Property, or any part thereof, to the Redeveloper, and until construction of the Minimum Improvements has been completed, the Redeveloper shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Redeveloper with respect to such construction. 7. Section 4.4 of the Contl'act is revised to read as follows: Section 4.4. Certificate of Comnletion. (a) Promntlv aftcr suhstantial comnletion of the Minimum Imnrovements (and each Phase thereof) in accordance with those nrovisions of the Al!reement relatinl! solelv to the ohlil!ations of the Redeveloner to construct the 336927v7 sm CL205.20 6 Minimum Imnrovements (includinl! the dates fOJ' comnletion thereof), the Authoritv will furnish the relevant Redeveloner with a Certificate of Comnletion in substantiallv the form attached as Schedule C. Such certification bv the Authoritv shall be (and it shall be so nrovided in the Deed and in the certification itself) a conclusive detennination of satisfaction and termination of the al!I'eements and covenants in the Al!reement with resnect to the oblil!ations of the Redeveloner. and its successors and assil!ns. to construct the I'elevant comnonent of the Minimum Imnrovements and the dates for the comnletion thereof. Such certification and such determination shall not constitute evidence of conmlianee with or satisfaction of any oblil!ation of the Redeveloner to any Holder of a Mortl!al!e. or any insurer of a MOI'tl!al!e. secul'inl! monev loaned to finance the Minimum Imnrovements. or any nart thereof, (b) Unon Rcdeveloner's reQuest. the Authoritv shall furnish to the Redeveloller a Certificate of Comllletion fOl' each housinl! unit ullon substantial comnletion of such unit. liS evidenced by issuance of II certificate of oceunancv therefor bv the resnonsible insnectinl! lIuthoritv. (c) Each Certificllte of Comnletion nrovided for in this Section 4.4 of this Al!reement shllll be in such form liS will enllble it to be recorded in the OJ'oner office for the recordation of deeds IInd other instruments nertllininl! to the RedeveloOJnent l)ronertv, If the Authoritv shill! refuse or fllil to OJ'ovide IInv certificlltion in IIccordance with the OJ'ovisions of this Section 4.4 of this Al!reement, the Authoritv shall. within thirtv (30) dllvs lifter wl'itten reauest bv the Redeveloner. nrovide the Redevelonel' with a written stlltement. indicatinl! in adeQullte detail in what resnects the Redevclonel' hils flliled to comnlete the Minimum Imnrovements in IIccordllnce with the nrovisions of the Al!reement. OJ'is otherwise in defllult. IInd whllt mellsures or acts it will be necessal'v. in the on inion of the Authoritv. for the Redeveloner to take or nerfol'm in order to obtllin such certificlltion, (d) The constrnction of each Phllse of the Housinl! Imnrovements shill! be deemed to be substllntiallv comnleted when the Redeveloner hils received II certificate of occunllncv from the Citv for al! housinl! units thllt make un that l)hase IInd all imnrovements IIssociated with thllt Phase have been substantilll!v comnleted liS reasonablv determined bv the Authoritv Renresentlltive. The construction of the Temnorllrv Site Imnrovements shill! be deemed to be substantillllv comnleted as reasonllblv determined bv the Authoritv Renresentative, +0& Any modification of the Contract that materially affects the amount or timing of Commercial Redeveloper Available Tax Increment pledged to the Commercial Redeveloper Housing Note requires written consent of the Commercial Redeveloper. 336927v7 sm CJ.20S-20 7 IN WITNESS WHEREOF, the Authority has caused this Amendment to bc duly exccuted in its name and behalf and its seal to be hercunto duly affixed and the Redeveloper has caused this Agreemcnt to be duly executed in its name and behalf on or as of the date first above written. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Its Presidcnt-Gary L. Pcterson By Its Executive Dircctor- WaIter R. Fehst STATE OF MINNESOTA ) ) SS. COUNTY OF ANOKA ) Thc foregoing instrument was acknowledged before me this _ day of 2008, by Gary Pcterson and Walter Fehst, the President and Executive Director of the Columbia Heights Economic Dcvelopment Authority, a public body politic and corporate, on behalf of the Authority. Notary Public 336927v7 sm CL205-20 8 GRAND CENTRAL PROPERTIES, LLC By Its STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of , 2008 by , the of Grand Central Properties, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public 336927v7 SJB CL205.20 9 CONSENT OF COMMERCIAL REDEVELOPER The undersigned consents to the forcgoing Fourth Amendment to Contract for Private Redevclopment between the Columbia Heights Economic Development Authority and Grand Central Properties, LLC. GRAND CENTRAL COMMONS LLC By Its STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of , 2008 by , the of Grand Central Commons LLC, a Minnesota limited liability company, on behalf ofthe company. Notary Public 336927v7 8m CL205-20 10 SCHEDULE A Grand Central Lofts Legal Dcscl"iptiolls I-lOUSING Lot 1, Block 1, Grand Central Lofts Lot 2, Block 1, Grand Central Lofts Lot 3, l3lock 1, Grand Central Lofts OUTLOT A Lot 1, I3lock 1, Grand Central Lofts Second Addition Lot 2, Block 1, Grand Central Lofts Second Addition Lot 3, Block 1, Grand Central Lofts Second Addition Lot 4, Block I, Grand Central Lofts Second Addition Lot 1, Block 2, Grand Central Lofts Second Addition Lot 2, I3lock 2, Grand Central Lofts Second Addition Lot 3, Block 2, Grand Central Lofts Second Addition Lot 4, Block 2, Grand Central Lofts Second Addition Lot 1, Block 3, Grand Central Lofts Second Addition Lot 2, Block 3, Grand Central Lofts Second Addition Lot 1, Block 4, Grand Central Lofts Second Addition Lot 2, Block 4, Grand Central Lofts Second Addition Lot 3, Block 4, Grand Central Lofts Second Addition Lot 1, Block 5, Grand Central Lofts Second Addition Lot 2, Block 5, Grand Central Lofts Second Addition Lot 3, Block 5, Grand Central Lofts Second Addition Lot 4, Block 5, Grand Central Lofts Second Addition Lot 1, Block 6, Grand Central Lofts Second Addition Lot 2, Block 6, Grand Central Lofts Second Addition Lot 3, Block 6, Grand Central Lofts Second Addition Lot 4, Block 6, Grand Central Lofts Second Addition Lot 1, Block 7, Grand Central Lofts Second Addition OUTLOT B 336927v7 8m CL205-20 A-I SCHEDULE H TO FOURTH AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. RESOLUTION API'ROVING FOURTH AMENDMENT TO CONTRACT FOR I'RIV ATE REDEVELOPMENT AND A W AIillING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTES, SERIES 2008A BE IT RESOLVED BY the Board of Commissioners ("Board") ofthe Columbia Heights Economic Dcvelopment Authority, Columbia Heights, Minncsota (thc "Authority") as follows: Section 1. Authorization: Award of Sale. 1.0 I. Authorization. The Authority and the City of Columbia Heights have heretofore approved the establishment of the Kmart/Central A venue Tax Increment Financing District (the "TIF District") the Downtown CBD Redevelopment Project (the "Project"), and have adopted a tax incremcnt financing plan for the purpose of financing certain improvemcnts within the Project. In connection with the TIF District, the Authority entered into a Contract for Private Redevelopment between the Authority and New Heights Development, LLC (now known as Grand Central Properties, LLC) dated as of September 22, 2004, as amended by a First Amendment thereto dated as of April 26, 2005, a second amendment thercto dated as of November 22, 2005, a Third Amendment thereto dated as of August 28, 2007 and intends to enter into a Fourth Amendment thereto referenced below (collectively, the "Agreement"). Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of tinancing a portion of the public development costs of the Project. Such bonds are payable li'om all or any portion of revenues derived li'om the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests ofthe Authority that it issue and sell its Taxable Tax Increment Revenue Notes in the principal amount of $700,000 (the "Notes") for the purpose of financing certain public redevelopment costs of the Project. 1.02. Approval of Contract Amendment. The Fourth Amendment to Contract for Private Redevelopment between the Authority Grand Central Properties, LLC ("Grand Central Properties") is approved in substantially the form on file in City Hall, subject to modifications that do not alter the substance of the transaction that are approved by the President and Executive Director, provided that execution of the amendment by such officials is conclusive evidence of and their approval. 336927v7 SJB CL205.20 A-2 1.03. Issuance, Sale, and Tcnns of thc Notes. The Authority hcreby delcgates to the Executive Director the determination of the date on which the Notes are to be delivered, in accordance with the Agreement. The Notes shall be issued as follows: one Note in the original principal amount of the Housing Redeveloper Portion issued to Grand Central Properties; and one Note in the original principal amount of the Commercial Redeveloper Portion issued to Grand Central Commons, LLC ("Grand Central Commons"), as such terms are defined in, and all in accordance with, the Agreement (Grand Central Properties and Grand Central Commons being referred to as the "Owner" or "Owners"). The Notes shall be dated August I, 2008, shall maturc no later than February I, 2014, and shall bear interest at the ratc of 6.0 % per annum from the date of original issue of the Note. The Notes are issued in consideration of payment by Grand Central Properties of the Public Redevelopment Costs in at least the principal amount of the Notes, in accordance with the Agreement. Section 2. Form of Note. The Notes shall be in substantially the following form, numbered R-l and R-2, with the blanks to be properly filled in as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY No.R- $ TAXABLE TAX INCREMENT REVENUE NOTE SERIES 2007 Rate Date of Original Issue 6.0% August 1,2008 The Columbia Heights Economic Development Authority ("Authority") for value received, certifies that it is indebted and hereby promiscs to pay to or registered assigns (the "Owner"), the principal sum of $ (the "Principal Amount"), as provided in the Agreement defined hereafter, together with interest on the unpaid balance thereof accrued from the date of original issue hereof at the rate of 6.0 percent per annum (the "Stated Rate"). This Note is given in accordance with that celiain Contract for Private Redevelopment between the Issuer and New Heights Development, LLC dated as of September 22, 2004, as amended by a First Amendment thereto dated as of April 26, 2005, a Second Amendment thereto dated as of November 22, 2005, a Third Amendment thereto dated as of August 28, 2007 and a Fourth Amendment thereto dated as of ,2008 (the "Agreement") and the authorizing resolution (the "Resolution") duly adopted by the Authority on August , 2008. Capitalized terms used and not otherwise defined herein have the meaning provided for such terms in the Agreement unless the context clearly requires otherwise. I. Pavments. Principal and interest ("Payments") shall be paid on the date of issue to the extent nrovided in Section 3.4( e )(jjn of the A!!reement. and thereafter in installments 336927v7 sm CL205.20 A-3 commencing February 1,2009 and continuing on each February I and August I thereafter to and including February I, 2014 ("Paymcnt Dates"), in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Notwithstanding anything to the contrary herein, the balance of [Housing Redeveloper A vailablc Tax Increment] [Commercial Redeveloper Available Tax Increment] on hand as of the date of issuance of the Note shall be paid on the date of issuance. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Simple interest shall accrue from the date of original issue of this Note and shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. [All payments on this Note are payable on each Payment Date solely from and in the amount of the "Housing Redeveloper Available Tax Increment" as defined in the Agreement that has been paid to the Authority by Anoka County in the six months preceding the Payment Date, subject to the withholding and contingent pledge of certain Tax Increment held in eserow by the Authority in accordanee with Section 3.4( c )(i) of the Agreement.] [All payments on this Note are payable on each Payment Date solely fi'om and in the amount of the "Commercial Redeveloper Available Tax Increment" as defined in the Agreement that has been paid to the Authority by Anoka County in the six months preceding the Payment Date.] The Authority shall have no obligation to pay principal of and interest on this Note on each Payment Date fi'om any source other than [Housing Redeveloper Available Tax Increment] [Commercial Redeveloper Available Tax Increment] and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of sueh pledged revenues. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February I, 2014. 4. Default. Upon an Event of Default by the Redeveloper under the Agreement, the Authority may exercise the remedies with respect to this Note described in Section 9.2 of the Agreement, the terms of which are incorporated herein by reference. 5. Optional Prepavment. (a) The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. (b) Upon receipt by Redeveloper of the Authority's writtcn statement of the Excess Amount as defined in Section 3 .4( c) of the Agreement, one-half of such Excess Amount will be 336927v7 sm CL205-20 A-4 deemcd to constitute, and will be applied to, prepayment of the principal amount of this Notc. Such deemed prepayment is effective as of the Final Closing Date as defined in Section 3.4(c) of thc Agreement, and will be rccorded by the Registrar in its rccords for thc Note. Upon request of the Owner, the Authority will deliver to the Owner a statement of the outstanding principal balance of the Note after application of the deemed prepayment under this paragraph. 6. Naturc of Obligation. This Notc is one of an issue in the total principal amount of $700,000 issued to aid in financing certain public redevelopment costs and administrative costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Scctions 469.001 through 469.047, and is issued pursuant to the Rcsolution, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minncsota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from the revenues pledged to the payment hereof under the Resolution, each Note issued under the Resolution being on parity with the other. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligatcd to pay the principal of or interest on this Note or other costs incident hereto except ti'om and to the extent of the revcnues pledged hereto, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferablc upon the books of the Authority kept for that purpose at the principal office of the City Finance Director, by thc Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrcnder of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmcntal charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivcry requirements of federal and applicable state securities laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, havc been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Columbia Hcights Economic Development Authority have caused this Note to be executcd with the manual 336927v7 sm eL205-20 A-5 signatures of its President and Executive Director, all as of the Date of Original Issue specified above. COLUMI3IA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Executive Director-WaIter R. Fehst President-Gary L. Peterson REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director, in the name of the person last listed below. Date of of Registration Signature Registered Owner _ City finance Director Federal Tax I.D. No. Section 3. Terms. Execution and Deliverv. 3.01. Denomination. Payment. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Finance Director to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. 336927v7 S18 CL20S-20 A-6 (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person unless the Authority has been provided with an opinion of counsel or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of: or on account ot: the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability ofthe Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof: and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or 336927v7 S18 CL205-20 A-7 been called for redcmption in accordance with its terms, it shall not be necessary to issue a new Notc prior to paymcnt. 3.04. Preparation and Deliverv. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any offIcer whose signature shall appear on the Note shall cease to be such otricer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner thereof in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Notese all Housing Redeveloper Available Tax Increment and Commercial Redeveloper Available Tax Increment, as the case may be, under the terms and as defIned in the Notes. Such revenues shall be applied to payment of the principal of and interest on the Notes, each Note being on parity with the other, in accordance with the terms of the form of Note set forth in Section 2 ofthis resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year all I-lousing Redeveloper Available Tax Increment and Commercial Redeveloper Available Tax Increment; and agrees with respect to the Note issued to Grand Central Properties, to maintain and apply the escrowed Tax Increment in accordance with Section3.4(c)(i) of the Agreement. Any amount remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon termination of the Note in accordance with its terms. 4.03. Available Tax respects. Additional Bonds. If the Authority issues any bonds or notes secured by Increment, such additional bonds or notes are subordinate to the Notes in all Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The offIcers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certitlcates, and affIdavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. 336927v7 sm CL20S-20 A-8 Section 6. EfIeetive Date. This resolution shall be effective upon execution of the Fourth Amendment to the Agreement. Adopted this ~ day of September, 2008. President-Gary L. Peterson Executive Director-Walter R. Fehst 336927v7 SJB CL205-20 A-9 SCHEDULE D INVESTMENT LETTER To the Columbia Heights Economic Development Authority (Authority) Attention: Executive Director Re: $ Tax Increment Revenue Note, Series 2008 The undersigned, as Purchaser of the above captioned Note (Note) pursuant to a resolution of the Authority adopted on , 2008 (Resolution), hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, Bond Counsel, as follows: 1. We understand and acknowledge that the Note is delivered to the Purchaser as of this date pursuant to the Resolution and the Contract for Private Redevelopment between the Authority and New Heights Development, LLC dated as of September 22, 2004, as amended by a First Amendment thereto dated as of April 26, 2005, a Second Amendment thereto dated as of November 22, 2005, a Third Amendment thereto dated as of August 28, 2007 and a Fourth Amendment thereto dated as of , 2008 (Contract). 2. The Notc is payable as to principal and interest solely from [I-lousing Redeveloper Available Tax Increment] [Commercial Redeveloper Available Tax Increment] as defined in the Note. The Purchaser understands and acknowledges that the Authority makes no representations or warranties regarding the amount of [Housing Redeveloper Available Tax Increment] [Commercial Redeveloper Available Tax Increment], or that revenues pledged to the Note will be sufficient to pay the principal and interest on the Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District, the Note or the Contract are for the benefit of the Authority, and are not intended as representations on which the Purchaser may rely. 3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above stated principal amount of the Note. 4. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment ofthe Note. 5. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning 336927v7 S18 CL205.20 A-lO the Authority, the Notc and the security thercfor, and that as a reasonable investor we have been able to make our decision to purchase the above stated principal amount of the Note. 6. Wc have been informed that the Note (i) is not being registercd or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, or under fcderal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. 7. We acknowledge that neither the Authority nor Kennedy & Graven, Charted has made any represcntations as to the status of intcrest on the Note for state or federal income tax purposes. 8. We represent to you that we are purchasing the Note for our own accounts and not for resale or other distribution thercol~ except to the cxtent otherwise provided in the Note or the Resolution. 9. All capitalized terms used hcrein have the meanmg provided in the Contract unless the context clearly requires otherwise. 10. The Purchaser's federal tax identification number is 11. Wc acknowledge receipt of the Note on the date hereof. [NAME or PURCHASER] By Its Dated: ,2008. 336927v7 SJB CL205.20 A-11 SCHEDULE E TEMPORARY SITE IMPROVEMENTS The term Site Improvements means the following work on the Housing Propcrty: I. Reestablishment of groundcover, including: . Removal of all bituminous coveragc from thc balance of the Housing Property not used by Phase I . Removal of all gravel areas . Secding and/or landscaping of all areas fi'om which bituminous cover and gravel were removed . Completion of grading plan for the Housing Property that was approved in connection with Phase I. 2. Filling in and seeding of cxisting excavation pit. 3. Establishment of permanent catch basin lids in accordance with plans approved in connection with Phase I. 4. Removal of existing sign fi'ame adjacent to Grand A venue, 5. Installation of sod turf on all City right-of-way areas adjaccnt to the Housing Property. 336927v7 SJB CL205-20 A-12 FiftflSixth Draft, September H;-!1. 2008 CONTRACT FOR PRIVATE REDEVELOPMENT By and Between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY COLUMBIA HEIGHTS, MINNESOTA and GRAND CENTRAL COMMONS LLC Dated as of: ,2008 This document was drafted by: KENNEDY & ORA VEN, Chartered 470 US Bank Plaza Minneapolis, Minnesota 55402 Telephone: (612) 337-9300 336985v6 SJB CL205-42 PREAMBLE Section 1.1. Section 2.1. Section 2.2. Scction 3.1. Section 3.2. Section 3.3. Scction 3.4. Section 3.5. Section 3.6. Section 3.7. Section 3.8. Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 5.1. Section 5.2. Section 6.1. Section 6.2. 336985v6 sm CL205-42 TABLE OF CONTENTS .........................................................................................................................1 ARTICLE I Definitions Defini ti ons....................................................................................................... 3 ARTICLE II Representations and Warranties Representations by the Authority.................................................................... 7 Reprcsentations and Warranties by the Redeveloper......................................7 ARTICLE III Property Acquisition, Conveyance and Financing Status 0 f the Property......................................................................................9 Environmental Conditions.............................................................................. 9 Public Redevelopment Costs.......................................................................... 9 Issuance of Commercial Note......................................................................... 9 Met Council Grant....................................................................................... .11 Payment of Administrative Costs .................................................................11 Records........................................................................................................ .12 No Business Subsidy.................................................................................... .12 ARTICLE IV Construction of Minimum Improvements and Public Improvements Construction of Minimum Improvements and Public Improvements ..........13 Construction Plans...................................................................................... ..13 Completion of Construction......................................................................... .14 Certificate of Completion .............................................................................15 ARTICLE V Insurance Insurance...................................................................................................... .16 Subordination............................................................................................... .17 ARTICLE VI Tax Increment; Taxes Right to Collect Delinquent Taxes................................................................18 Review of Taxes ...........................................................................................18 Section 6.3. Section 7.1. Section 8.1. Section 8.2. Section 8.3. Section 9.1. Section 9.2. Section 9.3. Section 9.4. Section 9.5. Section 10.1. Section 10.2. Section 10.3. Section 10.4. Section 10.5. Section 10.6. Section 10.7. Section 10.8. Section 10.9. Section 10.10. Section 10.11. SCHEDULE A SCHEDULE B SCHEDULE C SCHEDULE D SCHEDULE E SCHEDULE F SCHEDULE G 3369H5v6 sm CL205.42 Assessment Agreement................................................................................ .18 ARTICLE VII Financing Mortgage Financing...... .............................................................................. ..19 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Representation as to Redevelopment............................................................20 Prohibition Against Redeveloper's Transfer of Property and Assignment of Agreement........................................................................... .20 Release and Indemnification Covenants.......................................................22 ARTICLE IX Events of Default Events of Default Defined........................................................................... .23 Remedies on Default.................................................................................... .23 No Remedy Exclusive.................................................................................. .24 No Additional Waiver Implied by One Waiver............................................24 Attorney Fees.............................................................................................. ..24 ARTICLE X Additional Provisions Conflict ofInterests; Authority Representatives Not Individually Liable....25 Equal Employment Opportunity.................................................................. .25 Restrictions on Use...................................................................................... .25 Provisions Not Merged With Deed...............................................................25 Titles of Articles and Sections ......................................................................25 Notices and Demands.. .................................................. ............................. ..25 Counterparts................................................................................................. .26 Recording..................................................................................................... .26 Amendment.................................................................................................. .26 Authority or City Approvals .........................................................................26 Tennination.................................................................................................. .26 Description of Commercial Property Authorizing Resolution Certification of Completion Investment Letter Assessment Agreement Pro Forma Sewer Improvements 11 SCHEDULE H SCHEDULE I 33698Sv6 sm CL205-42 Other Infrastructure Parking Easement iii CONTRACT FOR PRIVATE REDEVELOl'MENT TI-IIS AGREEMENT, made on 01' as of the day of 2008, by and between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, COLUMBIA HEIGHTS, MINNESOTA, a public body corporate and politic (the "Authority"), established pursuant to Minnesota Statutcs, Sections 469.090 to 469.1081 (hereinafter referred to as the "Act"), and GRAND CENTRAL COMMONS LLC, a Minnesota limited liability company (thc "Redeveloper"). WITNESSETH: WHEREAS, the Authority was created pursuant to the Act and was authorized to transact business and exercise its powcrs by a resolution of the City Council of the City of Columbia Heights ("City"); and WHEREAS, the City and the Authority (as successor to the Housing and Redevelopment Authority in and for thc City of Columbia Heights) have undertaken a program to promote redevelopment of land that is characterized by blight and blighting factors within the City, and in this connection the Authority administers a redevelopment project known as the Downtown CDB Redevelopment Project ("Project") pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "I-IRA Act"); and WHEREAS, pursuant to the Act and the I-IRA Act, the Authority is authorized to acquire real property, 01' interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise; and WHEREAS, within thc Project, the City and Authority have created the Kmart/Central Avenue Tax Increment Financing District ("TIF District") in order to facilitate redevelopment of certain property in the Projcct; and WHEREAS, the Authority and New Heights Development, LLC ("Housing Redeveloper") entered into that certain Contract for Private Redevelopment datcd as of Septembcr 22, 2003, as amended by a First Amendment thereto dated April 26, 2005 and by a Second Amendment thereto dated November 22, 2005 and a Third Amendment thereto dated August 28, 2007 (the "Housing Contract") providing for the redevelopment of certain property described as the Redevelopment Property in the Contract; and WHEREAS, New Heights Development, LLC has changed its legal name to Grand Central Properties, LLC but in all respects remains the Housing Redeveloper under the I-lousing Contract; and WHEREAS, Housing Redeveloper sold a portion of the Rcdevelopment Property under thc Housing Contract, which portion is described in Schedule A hereto and is referred to herein as the "Commercial Property;" and 336985v6 8m CL205.42 WHEREAS, the Authority has determined to enter into this Agreement with the Redeveloper regarding the Commercial Improvements to be constructed on the Commercial Property, and has further determined to release the Commercial Property from any encumbrance of the Housing Contract; and WHEREAS, the Authority believes that the redevelopment of the Commercial Property pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 336985v6 SJB CL205-42 2 ARTICLE I Definitions Section 1.1. Definitions. In this Agreemcnt, unless a different meaning clearly appears from the context: "Act" means the Economic Development Authority Act, Minnesota Statutes, Sections 469.090 to 469.108, as amended. "Affiliate" means with respect to the Redcveloper (a) any corporation, partnership, corporation or other business entity or person controlling, controlled by or under common control with the Redeveloper, and (b) any successor to such party by merger, acquisition, reorganization or similar transaction involving all or substantially all of the assets of such party (or such Affiliate). For the purpose hereof the words "controlling", "controlled by" and "under common control with" shall mean, with respect to any corporation, partnership, corporation or other business entity, the ownership of fitly percent or more of the voting interests in such entity possession, directly or indirectly, of the power to direct or cause the direction of management policies of such entity, whether ownership of voting securities or by contract or otherwise. "Agreement" means this Agreement, as the same may be fi'om time to time modified, amended, or supplemented. "Authority" means the Columbia Heights Economic Development Authority, or any successor or assign. "Authority Representative" means the Executive Director of the Authority, or any person designated by the Executive Director to act as the Authority Representative for the purposes of this Agreement. "Authorizing Resolution" means the resolution of the Authority, substantially in the form of attached Schedule B to authorize the issuance of the Commercial Note. "Available Tax Increment" means 90 percent of the Tax Increment attributable to the Commercial Property (or relevant portion thereof: as the context requires), received by the Authority in the six-month period before any schedule payment date on the Commercial Note. "Business Day" means any day except a Saturday, Sunday, legal holiday, a day on which the City is closed for business, or a day on which banking institutions in the City are authorized by law or executive order to close. "Business Subsidy Act" means Minnesota Statues, Sections 116J.993 to 116J.995, as amended. 3369S5v6 8m CL205-42 3 "Certificate of Completion" means the certification provided to the Redeveloper, or the purchaser of any part, parcel or unit of the Commercial Property, pursuant to Section 4.4 of this Agreement. "City" means the City of Columbia Heights, Minnesota. "Commercial Improvements" means the construction on the Commercial Property of at least 51,000 square feet of retail, office or service facilities that are permitted or conditional uses for such site under the City zoning ordinance. consistinl! of two buildinl!s. one with annroximatelv 32.000 souare feet ("l'hase I") and one with annroximatelv 19.000 SOlllll'e feet ("Phase II"), "Commercial Note" means the Tax Increment Revenue Note substantially in the form contained in the Authorizing Resolution, issued in accordance with Section 3.4 hereof. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Commercial Property which a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building oilicials of the City, and (b) shall include at least the following for each building: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) landscape plan; and (8) such other plans or supplements to the foregoing plans as the Authority may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "Commercial Property" means the property so described on Schedule A.. "County" means the County of Anoka, Mirmesota. "Event of Default" means an action by the Redeveloper listed 111 Article IX of this Agreement. "Grant" means the grant from the Metropolitan Council described 111 the Grant Agreement. "Grant Agreement" means the Metropolitan Livable Communities Act Livable Communities Demonstration Account Grant Agreement between the Metropolitan Council and the City dated February 9, 2007 "Holder" means the owner of a Mortgage. "Housing Contract" means the Contract for Private Redevelopment between the Authority and New Heights Development, LLC dated as of September 22, 2003, as amended by a First Amendment thereto dated April 26, 2005 and by a Second Amendment thereto dated November 22, 2005 and by a Third Amendment thereto dated August 28, 2007 and by Fourth Amendment thereto dated September _, 2008. 336985v6 SJB CL205-42 4 "Housing Notes" means the Taxable Tax Increment Revenue Notes issued under the Housing Contract. "I-lousing Redeveloper" means Grand Central Properties, LLC. "Minimum Improvements" means the Commercial Improvements and the Parking Ramp. "Mortgage" means any mortgage made by the Redeveloper which is secured, in whole or in part, with the Commercial Property and which is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. "Other Infrastructure" means the improvements described in Section 4.1 (b) and Schedule H. "Parking Ramp" means the structured parking facility to be constructed on the Commercial Property containing at least 210 stalls. "Phase" mcans Phase lor Phase II ofthc Commercial ImOl'ovemcnts. as the context reauires. "Planning Contract" has the meaning provided in Section 4.1 (b) hereof. "Public Improvements" has the meaning provided in Section 4.1 (b) hereof. "Public Redevelopment Costs" has the meaning provided in Section 3.3 hereof. "Redeveloper" means Grand Central Commons LLC or its permitted successors and assigns. "Redevelopment Project" means the Authority's Downtown CDB Redevelopment Project. "Redevelopment Plan" means the Authority's Redevelopment Plan for the Redevelopment Project, as amended. "Sewer Improvements" means the improvements described III Section 4.1 (b) and Schedule G. "State" means the State of Minnesota. "Tax Increment" mcans that portion of the real property taxes which is paid with respect to the Commercial Property and which is remitted to the Authority as tax increment pursuant to the Tax Increment Act. The tcrm Tax Increment does not include any amounts retained by or payable to the State auditor under Section 469.177, subd. 11 of the Tax Increment Act, and does 336985v6 8m CL205-42 5 not include any amounts defincd as tax incremcnt undcr Section 469.174, subd. 25, clauses (2), (3), (4) and (5) of the TIF Act. "Tax Increment Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 to 469.1799, as amended. "Tax Incrcment District" or "TIF District" means thc Authority's KmartlCentral Avenue Tax Increment Financing District. "Tax Increment Plan" or "TIF Plan" means the Authority's Tax Increment Financing Plan for the TIF District, as approved by the Authority on September 16, 2003 and by the City on September 22,2003, and as it may be amended from time to time. "Tax Official" means any County assessor; County auditor; County or State board of cqualization, the commissioner of revenuc of the State, or any Statc or federal district court, the tax court of the State, or the State Supreme Court. "Termination Datc" means the date the Authority receives the last installment of Tax Increment from the County. "Transfcr" has the meaning set forth in Section 8.2(a) hereof. "Unavoidablc Delays" means delays beyond thc reasonable control of the party seeking to be excuscd as a result thereof which are thc direct result of war, terrorism, strikes, other labor troubles, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority in exercising its rights under this Agreement) which directly result in delays. Unavoidable Delays shall not include dclays in the Redeveloper's obtaining of pennits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement. 336985v6 8m CL205.42 6 ARTICLE II Representations and Warranties Section 2.1. Rcpresentations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is an economic development authority duly organized and existing under the laws of the State. Under the provisions of the Act and the TIF Plan, the Authority has the power to enter into this Agreement and carry out its obligations hereunder, including without limitation the authority to issue the Commercial Note and provide proceeds of the Grant, subject to all the tcrms and conditions of this Agreement. (b) The activities of the Authority are undertaken to foster the redevelopment of certain real property which for a variety of reasons is presently underutilized, to eliminate blighting factors and prevent the emergence of further blight at a critical location in the City, to create increased tax base in the City, to increase commercial activity and to stimulate further development of the TIF District and Redevelopment Project as a whole. Section 2.2. Representations and Warranties by thc Redeveloper. The Redeveloper represents and warrants that; (a) The Redeveloper is a limited liability company duly organized and in good standing under the laws of the State of Minnesota, is not in violation of any provisions of its article of organization or the laws of the State, is duly authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its members. (b) The Redeveloper will construct, operate and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan and all applicable local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). ( c) The Redeveloper has received no notice or communication from any local, state or federal of1icial that the activities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware). The Redeveloper is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state or federal environmental law, regulation or review procedure. (d) The Redeveloper will construct the Minimum Improvements in accordance with all local, state or federal energy-conservation laws or regulations. ( e) The Redeveloper will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state 336985v6 sm CL205-42 7 and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (f) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or cont1icts with or results in a breach of, the terms, conditions or provisions of any partnership or company restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Redeveloper is now a party or by which it is bound, or constitutes a default under any of the foregoing. (g) Whenever any Event of Default occurs and if the Authority or the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, and the Authority or the City or prevails in such action, the Redeveloper agrees that it shall, within ten days of written demand by the City, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. (h) The Redeveloper shall promptly advise City in writing of all litigation or claims atIeeting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Redeveloper or its business which may delay or require changes in construetion of the Minimum Improvements. (i) The proposed redevelopment by the Redeveloper hereunder would not oecur but for the tax increment finaneing assistance being provided by the Authority hereunder. G) The Redeveloper is not eurrently in default under any business subsidy agreement with any grantor, as such terms are detined in the Business Subsidy Act. 336985v6 sm CL205-42 8 ARTICLE III Propcrty ACQuisition. Pal"idng Ramp Financing Section 3.1. Status of the Propcrty. As of the date of this Agrcement, the Redeveloper has acquired the Commercial Property from the Housing Redeveloper. The Authority has no obligation to acquire the Commercial Property or any portion thereof. The Redeveloper and the Commercial Property are released in all respects fl'om the Housing Contract. Section 3.2. Environmental Conditions. (a) The Redeveloper acknowledges that the Authority makes no representations or warrantics as to the condition of the soils on thc Commercial Property or the fitness of such property for construction of the Minimum Improvements or any other purpose for which the Redeveloper may make use of such property, and that the assistance provided to the Redeveloper under this Agreement neither implies any responsibility by the Authority or the City for any contamination of the Commercial Property nor imposes any obligation on such parties to participate in any cleanup of such property. (b) Without limiting its obligations under Article VIII of this Agreement the Redeveloper further agrees that it will indcmnify, defend, and hold harmless the Authority, the City, and their governing body members, of1icers, and cmployces, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Commercial Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions ofthe indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of the City or Authority under State or federal law, including without limitation Minnesota Statutes Sections 466.04 and 604.02. Section 3.3. Public Redevelopment Costs. The Redeveloper shall construct the Parking Ramp in accordance with Article IV hereof. All costs of construction of the Parking Ramp are referred to as the "Public Redevelopment Costs". The Authority will assist in financing the Public Redevelopment Costs in part through issuancc of the Commercial Note under Section 3.4 hereof, and in part through proceeds of the Grant under Section 3.5. Section 3.4. Issuance of Commercial Note. (a) Terms. In order to reimburse the Redeveloper for a portion of the Public Redevelopment Costs incurred by Redeveloper, the Authority shall issue and the Redeveloper shall purchase the Commercial Note in the maximum aggregate principal amount of $440,000. The Commercial Note will be payable solely from Available Tax Increment. The terms of the Commercial Note, including maturity, payment dates and interest rate, will be substantially those sct forth in the form of the Commercial Note shown in Schedule B. The Commercial Note will be dated as of the date of delivery, and interest will accrue from such date. Redeveloper is the sole beneficiary of the Commercial Note, and no other party (including without limitation the Housing Redeveloper) has any right, title or interest in the Commercial Note unless assigned such rights in accordance with the terms thereof. (b) Issuance. Before issuance and delivery of the Commercial Note, Redeveloper must submit to the Authority onc or more certificates signed by the Redeveloper's duly 336985v6 sm CL205-42 9 authorized representative, containing the following: (i) a statement that each cost identified in the certificate is a Public Redevelopment Cost incurred on or in connection with the Parking Ramp and that no part of such cost has been included in any previous certification under this Section, or reimbursed or requested to reimbursed from Grant proceeds under Section 3.5; (ii) evidence that each identified Public Redevelopment Cost has been paid or incurred by or on behalf of the Redeveloper, and (iii) a statement that no uncured Event of Default by the Redeveloper has occurred and is continuing under the Agreement. The Authority may, if not satisfied that the conditions described herein have been met, return any certificate with a statement of the reasons why it is not acceptable and requesting such further documentation or clarification as the Authority may reasonably require. The Authority will deliver the Commercial Note upon receipt and approval of certificates evidencing Public Redevelopment Costs in at least the principal amount of the Commercial Note, and Redeveloper having delivered to the Authority an investment letter in substantially the form of Schedule D. (c) Termination of right to Commercial Note. Notwithstanding anything to the contrary in this Agreement, if the conditions for delivery of the Commercial Note are not met by July 23, 2009 (which is the date of expiration of the "five year rule" for the TIF District under Section 469.1763 of the TIP Act), the Authority may terminate the Commercial Note by ten days written notice to the Redeveloper. Thereafter neither party shall have any obligations or liability to the other hereunder, except that any obligations of the Redeveloper under Sections 3.2, 3.6 and 8.3 survive such termination. (d) Qualifications. The Redeveloper understands and acknowledges that the Authority makes no representations or warranties regarding thc amount of Available Tax Increment, or that revenues pledged to the Commercial Note will be sufficient to pay the principal and interest on the Commercial Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIP District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Redeveloper may rely. If the Public Redevelopment Costs exceed the principal amount of the Conul1ercial Note and proceeds of the Grant, such excess is the sole responsibility of Redeveloper. ( e) Reduction of Assistance. The financial assistance to the Redeveloper under this Agreement is based on certain assumptions regarding likely costs and expenses associated with constructing the Commercial Improvements. The Authority and the Redeveloper agree that those assumptions will be reviewed at the times described in this Section, and that the amount of Commercial Note will be adjusted accordingly. (i) Definitions. For the purposes of this Section, the following terms have the following definitions: "Calculation Date" means 60 days after the earliest of (i) the date of Stabilization; (ii) the date of any Transfer in whole or in part of the Commercial Property or (iii) tiu'ee years after the date of issuance of the Certificate of Completion for the Commercial Improvements. 336985v6 8m CL205-42 10 "Net Operating Income" means all net rental income from the Commercial Improvements received in the last fiscal year prior to the Calculation Date, subject to the following adjustments: (i) if the Commercial Improvements have not reached Stabilization as of the Calculation Date, income will be calculated as the sum of actual net rent plus assumed rent for the space needed to reach 95% lease-up at rates equal to the average rent from actual leases as of the Calculation Date; (ii) from that total will be deducted non-reimbursable expenses (e.g., common area maintenance charges, insurance and taxes) allocated to the actual vacant area (if Stabilization has occurred) or allocated to the assumed 5% vacant area (if Stabilization has not occurred); and (iii) from that total will also be deducted a stractHral reserve in the amount of $.10 per square foot of the Commercial Improyements, "Return on Investment" means eash-on-eash return on investment calculated as shown in Schedule F (see "Return on Inves.-Annual" on nal!e F-5); hased on Net Oneratinl! Income and all exnenses shown in Schedule F. "Stabilization" means 95% of leaseable space in the Commercial Improvements is leased. "Target ~Return On Investment" means a Yield on Total Project GestsRetul'll on Investment of 12%. "Total Project Costs" means all costs incurred b)' Redeyeloper in connection "vith the-80mmereiallmprovements as of the CaleHlation Date, inclHding the cost of acquiring the Commercial Propert)', on and off site improvements benefiting the Commercial Pfeperty, leasing commissions, cllflitalized interest on all saeh costs, and operating deficits, and all other hard related soft costs incurred in connection v..ith the Commercial Improvements, net of (i) the principal amount of the Commercial Note and the HO',lsing Note, (ii) proceeds from Transfer of an)' undeveloped portion of the Commercial Pfeperty. "Yield on Total Project Costs" means Net Operating Income diyided by Total Proj cct Costs. (ii) Lookback Calculation. Upon the Calculation Date, the Redeveloper must deliver to the Authority reasonable evidence of its ~Retul'll on Total Project GestsInvestment calculated as of the Calculation Date, determined in accordance with generally accepted accounting principles ("GAAP") and substantially in the format of the lookback pro forma attached as Schedule F hereto (except that if definitions in this Section vary from GAAP, the provisions of this Section control). The Redeveloper agrees to provide to the Authority's consultant any background documentation related to the financial data, upon request. The Authority may request a written certificate of a certified public accountant regarding Total PrGject Costsall oneratinl! exnenses and Net Operating Income, to be provided at Redeveloper's expense (which expense may be included as part of Total Project Costs)oneratinl! exnenses. 336985v6 sm C1,205.42 II If the .'HekIReturn on Total Project CostsInvestment exceeds the Target .'HekIReturn on Investment, the portion of Net Operating Income in excess of the amount that produces the Target .'HekIReturn on Investment is referred to as the "Excess Amount." On the Calculation Date, 50% of the Excess Amount will be applied to reduce the outstanding principal amount of the Commercial Note in accordance with thc terms of Section 5(b) of the Commercial Note. Such event must be evidenced by delivery by the Authority to the Redeveloper of a written notice stating the Excess Amount. The one-half share of Excess Amount will be deemed prepaid as of the Calculation Date. Section 3.5. Met Council Grant. (a) As further assistance to make development of the Minimum Improvements economically feasible, the City will payor reimburse Redeveloper for up to $974,369 in costs of the Parking Ramp, from and to the extent of proceeds of the Grant in accordance with all the terms and conditions of the Grant Agreement. Proceeds of the Met Council grant will be disbursed in accordance with a disbursing agreement in a form mutually agreed by the City, the Authority and the Redeveloper. The parties agree and understand that the disbursing agreement will set forth procedures for draw requests consistent with the terms of this Section and the Grant Agreement. The disbursing agreement may be executed by Authority and City otIieials subject to approval by the Mayor, Authority President and Authority Executive Director, provided that execution of the agreement by those officials will be conclusive evidence of their approval. (b) .A.s a condition to the first disbursement of Grant proceeds (and the disbursing agreement shall so provide )Ev no later than 30 davs after the date of this A!!reement, the Redeveloper shall execute and deliver to the Authority the Parking Easement in recordable form, in substantially the form attached as Schedule I. (c) Developer shall comply with all terms and conditions of the Grant Agreement as if Redeveloper were grantee. Without limiting the forgoing, Redeveloper shall: (i) ensure that all contracts and subcontracts related to the Parking Ramp costs funded by the Grant comply with all applicable State and federal laws, including applicable State and federal Occupational Safety and Health Act regulations; (ii) meet all requirements of federal and State law relating to stormwater discharges, including without limitation, any applicable requirements of title 40, CFR, parts 122 and 123; (iii) acknowledge the assistance provided by the Metropolitan Council in promotional materials, press releases, reports and publications relating to development of the Commercial Property, which acknowledgement must contain the following language: Financing for this project was provided by the Metropolitan Council Metropolitan Livable Communities Fund and by the Columbia Heights Economic Development Authority. Such statement shall also be included on signs located on the Commercial until substantial completion of all Minimum Improvements constructed thereon. 3369H5v6 sm CI.205-42 12 (d) The Redeveloper is the sole beneficiary of this Section, and no third party (including without limitation the Housing Redeveloper) shall have any right, title or interest in proceeds of the Grant unless assigned by Redeveloper in accordance with the terms and conditions of this Agreement. (e) Redeveloncr acknowlcdl!es and undcI'stands that the Grant Al!reemcnt cxnires as of Dccembcr 31. 2008. Thc Anthority willnse its best efforts to cnsure the time line is extended. and reasonably believes that if Redeveloncr eomnlies with this A!!TCement. includinl! timely deliverv of the Parldnl! Eascment in accordance with this Section. thc time for disbursement of fnnds will be extended. However. the Authoritv mal,es no warranties or l'em'esentations to that effect. Section 3.6. Pavment of Administrative Costs. The Redeveloper is responsible for "Administrative Costs," which means out-of~pocket costs incurred by the Authority attributable to or incurred in connection with the negotiation and preparation of this Agreement and other documents and agreements in connection with the Commercial Property. Redeveloper shall pay such amounts fi'om time to time within ten calendar days of receipt of an notice from the Authority reasonably documenting the Administrative Costs then due. The Authority acknowledges that Redeveloper has no liability for Administrative Costs reasonably allocated to the Housing Property and the Housing Contract, including without limitation costs related to issuance of the Housing Notes. Section 3.7. Records. The Authority or its representatives shall have the right at all reasonable times after reasonablc notice to inspect, examine and copy all books and records of Redeveloper relating to the Minimum Improvements. Section 3.8. No Business Subsidv. The Redeveloper warrants and represents that its investment in the purchase of the Commercial Property (which occurred in 2007) will equal at least 70% of the County assessor's estimated market value of the Commercial Property for the 2007 assessment year, calculated as follows: Commercial Property cost............................................................. .$1 ,400,000 2007 Assessor's Estimated Fair Market Value of Commercial Property...................................................................... .$5 30,500 Cost equals 264% of market value. Accordingly, the parties agree and understand that the financial assistance described in this Agreement does not constitute a business subsidy within the meaning of the Business Subsidy Act, pursuant to Section 116.1.993, subd. 3(17) thereof. Notwithstanding anything to the contrary in Section 8.3(b) hereof, the Redeveloper releases from and covenants and agrees that the Authority and the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority and the City and the governing body members, officers, agents, servants and employees thereof against any claim arising from application of the Business Subsidy Act to this 336985v6 8m CL205.42 13 Agreement, including without limitation any claim from any person or entity that the Authority failed to comply with the Business Subsidy Act with respect to this Agreement. 336985v6 sm CL205-42 14 ARTICLE IV Construction of Minimum Improvements and Publie Improvements Section 4.1. Construction of Minimum Improvements and Public Improvements. (a) The Redeveloper agrees that it will construct or cause construction of the Minimum Improvements on the Commercial Property, in accordance with approved Construction Plans and at all times while Redeveloper owns the Commercial Property, will operate and maintain, preserve and keep the respective components of the Minimum Improvements or cause such components be maintained, preserved and kept with the appurtenances and every part and parcel thereot: in good repair and condition. (b) The Redeveloper must construct (1) the oversized sanitary sewer mains required by the City as described in more detail in Schedule G (the "Sewer Improvements"); and (2) any streets and associated traffic improvements, sewer, water, storm sewer improvements, sidewalks, landscaping, open space and related amenities located within or serving the Commercial Property, all described in more detail in Schedule H (the "Other Inti'astructure"). The Sewer Improvements and Other Infrastructure are referred to together as the "Public Improvements." Before commencing such construction, the Redeveloper must enter into the planning contract with the City in substantially the form approved by the City Council on September 8, 2008 (the "Planning Contract"), addressing City requirements for construction of the Other Infrastructure and security therefore in accordance with City ordinances and procedures. Redeveloper must construct the Public Improvements substantially in accordance with the plans described in Schedules G and H and shall comply with all City requirements regarding such improvements. The parties agree and understand that the City will accept the improvements in accordance with City procedures and the Planning Contract. Section 4.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, the Redeveloper shall submit to the Authority Construction Plans. The Construction Plans shall provide for the construction ofthe Minimum Improvements and shall be in conformity with the TIF Plan, Redevelopment Plan, this Agreement, the Planning Contract and all applicable State and local laws and regulations. The Authority Representative will approve the Construction Plans in writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds available to the Redeveloper from all sources (including Redeveloper's equity) for construction of the Minimum Improvements; and (vi) no Event of Default has occurred. Approval may be based upon a review by the City's Building Official of the Construction Plans. No approval by the Authority Representative shall relieve the Redeveloper of the obligation to comply with the terms of this Agreement or of the Development Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority Representative shall constitute a waiver of an Event of Default. If approval of the Construction 336985v6 sm CL205-42 15 Plans is requestcd by the Redeveloper in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority Representative, in whole or in part. Such rejections shall set forth in dctail the rcasons thcrefore, and shall be made within 10 days after the datc of their receipt by the Authority. If the Authority Representative rejects any Construction Plans in whole or in part, the Redeveloper shall submit new or corrected Construction Plans within 10 days after written notification to the Redeveloper of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority Representative's approval shall not be unreasonably withheld, delayed or conditioned. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. (b) If the Redeveloper desires to make any material change in the Construction Plans after their approval by the Authority, the Redeveloper shall submit the proposed change to the Authority for its approval. If thc Construction Plans, as modified by the proposed change, conform to the requirements of Section 4.2 of this Agreement with respect to such previously approved Construction Plans, the Authority shall approve the proposed changc and notify the Redeveloper in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejccted, in whole or in part, by written notice by the Authority to the Redeveloper, setting forth in detail the reasons thcrefor. Such rejection shall be made within ten (10) days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans will not be unreasonably withhcld. Section 4.3. Completion of Construction. Subject to Unavoidable Delays, the Rcdeveloper must commence construction of the Miaimum Improvcmcats by Noycmbcr 1, ;!{lOg, andParking Ramo and hoth Phases of the Commercial Imorovements hv Mav 1. 2009: the term "commencement" means at least the fi,'st work on footings or foundations. Suhied to Unavoidahle Delavs. the Redeveloner must substantially complete construction of the MiBimuml>arldng Ramn and hoth Phases of the Commercial Improvements by December 31,2009. All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Commcrcial Property shall be in substantial conformity with the Construction Plans as submitted by the Redeveloper and approved by the Authority, and with he Planning Contract. If the Redeveloper is making substantial progress with respect to the redevelopment project, and is unable to meet one or more of the above-referenced deadlines, the Authority and the Redeveloper shall negotiate in good faith for a reasonable period to extend the time in which necessary action(s) must be taken or occur, the lapse of which time would otherwise constitute a default under this Agreement. The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Commercial Property, or any part thereof: that the Redeveloper, and such successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Commercial Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Section 4.3 of this Agreement. Subsequent to 336985v6 8m CL205-42 16 conveyance of the Commercial Property, or any part thereof, to the Redeveloper, and until construction of the Minimum Improvements has been completed, the Redeveloper shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Redeveloper with respect to such construction. Section 4.4. Certificate of Completion. (a) Promptly after substantial completion of the Minimum Improvements (and each component or Phase thereof) in accordance with those provisions of the Agreement relating solely to the obligations of the Redeveloper to construct the Minimum Improvements (including the dates for completion thereot), the Authority will furnish the relevant Redeveloper with a Certificate of Completion in substantially the form attached as Schedule C. Such certification by the Authority shall be a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Redeveloper, and its successors and assigns, to construct the relevant component of the Minimum Improvements and the dates for the completion thereof. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any obligation of the Redeveloper to any Holder of a Mortgage, or any insurer of a Mortgage, securing money loaned to finance the Minimum Improvements, or any part thereof. (b) Each Certificate of Completion provided for in this Section 4.4 of this Agreement shall be in such form as will enable it to be recorded in the propel' office for the recordation of deeds and other instruments pertaining to the Commercial Property. If the Authority shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 of this Agreement, the Authority shall, within thirty (30) days after written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, 01' is otherwise in default, and what measures 01' acts it will be necessary, in the opinion of the Authority, for the Redeveloper to take 01' perform in order to obtain such certification. (c) The construction of eaeh Phase of the Minimum Improvements shall be deemed to be substantially completed when the Redeveloper has received a certificate of occupancy for all Commercial Improvements in that Phase (except for any tenant build-outs), and the Parking Ramp and all site improvements have been substantially completed as reasonably determined by the Authority Representative. 336985v6 sm CL205.42 17 ARTICLE V Insurance Section 5.1. Insurance. (a) The Redeveloper will provide and maintain (or cause to be provided and maintained by Redeveloper's contractor) at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, fU1'llish the Authority with proof of payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so-called "all risk" form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and (iii) Workers' compensation insurance, with statutory coverage. (b) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certiticate or certiticates or binders of the respective insurers stating that such insurance is in force and etl'ect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or moditication becomes etl'ective. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (c) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from tire or other casualty. In such event the Redeveloper will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the 336985v6 sm CL205-42 18 extent necessary to accomplish such repair, reconstruction and restoration, the Rcdeveloper will apply the net proceeds of any insurance relating to such damage received by the Redevcloper to the payment or reimbursement ofthe costs thereof. The Redeveloper shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the net proceeds of insurance received by the Redeveloper for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction and restoration shall be the property of the Redeveloper. (d) The Redeveloper and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V, the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all respects, be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to Article VII ofthis Agreement. 336985v6 sm CL205-42 19 ARTICLE VI Tax Increment: Taxes Section 6.1. Right to Collect Delinquent Taxes. The Redeveloper acknowledges that the Authority is providing substantial aid and assistance in furtherance of the redevelopment described in this Agreement, in part through issuance of the Commercial Note. The Redeveloper understands that the Tax Increments pledged to payment of the Commercial Note are derived from real estate taxes on the Minimum Improvements, which taxes must be promptly and timely paid. To that end, the Redeveloper agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Commercial Property and the Minimum Improvements. The Redeveloper acknowledges that this obligation creates a contractual right on behalf of the Authority through the Termination Date to sue the Redeveloper or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney fees. Section 6.2. Review of Taxes. The Redeveloper agrees that prior to the Termination Date, it will not cause a reduction in the real property taxes paid in respect of the Commercial Property through: (A) willful destruction of the Commercial Property or any part thereat; or (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement. The Redeveloper also agrees that it will not, prior to the Termination Date, apply for a deferral of property tax on the Commercial Property pursuant to any law, or transfer or permit transfer of the Commercial Property to any entity whose ownership or operation of the property would result in the Commercial Property being exempt ti'om real estate taxes under State law (other than any portion thereof dedicated or conveyed to the City or Authority in accordance with this Agreement). Section 6.3. Assessment Agreement. (a) Prior to issaancccommencement of construction of Phase I of the Commercial NeteImnrovements, the Redeveloper shall, with the Authority, execute an Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd. 8, specifying an assessor's minimum Market Value for Phase I and an allocable nortion .!!Lthe Commercial Property and Minimum Improvements constructed tl1_. The amount of the minimum Market Value shall be $6,100,0094.000.000 of January 2, 2010 and each January 2 thereafter, notwithstanding the status of construction by such dates. (b) The Prior to commencement of anv work on Phase II of the Commercial Imnrovements bevond footings and foundations. bnt in anv event nromntlv nnon the Authoritv's annrovaI of financing for Phase II in accordance with Article VII hereof. the Redeveloner shall. with the Authoritv. execnte an Assessment Agreement nursnant to Minnesota Statutes. Section 469.177. subd. 8. snecifying an assessor's minimum Marl,et Value for Phase II of the Commercial Imnrovements and an alloeable nortion of the Commet'cial Pronertv. The amount of the minimum Market Value shall be $2,375.000. as 336985v6 sm CL205.42 20 of .Januarv 2. 2010 and each .Januarv 2 thereafter. notwithstandinl! the status of construction bv such dates. (c) Each Assessment Agreement shall be substantially in the form attached hereto as Schedule E. Nothing in #Ieeach Assessment Agreement shall limit the discretion of the assessor to assign a market value to the property in excess of such assessor's minimum Market Value. +heEach Assessment Agreement shall remain in force for the period specified in the Assessment Agreement. 336985v6 8JB CL205.42 21 ARTICLE VII Financinl!: Section 7.1. Mortgage Financing. (a) Before commencement of construction of any of the Minimum(i) the l'arking Ramn and Phase 1 of the Commercial Imnrovements. and (ii) Phase II of the Commercial Improvements, the Redeveloper shall submit to the Authority evidence of one or more commitments for financing which, together with committed equity for such construction, is sufticient for payment of the Minimam Improvements.cost of such imnrovements. Such commitments may be submitted as short term financing, long term mortgage financing, a bridge loan with a long term take-out financing commitmcnt, or any combination of the foregoing. The evidence of financinl! described in clauses Ii) and (ii) mav be submitted at different times. (b) If the Authority finds that the financing is suffIcicntly committed and adequate in amount to pay the costs speciJied in paragraph (a) thcn thc Authority shall notify the Redeveloper in writing of its approval. Such approval shall not be unreasonably withhcld and either approval or rejection shall be givcn within twenty (20) days from thc datc when the Authority is provided the evidence of financing. A failure by the Authority to respond to such evidence of financing shall be deemed to constitute an approval hereunder. If the Authority rejects the cvidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection. In any event the Redeveloper shall submit adequate cvidence of financing within ten (10) days aftcr such rejection. ( c) In the event that there occurs a default under any Mortgage authorized pursuant to Section 7.1 of this Agreement, the Redeveloper shall cause the Authority to receive copies of any notice of default received by the Redeveloper fl'om the holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Redeveloper within such cure periods as are available to the Redeveloper under the Mortgage documents. In the event there is an event of default under this Agreement, the Authority will transmit to the Holder of any Mortgage a copy of any notice of default given by the Authority pursuant to Article IX of this Agreement. (d) In order to facilitate the securing of other financing, the Authority agrees to subordinate its rights under this Agreement provided that such subordination shall be subject to such reasonable terms and conditions as the Authority and Holder mutually agree in writing. Notwithstanding anything to the contrary herein, any subordination agreement must include the provision described in Section 7.1(c). and in no event will the Authority subordinate its interest in anv Assessment Al!reement. 336985v6 sm CL205-42 22 ARTICLE VIII Prohibitions Against Assignment and Tl"ansfer; Indemnification Section 8.1. Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Commcrcial Propcrty, and its other undertakings pursuant to the Agreement, arc, and will bc used, for thc purpose of redevelopment of the Commercial Property and not for speculation in land holding. Section 8.2. Prohibition Against Redeveloper's Transfer of Propertv and Assignment of Agreement. The Redeveloper represents and agrees that until issuance of the Certificate of Completion for the Minimum Improvements: (a) Except as specifically described in this Agrcement, the Redeveloper has not made or created and will not make or create or sufTer to be made or created any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with rcspect to this Agrecment or the Commercial Property or any part thereof or any interest thcrein, or any contract or agreement to do any of the same, to any person or entity (collectively, a "Transfer"), without the prior written approval of the Authority's board of commissioners. The term "Transfer" does not include (i) encumbrances madc or granted by way of security for, and only for, the purpose of obtaining construction, interim or permanent financing necessary to enable the Rcdeveloper or any successor in interest to the Commercial Property or to construct the Minimum Improvcments or component thereof, or (ii) any lease, license, easement or similar arrangement entered into in the ordinary course of business related to operation of the Minimum Improvements. (b) If the Redeveloper seeks to effect a Transfcr prior to issuance of the Celiificate of Completion, the Authority shall be entitled to require as conditions to such Transfer that: (1) any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper as to the portion of the Commercial Propcrty to be transferred; and (2) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable in the public land records of Anoka County, Minnesota, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Redeveloper under this Agrcement as to the pOliion of the Commercial Property to be transferred and agreed to be subject to all thc conditions and restrictions to which the Redeveloper is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in intcrest whatsoever to, the Commercial Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent othcrwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls 336985v6 8m CL20S-42 23 with respect to the Commercial Property, the Minimum Improvements or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Commercial Property or any part thereot: or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally, or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting fl'om this Agreement with respect to the Commcrcial Property that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the Commercial Property, from any of its obligations with respect thereto. (3) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Commercial Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. (c) If the conditions described in paragraph (b) are satisfied then the Transfer will be approved and the Redeveloper shall be released from its obligation under this Agreement, as to the portion of the Commercial Property that is transferred, assigned, or otherwise conveyed. The provisions of this paragraph ( c) apply to all subsequent transferors, assuming compliance with the terms of this Article. (d) Upon issuance of the Certificate of Completion, the Redeveloper may transfer or assign the Minimum Improvements and/or the Redeveloper's rights and obligations under this Agreement with respect to such property without the prior written consent of the Authority; provided that: (i) until the Termination Date the transferee or assignee is bound by all the Redeveloper's obligations hereunder with respect to the propeliy and rights transferred. The Redeveloper shall submit to the Authority written evidence of any such transfer or assignment, including the transferee or assignee's express assumption of the Redeveloper's obligations under this Agreement. If the Redeveloper fails to provide such evidence of transfer and assumption, the Redeveloper shall remain bound by all obligations with respect to the subject property under this Agreement; and (ii) upon compliance with clause (d)(i) above (whether the transfer occurred before or after issuance of the Certificate of Completion), the Redeveloper shall be released fl'om its obligations under this Agreement with respect to the property transferred. The provisions of this paragraph (d) apply to all subsequent transferors, assuming compliance with the terms of this Article. 336985v6 8m CL205-42 24 (e) Nothing in this Article VTII will be construed to require, as a condition for release of the Redeveloper hereunder or otherwise, that purchasers of any unit assume any obligations of the Redeveloper. Upon sale of any residential unit to an initial owner-occupant, the Authority will provide to Redeveloper or the buyer a certificate in recordable form releasing the unit from all encumbrances of this Agreement. Section 8.3. Release and Indemnification Covenants. (a) The Redeveloper releases from and covenants and agrees that the Authority and the City and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority and the City and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements or the Public Improvements. (b) Except for any willful or negligent misrepresentation or any willful or wanton misconduct or negligence of the following named parties, the Redeveloper agrees to protect and defend the Authority and the City and the governing body members, ofIicers, agents, servants and employees thereof (the "Indemnified Parties"), now or forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements and Public Improvements. (c) Except for any negligence of the Indemnified Parties (as defined in clause (b) above), and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants or employees or any other person who may be about the Minimum Improvements or Public Improvements due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements and obligations ofthe Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, of1icer, agent, servant or employee ofthe Authority in the individual capacity thereof. 336985v6 SJB CL205-42 25 ARTICLE IX 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 Default" shall mean, whenever it is used in this Agreement, anyone or more of the following events, after the non-defaulting party provides 30 days written notice to the defaulting party of the event, but only if the event has not been cured within said 30 days or, if the event is by its nature incurable within 30 days, the defaulting party does not, within such 3D-day period, provide assurances reasonably satisfactory to the party providing notice of default that the event will be cured and will be cured as soon as reasonably possible: (a) Failure by the Redeveloper or the Authority to observe or perform any covenant, condition, obligation, or agreement on its part to be observed or performed under this Agreement or the Planning Contract; (b) The Redeveloper: (i) files any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law; (ii) makes an assignment for benefit of its creditors; (iii) admits in writing its inability to pay its debts generally as they become due; or (iv) is adjudicated a bankrupt or insolvent. Section 9.2. Remedies on Default. (a) Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the non-defaulting party may exercise its rights under this Section 9.2 after providing thirty days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default is by its nature incurable within thirty days, the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (b) Upon an Event of Default by the Redeveloper, the Authority may withhold payments under the Commercial Note in accordance with its terms, which withheld amount is payable, without interest thereon, on the first payment date after the default is cured. (c) If an Event of Default continues for more than three years after the date of receipt by the Redeveloper of the default notice, the Authority may terminate the Commercial Note. 336985v6 sm CI.205.42 26 (d) If the Event of Default constitutes breach of rcstrictions on Transfcr of the Commercial Property under Section 8.2 hereof, the Authority may terminate the Commercial Note if the default is not curcd within the periods provided in Section 9.1. (e) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agrecment, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. Section 9.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the Authority or Redeveloper 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 be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.4. No Additional Waiver Implied bv One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 9.5. Attorney Fees. Whenever any Event of Default occurs and if the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, the Redeveloper agrees that it shall, within 10 days of written demand by the Authority, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. 336985v6 sm CL205-42 27 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests: Authority Representatives Not Individually Liable. The Authority and the Redevelopcr, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the Authority or County or for any amount which may become due to the Redeveloper or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 10.3. Restrictions on Use. The Redeveloper agrees that until the Termination Date, the Redeveloper, and such successors and assigns, shall devote the Commercial Property to, the operation of the Minimum Improvements for uses described in the definition of such term in this Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Commercial Property or any improvements erected or to be erected thereon, or any pati thereof. Section lOA. Provisions Not Merged With Deed. None of the prOVISIOns of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Commercial Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper at 139 Stonebridge Road, Lilydale, Minnesota 55118; and 336985v6 8m CL205.42 28 (b) in the case of the Authority, is addressed to or delivercd pcrsonally to the Authority at 100 Civic Center Parkway, Columbia Heights, Minnesota 55337, Attn: Executive Director; or at such other address with respect to eithcr such party as that patiy may, ti'om time to time, dcsignate in writing and forward to the other as provided in this Section. Section 10.7. Counterparts. This Agreemcnt may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.8. Recording. The Authority may record this Agreement and any amendments thercto with the Anoka County recorder. The Redeveloper shall pay all costs for recording. Section 10.9. Amendment. This Agreement may be amended only by written agreement approved by the Authority and the Redeveloper. Section 10.10. Authority or City Approvals. Unless otherwise specified, any approval required by the Authority under this Agreement may be given by the Authority Representative. Section 10.11. Termination. This Agreement terminates on the Termination Date, except that termination of the Agreement does not terminate, limit or atfect the rights of any party that arise before the Termination Date. 336985y(, SJB CL205-42 29 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Redeveloper has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. COLUMBIA HEIGl-ITS ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this _ day of 2008, by and , the President and Executive Director of the Columbia Heights Economic Development Authority, a public body politic and corporate, on behalf ofthe Authority. Notary Public 336985v6 sm CL205-42 30 GRAND CENTRAL COMMONS LLC By Its STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of , 2008 by , the of Grand Central Commons LLC, a Minnesota limited liability company, on behalf ofthe company. Notary Public 336985v6 SJB CL205-42 31 SCHEDULE A Commercial P,'operty Outlot C, Grant Central Lofts, Anoka County, Minnesota 336985v6 SIB CL205-42 A-I SCHEDULE B AUTHORIZING RESOLUTION COLUMBIA HEIGHTS ECONOMIC DEVELOI'MENT AUTHORITY RESOLUTION NO. RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT AND RESOLUTION A WARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR TI-IE ISSUANCE OF ITS $-440.000 TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2008B BE IT RESOLVED BY the Board of Commissioners ("Board") of the Columbia Heights Economic Dcvelopmcnt Authority, Columbia Heights, Minnesota (the "Authority") as follows: Section I. Authorization. 1.01. Authorization. The Authority and the City of Columbia Heights have heretofore approved the establishment of the Kmart/Central A venue Tax Increment Financing District (the "TIF District") the Downtown CBD Redevelopment Project (the "Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable from all or any portion of revenues derived from the TlF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Taxable Tax Increment Revenue Note in the maximum principal amount of $440,000 (the "Note") for the purpose of financing certain public redevelopment costs of the Project. 1.02. Approval of Agreement. The Contract for Private Redevelopment (the "Agreement") between the Authority Grand Central Commons, LLC ("Grand Central Properties") is approved in substantially the form on file in City Hall, subject to modifications that do not alter the substance of the transaction that arc approved by the President and Executive Director, provided that execution of the amendment by such oflicials is conelusive evidence of and their approval. 1.03. Issuance. Sale. and Terms of the Note. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with the Agreement. The Note shall be issued to Grand Central Commons LLC ("Owner"). The Note shall be dated as of the date of delivery, shall mature no later than February I, 2018 and shall bear interest at the rate of 7.0% per annum from the date of original issue of the Note. The Note is issued in consideration of payment by Owner of certain Public 330985v6 sm CL205.42 B-1 Redevelopment Costs in at least the principal amount of the Note, 10 accordance with the Agreement. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA COLUMBIA HEIGl-ITS ECONOMIC DEVELOPMENT AUTHORITY No.R-1 $ TAXABLE TAX INCREMENT REVENUE NOTE SERIES 20 Rate Date of Original Issue 7.0% ,20_ The Columbia Heights Economic Dcvelopment Authority ("Authority") for value received, certifies that it is indebted and hereby promises to pay to Grand Central Commons LLC or registered assigns (the "Owner"), the principal sum of $ or so much thcreof as has been from time to time advanced (the "Principal Amount"), as provided in the Agreement defined hereafter, together with interest on the unpaid balance thereof accrued from the date of original issue hereof at the rate of _ percent per annum (the "Stated Rate"). This Note is given in accordance with that certain Contract for Private Redevelopment between the Issuer and the Owner dated as of , 2008 (the "Agreement") and the authorizing resolution (the "Resolution") duly adopted by the Authority on , 2008. Capitalized terms used and not otherwise defined herein have the meaning provided for such terms in the Agreement unless the context clearly requires otherwise. 1. Pavments. Principal and interest ("Payments") shall be paid on August I, 20 I 0 and each February 1 and August 1 thereafter to and including February I, 2021 ("Payment Dates") in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may dcsignate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest accruing from the date of original issue through and including February 1, 2010 (and not otherwise paid from Available Tax Increment) will be compounded 336985v6 SJB CL205-42 B-2 semiannually on February 1 and August 1 of each year and added to principal. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. All payments on this Note are payable on each Payment Date solely from and in the amount of the "Available Tax Increment," which means, on each Payment Date, 90 percent of the Tax Increment attributable to the Commercial Property as defined in the Agreement that is paid to the Authority by Anoka County in the six months preceding the Payment Date. The Authority shall have no obligation to pay principal of and interest on this Note on each Paymcnt Date from any source other than Available Tax Increment and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hercunder as long as the Authority pays principal and interest hereon to the extcnt of such pledged revenues. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2021. 4. Default. Upon an Event of Default by the Redeveloper under the Agreement, the Authority may exercise the remedies with respect to this Note described in Section 9.2 of thc Agreement, the terms of which are incorporated herein by reference. 5. Optional Prepavment. (a) The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall atfect the amount or timing of any other regular payment otherwise required to be made under this Note. (b) Upon receipt by Redevelopcr of the Authority's written statement of the Excess Amount as defined in Section 3.4(e) of the Agreement, one-half of such Excess Amount will be deemed to constitute, and will be applied to, prcpayment of the principal amount of this Note. Such deemed prepayment is effective as of the Calculation Date as defined in Section 3.4(e) of the Agreement, and will be recorded by the Registrar in its records for the Note. Upon request of the Owner, the Authority will deli vcr to the Owner a statement of the outstanding principal balance ofthe Note after application ofthe dcemed prepayment under this paragraph. 6. Nature of Obligation. This Note is one of an issue in the total principal amount of $ issued to aid in financing certain public redevelopment costs and administrative costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Scctions 469.001 through 469.047, and is issued pursuant to the Resolution, and pursuant to and in full conformity with the Constitution and laws of the State of Milmesota, including Minnesota Statutes, Sections 469.174 to 469.179. This Note is a limited obligation of the Authority which is payable solely from the revenues pledged to the paymcnt hereof under the Resolution. This Note and the interest hereon shall not be dccmed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Mirmesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except from and to the extent of the revcnues pledged hereto, and neither the full faith and credit nor the taxing power of the State of 336985v6 SJB CL20S-42 B-3 Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Chief Financial Officer, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requiremcnts of federal and applicable state securities laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Columbia Heights Economic Development Authority have caused this Note to be executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Executive Director President REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Chief Financial Officer, in the name of the person last listed below. 336985v6 SJB CL205-42 B-4 Date of Registration Registered Owner Signature of City Chief Financial Otlicer Grand Central Commons LLC Federal Tax I.D. No. Section 3. Terms. Execution and Delivery. 3.01. Denomination. Payment. The Note shall be issued as a single typewritten note numbered R -1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Pavment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Chief Financial Officer to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The eiIect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person unless the Authority has been provided with an opinion of counsel or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. ( c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur 336985v6 sm CL205.42 B-5 no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. ( e) Persons Deemed Owners. The Authority and thc Registrar may treat the person in whose name the Note is at any time registercd in thc bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all othcr purposes, and all such payments so made to any such registcred owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmcntal charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deli vcr a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the paymcnt of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Notc was lost, stolen, or destroyed, and of the ownership thercof, and upon furnishing to the Registrar of an appropriatc bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be namcd as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Notc shall be prepared under thc direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its Presidcnt and Executive Director. In case any otlicer whose signature shall appear on thc Note shall cease to be such officer before the delivery of the Note, such signature shall nevcrtheless bc valid and suflicient for all purposes, the same as if such officer had rcmained in office until delivery. When the Note has been so executed, it shall be dclivered by the Executive Director to the Owner thereof in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment under the terms and as defined in the Note. Available Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains 336985v6 sm CL205-42 B-6 unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority ilTevocably agrees to appropriate to the Bond Fund in each year all Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon termination of the Note in accordance with its terms. 4.03. Additional Bonds. If the Authority issues any bonds or notes secured by Available Tax Increment, such additional bonds or notes are subordinate to the Note in all rcspects. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorizcd and directed to prepare and furnish to the Owner of the Note certified copies of all proccedings and records of the Authority, and such other affidavits, certificates, and information as may be rcquired to show the facts relating to thc legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts rccited therein. Section 6. Agreement. Efl'ective Datc. This resolution shall be effective upon cxecution of the Adopted this _ day of ,2008. President-Gary L. Peterson Executive Director-Walter R. Fehst 336985v6 SJB CL205-42 B-7 SCHEDULE C CERTIFICATE OF COMPLETION The undersigned hereby certifies that Grand Central Commons LLC (the "Redeveloper") has fully complied with its obligations under Articles III and IV of that document titled "Contract for Private Redevelopment," dated , 2008 between the Columbia Heights Economic Development Authority and the Redeveloper (the "Contract"), with respect to construction of the Minimum Improvements in accordance with the Construction Plans, and that the Redevelopcr is released and forever discharged from its obligations to construct the Minimum Improvcments under Articles III and IV. Dated: ,20_ COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Its Executive Director-Walter R. Fehst STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) On this _ day of ,20_, before me, a Notary Public within and for said County, personally appeared , to me personally known, who, being by me duly sworn, did say that (s)he is the President of the Authority named in the foregoing instrument; that the seal affixed to said instrument is the seal of said Authority; that said instrument was signed and sealed in behalf of said Authority by authority of its governing body; and said acknowledged said instrument to be the free act and deed of said Authority. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) On this _ day of , 20_, before me, a Notary Public within and for said County, personally appeared , to me personally known, who, being by me duly sworn, did say that (s)he is the Executive Director of the Authority named in the foregoing instrument; that the seal atIixed to said instrument is the seal of said Authority; that 336985v6 sm CL205.42 C-l said instrument was signed and sealed in behalf of said Authority by authority of its governing body; and said acknowledged said instrument to be the free act and deed of said Authority. 336985v6 SJB CL205-42 Notary Public C-2 SCHEDULE D INVESTMENT LETTER To the Columbia Heights Economic Dcvelopment Authority (Authority) Attention: Executive Director Re: $_ Tax Increment Revenue Note, Scries 2008B The undcrsigncd, as Purchaser of the above captioned Note (Note) pursuant to a resolution of the Authority adopted on , 2008 (Resolution), hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, Bond Counsel, as follows: 1. We understand and acknowledgc that the Note is delivcred to the Purchaser as of this datc pursuant to the Resolution and the Contract for Private Redevelopment between the Authority and Grand Central Commons LLC dated ,2008 (Contract). 2. The Note is payable as to principal and intercst solely from Available Tax Incrcment as defined in the Note. The Purchascr understands and acknowledges that the Authority makes no reprcsentations or wa\'l'anties regarding the amount of A vailablc Tax Incremcnt, or that revcnues pledged to the Note will bc sufficient to pay the principal and interest on the Note. Any estimates of Tax Incremcnt prepared by thc Authority or its financial advisors in connection with the TIF District, the Note or the Contract arc for the bencfit of the Authority, and are not intended as representations on which the Purchaser may rely. 3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above stated principal amount of the Note. 4. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 5. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Authority, the Note and the security therefor, and that as a reasonable investor we have been able to make our decision to purchase the above stated principal amount of the Note. 6. qualified for We have been informed that the Note (i) is not being registered or otherwise sale under the "Blue Sky" laws and regulations of any state, or under federal 336985v6 sm CL205.42 D-I securitics laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. 7. We acknowledge that neither the Authority nor Kennedy & Graven, Charted has made any representations as to the status of interest on the Note for state or federal income tax purposes. 8. We represent to you that we are purchasing the Note for our own accounts and not for resale or other distribution thereof, except to the extent otherwise provided in the Note or the Resolution. 9. All capitalized terms used herein have the meaning provided in the Contract unless the context clearly requires otherwise. 10. The Purchaser's federal tax identitication number is 11. We acknowledge receipt ofthe Note on the date hereof. GRAND CENTRAL COMMONS LLC By Its Dated: ,2008. 336985v6 sm CL205-42 0-2 SCHEDULE E ASSESSMENT AGREEMENT [I>HASE 11 [PHASE III TI-IlS AGREEMENT, made and entered into as of the day of , 2008 by and between the and the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a Minnesota public body corporate and politic (the "Authority") and GRAND CENTRAL COMMONS LLC, a Minnesota limited liability company (the "Redeveloper"). WITNESSETH: WHEREAS, the Authority and the Redeveloper entered that certain agreement entitled Contract for Private Development dated , 2008 (the "Contract"); and WHEREAS, pursuant to the Contract the Redeveloper is obligated to construct, 01' has construete4; [Phase 11 [Phase III of the Minimum Commercial Improvements (as defined in the Contract) upon the property legally described at Exhibit A hereto (the "Property"); and WHEREAS, the Authority and the Redeveloper desire to establish a minimum market value for the Property and the Minimum[Phase 11 [Phase III of the Commercial Improvements constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the Assessor for Anoka County (the "Assessor") has reviewed the plans and specifications for the Improvements; NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: I. The minimum market value which shall be assessed for the Property described in Exhibit A, together with the Improvementsimnrovements thereon, for ad valorem tax purposes, shall be $ as of January 2, 2010 and each January 2 thereafter, notwithstanding the progress of construction of the Minimum Improvements by such dates. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the Termination Date (as defined in the Contract). 3. Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms ofthe Contract. 4. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 5. Each of the patties has authority to enter into this Agreement and to take all actions required of it, and has taken all actions necessary to authorize the execution and delivery of this Agreement. 336985v6 SiB CL205-42 E-I 6. In the event any provIsIon of this Agreement shall be held invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 7. This Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 8. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 9. This Agreement shall be construed in accordance with the laws of the State of Minnesota. Any dispute arising from this Agreement shall be heard in the state or federal courts of Minnesota, and all parties waive any objection to the jurisdiction thereof, whether based on convenience or otherwise. 336985v6 SJB CL205-42 E-2 IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year tirst above written. THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By: Its: President-Gary 1. Peterson By: Its: Executive Director-Walter R. Fehst STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this _ day of 200_, by and , the President and Executive Director of the Columbia Heights Economic Development Authority, a public body corporate and politic under the laws of the state of Minncsota, 011 behalf of the Authority. Notary Public 3369X5v6 SIB CL205-42 E-3 GRAND CENTRAL COMMONS LLC By: Its: By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of 2008 by and of Grand Central Commons LLC, a Minnesota limited liability company, on behalf of the company. Notary Public This document drafted by: Kelmedy & Graven, Chartered 470 US Bank Plaza Minneapolis, MN 55402 (612) 337-9300 336985v6 sm CL205-42 E-4 EXHIBIT A TO ASSESSMENT AGREEMENT PROPERTY LEGAL DESCRIPTION Outlot C, Grunt Central Lotts, i\noka COImty, Minnesota IInsel't descrintion 1 3369R5v6 sm CL205-42 E-A-l CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, hereby ccrtifies as follows: The undersigned Assessor, being lcgally responsible for the assessment of the above described property, hereby certifies that the values assigned to the land and improvements are reasonable. County Assessor for the County of Anoka STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) The foregoing instrument was acknowlcdged bcfore me this _ day of by , the County Assessor of the County of Anoka. Notary Public 3369H5v6 sm CL205~42 SCHEDULE F PRO FORMA 33698Sv6 sm CL2QS-42 F-l SCHEDULE G SEWER IMPROVEMENTS The design and construction of the sewer improvements referenced below: Date of Plans: Constmction Range: Engineel'ing Company: Pipe Contractor Co.: 336985v6 sm CL205.42 August 25,2008 4 7th Ave. to north leg of 5151 Ct. Humphrey Engineering Michels Pipeline 0-1 SCHEDULE H OTHER INFRASTRUCTURE The design and construction of the improvement referenced in the documents referenced below: Datc of CUI' Plans: City Council Approval: Date of Site Plans: Planning Commission Approval: Planning Contract: 336985v6 SJB CL205-42 May 5, 2008 (Humphrey Engineering) June 9, 2008 May 5, 2008 (Humphrey Engineering) June 3, 2008 September 8, 2008 (approved) H-I SCHEDULE I EASEMENT AND MAINTENANCE AGREEMENT between THE CITY OF COLUMBIA HEIGHTS and GRAND CENTRAL COMMONS LLC for construction, maintenance and use of PARKING RAMP TI-IIS AGREEMENT, made as of this _ day of ,20 , by and between the CITY OF COLUMBIA HEIGHTS, a Minnesota municipal corporation (hereinaftcr the "City") and GRAND CENTRAL COMMONS LLC, a Minnesota limitcd liability company (hereinafter the "Redeveloper"). W IIN E.s..s.EIH: WHEREAS, the Columbia Heights Economic Development Authority (the "Authority) and the Redcveloper have entered into a Contract for Private Redevelopment dated , 2008 (the "Contraet"), and WHEREAS, the capitalized terms used, but not defined, in this Agreement have the meanings given in the Contract; and WHEREAS, the Contract is intended to provide for the construction of the Minimum Improvements by the Redeveloper on the Commercial Property in coordination with the Authority and with the cooperation and assistance of the Authority; and WHEREAS, the Contract provides for the expenditure of public funds for the certain costs related to the Minimum Improvements to assist in the redevelopment of the Commercial Property; and WHEREAS, the Redeveloper has agreed under the Contract to build a Parking Ramp on the Commercial Property in connection with the Minimum Improvements, and to grant a public parking easement in favor of the City regarding such Parking Ramp; and WHEREAS, the Redeveloper has agreed to operate, manage, and maintain the Parking Ramp pursuant to the Contract; and 33698Sv6 sm CL205-42 I-I WHEREAS, the Authority and the Redeveloper deem it to be in their vital interest and in the best interest of the Authority, the Authority and the State of Minnesota and in furtherance of the economic development and redevelopment plan for the Minimum Improvements Area to enter into this Easement and Maintenance Agreement (hereinafter this "Agreement") with the Redeveloper with respect to certain lands included within the Minimum Improvements Area on which the Parking Ramp will be constructed; NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I GRANT OF EASEMENT Section 1.1. Easement Premises - Subject to Section 2.1, the Redeveloper hereby grants and conveys to the Authority a non-exclusive public parking easement (the "Easement") over and across those portions of the Commercial Property upon which the Parking Ramp will be constructed, and in the Parking Ramp, described on Exhibit A, which are situated in the Authority of Columbia Heights, County of Anoka, State of Minnesota (the "Easement Premises"). Section 1.2. Easement Purpose - The Easement is granted for the purpose of vehicular parking, vehicular ingress and egress, and parking-related pedestrian traffic over and across the Easement Premises. Section 1.3. Releases and Reservations (a) The Redeveloper reserves in, over, under, above, across and upon the Easement Premises the right to use the Easement Premises for any and all uses and purposes provided that such use does not obstruct or materially interfere with the intended purpose of the Easement, including without limitation: (i) the right of support for the Minimum Improvements; (ii) the right of access for ingress and egress through the Easement Premises; (iii) the right to bring utilities, materials, and other facilities through the Easement Premises; (v) the right to grant easements in, over, under and across the Easement Premises for the purpose of installation, use and operation of utilities; (vi) the right to perform all construction, maintenance and repair of the Parking Ramp and adjoining improvements; and 336985v6 sm CL205-42 1-2 (vii) with prior consent by the City, the right to enter into licenses, or leases or other agreements (collectively, "Commercial Parking Agreements") with owners or tenants of the Commercial Improvements within the Commercial Property, providing for use of the Parking Ramp or specified portions thereof for use by customers of such owners or tenants; provided that in no event shall Commercial Parking Agreements materially impair or interfere with use by the general public of the Park Ramp for its intended purpose. (b) The Redeveloper must repair any damage to the Parking Ramp caused by construction of the Minimum Improvements and minimize the extent and duration of any interference with the easement rights granted herein. ( c) Upon request by the Redeveloper, the City must execute and deliver instruments to evidence the Redeveloper's reservation of rights under sections (a), however execution of such instruments is not necessary to effect the reservations in this Section. ARTICLE II TERM Section 2.1. Term - This Easement will becomc effective upon Redeveloper's receipt of a Certificate of Completion for the Parking Ramp in accordance with the Contract. This Easement will be perpetual. ARTICLE III UTILITIES Section 3.1. Utilitv Charges - The Redeveloper will pay, or cause to be paid, when the same become due, all charges for water, sewer usage, gas, electricity, power, heat, telephone, or other communications service and any and all other utility or similar services used, rendered, supplied, or consumed in, upon, at, from, or in connection with the Easement Premises, or any part thereo f. ARTICLE IV TAXES AND ASSESSMENTS Scction 4.1. Pavment of Taxes and Assessments - The Redeveloper must pay, or cause to be paid, before becoming delinquent, all real estate taxes, charges, assessmcnts, and levies, assessed and levied by any governmental taxing authority against the Easement Premises. Nothing contained in this Agreement requires the Redeveloper to pay any franchise, estate, inheritance, excise, succession, capital levy, or transfer tax of the City or any income, excess profits or revenue tax payable by the City under this Agreement. The Redeveloper has the right and option, at any time but solely at the Redeveloper's expense, to pay any real estate taxes or 336985v6 sm CL205-42 1-3 assessments in installments or under protest or in a similar manner, or to contcst the levy or amount of the same in appropriatc legal or administrativc procecdings. ARTICLE V USE OF EASEMENT PREMISES Section 5.1. Construction of Parking Ramp - Thc Developer shall construct the Parking Ramp in accordancc with all terms and conditions of the Agreement. Section 5.2. Liens - The Redeveloper will not permit any mechanic's or materialmen's liens to stand against the Easement Premises on account of improvements authorized by the Redeveloper, provided, however, that the Redeveloper may in good faith and at its expense contest any such lien in which event such lien may remain undischarged and unsatisficd during the contest and any appeal, provided the Redcveloper files a bond or deposits cash or other reasonable security in the amount of such lien with the court or with a mortgagee of the Easemcnt Premises or with the City to secure the payment of such lien if tinally determined to be valid. Section 5.3. Legal and Regulatory Compliance; Control ofPremiscs - Thc Redeveloper must operatc and maintain the Parking Ramp on the Easement Premises for public use in accordance with all applicable govcrnmentallaws, ordinances, regulations and orders pertaining to Parking Ramp generally from timc to timc. Subject only to thc express provisions of this Agreement and the Planning Contract, the Redeveloper will have full authority and control over the management, operation, and use of the Eascment Premises. Scction 5.4. No Fees - The Easement Premises must be open to the public for public usc without charge or fee. Section 5.5. Hours of Operation, Rules and Regulations - The Redeveloper must establish reasonable hours of operation, rules, and regulations as it deems advisable, necessary, or appropriate for the safe, cfficient, and ordcrly use of the Parking Ramp, subject to prior City approval. Section 5.6. Contractors - The Redeveloper may engage such employees, agents, or independent contractors as it may deem advisable to conduct the management, repair, maintenance, and operation of the Easement Premises from time to time. Redeveloper may make all decisions and execute all agreements, in its sole discretion, with respect to the Parking Ramp so long as such decisions and agreements do not violate any provisions in this Agreement or the Planning Contract. Section 5.7. No Waste or Damage - Neither the City nor the Redeveloper may knowingly or willfully commit or suffer to be committed any waste or damage in or upon the Easement Premises, or any distigurement or injury to any Parking Ramp. The Redeveloper in its use and occupancy of the Easement Premises, may not knowingly and willfully commit or suffer to be committed any act or thing which constitutes a nuisance or interferes with the public use and enjoyment of the Parking Ramp. Usual and normal wear and tear, damage by the elements, 336985v6 SJI3 CL20S-42 1-4 unavoidable casualty or depreciation and diminution over time will not be considcred "waste," "nuisance," Hdmnage, "disfigurement," or "injury." ARTICLE VI INDEMNIFICATION, INSURANCE Section 6.1. Property Insurance - The Redeveloper, at its sole cost and expense, must keep all Parking Ramp, and all alterations, extensions, and improvements thereto and replacements thereof, insured against loss or damage by fire and against those casualties covered by extended coverage insurancc and against vandalism and malicious mischief and against such other risks, of a similar or dissimilar nature, as are customarily covered with respect to buildings and improvements similar in construction, general location, use, and occupancy to the Parking Ramp. Such policy of insurancc will affirmatively include the lull replacement cost mcasure of recovery. Section 6.2. Personal Property - All property of evcry kind and character which the Redeveloper may keep or store in, at, upon, or about the Easement Premises will be kept and stored at the sole risk, cost, and expense of the Redeveloper. Section 6.3. Indemnification of thc City- (a) The Redeveloper releases and covcnants and agrees that the City shall not be liable for and agree to indemnify and hold harmless the City Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Parking Ramp constructed by the Redevcloper to the extent not attributable to the negligence of the City Parties. (b) Except for negligence of the City Parties, the Redeveloper agrees to indemnify the City Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including rcasonable attorney's fees), actions or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Redeveloper (or if other persons acting on their behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements and Public Infrastructure Improvements constructed by the Redevelopcr. (c) The City in no way waives its right to statutory liability caps under Minnesota Statutes, Section 466.04, as amended. The Redeveloper's liability to the City equals, but does not exceed, the City's statutory liability limits under Minnesota Statutes, Section 466.04, as amended. (d) This provision will survive termination of this Agreement. Section 6.4. Liability Insurance - The Redeveloper, and any successor in interest to the any Redeveloper, shall obtain and continuously maintain insurance on the Parking Ramp and, ii'om time to time at the request of the Authority, furnish proof to the City that the premiums for 336985v6 sm CL205.42 1-5 such insurance have been paid and the insurance is in effect. The Redeveloper must procure and maintain continuously in effect (or cause the same to occur), policies of insurance of the kind and minimum amounts as are customarily maintained with respect to Parking Ramp and, to be reviewed from time to time by the parties, such policies must meet the minimum requirements set forth in Minnesota Statutes Section 466.04, and must further include the following: (a) Insurance against liability for injuries to or death of any person or damage to or loss of property arising out of or in any way relating to the condition of the Parking Ramp. Such insurance must provide that the City is an additional insured. (b) To the extent reasonably available, insurance coverage with respect to the indemnification expressed in Section 6.3 hereof. Section 6.5. General Insurance Requirement - All insurance required in this Agreement must be placed with financially sound and reputable insurers licensed to transact business in the State of Minnesota. The Redeveloper must furnish to the City policies evidencing all such insurance or a certificate or certificates of the respective insurers stating that such insurance is in force and dTect. Each policy of insurance herein required must contain a provision that the insurer may not cancel it without giving written notice to the City at least thirty (30) days before the cancellation becomes effective. All policies or certificates of insurance will be approved reasonably as to form and content by the City. The insUl'ance coverage herein required may be provided by a blanket insurance policy or policies. Section 6.6. No InsUl'ance Obligation of Citv - At no time and under no circumstances will the City be required to take out, maintain in force and effect, or pay for any type of insurance coverage with reference to the protection of and/or ownership of and/or occupancy of and/or a suit relating to the Easement Premises and/or any improvements hereafter located thereon. ARTICLE VII ASSIGNMENT, SUBORDINATION Section 7.1. Assigru11ent bv the City - The City may not assign or transfer its interest under this Agreement without the prior written consent of the Redeveloper. Section 7.2. Assignment by Redeveloper - The Redeveloper may not assign or otherwise transfer its interest under this Agreement, except (i) to whomever becomes a permitted assignee of the Redeveloper under the Agreement, (ii) to any lender holding a mortgage on or interest in the Easement Premises, and (iii) assignment of the Redeveloper's maintenance obligation to extent permitted in Section 8.2 herein. The City will recognize and accept any successors or assigns of Redeveloper. 336985v6 sm CL205-42 1-6 ARTICLE VIII MAINTENANCE OF THE EASEMENT PREMISES Section 8.1. Maintenance - The Redeveloper, at its cost and expensc, must keep and maintain all of the Easement Premises in good condition and repair. It is distinctly understood that the preceding does not require maintenance and/or repair of the Easement Premises and/or improvements hereinafter erected thereon in perfect condition or is a condition equal to new at all times, but the Redeveloper must keep and maintain the same in such condition as to minimize, so far as is practicable, by reasonable care, maintenance, replacement, and repair, the effects of use, decay, injury, and destruction of the Easement Premises or any part thereof: the City recognizing that depreciation and diminution by reason of age, use, and environmental factors is unavoidable and expected. However, notwithstanding anything herein to the contrary, it shall be the obligation of the Redeveloper to maintain, repair and operate the Parking Ramp in a condition which is safe, operation and in accordance with all government agreements. Section 8.2. Assignment of Maintenance Obligations - The Redeveloper may assign its maintenance obligations under Section 8.1 to a third party, including an association of property owners, provided that (l) such third party is determined by the City to have fInancial resources adequate to fund the Redeveloper's obligations under this Agreement and (ii) such third party and the City have entered into a signed agreement requiring the third party to be bound by the terms of this Agreement, in which event the Redeveloper will be released from further liability with respect to such assigned obligations. Section 8.3. No Obligation of the Citv to Repair or Maintain - The City will have no obligation of any kind, expressed or implied, to repair, rebuild, restore, reconstruct, modify, alter, replace, or maintain the Easement Premises or any part thereof. Section 8.4. Entry bv Citv -The City may, after notice and opportunity to cure, enter onto the Easement Premises to repair and maintain the Parking Ramp within the Easement Premises if the City determines, in its sole discretion, that performance of such repairs and maintenance is necessary (i) to cure any default hereunder or (ii) to protect public health, welfare and safety; provided, however, that in case of emergency or failure of Redeveloper to maintain the Parking Ramp sufficiently to protect the public health and safety, the Easement Premises are subject to entry without notice and at any time, by City or its authorized employees and/or agents and/or by any public safety personnel to perform such maintenance or repairs as City may deem necessary in its sole discretion. The City will submit an invoice for the costs incurred for such maintenance or repairs to the Redeveloper. If the Redeveloper has failed to make payment on the invoice within 60 days, the City will have the right to assess the costs incurred by the City to all or any portion of the Minimum Improvements Area as a service charge pursuant to Minnesota Statutes, Section 429.101, or any successor statute. By execution of this Agreement, the Redeveloper is agreeing to such an assessment for maintenance and repair costs, agreeing that the Minimum Improvements Area assessed for such service charges is benefited thereby, and waiving any rights the Redeveloper or a third party may have to object to an assessment of such service charges, including any rights of appeal under Minnesota Statutes, Chapter 429. 336985v6 SJB CL205-42 1-7 Section 8.5. Destruction - In the event that thc Parking Ramp on the Easement Premises are destroyed by tire or other casualty, and subject to a determination by any lender holding a mortgage on the Easement Premises, the Redeveloper will rcbuild or reconstruct the Parking Ramp to the extent insurance procecds are available or, in the event insurance proceeds are not sufficient to reconstruct the entire Parking Ramp, to the cxtent insurance proceeds combined with any contributions by the Redeveloper toward reconstruction are available. If the Redeveloper rebuilds or reconstructs the Parking Ramp, the proceeds from any and all insurance policies covering risks against loss or damage must be used to rcbuild or reconstruct. ARTICLE IX EMINENT DOMAIN Scction 9.1. Condemnation - If the Easement Premises arc taken, acquired, or condemned by eminent domain for any public or quasi-public use or purpose, then the Redeveloper, at any time within sixty (60) days next aftcr it has actual notice of such proposed acquisition or condemnation, will have the option to (i) cancel and terminate this Agreement as of the date of vesting of title in the condemning authority of the acquired or condemned property, or to (ii) continue this Agreement as to the remaining part of the Easement Premises not so taken or threatened to be taken. The Redeveloper may exercise one of the foregoing options by giving the City written notice of the exercise thereof within the foregoing sixty (60) days' period, and in the event Redeveloper fails or refuses, for any reason, so to furnish the City written notice of the exercise thereof within the time and in the manner herein provided, then this Agreement will continue in full force and effect under option (ii) above. ARTICLE X DEFAULT AND TERMINATION Section 10.1. Default bv the City - If the City fails to pcrform any of its obligations under this Agreement, and fails to cure such default after thhiy (30) days' written notice of such default, or, if such default cannot reasonably be cured within such thirty (30) days, fails to commence curative action and thereafter diligently complete the same, then in such case the Redeveloper may dcclare the termination of this Agreement and re-enter and take possession of the Easement Premises. In such case, or at such time as this Agreement is terminated pursuant to Section 2.1 hereof, thc City agrees to execute and deliver to the Redeveloper a written termination of this Agreement in recordablc form, which termination agreement will be filed in the official records of Anoka County, Minnesota. In addition, the Redeveloper may exercise all remedies available to it at law or equity. Section 10.2. Default bv Redeveloper - If the Redeveloper fails to perform any of its obligations under this Agreement, and fails to cure such default after thirty (30) days' written notice of such default or, if such default cannot reasonably be cured within such thirty (30) days, fails to commence curative action and thereafter diligently complete the same, then in such case, the City may cure such default on behalf of the Redeveloper and Redeveloper consents to pay to the City any and all such sums as are due and owing on account thereof City will submit a statement to Redeveloper evidencing the costs incurred to cure such default. If Redeveloper has 336985v6 sm CL205-42 1-8 failed to make payment in aeeordanee with the statement within 60 days after reeeipt thereof, City will have the right to assess the eosts ineurred by City to all or any portion of the Minimum Improvements Area as a serviee eharge pursuant to Minnesota Statutes, Seetion 429.101, or any sueeessor statute. In addition, the City may exereise all remedies available to it at law or equity. ARTICLE XI SURRENDER Seetion 11.1. Surrender - Upon any termination of this Agreement, the City will surrender the Easement Premises to the Redeveloper, including without limitation any and all buildings, improvements, and fixtures then upon the Easement Premises, and all buildings, improvements, struetures, fixtures, alterations, and other additions whieh may be made or installed by or at the instance of either party hereto, in, upon, or about the Easement Premises will become the property of Redeveloper upon any termination and will be surrendered to the Redeveloper by the City without any payment therefor. ARTICLE XII MISCELLANEOUS Section 12.1. Waiver - The waiver by any party hereto of any breach or default of any provisions anywhere contained in this Agreement does not eonstitute a waiver of any subsequent breaeh or default thereof. No provision of this Agreement is waived unless such waiver is in writing and signed by the party charged with any such waiver. Section 12.2. Amendments - Except as otherwise herein provided, no subsequent alteration, amendment, change, waiver, discharge, termination, deletion, or addition to this Agreement will be binding upon either party unless in writing and signed by both parties. The Redeveloper and the City agree to join in and consent to amendments to this Agreement, to the extent sueh amendments are reasonably required by the Redeveloper's lenders; provided, however, that the Redeveloper and the City will not be required to enter into sueh amendments if the amendments do not adequately protect the legitimate interest and security of the Authority or the City with respect to the Projeet as defined in the Contract. Section 12.3. Joinder: Permitted Encumbrance - Except for the Consent and Subordinations attached hereto, if any, this Agreement does not require the joinder or approval of any other person and each ofthe parties respectfully has the full, unrestrieted and exclusive legal right and power to enter into this Agreement for the term and upon the provisions herein recited and for the use and pUl'poses hereinabove set forth. This Agreement will constitute a permitted encumbrance under any loan agreement heretofore or hereafter entered into between the Redeveloper and any construction or permanent lender. 336985v6 sm CL205.42 1-9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CITY OF Minnesota COLUMBIA HEIGl-ITS, a municipal corporation By: Its: Mayor-Gary L. Peterson By: Its: City Manager-Waiter R. Fehst 336985v6 sm CL205-42 1-10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. GRAND CENTRAL COMMONS LLC, a Minnesota limited liability company By: Its 336985v6 SIB CL205-42 1- 11 STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of , 200_, by and , the and , respectively, of the CITY OF COLUMBIA HEIGHTS, a Minnesota municipal corporation, on behalf of the corporation. Notary Public My Commission Expires] 336985v6 SJI3 CL205*42 1-12 ST ATE OF MINNESOTA) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of , 200_, by , the of GRAND CENTRAL COMMONS LLC, a Minnesota limited liability company, on behalf of the company. Notary Publie My Commission Expires This Instrument was drafted bv and when recOI'ded should be returned to: Kennedy & Graven (SJB) 470 South Sixth Street Minneapolis, Minnesota 55402 336985v6 8m CL20S-42 1-13 336985v6 SJ13 CL205-42 EXHIBIT A DESCRIPTION OF EASEMENT PREMISES I-A-I CONSENT AND SUBORDINATION The undersigned, , a , holder of (i) that certain [Mortgage] (the "Mortgage"); and (2) that certain [Assignment of Leases and Rents] (the "Assignment"), hereby consents to the foregoing Easement and Maintenance Agreement (the "Easement Agreement"), and hereby subjects and subordinates the Mortgage and the Assignment and all of its right, title and intcrest in the Easement Prcmises to the Easement Agreement. Nothing in this Consent and Subordination may be construed to impose on the undersigned any obligation created by the Easement Agreement, unless and until the undersigned has acquired fee title to property burdened by the Easement Agreement. ], a By: Printed Name: Title: COUNTY or ) ) ss. ) STATE OF The foregoing instrument was acknowledged before me this _ day of 200 , by , the of , on behalf of the , a (Signature of Person Taking Acknowledgment) This Instrument was drafted bv and when .'ecorded should be returned to: Kennedy & Graven (SJB) 470 South Sixth Street Mitmeapolis, Minnesota 55402 336985v6 sm CL205-42 I-A-2