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HomeMy WebLinkAbout2012-06-04 Regular Meeting PacketCity of Apple Va lev NOTICE: The Apple Valley Economic Development Authority will hold a special meeting at the Municipal Center, on Monday, June 4, 2012, at 3:30 p.m. to consider the items listed in the following agenda: ECONOMIC DEVELOPMENT AUTHORITY MEETING TENTATIVE AGENDA JUNE 4, 2012 3:30 P.M. 1 Call to Order. 2. Approval of Agenda. 3 Approval of Minutes of May 7, 2012. 4. Adopt Resolution Authorizing Execution of a Development Assistance Agreement with SPOWD Developments LLC. 5. Adopt Resolution Authorizing Development Assistance Agreement for AV 147 Properties, LLC for 7600 — 147 Street W. 6 Authorization to Secure Business Assistance through Metropolitan Consortium of Community Developers (MCCD) and Dakota County CDA. 7. Discuss Skyway at 147 Street and EDA Role. 8. Discuss IMH Development Proposal for Legacy/Central Village, MOU. 9. Project Updates. 10. Other items. 11. Adjourn. (Agendas are also available on the City's Internet Web Site http://www.cityofapplevalley.org) ECONOMIC DEVELOPMENT AUTHORITY City of Apple Valley Dakota County, Minnesota May 7, 2012 Minutes of the special meeting of the Economic Development Authority of Apple Valley, Dakota County, Minnesota, held May 7, 2012, at 3:00 o'clock p.m., at Apple Valley Municipal Center. PRESENT: President Severson, Commissioners Bergman, Goodwin, Grendahl, Hamann- Roland, and Hooppaw. ABSENT: City staff members present were: City Attorney Dougherty, Associate City Planner Bodmer, Associate City Planner Dykes, Finance Director Hedberg, City Planner Lovelace, Community Development Director Nordquist, and Department Assistant Murphy. APPROVAL OF AGENDA Meeting was called to order at 3:07 p.m. by President Severson. MOTION: of Hamann-Roland, seconded by Grendahl, approving the agenda for today's meeting as presented. Ayes - 5 - Nays - 0. APPOINTMENT OF OFFICERS MOTION: of Hamann-Roland, seconded by Grendahl, adopting Resolution No. EDA-12-1 appointing 2012 officers of the Economic Development Authority as: President — Severson, Vice-President — Goodwin, Secretary — Gackstetter, Treasurer — Hooppaw, and Assistant Treasurer — Gackstetter. Ayes - 5 - Nays - O. APPROVAL OF MINUTES MOTION: of Hooppaw, seconded by Goodwin, approving the minutes of the special meeting of April 26, 2012, as written. Ayes - 5 - Nays - 0. CONTINUE PUBLIC HEARING: AUTHORIZE BUSINESS ASSISTANCE POLICY Continued the public hearing at 3:09 p.m. Closed the public hearing at 3:10 p.m. MOTION: of Goodwin, seconded by Hamann-Roland, adopting Resolution No. EDA-12-3 amending business subsidy policy, now referred to as the "Business Assistance Policy". Ayes - 5 - Nays - 0. Associate Planner Margaret Dykes provided an overview and history of the Business Subsidy policy. The City Council and EDA adopted the Business Subsidy policy in 2000. The policy was amended to deal with additional changes in State law in 2003 and has not been amended since. She reviewed the policy amendments. Economic Development Authority City of Apple Valley Dakota County, Minnesota May 7, 2012 Page 2 Discussion followed. Commissioner Bergman arrived at 3:11 p.m. AUTHORIZE TAX INCREMENT FINANCING (TIF) POLICY Ms. Dykes stated the City began using Tax Increment Financing (TIF) as an economic development tool in 1982 and the EDA adopted a TIF policy in 1988. The policy was amended and responsibility was transferred from the City Council to the EDA in 1990. The policy has not been changed since then. She provided a synopsis of the current policy and policy amendments. Discussion followed. MOTION: of Hamann-Roland, seconded by Hooppaw, adopting Resolution No. EDA-12-4 approving the amendments to the Economic Development Authority's Tax Increment Financing policy. Ayes - 6 - Nays - 0. MASTER DEVELOPMENT DISTRICT AND ESTABLISHMENT OF TIF DISTRICT 14 Finance Director Ron Hedberg introduced the amendments to the Master Development District requesting establishment of a new Tax Increment Financing (TIF) District, Number 14. The Master Development District should be amended to include any new districts that are contemplated. He stated this amendment would modify the boundaries. Discussion followed. MOTION: of Goodwin, seconded by Hamann-Roland, adopting Resolution No. EDA-12-5 approving amendments to the Master Development Program for Master Development District, Tax Increment Financing Amendments and the Establishment of Tax Increment Financing District No. 14 and Approving the Tax Increment Financing Plan therefore. Ayes - 6 - Nays - 0. BLUEWATER CAPITAL MANAGEMENT II, aka WISE AQUATIC FACILITY Ms. Dykes provided an overview of the project analysis located at 5885 — 149th Street W. The facility is located in a commercial area with high visibility or in an existing industrial park. It is likely to have a positive "snowball" effect on neighboring businesses. She stated it is part of an overall expansion project or a significant reinvestment in a building with a history of high vacancy rates and would improve usability and structural integrity of an older commercial building. It would address safety of employee and customers and would allow new businesses to occur that create jobs in Apple Valley, including both construction and permanent jobs. Discussion followed. Economic Development Authority City of Apple Valley Dakota County, Minnesota May 7, 2012 Page 3 MOTION: of Hooppaw, seconded by Hamann-Roland, adopting Resolution No. EDA-12-6 approving development agreement for Bluewater Capital Management II, LLC, to provide $149,900 for construction costs at Wise Aquatic Facility, 5885 — 149th Street W. Ayes - 6 - Nays - 0. SHERVOSS COMPANY, INC., DEVELOPER OF AMERICINN AND OLD CHICAGO HOTEL, RESTAURANT AND CONFERENCE CENTER Finance Director Ron Hedberg stated the EDA was asked to authorize the execution of a certificate of completion for the development agreement with Shervoss Company, Inc. The Shervoss Company entered into a development agreement for the construction of a 64 unit hotel (the AmericInn Hotel), a restaurant (Old Chicago) and conference center/banquet facility in 1995. The current owner is seeking action from the EDA indicating that they have completed the improvements as called for in the agreement. MOTION: of Bergman, seconded by Grendahl, adopting Resolution No. EDA-12-2 authorizing the execution of a Certificate of Completion for the development agreement with Shervoss Company, Inc. Ayes - 6 - Nays - 0. r T1 V A 'T`TT r lk - 1 - 1 A A x TT T A T ,C1T) 9' A le Tr1 T) 17 CNT TT7 CirT STM AT) TTD c T T TT) 11 TTKT1I ' V1 T A T UIVEI 1 fil‘ ivir IA IN IN U ult. 1 JAIN IvE,y urio 1 1 ivirdiviDEJN.,_31 _PUGIN 11 v V PAL. Community Development Director Bruce Nordquist delivered an overview of GREATER MSP and their annual report. He stated that with Apple Valley's reported population of 49,084, it only requires a $10,000 contribution to renew the membership. MOTION: of Goodwin, seconded by Hamann-Roland, authorizing payment for the annual membership to GREATER MSP to be paid with EDA funding in the amount of $10,000. Ayes - 6 - Nays - 0. LEGISLATIVE AND PROJECT UPDATES Mr. Nordquist stated HF 2337 was vetoed by Governor Dayton. The Honorable Julianne E. Ortman, Chair of the Senate Tax Committee, was hopeful the bill will come up again in discussion. It needs to go back to the House Conference Committee. The lease for Steam Global has been reviewed and they have received amazing attention from DEED. Mr. Nordquist updated the Commissioners on the Station Stops on Cedar Avenue. He stated that the Metropolitan Council and Dakota County got the message that the City of Apple Valley wants the skyway. Economic Development Authority City of Apple Valley Dakota County, Minnesota May 7, 2012 Page 4 MOTION: of Grendahl, seconded by Hooppaw, to adjourn. Ayes - 6 - Nays - 0. The meeting was adjourned at 4:18 p.m. Respectfully Submitted, Approved by the Apple Valley Economic Development Authority on City of Apple Valley MEMO Finance Department TO: Economic Development Authority, and Tom Lawell, Executive Director FROM: Ron Hedberg, Finance Director DATE: May 29, 2012 SUBJECT: Adopt Resolution Authorizing Execution of Development Assistance Agreement with SPOWD Developments, LLC Introduction The Economic Development Authority (EDA) is asked to authorize the execution of a development assistance agreement SPOWD Developments LLC. The EDA and the City Council recently created a new Tax Increment Financing (TIF) District, number 14. SPOWD Developments is proposing to develop 21 acres that comprises TIF 14. Staff has been negotiating with SPOWD Developments, LLC (represented by Hebert and Associates) for assistance with their project in the Apple Valley Business Campus, the area adjacent to the 147 St extension project, east of Flagstaff and west of Johnny Cake Ridge Road. The timing of this ro'ect is expected to begin along with the anticipated construction of 147 St between p J p � g p Flagstaff and Johnny Cake. The significant issues in the negotiation was obtaining the easement required for the lowering of the pipeline along with the assessments, the development agreement provides the City with this easement. Discussion: This development agreement and the new TIF District No. 14 would include the development of 21 acres, which will be comprised of two separate phases including four buildings, totaling 200,000 square feet of office/ show room/ warehouse. The total development costs are estimated to be $13,930,000. The assistance requested by the developer is to offset the anticipated special assessments related to the construction of 147 St and Felton Court. Felton Court would be constructed during the first p hase of the project and would serve only the four properties ultimately constructed on the site. 147 Street, Flagstaff to Johnny Cake, would be completed and serve as the Ring Route connection. Because of the site layout and the plans by the developer to construct the northern two buildings first it is necessary to construct both Felton Court and 147 Street at the same time. The property owned by SPOWD Development and is encumbered by an agreement between the City and the property owner that calls for the City to construct 147 street by 2015 and in turn calls for the assessment of the road costs to be levied against the SPOWD Development parcels. The agreement also called for the costs to be assessed for the portion of the assessable cost related to the Magellan parcel against the SPOWD Development parcel. EDA and Executive Director Authorize Execution of Development agreement with SPOWD Developments May 29, 2012 Page 2 The agreement caps the special assessment amounts for 147 Street at $900,000 plus estimated financing costs and interest with an associated bond issue to finance this portion of the project. In addition to the cost for 147 the cost for Felton Court (formerly referred to as Flagstaff Ct.) is approximately $800,000, for a total of $1,700,000 in road costs. The attached proforma shows that the costs for 147 Street would be assessed and the costs for Felton Court would be financed by the developer. The developer has requested that the repayment of the special assessments be structured around the timing of the Tax Increments that would be generated from the project, this results in the inclusion of capitalized interest of $32,000 in the financing costs. The developer would be reimbursed TIF eligible costs through the mechanism of a TIF developer note, and any repayments would be restricted to the available increment generated and assuming full development would generate approximately $1,931,000 towards reimbursement of eligible costs. The development agreement includes a pay as you go TIF district, with the costs incurred secured by the property in the form of a special assessment levied against the property. The available increment would be the amounts generated from the project less 10% to provide for administrative costs incurred by the City and the amounts deducted by the State Auditor. Based on the initial values of the development of $70 per square foot for phase I and $73.50 for phase II the project as contemplated would generate tax increment of approximately $1,079,000 on the first phase and $853,000 in the second phase, a total of $1,932,000, assuming both phases are completed. The first phase of the project would commence in early 2012 and the second phase would be in 2014. Recap of SPOWD Developments costs associated with the construction of 147 and Felton Ct: Tax Increment Generated Project Costs: 147 Street Felton Court Assessment Financing costs Total Assessment Costs Remaining Gap between Developer Request and Revenues Generated from the Project Phase I Phase II Total $ 1,079,000 $ 853,000 $ 1,932,000 (900,000) -0- ( 900,000) -0- 800,000- ( 800,000) ( 180,000) -0- ( 180,000 (1,080,000) 53,000- ( 1,880,000) (1,000) 53,000 52,000 Because of the timing of the road construction and the timing of each of the phases there remains a risk of the development occurring within a time frame that generates resources to cover the project costs. For example, if only phase I is completed none of the costs for Felton Ct. would be reimbursed and if the phase II construction is delayed the district would not cover the full principal portion of the TIF note. This risk has been mitigated to an acceptable level for SPOWD Developments, LLC. EDA and Executive Director Authorize Execution of Development agreement with SPOWD Developments May 29, 2012 Page 3 Staff Recommendation Staff recommends the adoption of the attached resolution authorizing the execution of a Development Assistance Agreement with SPOWD Developments, LLC. Action Requested: Adopt Resolution authorizing the execution of a Development Assistance Agreement with SPOWD Developments, LLC. EXTRACT OF MINUTES OF MEETING OF THE BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA HELD: , 2012 Pursuant to a meeting of the Board of Commissioners of the Apple Valley Economic Development Authority, Dakota County, Minnesota, was held at the Apple Valley Municipal Center in the City of Apple Valley, Minnesota (the "City") on , the day of 1, 2012, at :00 o'clock .m. The following members were present: and the following were absent: Member adoption: 4580034v1 introduced the following resolution and moved its RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT ASSISTANCE AGREEMENT A. WHEREAS, SPOWD DEVELOPMENTS LLC (the "Developer") has requested that the Apple Valley Economic Development Authority, Minnesota (the "EDA") assist with the financing of certain costs incurred in connection with the construction and equipping of two Industrial 1-2 warehouse/office buildings to be constructed by the Developer (the "Project"). B. WHEREAS, the Developer and the EDA have determined to enter into a Development Assisstance Agreement providing for the EDA's tax increment financing assistance for the Project (the "Development Agreement"). NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Apple Valley Economic Development Authority, Minnesota, as follows: 1. The Board hereby approves the Development Agreement in substantially the form submitted, and the President and Secretary are hereby authorized and directed to execute the Development Agreement on behalf of the EDA. 2. The approval hereby given to the Development Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the EDA officials authorized by this resolution to execute the Development Agreement. The execution of the Development Agreement by the appropriate officer or officers of the EDA shall be conclusive evidence of the approval of the Development Agreement in accordance with the terms hereof. The motion for adoption of the foregoing resolution was duly seconded by member and, after full discussion thereof, and upon a vote being taken thereof, the following voted in favor thereof: and the following voted against same: whereupon said resolution was declared duly adopted. Adopted this day of , 2012 by the Apple Valley Economic Development Authority Board of Commissioners. Attest: 4580034v1 Secretary 2 President STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF APPLE VALLEY I, the undersigned, being the duly qualified and acting Secretary of the Apple Valley Economic Development Authority, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the Board of Commissioners held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Authorizing Execution of a Development Agreement. WITNESS my hand as such Secretary of the Board of Commissioners of the Apple Valley Economic Development Authority, Minnesota this day of , 2012. 4580034v1 3 Secretary APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA AND SPOWD DEVELOPMENTS LLC This document drafted by: 4532952v5 DEVELOPMENT ASSISTANCE AGREEMENT BY AND BETWEEN BRIGGS AND MORGAN (MLI) Professional Association 2200 First National Bank Building St. Paul, Minnesota 55101 ARTICLE I Section ARTICLE II Section Section ARTICLE III Section Section Section Section Section Section ARTICLE IV Section Section Section Section Section Section ARTICLE V Section Section Section ARTICLE VI Section Section Section Section Section Section Section Section Section EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D 4532952v5 Table of Contents DEFINITIONS 2 1.1. Definitions 2 REPRESENTATIONS AND WARRANTIES 4 2.1. Representations and Warranties of the Authority 4 2.2. Representations and Warranties of the Developer 4 UNDERTAKINGS BY DEVELOPER AND CITY 6 3.1. Project and Reimbursement Amount 6 3.2. Reimbursement: Tax Increment Revenue Note 6 3.3. Public Improvements 7 3.4. Real Property Taxes 3.5. Business Subsidies Act 8 3.6. Prohibitions Against Assignment and Transfer 9 EVENTS OF DEFAULT 11 4.1. Events of Default Defined 11 4.2. Remedies on Default 11 4.3. No Remedy Exclusive 12 4.4. No Implied Waiver 12 4.5. Agreement to Pay Attorney's Fees and Expenses 12 4.6. Indemnification of City 12 DEVELOPER'S OPTION TO TERMINATE AGREEMENT 14 5.1. The Developer's Option to Terminate 14 5.2. Action to Terminate 14 5.3. Effect of Termination 14 ADDITIONAL PROVISIONS 15 6.1. Restrictions on Use 15 6.2. Conflicts of Interest 15 6.3. Titles of Articles and Sections 15 6.4. Notices and Demands 15 6.5. Counterparts 16 6.6. Law Governing 16 6.7. Expiration 16 6.8. Provisions Surviving Rescission or Expiration 16 6.9. Assignability of Agreement 16 Description of Development Property A-1 Form of TIF Note B-1 Public Improvements C-1 Street Improvements D-1 1 Page THIS AGREEMENT, made as of the day of , 2012, by and between the Apple Valley Economic Development Authority, Minnesota (the "Authority"), a body corporate and politic, organized and existing under the laws of the State of Minnesota and Spowd Developments LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: DEVELOPMENT ASSISTANCE AGREEMENT WHEREAS, pursuant to Minnesota Statutes, Section 469.124 to 469.134, the City of Apple Valley, Minnesota (the "City") has heretofore established the Apple Valley Master Development District (the "Development District") and has adopted a development program therefor (the "Development Program"); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1799, as amended (hereinafter, the "Tax Increment Act"), the City has heretofore established, within the Development District, Tax Increment Financing District No. 14 (the "Tax Increment District") and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with certain development within the Development District; and WHEREAS, in order to achieve the objectives of the Development Program and particularly to make the land in the Development District available for development by private enterprise in conformance with the Development Program, the Authority has determined to authorize and issue a tax increment financing note as set forth herein to assist the Developer with the financing of certain costs of a Project (as hereinafter defined) to be constructed within the Tax Increment District as more particularly set forth in this Agreement; and WHEREAS, the Authority believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the Authority, the health, safety, morals and welfare of residents of the Authority, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, apply to this Agreement; and WHEREAS, the Authority has adopted criteria for awarding business subsidies that comply with the Business Subsidy Law, after a public hearing for which notice was published; and WHEREAS, the Authority's Board of Commissioners has approved this Agreement as a subsidy agreement under the Business Subsidy Law; 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: 4532952v5 ARTICLE I DEFINITIONS Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Authority means the Apple Valley Economic Development Authority, its successors and assigns; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the Authority are authorized by law or executive order to close; City means the City of Apple Valley, Minnesota; Commencement of Construction means the issuance of all building permits and any other permits the Authority requires for construction of the Project and commencement of physical construction of the Project on the Development Property; County means Dakota County; Developer means Spowd Developments LLC, its successors and assigns; Development District means the real property included in the Authority' s Master Development District; Development Program means the Authority's Master Development Program, as amended, approved in connection with the Development District; Development Property means the real property described in Exhibit A attached to this Agreement; Legal and Administrative Expenses means the fees and expenses incurred by the Authority in connection with the adoption of the Tax Increment Financing Plan, the preparation of this Agreement and the issuance of the TIF Note; Note Payment Date means August 1, 2014, and each February 1 and August 1 of each year thereafter to and including February 1, 2023; provided, that if any such Note Payment Date should not be a Business Day, the Note Payment Date shall be the next succeeding Business Day; 4532952v5 Event of Default means any of the events described in Section 4.1 hereof; 2 Prime Rate means the rate of interest from time to time publicly announced by U.S. Bank National Association in St. Paul, Minnesota, as its "prime rate" or "reference rate" or any successor rate, which rate shall change as and when that rate or successor rate changes; Project means the construction and equipping of two Industrial 1-2 warehouse/office buildings of approximately 100,000 square feet, in the aggregate, on the Development Property located in the City; Public Improvements means those Public Improvements identified on Exhibit C attached hereto to be undertaken on the Development Property; Special Assessments means the special assessments levied against the Development Property in connection with the Public Improvements which benefit the Development Property; State means the State of Minnesota; Street Improvements means the street improvements to be undertaken on the Development Property, as identified on Exhibit D attached hereto; Subdivision Development Agreement means the agreement entered into by and between the Developer and City dated , 2012, setting forth the terms and conditions for the subdivision and platting of the Development Property; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1799, as amended; Tax Increment District means Tax Increment Financing District No. 14 located within the Development District, a description of which is set forth in the Tax Increment Financing Plan, which was qualified as an economic development district under the Tax Increment Act; Tax Increment Financing Plan means the tax increment financing plan approved for the Tax Increment District by the Board of Commissioners of the Authority and the City Council for the City and any future amendments thereto; Tax Increments means 90% of the tax increments derived from the Development Property which have been received by the Authority in accordance with the provisions of Minnesota Statutes, Section 469.177; TIF Note means the Tax Increment Revenue Note (Apple Valley Business Campus Project) to be executed by the Authority and delivered to the Developer pursuant to Article III hereof, the form of which is attached hereto as Exhibit B; and Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority) which directly result in delays. 4532952v5 3 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the Authority. The Authority makes the following representations and warranties: (1) The Authority is a public body, corporate and politic of the State and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Increment District is an "economic development district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 12, and was created, adopted and approved in accordance with the terms of the Tax Increment Act. ( The development contemplated by this Agreement is in conformance with the development objectives set forth in the Development Program. (4) To finance certain costs within the Tax Increment District, the Authority proposes, subject to the further provisions of this Agreement, to apply Tax Increments to reimburse the Developer for all or a portion of the costs of Public Improvements specially assessed against the Development Property and all or a portion of the costs of the Street Improvements incurred in connection with the Project as further provided in this Agreement. ( The Authority makes no representation or warranty, either express or implied, as to the Development Property or its condition or the soil conditions thereon, or that the Development Property shall be suitable for the Developer's purposes or needs. Section 2.2. Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a Minnesota limited liability company and has the power and authority to enter into this Agreement and to perform its obligations hereunder and doing so will not violate its articles, operating agreement, or the laws of the State and by proper action has authorized the execution and delivery of this Agreement. (2) The Developer will pay all Special Assessments, as defined herein, levied against the Development Property. ( The Developer shall cause the Project to be constructed in accordance with the terms of this Agreement, the Development Program, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (4) The construction of the Project would not be undertaken by the Developer by July 1, 2012, and in the opinion of the Developer would not be economically feasible prior to July 1, 2012, without the assistance and benefit to the Developer provided for in this Agreement. 4532952v5 4 ( Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (6) The Developer will cooperate fully with the Authority with respect to any litigation commenced with respect to the Project. ( The Developer will cooperate fully with the Authority in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Project. ( The financing commitments which the Developer has obtained to finance construction of the Project, together with the equity funds available to the Developer, together with the financing provided by the City pursuant to this Agreement, will be sufficient funds to enable the Developer to successfully complete the construction of the Project. ( Commencement of Construction shall begin by June 30, 2012 and the construction of the Project will be substantially completed by June 30, 2014, subject to Unavoidable Delays, and will create jobs in the State. (10) Upon execution of this Agreement by the parties hereto, the Developer shall record this Agreement with the office of the Dakota County Recorder or Registrar of Titles. 4532952v5 5 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1. Project and Reimbursement Amount. (1) The parties agree that the costs of the installation of the Public Improvements and the Street Improvements are essential to the successful completion of the Project. The City shall install the Public Improvements and will specially assess the Development Property for such costs. Subject to the terms and conditions herein, the Authority shall reimburse the Developer for the amount of Special Assessments levied against the Public Improvements not to exceed $900,000. The Developer shall install the Street Improvements in accordance with plans and specifications prepared by the City and subject to inspections of the City. The costs of the Street Improvements shall be paid by the Developer. Upon completion of the Street Improvements the Developer shall dedicate the Street Improvements to the City for use as a public street. The Authority shall reimburse the Developer for the cost of the Street Improvements incurred and paid by the Developer not to exceed $800,000. The costs of the Public Improvements assessed to the Development Project in an amount not to exceed $900,000 and the costs of the Street Improvements in an amount not to exceed $800,000 are collectively referred to as the "Reimbursement Amount". The Developer shall be reimbursed the Reimbursement Amount as further provided in Section 3.2. (2) The Developer has deposited with the Authority the sum of $25,000 to reimburse the Authority for its actual out of pocket Legal and Administrative Expenses and any excess will be returned to the Developer. The Legal and Administrative Expenses shall by paid by the Authority from said Developer's deposit. If the Authority determines said deposit to be inadequate, the Developer shall provide additional funds to be escrowed or to pay the Legal and Administrative expenses when due. However, prior to incurring any such expenses in excess of the $25,000 deposit, the Authority will provide the Developer with notice of said excess amount, along with details as to what additional out of pocket expenses the Authority expects to incur. Section 3.2. Reimbursement: Tax Increment Revenue Note. The Authority shall reimburse for the costs identified in Section 3.1 through the issuance of the Authority's TIF Note in substantially the form attached to this Agreement as Exhibit B, subject to the following conditions: (1) The TIF Note shall be dated, issued and delivered when the Developer shall have demonstrated in writing to the reasonable satisfaction of the Authority that the Street Improvements have been substantially completed and dedicated to the City and that Developer has incurred and paid all costs of the Street Improvements, as described in and limited by Section 3.1, and shall have submitted paid invoices for the costs of the Street Improvements. The principal amount of the Note shall be in the amount of the Reimbursement Amount. (2) The unpaid principal amount of the TIF Note shall bear simple, non- compounding interest from the date of issuance of the TIF Note, at 3.6% per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. 4532952v5 ( The principal amount of the TIF Note and the interest thereon shall be payable solely from the Tax Increments. (4) On each Note Payment Date and subject to the provisions of the TIF Note, the Authority shall pay, against the principal and interest outstanding on the TIF Note, any Tax Increments received by the Authority during the preceding 6 months. All such payments shall be applied first to accrued interest and them to reduce the principal of the TIF Note. ( The TIF Note shall be a special and limited obligation of the Authority and not a general obligation of the Authority, and only Tax Increments shall be used to pay the principal and interest on the TIF Note. If, on any Note Payment Date, the Tax Increments for the payment of the accrued and unpaid interest on the TIF Note are insufficient for such purposes, the difference shall be carried forward, without interest accruing thereon, and shall be paid if and to the extent that on a future Note Payment Date there are Tax Increments in excess of the amounts needed to pay the accrued interest then due on the TIF Note. (6) The Authority's obligation to make payments on the TIF Note on any Note Payment Date or any date thereafter shall be conditioned upon the requirements that: (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement and (B) this Agreement shall not have been rescinded pursuant to Section 4.2. ( The TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B. In the event of any conflict between the terms of the TIF Note and the terms of this Section 3.2, the terms of the TIF Note shall govern. The issuance of the TIF Note pursuant and subject to the terms of this Agreement, and the taking by the Authority of such additional actions as bond counsel for the TIF Note may require in connection therewith, are hereby authorized and approved by the Authority. Section 3.3. Public Improvements. (1) The parties agree that the installation of the Public Improvements is essential to the successful completion of the Project. The cost of the Public Improvements shall be paid or financed by the City. The costs for the Public Improvements include all planning, engineering, legal, construction, construction management, testing and inspections of the Public Improvements and other soft costs authorized under Minnesota Statutes, Chapter 429. (2) The City shall assess a portion of the cost of the Public Improvements against the Development . ( The City shall cause the Public Improvements to be authorized, constructed and installed in accordance with the terms of Minnesota Statutes, Chapter 429. (4) The Developer agrees with respect to the Special Assessments: (a) it will not seek administrative review or judicial review of the applicability, amount or validity of the Special Assessments or raise the inapplicability of the Special Assessments as a defense in any proceedings with respect to the Development Property, including delinquent tax proceedings; (b) it will not seek administrative review or judicial review of the constitutionality of the Special Assessments or raise the unconstitutionality of the Special Assessments as a defense in any 4532952v5 7 proceedings, including delinquent tax proceedings with respect to the Development Property; and (c) it will not seek any deferral or abatement of the Special Assessments, either presently or prospectively authorized under any State or federal law between the date of execution and the date of termination of this Agreement. Section 3.4. Real Property Taxes. The Developer acknowledges that it is obligated under law to pay all real property taxes payable with respect to the Development Property and pursuant to the provisions of the Agreement until the Developer's obligations have been assumed by any other person with the written consent of the City and pursuant to the provisions of this Agreement. The Developer agrees that prior to the Termination Date: (1) It will not seek administrative review or judicial review of the applicability of any tax statute relating to the taxation of real property contained on the Development Property determined by any tax official to be applicable to the Project or the Developer or raise the inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (2) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of real property contained on the Development Property determined by any tax official to be applicable to the Project or the Developer or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; ( It will not seek any tax deferral or abatement, either presently or prospectively authorized under any other State or federal law, of the taxation of real property contained in the Development Property between the date of execution of this Agreement and the Termination Date. Section 3.5. Business Subsidies Act. (1) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is the Reimbursement Amount not to exceed $1,700,000 for Site Improvements paid by the Developer and reimbursed to the Developer by Tax Increments. The Business Subsidy is needed because the Project is not sufficiently feasible for the Developer to undertake without the Business Subsidy. The Tax Increment District is an economic development district and the public purpose of the Business Subsidy is to encourage the expansion of warehouse/office facilities in the City. The Developer agrees that it will meet the following goals (the "Goals") in connection with the Development Property and cause its tenants (the "Tenants") to create at least forty (40) full time jobs at an hourly wage of at least $12.00 per hour within two years from the "Benefit Date", which is the earlier of the date the Developer completes or the Tenants occupy the Project. 4532952v5 8 (2) If no Goals are met, the Developer agrees to repay all or a part of the Business Subsidy to the Authority, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is forty (40) (i.e. number of jobs set forth in the Goals). ( The Developer shall (or cause the Tenants to agree to): (i) report its progress on achieving the Goals to the Authority until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Minnesota Statutes, Section 116J.994, Subdivision 7 on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the Authority. The Tenant shall agree to file these reports no later than March 1 of each year commencing March 1, 2013, and within 30 days after the deadline for meeting the Goals. The Authority agrees that if it does not receive the reports, it will mail the Developer a warning within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Developer shall pay to the Authority a penalty of $100 for each subsequent day until the report is filed up to a maximum of $1,000. (4) The Developer agrees to continue operations within the City for at least five (5) years after the Benefit Date. ( There are no other state or local government agencies providing financial assistance for the Project other than the Authority which is providing the TIF Note. 4532952v5 (6) There is no parent corporation of the Developer. ( The Developer certifies that it does not appear on the Minnesota Department of Employment and Economic Development's list of recipients that have failed to meet the terms of a business subsidy agreement. Section 3.6. Prohibitions Against Assignment and Transfer. The Developer shall own the Project for a period of not less than 5 years commencing from the date that the construction of the Project is substantially complete. The Developer has not made nor will make, or suffer to be made, any total or partial sale, assignment, conveyance, lease (other than leases of space in the Project constructed as a part of the Project), or other transfer, with respect to this Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the City, which shall not be unreasonably withheld. The City shall be entitled to require as conditions to any such approval that: (i) the proposed transferee have the qualifications and financial responsibility, as reasonably determined by the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer; and (ii) the proposed transferee, by recordable instrument satisfactory to the City shall, for itself and its successors and assigns, assume all of the obligations of the Developer under this Agreement. No transfer of, or change with respect to, 9 ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the City of or with respect to any rights or remedies or controls provided in or resulting from this Agreement with respect to the Development Property and the completion of the Project that the City would have had, had there been no such transfer or change. There shall be submitted to the City for review all legal documents relating to the transfer. In the absence of specific written agreement by the City to the contrary, no such transfer or approval by the City thereof shall be deemed to relieve the Developer, or any other party bound in any way by this Agreement or otherwise with respect to the completion of the Project, from any of their obligations with respect thereto. 4532952v5 10 4532952v5 or (4) If the Developer shall: ARTICLE IV EVENTS OF DEFAULT Section 4.1. 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 any one or more of the following events: (1) Failure by the Developer to timely pay any ad valorem real property taxes assessed and special assessments or other City charges with respect to the Development Property. (2) Failure of the Developer to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or the Subdivision Development Agreement. ( The holder of any mortgage on the Development Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents. (a) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (b) make an assignment for the benefit of its creditors; or (c) admit in writing its inability to pay its debts generally as they become due; (d) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer as bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or a receiver, liquidator or trustee of the Developer, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer, and shall not be discharged within sixty (60) days after such appointment, or if the Developer, shall consent to or acquiesce in such appointment. Section 4.2. Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the Authority, as specified below, may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer, but only if the Event of Default has not been cured within said thirty (30) days: (1) The Authority may suspend its performance under this Agreement and the TIF Note until it receives assurances from the Developer, deemed adequate by the Authority, that the Developer will cure its default and continue its performance under this Agreement. 11 (2) The Authority may abate the payment of any and all accrued interest under the TIF Note during the period of time that an Event of Default exists and continues to exist. ( The Authority may cancel and rescind the Agreement and the TIF Note. (4) The Authority may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority 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. Section 4.4. No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any 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 4.5. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it shall, on demand therefor, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. (1) The Developer (a) releases the Authority and its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees (collectively, the "Indemnified Parties") from, (b) covenants and agrees that the Indemnified Parties shall not be liable for, and (c) agrees to indemnify and hold harmless the Indemnified Parties against, any claim, cause of action, suit or liability for 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 Project or on the Development Property. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the Authority in this Agreement or to any actions undertaken by the 4532952v5 Section 4.6. Indemnification of City. 12 Authority which are not contemplated by this Agreement but shall, in any event and without regard to any fault on the part of the Authority, apply to any pecuniary loss or penalty (including interest thereon from the date the loss is incurred or penalty is paid by the Authority at a rate equal to the Prime Rate) as a result of the Project causing the Tax Increment District to not qualify or cease to qualify as an "economic development district" under Section 469.174, Subdivision 12, of the Act and Section 469.176, Subdivision 4c or to violate limitations as to the use of Tax Increments as set forth in Section 469.176, Subdivision 4c. ( All covenants, stipulations, promises, agreements and obligations of the 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, officer, agent, servant or employee of the Authority. 4532952v5 13 4532952v5 ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT Section 5.1. The Developer's Option to Terminate. This Agreement may be terminated by the Developer, if (i) the Developer is in compliance with all material terms of this Agreement, including satisfaction of the requirements of Section 3.3 and no Event of Default has occurred; and (ii) the Authority fails to comply with any material term of this Agreement, and, after written notice by the Developer of such failure, the Authority has failed to cure such noncompliance within ninety (90) days of receipt of such notice, or, if such noncompliance cannot reasonably be cured by the Authority within ninety (90) days, of receipt of such notice, the Authority has not provided assurances, reasonably satisfactory to the Developer, that such noncompliance will be cured as soon as reasonably possible. Section 5.2. Action to Terminate. Termination of this Agreement pursuant to Section 5.1 must be accomplished by written notification by the Developer to the Authority within sixty (60) days after the date when such option to terminate may first be exercised. A failure by the Developer to terminate this Agreement within such period constitutes a waiver by the Developer of its rights to terminate this Agreement due to such occurrence or event. Section 5.3. Effect of Termination. If this Agreement is terminated pursuant to this Article V, this Agreement shall be from such date forward null and void and of no further effect; provided, however, the termination of this Agreement shall not affect the rights of either party to institute any action, claim or demand for damages suffered as a result of breach or default of the terms of this Agreement by the other party, or to recover amounts which had accrued and become due and payable as of the date of such termination. Upon termination of this Agreement pursuant to this Article V, the Developer shall be free to proceed with the Project at its own expense and without regard to the provisions of this Agreement; provided, however, that the Authority shall have no further obligations to the Developer with respect to reimbursement of the expenses set forth in Section 3.2. 14 Authority at: 4532952v5 ARTICLE VI ADDITIONAL PROVISIONS Section 6.1. Restrictions on Use. Until termination of this Agreement, the Developer agrees for itself, its successors and assigns and every successor in interest to the Development Property, or any part thereof, that the Developer and such successors and assigns shall operate, or cause the Project to be operated as commercial facilities and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 6.2. Conflicts of Interest. No member of the governing body or other official of the Authority shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the Authority shall be personally liable to the Authority in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 6.3. 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 6.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (1) in the case of the Developer is addressed to or delivered personally to: Spowd Developments LLC 23300 Grandview Trail Apple Valley, MN 55044 (2) in the case of the Authority is addressed to or delivered personally to the Apple Valley Economic Development Authority, Minnesota Apple Valley Municipal Center 7100 West 147 Street Apple Valley, MN 55124 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. 15 Section 6.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 6.6. Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 6.7. Expiration. This Agreement shall expire on the earlier of (i) February 1, 2023, (ii) the date the TIF Note is paid in full or (iii) the date this Agreement is terminated or rescinded in accordance with its terms (the "Termination Date"). Section 6.8. Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the Termination Date. Section 6.9. Assignability of Agreement. This Agreement may be assigned only with the consent of the Authority which consent shall not be unreasonably withheld. The TIF Note may only be assigned pursuant to the terms of the TIF Note. 4532952v5 16 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and on its behalf and the Developer has caused this Agreement to be duly executed in its name and on its behalf, on or as of the date first above written. STATE OF MINNESOTA ) ) SS COUNTY OF 4532952v5 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA By Its President By Its Secretary The foregoing instrument was acknowledged before me this day of , 2012, by , the President and , the Secretary, respectively of the Apple Valley Economic Development Authority, Minnesota. Notary Public This is a signature page to the Development Assistance Agreement by and between the Apple Valley Economic Development Authority, Minnesota and Spowd Developments LLC 17 STATE OF MINNESOTA ) SS COUNTY OF ) SPOWD DEVELOPMENTS LLC By Its The foregoing instrument was acknowledged before me this day of 2012, by , the of Spowd Developments LLC. Notary Public This is a signature page to the Development Assistance Agreement by and between the Apple Valley Economic Development Authority, Minnesota and Spowd Developments LLC 4532952v5 18 4532952v5 EXHIBIT A Description of Development Property Parcel Identification No. 01-46950-00-010 A-1 EXHIBIT B Form of TIF Note No. R -1 $ The Apple Valley Economic Development Authority, Minnesota (the "Authority "), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts ") to Spowd Developments LLC (the "Developer ") or its registered assigns (the "Registered Owner "), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event exceed $2,100,000 as provided in that certain Development Assistance Agreement, dated as of , 2012, as the same may be amended from time to time (the "Development Assistance Agreement "), by and between the Authority and the Developer. The unpaid principal amount of the Note shall bear simple, non - compounding interest from the date of issuance of the Note, at 3.6% per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The amounts due under this Note shall be payable on August 1, 2014, and on each February 1 and August 1 thereafter to and including February 1, 2023, or, if the first should not be a Business Day (as defined in the Development Assistance Agreement), the next succeeding Business Day (the "Payment Dates "). On each Payment Date the Authority shall pay by check or draft mailed to the person whom was the Registered Owner of this Note at the close of the last business day preceding such Payment Date an amount equal to the sum of the Tax Increments (hereinafter defined) received by the Authority during the six month period preceding such Payment Date. All payments made by the Authority under this Note shall first be applied to accrued interest and then to principal. The Payment Amounts due hereon shall be payable solely from 90% of tax increments (the "Tax Increments ") from the Development Property (as defined in the Development Assistance Agreement) within the Authority's Tax Increment Financing District No. 14 (the "Tax Increment District ") within its Master Development District which are paid to the Authority and which the Authority is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799, as the same may be amended or supplemented from time to time (the "Tax Increment Act "). This Note shall terminate and be of no further force and effect 4532952v5 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT REVENUE NOTE (APPLE VALLEY BUSINESS CAMPUS PROJECT) B -1 following: (i) the last Payment Date defined above; (ii) on any date upon which the Authority shall have terminated the Development Assistance Agreement under Section 4.2(2) thereof or the Developer shall have terminated the Development Assistance Agreement under Article V thereof; (iii) on the date the Tax Increment District is terminated; or (iv) on the date that all principal payable hereunder shall have been paid in full, whichever occurs earliest. The Authority makes no representation or covenant, express or implied, that the Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The Authority's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Assistance Agreement shall have occurred and be continuing at the time payment is due hereunder, but subject to the terms and conditions under the Development Assistance Agreement such unpaid amounts may become payable if said Event of Default shall thereafter have been timely cured. Further, if pursuant to the occurrence of an Event of Default under the Development Assistance Agreement the Authority elects to cancel and rescind the Development Assistance Agreement, the Authority shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Assistance Agreement, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation and not a general obligation of the Authority and is payable by the Authority only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the Authority and neither the full faith and credit nor the taxing powers of the Authority are pledged to the payment of the principal of this Note and no property or other asset of the Authority, save and except the above- referenced Tax Increments, is or shall be a source of payment of the Authority's obligations hereunder. This Note is issued by the Authority in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only with the consent of the Authority which consent shall not be unreasonably withheld. In order to assign the Note, the assignee shall surrender the same to the Authority either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the Authority. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional or statutory limitation thereon. 4532952v5 B-2 IN WITNESS WHEREOF, Apple Valley Economic Development Authority, Minnesota, by its Board of Commissioners, has caused this Note to be executed by the manual signatures of its President and Secretary and has caused this Note to be dated as of 20 . President Secretary 4532952v5 B-3 CERTIFICATION OF REGIST TION It is hereby certified that the foregoing Note was registered in the name of Spowd Developments LLC, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF DATE OF SIGNATURE OF 4532952v5 REGISTERED OWNER REGISTRATION EDA SECRETARY Spowd Developments LLC 23300 Grandview Trail Apple Valley, MN 55044 B -4 4532952v5 EXHIBIT C Public Improvements Improvements to 147 Street, to include a 3 lane collector street from Flagstaff Avenue east to Johnny Cake Ridge Road. Installation of utilities to include storm water, clean water and sanitary sewer to serve the Development Property. C -1 EXHIBIT D Street Improvements Construction of Felton Court along with associated utilities to, and service to, the Project, including trunk utility charges. 4532952v5 D-1 EXTRACT OF MINUTES OF MEETING OF THE BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA HELD: , 2012 Pursuant to a meeting of the Board of Commissioners of the Apple Valley Economic Development Authority, Dakota County, Minnesota, was held at the Apple Valley Municipal Center in the City of Apple Valley, Minnesota (the "City") on , the day of 1, 2012, at :00 o'clock _.m. The following members were present: and the following were absent: Member adoption: 4580034v1 introduced the following resolution and moved its RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT ASSISTANCE AGREEMENT A. WHEREAS, SPOWD DEVELOPMENTS LLC (the "Developer") has requested that the Apple Valley Economic Development Authority, Minnesota (the "EDA") assist with the financing of certain costs incurred in connection with the construction and equipping of two Industrial 1-2 warehouse/office buildings to be constructed by the Developer (the "Project"). B. WHEREAS, the Developer and the EDA have determined to enter into a Development Assisstance Agreement providing for the EDA's tax increment financing assistance for the Project (the "Development Agreement"). NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Apple Valley Economic Development Authority, Minnesota, as follows: 1. The Board hereby approves the Development Agreement in substantially the form submitted, and the President and Secretary are hereby authorized and directed to execute the Development Agreement on behalf of the EDA. 2. The approval hereby given to the Development Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the EDA officials authorized by this resolution to execute the Development Agreement. The execution of the Development Agreement by the appropriate officer or officers of the EDA shall be conclusive evidence of the approval of the Development Agreement in accordance with the terms hereof. The motion for adoption of the foregoing resolution was duly seconded by member and, after full discussion thereof, and upon a vote being taken thereof, the following voted in favor thereof: and the following voted against same: whereupon said resolution was declared duly adopted. Adopted this day of , 2012 by the Apple Valley Economic Development Authority Board of Commissioners. Attest: 4580034v1 Secretary 2 President STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF APPLE VALLEY I, the undersigned, being the duly qualified and acting Secretary of the Apple Valley Economic Development Authority, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the Board of Commissioners held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Authorizing Execution of a Development Agreement. WITNESS my hand as such Secretary of the Board of Commissioners of the Apple Valley Economic Development Authority, Minnesota this day of , 2012. 4580034v1 3 Secretary w X 0 .. X a . X a . 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E E c a) m NI kJ 2. _ 0_ E , 7 a) 0_ O o i- ..0 eL 6 0 ft, ay > E >, co a) - ii, 73 --ci > 2 (0 ru eL = 73 o ▪ - 0 -o v) c a) a) c a) (I) x ra E 0 ' ( ‘ 0 5 in g(n ul C - 7,i • ' 0 1..4 1...4 u4. a) a) a) u E LI) LI "5 2 co co X _ _c ) E 1 c a E • N rn t Ln ▪ l. 0 N City of Apple ValleV SUBJECT: Development Agreement for AV 147 Properties, LLC 7600 -147 Street W. MEMO Community Development Department TO: President and Board Members of the Economic Development Authority, Executive Director FROM: Margaret Dykes, Associate City Planner MEETING DATE: June 4, 2012 Background At its meeting of March 8 the EDA reviewed information regarding the feasibility of using TIF pooling funds to support local commercial property owners who would like to make investments in their buildings in order to attract businesses. In 2010, the Legislature approved changes to Tax Increment Financing (TIF) law that allowed the broad use of tax increment from any TIF district to assist in the construction or rehabilitation of private development. The purpose of this legislation was to help private development begin construction on projects that would create jobs, both temporary construction jobs and permanent jobs. Construction on any project receiving funds from this program had to begin by July 1, 2011, and all expenditures needed to be completed by December 31, 2011. This legislation was extended in 2011 so that the construction needs to occur no later than June 30, 2012, and all expenditures must be made by December 30, 2012. Project Description Mr. Keith Sperbeck has approached the City about possible resources to assist with renovations at the former Granny's Attic building located at 7600-147 St. W. Mr. Sperbeck has recently purchased this building and he has created AV 147 Properties, LLC for this property. Mr. Sperbeck would like to be able to lease the building for a combination of small retail and office/warehouse users. The approximately 14,000 sq. ft. two-story building was constructed in 1972 and was originally used as a racquetball club. The site has been used as a retail store (Granny's Attic), and has had a number of owners and tenants over the years. The building has been vacant for the past several years and is now in disrepair. Staff has been through the building and it appears that previous owners installed building systems (plumbing, electrical) that did not meet the requirements of the Building Code. These items must be repaired to meet the Building Code requirements. Mr. Sperbeck would like assistance to help fund substantial improvements to the building including a complete retrofit of the HVAC system, rewire the electrical system, repair the roof structure, install a hydraulic wheelchair lift to the second story, resurface the parking lot, make landscape improvements, and abate mold damage that has occurred throughout the structure. Mr. Sperbeck states the total project costs are approximately $654,350 including site acquisition; he is requesting assistance in the amount of $149,100. Site plan review is not required as there is no expansion of the existing structure. The primary tenant would be a E LA C wholesale food operation with a small amount of retail operating in about 3,750 sq. ft. on the first floor. The remaining space on the first floor could be leased by office users or small wholesale/retail shops. The second floor will be primarily storage or small offices with a low number of employees. There are only 45 parking spaces available to the site, so users with low parking demands must be found who are willing to occupy the building. The building improvements will create approximately 20 new permanent jobs. Funding for the assistance would come from the TIF pooling dollars that can be used for projects such as the one proposed by Mr. Sperbeck. Staff is recommending support of Mr. Sperbeck's proposal for the following reasons: 1. The building improvements will modernize an outdated and non-compliant building. 2. The new construction will allow the building to be occupied and made viable for new small business that will created approximately 20 new permanent jobs. 3. The project is ready to begin and would meet the June 30 start-date deadline. 4. The requested funding is approximately 17% of total project construction costs. The requested funding from Mr. Sperbeck does not require a public hearing. Attached to this memo is the Development Agreement drafted by Mary Ippel of Briggs & Morgan, the City's bond counsel. It has been reviewed by the City Attorney, and agreed to by Mr. Sperbeck. Recommended Action: Adopt the draft resolution approving the Development Agreement between the Apple Valley Economic Development Authority and AV 147 Properties, LLC to provide S149,100 for substantial construction costs at 7600-147 Street W. Attachments: 1. Site Location Map 3. Application 5. Building Photos 2. Funding Request from Applicant 4. Sworn Construction Statement 2 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-12- A RESOLUTION APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY AND AV 147 PROPERTIES, LLC WHEREAS, the Apple Valley Economic Development Authority (the "EDA") and the City of Apple Valley, Minnesota (the "City") have adopted a Master Development Program and established the Master Development District and created Tax Increment Financing Districts within the Master Development District and adopted Tax Increment Financing Plans with respect to these Tax Increment Districts pursuant to Chapter 469 of the Minnesota Statutes in an effort to encourage development and redevelopment of certain designated areas within the City, which program, plans and districts have been amended from time to time; and WHEREAS, the City has previously established Tax Increment Financing District No. 13 (the "TIF District") and adopted the tax increment financing plan therefor (the "TIF Plan"); and WHEREAS, on December 20, 2011, the City Council approved a spending plan for the TIF District in accordance with Minnesota Statutes, Section 469.176 Subd. 4m (the "Spending Plan") to utilize existing tax increment revenues from the TIF District in order to stimulate construction or rehabilitation of private development in a way that will also create or retain jobs; and WHEREAS, AV 147 Properties, LLC (the "Developer") has requested assistance from the EDA to support building renovations and construction at property identified as the East 85 feet of Lot 1, Block 2 and the West 40 feet of Lot 2, Block 2, Valley Commercial Park First Addition, (7600-147 St. W.); and WHEREAS, a Development Agreement between the EDA and the Developer has been prepared describing a project and site improvements consistent with the Spending Plan; and WHEREAS, the EDA deems it to be in the best interest of the EDA and City to utilize a portion of the revenues from Tax Increment Financing District No. 13 to provide assistance to the Developer for substantial building improvements listed in the Development Agreement, which include retrofitting of the HVAC system, rewiring the electrical system, and repairing the roof structure to comply with the City Building Code. NOW, THEREFORE, be it resolved by the Commissioners of the EDA that the Development Agreement is hereby approved and the President and Secretary are authorized to sign the same. ADOPTED this 4 day of June, 2012. DRAFT ATTEST: Pamela J. Gackstetter, Secretary Larry S. Severson, President DRAFT CERTIFICATE I, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on June 4, 2012, the original of which is in my possession, dated this day of , 2012 . Pamela J. Gackstetter, Secretary DEVELOPMENT AGREEMENT BY AND BETWEEN APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA AND AV 147 PROPERTIES, LLC Table of Contents ARTICLE I DEFINITIONS 2 Section 1.1 Definitions 2 ARTICLE II REPRESENTATIONS AND WARRANTIES 4 Section 2.1 Representations and Warranties of the Authority 4 Section 2.2 Representations and Warranties of the Developer 4 ARTICLE III UNDERTAKINGS BY DEVELOPER AND AUTHORITY Section 3.1 Site Improvements; Project Costs 6 Section 3.2 Reimbursement 6 ARTICLE IV EVENTS OF DEFAULT 7 Section 4.1 Events of Default Defined 7 Section 4.2 Remedies on Default 7 Section 4.3 No Remedy Exclusive 8 Section 4.4 No Implied Waiver 8 Section 4.5 Agreement to Pay Attorney's Fees and Expenses 8 Section 4.6 Indemnification of Authority ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT 10 Section 5.1 The Developer's Option to Terminate 10 Section 5.2 Action to Terminate 10 Section 5.3 Effect of Termination 10 ARTICLE VI ADDITIONAL PROVISIONS 11 Section 6.1 Restrictions on Use 11 Section 6.2 Conflicts of Interest 11 Section 6.3 Titles of Articles and Sections 11 Section 6.4 Notices and Demands 11 Section 6.5 Counterparts 12 Section 6.6 Law Governing 12 Section 6.7 Provisions Surviving Rescission or Expiration 12 Section 6.8 Assignability of Agreement 12 Section 6.9 Expiration 12 EXHIBIT A Parcel Identification Numbers of Development Property A-1 Page DEVELOPMENT AGREEMENT BY AND BETWEEN APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA AND AV 147 PROPERTIES, LLC ARTICLE I DEFINITIONS Section 1.1 Definitions ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the Authority Section 2.2 Representations and Warranties of the Developer ARTICLE III UNDERTAKINGS BY DEVELOPER AND AUTHORITY Section 3.1 Site Improvements; Project Costs Section 3.2 Reimbursement ARTICLE IV EVENTS OF DEFAULT Section 4.1 Events of Default Defined Section 4.2 Remedies on Default Section 4.3 No Remedy Exclusive Section 4.4 No Implied Waiver Section 4.5 Agreement to Pay Attorney's Fees and Expenses Section 4.6 Indemnification of Authority ARTICLE V Section 5.1 Section 5.2 Section 5.3 ARTICLE VI Section 6.1 Section 6.2 Section 6.3 Section 6.4 Section 6.5 Section 6.6 Section 6.7 Section 6.8 Section 6.9 Table of Contents DEVELOPER'S OPTION TO TERMINATE AGREEMENT The Developer's Option to Terminate Action to Terminate Effect of Termination ADDITIONAL PROVISIONS Restrictions on Use Conflicts of Interest Titles of Articles and Sections Notices and Demands Counterparts Law Governing Provisions Surviving Rescission or Expiration Assignability of Agreement Expiration EXHIBIT A Parcel Identification Numbers of Development Property Page 2 2 4 4 4 6 6 6 7 7 7 8 8 8 8 10 10 10 10 11 11 11 11 11 12 12 12 12 12 A-1 WITNES SETH: DEVELOPMENT AGREEMENT THIS AGREEMENT, made as of the day of , 2012, by and between the Apple Valley Economic Development Authority, Minnesota (the "Authority"), a public body corporate and politic under the laws of the State of Minnesota and AV 147 Properties, LLC (the "Developer"), a limited liability corporation. WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134, the City has formed Apple Valley Master Development District (the "Development District") and has adopted a development program therefor (the "Development Program"); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1799, as amended, (hereinafter the "Tax Increment Act"), the City has created, within the Development District, tax increment districts within the Development District and has in accordance with the provisions of Minnesota Statutes, Section 469.176, subd. 4m adopted a spending plan which provides for the use of tax increment financing in connection with certain developments within the Development District; and WHEREAS, in order to achieve the objectives of the Development Program and particularly to make the land in the Development District available for development by private enterprise in conformance with the Development Program, the Authority has determined to reimburse the Developer for certain costs of a Project (as hereinafter defined) to be undertaken by the Developer as more particularly set forth in this Agreement; and WHEREAS, the Authority believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the Authority, the health, safety, morals and welfare of residents of the Authority, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted. WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement because the amount paid to the Developer is less than $150,000; and NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Authority means Apple Valley Economic Development Authority, Minnesota, a Minnesota public body corporate and politic; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the Authority are authorized by law or executive order to close; City means the City of Apple Valley, Minnesota; Commencement of Construction means the issuance of all building permits and any other permits the City requires for construction of the Project and commencement of physical construction of the Project on the Development Property; County means Dakota County, Minnesota; Developer means AV 147 Properties, LLC, its successors and assigns; Development District means the real property described in the Development Program; Development Program means the development program approved in connection with the Development District; Development Property means the real property legally described in Exhibit A attached to this Agreement; Event of Default means any of the events described in Section 4.1 hereof; Project means the substantial rehabilitation of the building at 7600 — 147 Street West, including retrofitting the HVAC system, rewiring the electrical system, repairing the plumbing system, repairing the roof structure, resurfacing the parking lot, installing a wheelchair lift for ADA accessibility, and abating mold damage that has occurred throughout the structure. Site Improvements means the retrofitting the HVAC system, rewiring the electrical system, repairing the plumbing system, repairing the roof structure, resurfacing the parking lot, installing a wheelchair lift for ADA accessibility, and abating mold damage that has occurred throughout the structure; State means the State of Minnesota; 2 Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1799, as amended; Unavoidable Delays means delays, outside that control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority) which directly result in delays. 3 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the Authority. The Authority makes the following representations and warranties: (1) The Authority is a body corporate and politic and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The development contemplated by this Agreement is in conformance with the development objectives set forth in the Development Program. ( The Authority proposes, subject to the further provisions of this Agreement, to reimburse the Developer for a portion of the costs of the Site Improvements as further provided in this Agreement. (4) The Authority makes no representation or warranty, either express or implied, as to the Development Property or its condition or the soil conditions thereon, or that the Development Property shall be suitable for the Developer's purposes or needs. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a limited liability corporation, qualified to do business in the State and has the power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles of organization, operating agreement, member control agreement or the laws of the State. (2) The Developer shall cause the Project to be installed in accordance with the terms of this Agreement, the Development Program, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). ( The construction of the Project would not be undertaken by the Developer, and in the opinion of the Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. (4) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which they are bound, or constitutes a default under any of the foregoing. 4 ( The Developer will cooperate fully with the Authority with respect to any litigation commenced with respect to the Project. (6) The Developer will cooperate fully with the Authority in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction of the Project. (7) The Commencement of Construction of the Project shall commence by July 1, 2012, and will create or retain jobs in the State including construction jobs and, barring Unavoidable Delays, the Project will be completed by December 31, 2012. (8) The Developer will continue to maintain and operate in the Development Property for a period of five (5) years after the date the assistance is provided. 5 ARTICLE III UNDERTAKINGS BY DEVELOPER AND AUTHORITY Section 3.1 Site Improvements; Project Costs. The parties agree that the Site Improvements to be constructed and installed by the Developer are essential to the successful completion of the Project. The Project Costs shall be paid by the Developer. The Authority shall reimburse the Developer for Project Costs up to $149,100, actually incurred and paid by the Developer (the "Reimbursement Amount") as further provided in Section 3.2 hereof. Section 3.2 Reimbursement. Upon satisfaction of the following preconditions the Authority agrees to reimburse the Developer for the costs identified in Section 3.1. The Authority's obligation to pay the Reimbursement Amount shall be conditioned upon the requirement that: (1) There shall not at any time be an Event of Default that has occurred and continuing under this Agreement; (2) This Agreement shall not have been rescinded pursuant to Section 4.2(b); ( The construction and installation of the Site Improvements are complete, and a Certificate of Occupancy has been issued by the City of Apple Valley Building Official; and (4) The Developer shall have provided the Authority, no later than November 15, 2012, with paid invoices and receipts for the installation of the Site Improvements in an amount not less than the Reimbursement Amount. 6 Section 4.1 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 any one or more of the following events: (a) Failure by the Developer to timely pay any ad valorem real property taxes assessed special assessments or other Authority charges with respect to the Development Property. (b) Failure by the Developer to cause the installation of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (c) Failure of the Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. (d) The holder of any mortgage on the Development Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents. (e) If the Developer shall ARTICLE IV EVENTS OF DEFAULT (A) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (B) make an assignment for the benefit of their creditors; or (C) admit in writing its inability to pay its debts generally as they become due; or (D) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer, as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or a receiver, trustee or liquidator of the Developer, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer, and shall not be discharged within sixty (60) days after such appointment, or if the Developer, shall consent to or acquiesce in such appointment. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the Authority, as specified below, may take any one or 7 more of the following actions after the giving of thirty (30) days' written notice to the Developer citing with specificity the item or items of default and notifying the Developer that it has thirty (30) days within which to cure said Event of Default. If the Event of Default has not been cured within said thirty (30) days: (a) The Authority may suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the Authority, that the Developer will cure its default and continue its performance under this Agreement. (b) The Authority may cancel and rescind the Agreement. (c) The Authority may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority 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. Section 4.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any 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 4.5 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that they shall, on demand therefor, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. Section 4.6 Indemnification of Authority. (1) The Developer (a) releases the Authority and its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees (collectively, the "Indemnified Parties") from, (b) covenants and agrees that the Indemnified Parties shall not be liable for, and (c) agrees to indemnify and hold harmless the Indemnified Parties against, any claim, cause of action, suit or liability for 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 Project or on the Development Property. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now 8 and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the Authority in this Agreement or to any actions undertaken by the Authority which are not contemplated by this Agreement. (3) All covenants, stipulations, promises, agreements and obligations of the 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, officer, agent, servant or employee of the Authority. 9 ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT Section 5.1 The Developer's Option to Terminate. This Agreement may be terminated by Developer, if (i) the Developer is in compliance with all material terms of this Agreement and no Event of Default has occurred; and (ii) the Authority fails to comply with any material term of this Agreement, and, after written notice by the Developer of such failure, the Authority has failed to cure such noncompliance within ninety (90) days of receipt of such notice, or, if such noncompliance cannot reasonably be cured by the Authority within ninety (90) days, of receipt of such notice, the Authority has not provided assurances, reasonably satisfactory to the Developer, that such noncompliance will be cured as soon as reasonably possible. Section 5.2 Action to Terminate. Termination of this Agreement pursuant to Section 5.1 must be accomplished by written notification by the Developer to the Authority within sixty (60) days after the date when such option to terminate may first be exercised. A failure by the Developer to terminate this Agreement within such period constitutes a waiver by the Developer of its rights to terminate this Agreement due to such occurrence or event. Section 5.3 Effect of Termination. If this Agreement is terminated pursuant to this Article V, this Agreement shall be from such date forward null and void and of no further effect; provided, however, the termination of this Agreement shall not affect the rights of either party to institute any action, claim or demand for damages suffered as a result of breach or default of the terms of this Agreement by the other party, or to recover amounts which had accrued and become due and payable as of the date of such termination. Upon termination of this Agreement pursuant to this Article V, the Developer shall be free to proceed with the Project at its own expense and without regard to the provisions of this Agreement; provided, however, that the Authority shall have no further obligations to the Developer with respect to reimbursement of the expenses set forth in Section 3.2. 10 ARTICLE VI ADDITIONAL PROVISIONS Section 6.1 Restrictions on Use. The Developer agrees for itself, its successors and assigns and every successor in interest to the Development Property, or any part thereof, that the Developer and such successors and assigns shall operate, or cause to be operated, the Project as an aquatic education facility, as well as an office and warehouse facility and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 6.2 Conflicts of Interest. No member of the governing body or other official of the Authority shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the Authority shall be personally liable to the Authority in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 6.3 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 6.4 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (a) in the case of the Developer is addressed to or delivered personally to: Mr. Keith Sperbeck AV 147 Properties, LLC 16233 Kenyon Avenue, Suite 210 Lakeville, MN 55044 (b) in the case of the Authority is addressed to or delivered personally to the Authority at: Apple Valley Economic Development Authority, Minnesota Apple Valley Municipal Center 7100 West 147 Street Apple Valley, MN 55124 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. 11 Section 6.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 6.6 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 6.7 Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 6.8 Assignability of Agreement. This Agreement may be assigned only with the consent of the Authority. Section 6.9 Expiration. This Agreement shall terminate on December 31, 2017. 12 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and on its behalf and its seal to be hereunto duly affixed, and the Developer has caused this Agreement to be duly executed in their names, on or as of the date first above written. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota STATE OF MINNESOTA ) )SS COUNTY OF By: Larry S. Severson Its: President By: Pamela Gackstetter Its: Secretary The foregoing instrument was acknowledged before me this day of 2012, by , the President and , the Secretary, respectively of the Apple Valley Economic Development Authority, Minnesota. Notary Public This is a signature page to the Development Assistance Agreement by and between the Apple Valley Economic Development Authority, Minnesota and AV 147 Properties, LLC 13 STATE OF MINNESOTA ) )SS COUNTY OF ) AV 147 PROPERTIES, LLC By Its By Its The foregoing instrument was acknowledged before me this day of 2012, b y , the of AV 147 Properties, LLC. Notary Public This is a signature page to the Development Assistance Agreement by and between the Apple Valley Economic Development Authority, Minnesota and AV 147 Properties, LLC 14 4608235v1 EXHIBIT A Legal Description of Development Property The East 85 feet of Lot 1, Block 2 and the West 40 feet of Lot 2, Block 2, Valley Commercial Park First Addition Parcel Identification Number of Development Property 01- 81200 -02 -020 A -1 AV 147TH PROPERTIES LOCATION MAP From: Keith Sperbeck [mailto:KSperbeck@twincitiespower.com] Sent: Tuesday, May 29, 2012 2:48 PM To: Dykes, Maggie Subject: RE: Funding request Re: Amendment to our original request. Maggie, After taking the time to review the building needs and meet with some contractors, City Officials, & architects, we would like to amend our request to include the following items. 1. Installation of a wheelchair lift in the building allowing ADA access to the upper level. Assuming the City of Apple Valley will authorize a hydraulic drive wheelchair lift, we feel the benefit to the community & potential tenants is worthy of this addition. 2. Resurfacing the east and southern parking/drive area. This improvement to the property would significantly improve the appearance and the shared drive area would improve access to neighboring businesses. ppliers of the amended request: Premier Lift Wheelchair lift - $26,000 Bid Framing and drywall- $3,000 Total for lift = $29,000 Total additional request = $44,350.00 Previous request— $104,750.00 Total request= $149,100 It will be our intention to start the construction immediately following the EDA approval and completion should be done within 90 days. Premier lift Radloff & Weber Demo & Clean up Plumbing Electrical HVAC Framing Sheet rock/drywall Exterior Repair Roof Repair Carpet Ceiling Landscape Signage General construction Jobs directly related to renovation Please call me with questions or anything else you need me to submit. Thanks, Keith Contractors Radloff and Weber Blacktopping, Inc Overlay East side of bldg (8391 sq) = $8,450.00 Overlay South Side of Bldg (7208 sq) =$6,900.00 Total for parking lot = S15,350 Employees for job site estimated 3 7 4 3 3 4 3 4 0 — Same as demo clean and framing 3 3 0- Same as demo clean and framing 4 2 6 (includes concrete contractor) 49 (Does not include future employees of tenants) January 20 , 2012 City of Apple Valley Municipal Center 7100 147 Street West Apple Valley, Minnesota 5512x Attn: Margaret M. Dykes Associate City Planner Re: Building at 7600 147 Street West- Financing Dear Ms. Dykes: The referenced building has been used in numerous ventures in the past none of which improved the facility for the long term. The lack of parking together with the need to do major modifications to the building to bring it back to a respectable condition for use will preclude most parties from leasing or purchasing the building without some assistance from the Economic Development Authority. As a prospective new owner of the building, and to qualify the building for a loan, a number of issues are going to need to be addressed such as a complete rewiring of the building; the demolition of part if not all of the inside of the building; resurfacing of the parking area; landscaping; and repair of the roof and brick areas of the building. The cost of these repairs are estimated to be approximately $150,000.00 without any consideration for the retrofitting of the facility which must be done for our business use plus the purchase of the furniture, fixtures and equipment that needs to be installed. Additional information requested is attached regarding the need for Economic Development Authority participation. Regards, Keith Sperbeck AV 147 Properties, LLC 16233 Kenyon Avenue, Suite 210 Lakeville, Minnesota 55044 • The Business is a: New Business or Startup Existing Business X • If Business is existing, how many years in business? Ten Years • The Business is primarily: O Manufacturing/Construction O Retail Sales X O Wholesale Sales X O Service Establishment O Professional Establishment O Other • If an existing business, how many employees does the business currently employ? Full Time 6 Part Time 3 • How many employees will the business employ upon completion of the project? Full Time 8 Part Time 5 • Please describe your project. Please describe in particular those portions of the project that help to explain why a request for economic development assistance is sought from City. See attached letter. • Please include contractors bid and diagram or photo if applicable. See bid of contractor. See photos. Is this project part of an overall commercial expansion? Please explain. No. • If the project is for building code and/or life/safety improvements, please explain the extent of the problems and the plans to eliminate or reduce the problem. Complete retrofit of HVAC System and rewiring of building. • What is the estimated completion date for the project? May 31 2012 • Please outline the sources of funds being utilized for the proposed project. Bank financing: Amount: $379,250 Owner equity (must be present): Amount: 125,000 Financing Requested from City (gap): Amount: 104,750 Total: Amount: $609,000 % of Total: 62% % of Total: 22% % of Total: 16% • Please describe why City financing is necessary to complete the project, i.e. building obsolescence, Minnesota State Building Code compliance, improvements related to safety, accessibility, habitability, and energy consumption. As previously addressed, the building after years of misuse, needs reconditioning in many areas to bring it up to current use standards. The largest issues remain the electric rewiring and HVAC system, both which require nearly complete retrofitting. Additionally, there appears to be a mold issue that needs to be considered due to the roof leaking and which cost has not yet been considered. 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L... 63 til 0- s_, 0 , - r a . = _. , 4_, IX +,,, - 10 C i.. 0.0 CU 4- a. ..... 0 CU 4,--. 0 -,., ...0 X a -- '-",,,, (1) CC ,3' 0 iz: 0 v) L...0 Fti 0 0 0 >4 - (...) .0 ..,C2 06 = _0 (3) 0) L. C 4— til 0 (5 OZi 0 0 t.... 03 (...) 0 0 CD 0 0 0 0 . 0 CD 0 0 00 N 0 0 Lii ui d crl r rn rti 0 0 0 0 0 0 0 0 0 0 4- tt) c 0 0 tie Cti a) a 0 'au 0 0 0 kny.,.....•.•.•••, • .,•• v • 1111111:!illillii:111 • . • .:Pfiteks4 , . .0„, • , • • City of App Va MEMO Community Development Department President and Board Members of the Economic Development Authority, Executive Director FROM: Margaret Dykes, Associate City Planner TO: MEETING DATE: The Metropolitan Consortium of Community Developers (MCCD) is an association of 43 non- profit community development agencies that work to improve economic opportunity throughout the Metropolitan area. The organization specifically helps small businesses and entrepreneurs through its "Open to Business" program, which is geared towards new and early stage businesses that need individual advice and counseling, and access to capital that is not available from the commercial banking system. The "Open to Business" program brings on-site business services specialists \vho can provide expertise in start-up financing and business plan development, as Well as funding opportunities. As part of a financing plan, their borrowers can receive help in planning, organizing and managing their businesses. This program is available in several Hennepin County cities such as Bloomington, Brooklyn Park, Richfield, and St. Louis Park. June 4, 2012 SUBJECT: Business Assistance though Dakota County CDA and MCCD The Dakota County Community Development Agency (CDA) has approached Apple Valley, as well as other large Dakota County cities, to determine if there is interest in creating an - Open to Business program in Dakota County. This program would be modeled on the one offered in Ilennepin County, with the CDA administering the program and funding half of MCCD's $150,000 fee, and participating cities funding the other half of the fee. Apple Valley's cost to participate in this program would be $7,500, which represents 50% of the total cost for the City's participation of S15,000. Attached to this report is a scope of work and fee schedule from MCCD for the program, as well as background infivmation about MCCD. Also attached is a May 3' email from Andrea Brennen, CDA Director of Community and Economic Development, which outlines the CDA's offer to pay for half of the fees. Rob Smolund, who is the Enterprise Facilitator with MCCD, will be at the EDA's meeting on June 4 to further explain the "Open to Business" program. It is staff's opinion that the MCCD program could help fill unmet needs in the marketplace. Small businesses and entrepreneurs generate a significant number of jobs and income, but are often unable to obtain traditional funding because they are considered too risky by many lending institutions. The technical assistance and financing network offered by MCCD can make a difference in ereatine, a successful business. Therefore, staff supports the request to participate in a Dakota County - Open to Business" program Recommended Action: Authorize participation, with available EDA funds, in the Metropolitan Consortium of Community Developers "Open to Business" Loan Program in Dakota County with an annual contribution of $7,500 to the Dakota County Community Development Agency. Who is MCCD? MCCD is TO BUSINESS in your community The Metropolitan Consortium of Community Developers (MCCD) is a 49 member association committed to increasing opportunities for development of quality, community-based projects through collaborative action on public policy issues, loan fund development, public education efforts, and long-term strategic planning. Through these efforts, we have been able to demonstrate the effectiveness and efficiencies gained by a shared vision and cooperation. Our mission is to: "work collectively to build strong, stable communities by leveraging resources for the development of people and places." Our goals are to: 1) increase popular, political, business, and financial support for community-based housing and small business development organizations; 2) create access to loan capital and technical assistance for emerging entrepreneurs; and 3) increase the effectiveness of community-based development through coordination, collaboration, and capacity building activities. MCCD's work is centered on three distinct program areas: Emerging Small Business Program, Member Convening, and Public Policy. Emerging Small BusinessProgram: Provides capital access and technical assistance for existing businesses and aspiring entrepreneurs who are unable to fully access the commercial banking system. The organization funds or participates in an average of 50 loans per year, with loan amounts of up to $100,000. Along with capital, MCCD staff provides more than 2,000 hours of direct technical assistance to entreprenuers. Technical assistance services include business plan development, loan packaging, feasibility studies, cash flow and financing projections, marketing plans, assistance with licensing and filing requirements, and development of sound financial management and tracking systems. Historically, more than 80% of MCCD's loans have been to minority borrowers. For many of our borrowers the loans provide self-employment, and unique opportunities for advancement and personal enrichment as business owners that may not be available to them as employees. Open to Business is a part of the Emerging Small Business Program. Convening: MCCD acts as a convener for our members. This is accomplished through monthly meetings of our Housing Committee, Economic Development Committee, and St. Paul Task Force. Agendas for each reflect the focus of the participating members. Meetings typically involve guest presenters on topics of relevance, strategy sessions related to common concerns, or general updating and sharing among the attendees. On at least an annual basis, staff from the City of Minneapolis' Community Planning and Economic Development (CPED), City of St. Paul's Planning and Economic Development (PED), the Minnesota Housing Finance Agency (MHFA), the Family Housing Fund, and Hennepin County among others, would be invited. Public Policy: With the combined expertise of the leading community development organizations, MCCD has become a recognized and respected voice on housing, small business development, and inner- city commercial development. Through the work of our standing committees, MCCD shapes an annual policy platform and legislative agenda that is formally adopted by the board of directors. These documents provide direction to staff as to items MCCD takes the lead on, those that we support others, and those that we monitor. Aside from the adopted positions, MCCD responds frequently to new program proposals, changes in policy or procedures, and funding changes at the local, state and federal levels. MCCD is What is Open to Business? TO BUSINESS in your community MCCD's Open to Business program brings on-site business services specialists who can expand your community development staff s expertise in such areas as start-up financing and business plan development. We can respond to requests for business assistance when those requests are beyond the range of the services normally provided by your municipal agencies. Open to Business Technical Assistance Services in Dakota County: MCCD will provide intensive one-on-one technical assistance to small City/County business owners and aspiring entrepreneurs intending to establish, purchase, or improve a business in the City/County. Technical assistance includes, but is not limited to the following: • Business plan development • Feasibility analysis • Marketing • Cash flow and other financial projection development • Operational analysis >. City and State licensing and regulatory assistance • Loan packaging, and other assistance in obtaining financing • Help in obtaining competent legal advice MCCD intends to hire a full time staff person once the minimum amount of contract is secured in Dakota County. This staff member will be based in Dakota and Carver County full time. The business advisor will be available to meet clients at the various city halls of municipalities that are OTB cities or at their place of business. This staff person will be based out of donated office space either at the Dakota CDA or another facility in the area. Currently in OTB cities in Hennepin County we hold two-hour "Test Drive Your Business Idea" sessions once a month. We plan to offer this service to Dakota County municipalities. MCCD has offered technical assistance services since 2003, primarily through our staff facilitator, Rob Smolund. Rob came to MCCD from the City of Richfield Enterprise Facilitation project — a Hennepin County supported initiative. In the years since, our program has added specialists in the areas of business accounting, finance, real-estate development, and regulatory compliance. We now offer a team of professionals and former business owners who can provide real world advice to clients, and tailor that support to meet each client's specific needs. Depending on the needs of the client, that assistance can include business plan development, feasibility studies, cash flow and financing projections, marketing plans, licensing and filing requirements, and development and implementation of sound financial management and tracking systems. Even if the client can obtain all their financing from a bank, staff will assist them in preparing their loan request and will advocate for the client with the bank. In essence, MCCD staff members become an advisor, an advocate, and a partner for that entrepreneur to lean on. In addition, each entrepreneur can draw on the diversity of backgrounds and expertise of our team MCCD is of experts, gaining the kind of support more established businesses benefit from with hired professionals and/or Boards of Directors. Open to Business Access to Capital Access to capital will be provided to qualifying businesses through MCCD's Emerging Small Business Loan Program (see Exhibit B Small Business Loan Program Guidelines below). MCCD also provides its financing in partnership with other community lenders, banks or municipalities interested in making capital available to residents and/or businesses in their community. Loan A ounts: Up to $25,000 for start-up businesses Larger financing packages for established businesses Designed to leverage other financing programs as well as private financing provided by the commercial banking community. EIigibIe Projects: • Borrowers must be a - for-profit" business. • Business must be complimentary to existing business community. Borrowers must have equity injection as determined by fund management. Allowable Use of Pro reeds: Interest Rates: Fees and Charges: EXHIBIT B Small Business Loan Program Guidelines in your community Loan proceeds can be used for working capital, inventory, building and equipment and general business operations. • Loan interest rate is dependent on use, term and other factors, not to exceed 10%. Loan Term Length: • Loan repayment terms will generally range from three to five years, but may be substantially longer for major asset financing such as commercial property. Borrowers are responsible for paying all customary legal and other loan closing costs. Open to Business Loan Products TO BUSINESS in your community MCCD manages a multi-million dollar loan pool consisting of a mix of State, Federal, Bank and private capital sources. We are able to structure financing packages for a variety of business purposes that are flexible and designed to either enhance a business's opportunities to leverage private financing, or act as a bridge to future financing be traditional capital markets. Below are some examples of the financing packages available to Open to Business clients: • Loan Packaging/Facilitation MCCD staff can assist potential borrowers with the preparation of business plans, cash flow and other financial projections and loan application materials. Our staff can assist entrepreneurs in identifying borrowing needs and accessing community lending programs that provide favorable terms and conditions for small business borrowers. We work with our clients to help them find the financing that best meets their unique needs. • Micro Loans Direct loans from MCCD for a variety of business purposes, including inventory, working capital, asset and equipment purchases, and start-up costs. Typical loan terms of 3-5 years, loan sizes up to $25,000 for retail/service businesses, or $50,000 for manufacturing businesses. This program is targeted to start-up and early stage businesses that cannot secure financing from traditional commercial lenders. • Four Percent Loan Program MCCD loans in partnership with private lenders for physical improvements and hard asset/equipment purchases. MCCD can provide financing of up to $40,000 at an interest rate of 4% provided that its funds are matched by an equal or greater amount of bank funds. The 4% rate is available for bank partnership loans provided that the term on the MCCD loan does not exceed five years. • Real Estate Participation Loans MCCD loans in partnership with private lenders to provide gap financing for real estate acquisition projects — including projects financed through the SBA 504 program. MCCD matches the bank's rate. MCCD also matches the bank's term provided that the term does not exceed 10 years. • Real Estate Acquisition Financing MCCD, in partnership with private lenders, provides permanent term financing for commercial real estate acquisition — up to 90% of the property's appraised value. MCCD MCCD is Loan Origination and Servicing TO BUSINESS in your community will provide up to 40% of the appraised value, with the bank providing 50% and holding first secured position. MCCD will match the bank's rate with terms up to 10 years (though amortizations may be longer). Transactional Financing MCCD provides short term loans for businesses whose cash flow cycle inhibits them from making regular monthly loan payments. Transactional loans are often used by construction contractors who have received or about to receive a construction contract with a community agency. MCCD can provide up front financing to cover the cost of labor and material associated with the contract. When the work on the contract is completed, the contracting agency issues a two-party check to cover the completed work, payable to MCCD and to the contractor. Larger loans are also available for businesses with performance bonds and escrow payment arrangements. MCCD seeks to integrate its financing products with other available resources in its service areas. To facilitate that integration, MCCD may be able to originate, package, underwrite and potentially service loan funds or programs offered by the County, individual Cities, or other Development authorities. Partnerships in other Open to Business communities include management of community facade/fix-up grants, packaging of City-controlled loan products, and full underwriting and servicing of Commercial loans with City funds "purchasing" a portion of the total financing. Where appropriate, MCCD and the municipal lending authority shall enact a separate agreement to govern the rights and duties of each party to such a partnership. Dakota County Fees: MCCD is Based on MCCD's current work load and resources, we would have to have a minimum of $100,000 in annual fees to begin work in Dakota County. The individual city pricing is listed below. To avoid confusion on what city is an Open to Business city, we would recommend covering all of Dakota County for $150,000 annually. Open To employment Business (2011) Annual Fee Dakota County Sort by population; Iargest to smallest Whole population employment county OTB (2010) (2011) Annual Fee 400,000 170,582 $ 150,000.00 population (2010) Marketing Open to Business: TO BUSINESS in your community Eagan 64,206 49,032 $ 15,000.00 Burnsville 60,306 31,656 $ 15,000.00 Lakeville 55,954 14,522 $ 15,000.00 Apple Valley 49,084 14,350 $ 15,000.00 IGH 33,880 9,647 $ 12,500.00 Hastings 22,172 8,303 $ 10,000.00 Rosemount 21,874 6,980 $ 10,000.00 Farmington 21,086 4,461 $ 10,000.00 SSP 20,160 8,112 $ 10,000.00 WSP 19,540 7,683 $ 10,000.00 MH 11,071 11,528 $ 7,500.00 City Total 379,333 166,274 $ 130,000.00 • Inform all city staff of OTB program, especially staff that has contact with prospective entrepreneurs and existing businesses. Have OTB staff make short presentation at city staff meetings • Feature OTB on website, especially advertise monthly walk in counseling sessions • Include article in city newsletter • Notices in utility bills • Promote program through local chamber of commerce • Coordinate meetings with key community bankers and OTB staff • Press releases to community newspapers on businesses helped by OTB From: Andrea Brennan imailto:abrennandakotacda.state.mn.usl Sent: Thursday, May 03, 2012 1:54 PM To: Nordquist, Bruce; Jake Sedlacek; Adam Kienberger (akienberger@lakevillemn.gov); Branna Lindell; David McKnight; dolson@lakevillemn.gov; Jim Hartshorn (jhartshorn©cityofwsp.org); John Hinzman (jhinzman@ci.hastings.mn.us); Jon Hohenstein (jhohensteincityofeagan.com); Kim Lindquist (kim.lindquist@ci.rosemount.mn.us); Lee Smick (Ismick@ci.farmington.mn.us); Mark Jacobs (mark.jacobs@co.dakota.mn.us); Peter Hellegers (peter.hellegerssouthstpaul.orq); Skip Nienhaus (skip.nienhaus©ci.burnsville.mn.us); Tom Link (tlinkinvergroveheights.org) Cc: Mark Ulfers Subject: FW: Dakota County Follow Up All: Attached please find the proposal from the Metropolitan Consortium of Community Developers (MCCD) for an Open to Business Program in Dakota County. The last page lists the proposed fees for each city to participate. They created 4 fee categories, based on population ranges. Please let me know if you think there is a more fair way to structure fees. In general, I think it would be best for everyone to provide their comments to me (and reply all), and I will consolidate and share with MCCD. Please provide me with your initial comments by COB Thursday, May 8. If you need more time, please let me know. Additional feedback/comments may arise as you discuss the proposal with city officials. MCCD has offered to attend individual city council or other meetings to provide information and answer questions about the program. Please note on the fee page that MCCD requires a minimum investment of $100,000 to initiate the Open to Business program in Dakota County. If there is enough interest to meet the minimum threshold requirement, the CDA will consider a 1:1 funding match (to reduce each city's contribution by 50%). The CDA will also consider hosting the MCCD staff person and acting as fiscal agent, if desired. The CDA's support for this is subject to approval by the CDA board and all participating cities required to meet the minimum threshold. This program is one of the topics to be discussed with the chamber executives on May 17, to solicit additional input. I will also forward the proposal to Bob Voss at DCTC for his comment. Please call or email with any other suggestions on process. Thanks much, Andrea Andrea Brennan 651-675-4464 TO: FROM: DATE: SUBJECT: DISCUSSION 000 0000 00 >te 00 000 City of Apple II Valiev INTRODUCTION President and Members of the Apple Valley Economic Development Authority May 31, 2012 Tom Lawell, City Administrat le Cedar Avenue Transit Station at 147 Street On April 12, 2012 the Apple Valley City Council adopted Resolution 2012-80 A RESOLUTION SUPPORTING THE PLANNING AND CONSTRUCTION OF TRANSIT FACILITIES AT 140 AND 147 STREETS AND CEDAR AVENUE TO MEET CITY TRANSIT AND ECONOMIC DEVELOPMENT OBJECTIVES. Since that time, representatives from the City and Dakota County have met multiple times to discuss development options, especially as it relates to the installation of a skyway at the 147 Street station. The purpose of this memo is to summarize the current status of those discussions and to address the economic development components of the skyway installation. Administration In conversations with Dakota County, the City has maintained that in order for the BRT system to be safe, successful and a catalyst for private investment along the Cedar Avenue Corridor, it is important to fully construct an enclosed station stop at 147 Street that includes an elevated skyway. Once reconstructed, Cedar Avenue in this location will be the equivalent of a nine-lane signalized highway carrying an average daily traffic count of 50,000 vehicles. It has been the City's position that the costs of completing this full build-out of the 147 Street station should be funded using typical Cedar Avenue BRT funding sources. Lastly, the City has maintained that traffic, business and transit rider disruption should be minimized and that fully completing the facility at 147 at this time will eliminate the need to cause additional disruption in the future. According to the approved Implementation Plan Update (IPU) for the Cedar bus transitway, transit boardings at the 147 Street station stop are expected to reach 600 per day by 2030. The County has taken the position that the transit ridership envisioned from 2013 to 2030 at this station can be safely handled at the soon to be improved at-grade MEMO intersections at 147 and 145 Streets. The County maintains that the 147 Street station will function differently than the Apple Valley Transit Station located at 155 Street in that there is not a park and ride facility at 147 Street. As such, transit riders will be coming and going from the 147 Street station from many different directions with many different origins and destinations. Because express bus service will not be offered at the 147 Street station, transit ridership will be spread throughout the course of the day and there will be less of a peak morning and evening rush. The County does agree that the facility should be built in such a way as to accommodate a future skyway. Phase I would provide a smaller enclosed building and an expanded rooftop that could be used for an expanded building at a future date. The footings to support the installation of a future elevator are also included in Phase I. Phase II would add additional enclosed building space, stairs, an elevator and a skyway across Cedar Avenue. The attached drawing shows what is envisioned in both Phase I and Phase II. COSTS The County indicates that State Bond funds are to be used in building the transit stops at both 140 Street and 147 Street and that a total of $2,954,191 has been budgeted for this purpose. Actual project costs are estimated to be $650,000 for the 140 Street station and $1,660,000 for the 147 Street station, for a total of $2,310,600. The 147 Street station estimate is for Phase I and does not include skyway, elevator, stairs, etc. To build Phase II would add an estimated $2,370,000 in additional capital costs. Once built, the station stop facilities will be owned by the Metropolitan Council. They have expressed concerns about the added operating and maintenance costs associated with adding Phase II at this time. They estimate the added annual operating and maintenance costs for Phase II alone will be $50,000. COST ALLOCATION County staff has indicated that funds are not available to build Phase II at this time. They would support the construction of Phase II as "local betterment" should the City or EDA wish to advance fund the project. They would recommend to the County Board that a performance milestone be established that if the average annual daily boarding at the 147 Street station stop exceeds 600 by 2030, the City would receive a full or partial reimbursement. Specifically, if the average annual daily ridership exceeds 600 in the first five years of operation (2014-2018) the City would receive a full reimbursement. Thereafter the amount of reimbursement would decline by 1/12 each year out through 2030. The operating cost issue also remains an issue. In treating Phase II as local betterment, Dakota County and the Metropolitan Council will expect the City to annually fund the incremental operating costs associated with Phase 2 until ridership exceeds 600 or 2030, whichever comes first. TIMING An additional issue raised by the County relates to the timing of construction and its impact on the commencement of BRT transit service. As currently envisioned, the station stops at 140 and 147 are expected to begin construction in October 2012 with full completion expected in May 2013. According to Dakota County, the addition of Phase II could impact this schedule in that the Environmental Assessment (EA) completed on the station stops would need to be amended as it did not previously include a skyway element. This requirement is being imposed by the Federal Transit Administration (FTA). The timeline to amend the EA is estimated to be 90 days. The FTA does not typically allow design to start until the environmental work is approved. Unless they would be willing to allow design work to proceed prior to the EA update, the construction on the station stops would not occur until 2013 and transit service would not commence until later in 2013. Given prior delays on the commencement of BRT bus service in the corridor, the County is very concerned about any plan that would delay the service start date beyond Spring 2013. OPTIONS Based on the above, there appears to be two options available to the City/EDA: 1. Accept the County's position that the Phase II work at 147 is not warranted at this time. Build the Phase I building to accommodate the future addition of an expanded building, skyway, stairs and elevator. Monitor transit ridership and safety statistics to determine when Phase II is warranted. 2. Reject the County's position that the Phase II work is not warranted at this time. If this option is chosen, the City could: a. Continue to advocate for the 2012 construction of Phase II before the Dakota County Board of Commissioners, the Dakota County Regional Rail Authority, the Counties Transportation Improvement Board (CTIB), the Metropolitan Council and the FTA, or b. Determine that the need for the Phase II improvements is important enough to the City and EDA that we are willing to advance fund the capital costs (estimated at $2.37 million) and the on-going incremental operating and maintenance costs (estimated at $50,000 per year). If this option is chosen, work closely with the FTA to address timing issues associated with the EA so that the bid package being prepared for the 147 Street station stop could be modified to include an Alternate Bid #1 for the cost of adding Phase II now. By doing so, the actual cost of adding the skyway would be known and a final decision on whether to add the skyway could be made following the opening of bids. NEXT STEPS If the EDA is interested in advancing Phase II construction as "local betterment", staff should be given direction to prepare a draft Joint Powers Agreement with Dakota County and the Metropolitan Council to formalize the repayment terms and conditions. The Metropolitan Council has submitted a site plan and building permit application for authorization to develop station stop facilities at 140 Street and 147 Street. The 147 Street facility includes Phase I only. The Metropolitan Council and County staff have expressed the importance of quickly receiving site plan/building permit authorization in order to allow them to finalize plans, receive bids and proceed with Phase I on schedule. The application is scheduled to be first heard before the Planning Commission on June 6. The Planning Commission review will address context and compatibility of Phase I with adjacent uses. The Planning Commission will also receive a copy of the Council's April 12, 2012 Resolution as additional background information. The earliest date for City Council review of a recommendation from the Planning Commission is June 14. Given the time constraints to get construction underway as soon as possible, feedback from the EDA is important and timely. activi CITY OF APPLE VALLEY RESOLUTION NO. 2012-80 A RESOLUTION SUPPORTING THE PLANNING AND CONSTRUCTION RUCTION OF TRANSIT FACILITIES AT 140th AND 147th STREETS AND CEDAR AVENUE TO MEET CITY TRANSII AND ECONOMIC DEVELOPMENT OBJECTIVES WHEREAS, the City of Apple Valley's adopted 2030 Comprehensive Plan recognizes the importance of economic development opportunities and connection to major regional locations through public transit stations on Cedar Avenue; and WHEREAS, the City has partnered with local, state, and federal agencies including the Minnesota Valley Transit Authority, the Metropolitan Council, the Dakota County Regional Rail Authority, and Dakota County to implement and operate the Apple Valley Transit Station at 155th Street West; and WHEREAS, permanent station stops are being planned in 2012 at 140th Street West and 147th Street West to provide the first Bus Rapid Transit (BRT) line in the State of Minnesota; and WHEREAS, the City seeks to promote Downtown vitality with BRT services; and WHEREAS, the Dakota County Regional Rail Authority's 2010 Implementation Plan Update (IPU) approved by the City in February 2011 plans for and fully funds a safe, elevated crossing of Cedar Avenue for pedestrians, and all season weather protection at station stop facilities; and WHEREAS, multiple national and local land use and transportation experts and organizations have evaluated the Cedar Corridor and emphasized the importance of permanent BRT facilities that will support business development, offer weather protection, and provide for safe and equitable crossing; and WHEREAS, planning and construction of the Cedar Corridor and BRT transit improvements has already been disruptive to the Apple Valley downtown business district since 2008; and WHEREAS, the City desires to not prolong near term transportation construction 7; and WHEREAS, the installation of a skyway crossing at the 147th Street station stop in conjunction with the construction of the station stop will ensure the safe crossing for planned nearby employee growth, and limits the disruption for downtown businesses; and WHEREAS, the Dakota County Traffic Engineer memorandum dated September 30, 2008, finds that the best accommodation for pedestrian, BRT users and vehicle traffic will be an overpass crossing facility; and WHEREAS, Apple Valley Building Official memorandum dated April 5, 2012, provides the required design, fire suppression and builcling requirements for station stop facilities at 140th and 147th Streets. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota: 1. Fully enclosed facilities at the 140th Street and 147th Street station stops, and an integrated skyway at the 147th Street station stop, that complies with all applicable City Codes and standards, should be installed as part of facility planning and construction in 2012. When sizing transit station facilities and planning safe crossing at station stops, the objectives to be achieved, in this order, include: minimizing business disruption; future development potential; bike and pedestrian connection and safety; service level and transfer opportunities; roadway traffic management impacts; and ridership. 3. The City of Apple Valley Cedar Corridor partners including the Dakota County Regional Rail Authority, the Minnesota Valley Transit Authority, Dakota County, and the Metropolitan Council are requested to work cooperatively in achieving the objective of a model Bus Rapid Transit system for the Twin Cities Region. ATTEST: ADOPTED this 12th day of April, 2012. etter, City Clerk 2 140th 111 115211110 -- 11,11111111 .1111111111 110 -, 101111116 , 811,' , Rilgi PPu! sueldan \s .foich 147th 147th 0 3 3 333 3 33 )33 ^ 133 0 3 0 3 0 3 3 3 .ggoiqrtzilitFft PPuFsueldaVS 1 \ 4-1 0.0 •••• ••••• •••• ••• City of Apple ValleV TO: President and Board Members of the Economic Development Authority, Executive Director FROM: Bruce Nordquist, Community Development Director, AICP Ron Hedberg, Financial Director DATE: May 31, 2012 SUBJECT: Discuss IMH Development Proposal for Legacy/Central Village At the June 4th EDA meeting, Tammy Omdal from Northland Securities will review the ongoing financial discussion with IMH through Titan Development and the City to resolve delinquent property tax and special assessment obligations that lead to future development of the Legacy North property. The basis for that work and ongoing discussion was a Memorandum of Understanding with IMH that was authorized by the EDA in December 2011. It was hoped during the 2012 legislative session, that an identified legislative solution to assist addressing the financial obligations would materialize and did not. Dakota County has provided notice that IMH must enter into a Confession of Judgement agreement related to the obligations by June 20 to avoid a property forfeiture process. There is an interest by IMH in entering into that agreement with the County if financial terms can be addressed. Attached for discussion purposes: • A Legacy Term Sheet that summarizes the assistance, land acquisition and payments being discussed • An aerial map of Legacy Village. • The December, 2011 Memorandum of Understanding. • The concept drawing for 325 housing units and some retail to be built in 2013. • The 2004 original Legacy Village plans and summary of changes necessitated by the significant marketplace changes that have occurred in recent years. Given the June 20 deadline that is approaching, the discussion and feedback at the EDA meeting on June 4 will assist staff with preparing agreements and requesting actions on June 14 by both the EDA and the City Council. IMH will have representatives at the June 4, 2012, EDA meeting. Community Development Public financial assistance: • City will reimburse the developer for $6.5 million of tax increment financing (TIF) eligible development costs. o $3,300,000 of developer land costs o $2,300,000 of developer site improvement costs o $ 886,000 for other qualifying improvements • Source and timing of the reimbursement of the $6.5 million in TIF eligible costs is as follows: o $1,150,000 to be paid up-front during construction phase based on certain milestones being met (the timing of this payment still being negotiated) o $5,336,000 pay-go TIF Note to be issued to the developer (with an interest rate of 5%) City Land Acquisition: Legacy Term Sheet Summary City/IM H • City will acquire property from Developer for park land for $787,449 2.5 acres (4 parcels=108,464 ft ) at $7.26/acre o City will pay the $230,816 of outstanding special assessments on the 4 parcels • City will acquire property from Developer for future economic development purposes for $199,236, 0.6 acres (1 parcel= 42,391 ft at $7.26/acre o City will pay the $43,524 of outstanding special assessments on the 1 parcel Summar of Develo.er Commitment for Pa ments: • $3,725,974 million of delinquent special assessments, taxes, penalties and interest will be paid in full over the next five years (this amount is net or after reimbursement from City for penalties and interest, $1,131,324, and a portion of the development cost paid by City, $1,150,000) • $525,737 of 2012 payable special assessments, taxes, and interest will be paid in full by August 15, 2012 • $2,695,105 of current outstanding special assessments and interest will be paid over the next 11 years, based on original certified schedule and interest rates • $390,000 in park dedication fees will be paid at time of construction / building permit Summary of City Commitment for Payments: • $1,131,324 reimbursement (waiving) of penalties and interest on delinquent special assessments and taxes over five years, this reimbursement would be made as the City receives the distribution of delinquent penalties and interest from the County. • Work toward creation of TIF district o $1,150,000 reimbursement of developer TIF eligible costs to be paid by construction completion 1. Payments from City will be phased in based on Developer reaching certain milestones, i.e., commencement of and completion of construction (the timing of this payment still being negotiated) the City would be reimbursed for these amounts from 10% of the future available tax Increment o $5,336,000 pay-go Note for reimbursement of remaining developer TIF eligible costs 1. Current estimates indicate developer would be paid back the principal amount plus interest within 23 yrs 2. Payments will be made based on 80% of the available increment and only to the extent increment is sufficient 5/31/12/RH/BN Legacy Recap of Special Assessments & taxes Due Delinquent portion remaining Portion IMH Allocation of Amounts Due: (years '11 and earlier) Current year '12 (Years '13 & later) Total Property Taxes 184,553 106,369 267,616 558,538 Special Asmts (incl COJ) 1,445,243 416,368 1,215,952 3,077,563 Penalties & Interst on De lq Taxes 72,527 104,084 176,611 Penalties & Interst on De lq Spec Asmts 632,556 632,556 Interest paid on COJ 260,802 260,802 Park Dedication Fee 390,000 390,000 Future spread Special asmts 2,695,105 2,695,105 city reimbursement of Penalties on Special Assessments (632,556) (632,556) Purchase of Parcels by City (986,686) (986,686) City contribution of upfront TIF (1,150,000) (1,150,000) 198,193 (109,819) 4,933,559 5,021,933 City allocation of Amounts Due: Property Taxes on City Purchase Parcels (2nd half pmt) 7,687 7,687 Special Asmt on City Parcels (2nd half pmt) 24,662 24,662 Penalties & Interst on Delq Taxes Penalties & Interst on Delq Spec Asmts 632,556 498,768 1,131,324 Interest paid on COJ Park Dedication Fee Future Special Asmts 266,453 266,453 Purchase of Parcels by City 986,686 986,686 City contribution of upfront TIF 1,150,000 1,150,000 2,403,139 664,905 498,768 3,566,812 Total 2,601,332 555,086 5,432,327 8,588,745 legacy Memorandum of Understanding Between IMIT Financial Corporation dba 'MR Special Asset NT 175—AVN, LLC and Apple Valley Economic Development Authority This non-binding Memorandum of Understanding "MOU" between IMH Financial Corporation dba MR Special Asset NT 175 AVN, LLC ("IMH") and the Apple Valley Economic Development Authority (the "EDA") is made and entered into on the date and pursuant to the terms set forth below, References to "City" refer to the City of Apple Valley, MN. Whereas, IMH is the fee owner of fourteen (14) platted lots in a portion of the City's Legacy Village referred to as Legacy of Apple Valley North as identified in the attached Exhibit A ("the 11V114 Property"), resulting from a foreclosure action against the former owner ; and Whereas, the IMH Property is subject to Ordinance No. 739, establishing the Central Village together with certain development approvals for The Legacy of Apple Valley North, entitled Planned Development Agreement, Park Dedication Agreement and Development Agreement, all of which are dated May 27, 2004; and Whereas, the IMH Property has been improved with public utilities and street improvements financed by a $6,832,152 special assessment duly adopted by the City pursuant to Minn. Stat. 429.061 and for which there was no appeal; and Whereas, IMH, as successor in possession of the IMEI Property, is in default on the aforementioned special assessment in the amount of approximately $4,232,566, together vvith past-due taxes payable to Dakota County in the amount of approximately $600,648; and Whereas, Dakota County is exercising its statutory authority under Minn. Stat. 281.23 to pursue tax forfeiture against the IMH Property based on the aforementioned delinquent special assessments and property taxes; and Whereas, the result of Dakota County's forfeiture action would be IMH's loss of ownership of the IMH Property; and Whereas, the City's special assessments on the IMH Property would be cancelled by Dakota County's forfeiture action, but pursuant to statutory authority under Minn. Stat. 429.071 may be re- levied at a future date and Whereas, time is of the essence to avert the pending forfeiture and elimination of the special assessments affecting the 1MH Property; and Whereas, IMH and the EDA desire to pursue development of the IMH Property on terms mutually acceptable to the-EDA and IMH and based on City approval of amendments to the development approvals for the IMH Property; and 1. Whereas, the EDA acknowledges that IMH has actively been pursuing the development of the IMEI Property and has acted in good faith and with diligence with respect to the proposed project and lIVIH acknowledges that the EDA has acted in good faith and with diligence in seeking a resolution of the past-due and future special assessments on the IMH Property; and Whereas, agreement between the EDA and IMH regarding the terms and conditions of any new use of the Ilval Property will be conditioned on resolving both the past-due taxes payable to Dakota County and the delinquent and future special assessments payable to the City related to the IMH Property. NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. IIME agrees to diligently prepare and submit applications to the City seeking approvals for the use of the IMH Property, which is expected to include approximately 325 residential units in three (3) multi-family buildings on a portion of the 1MHProperty identified in the attached Exhibit B. Based on market demand, initial construction is expected to commence upon City approval of the IMH plans and specifications, subject to City and IMH consideration and approval of the terms below. 2. The City will promptly, and in good faith, process the NH applications proposing a change to the allowed use of the IMH Property for consideration at duly scheduled meetings and special meetings of the City's Planning Commission and City Council. Nothing in this MOU is to be construed as any preapproval by the City of any application. 3. In conjunction with 11\414's pursuit of City approvals governing the use of the IMH Property, and subject to the City actually adopting such approvals, the EDA will consider recommending to the City the purchase of four (4) parcels of the IMH Property for the expansion of Kelly Park. Any recommendation is to be part of a negotiated package of economic development assistance that will include a price of land and past-due and future special assessments on which to base the purchase. 4. The-EDA will also consider the purchase of three (3) additional parcels of the IMH Property. The purchase price to be negotiated will also consider the past-due and future special assessments relating to such additional property. 5. All conveyances of IMH Property to the City and the EDA are independent events from the City consideration of the development approvals for use of the IMH Property, together with resolution of the past-due and future special assessments for such property. The City, if not then able to purchase all agreed-upon land for park use at one time, will be asked to cooperate in a schedule for purchase that considers the proportionate share of past-due and future assessments and release of EVII-1 from any further obligation. 6. The EDA and City will be asked by IMH to consider a Tax Increment Finance housing district, or another applicable TIF district category, with a term not to exceed 25 years pursuant to Minn. Stat. 469.176, the proceeds of which may be used by IMH for the use of 2. AGREED TO THIS DAY BY: IMR Fin a Corporation fl Bc: Wi1kcet kk-40t Its: TYCY6 1, - (2 -kA, Date:t. Date: the IMH Property, to develop a quality housing development consistent with the desire of the EDA, City and IMH. 7. The City will be asked by IMH to consider reallocating the remaining special assessments attributed to the IMH Property, in the amount of approximately $2,040,588, over a term of 20 years or such other term as allowed by state law. 8. The EDA and IMH will cooperate to ensure consideration and approval, as appropriate, of the review of for the IMH Property applications, together with the plans, specifications and agreements contemplated by this MOU and as required by law. 9. Notwithstanding the terms of this MOU, IMH reserves the right to challenge in Dakota County district court the authority of Dakota County to seize the MI Property and to address the past-due special assessments on the IM1-1 Property. In the event IMH determines in its self interest that pursuit of court action is necessary, IMH and the EDA, nonetheless, pledge to cooperate jointly achieve an acceptable outcome of all issues affecting the IMH Property. 10. While the parties agree to negotiate in good faith regarding all aspects of this MOU, nothing in this MOU shall bind the EDA or IMH with respect to the terms and conditions identified in this MOU and neither party shall have a right to pursue a claim arising from its terms. By: Thomas Its: Executive Director By: Its: Presi verson Apple Valley Economic Development Authority 3 N AV 3 LI Ni9 10 LEGACY NORTH PACK EXPANSION & FUTURE RESERVE PARCELS A LW .j ,,1 • .d � w ;..• .,: � 1, P 1 Pitim,01 "Sim loommur.aup.40 -- 1 paikvivik raw 4. :111N1AV 2111N3AV 30'0104 Vs e LU 1 46 04 11VHI VNYINOd 3niiAv a evl04 V4 10V a 46 3f1N3AV 31XV11/0 ) s PROPOSED NOVEMBER 11 2011 PLANS (IMH) Proposed Use Comm'l Res'I Units* Apartments 100 „ Apartments Apartments Future Reserve TBD TBD Future Reserve TBD TBD Park Expansion Park Expansion „ Park Expansion Park Expansion Apartments 150 Mix - Apts if Retail 7,500 Apartments Apartments 75 Apartments I 9ZE 009‘L 2004 LEGACY NORTH MASTER PLAN (HARTFORD) Use Comm'I Sq. Ft. Res'I Units Mix — Commercial/ 21,600 54 Apartments Townhome 18 Senior Apartments 248 Towrihome Commercial 28,000 Commercial 25,200 Townhome 20 Townhome 20 Townhome 20 Mix - Commercial/ 21,600 54 Apartments Mix - Commercial/ 21,600 54 Residential Commercial 40,000 Commercial 35,840 Commercial 28,000 0 909 018'1Z Location 1 o ' t 0 t 1 ; - IN NRNICOIN r cO I ,-- 1 -1-- 1 , , sieloi 0) (1) 0 z a) ti) 01) c (i) (2) << co 0 Lc) Lt .... ci\i ki) cY) L.n rY") Lr i 1 0 Cs4 .0 E g tlo (1,) (1) 0 o t.0 o0 u . c CN1 r\I co O. G) co 0 z CIO .co r4 u EE - 3 u CC Q.- (f) C * tta * v) •11 E c (-- - 0 !le* 0 * tti) 0 2 r** < = • U- G) G) a) 0 v) CZ) < < o re) „t o°, m r-i r7f r‘i • LID co 0. 0 (1) **Notes: 53,200 sq. ft. of commercial and 78 residential units Apple Valley - Plan Comparison not realized because of park expansion or future Legacy North o