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HomeMy WebLinkAbout07/10/14 EDA Meeting   Meeting Location: Municipal Center 7100 147th Street West City of Apple Valley, Minnesota 55124   NOTICE: The Apple Valley Economic Development Authority will hold a meeting at the Municipal Center, on Thursday, July 10, 2014, at 7:00 p.m. to consider the items listed in the following agenda: JULY 10, 2014 ECONOMIC DEVELOPMENT AUTHORITY MEETING TENTATIVE AGENDA 7:00 p.m. (immediately following the City Council meeting) 1. Call to Order. 2. Approval of Agenda. 3. Approval of Minutes of May 8, 2014. 4. Approval of Consent Agenda Items*: None 5. Regular Agenda Items: A. Approve Livable Communities Demonstration Account (LCDA) Grant Application. B. Parkside Village Revised Agreements for Two-Phase Project: 1. Resolution Approving Revised Development Assistance Agreement. 2. Resolution Approving Revised Business Subsidy Agreement 6. Staff Updates. 7. Adjourn. * Items marked with an asterisk (*) are considered routine and will be enacted with a single motion, without discussion, unless a commissioner or citizen requests the item separately considered in its normal sequence on the agenda nternet Web Site http://www.cityofapplevalley.org) ECONOMIC DEVELOPMENT AUTHORITY City of Apple Valley Dakota County, Minnesota May 8, 2014 Minutes of the special meeting of the Economic Development Authority of Apple Valley, Dakota County, Minnesota, held May 8, 2014, at 7:00 p.m., at Apple Valley Municipal Center. PRESENT: Commissioners Goodwin, Bergman, Grendahl, Hamann-Roland, Hooppaw and Melander. ABSENT: Commissioner Maguire City staff members present were: Executive Director Tom Lawell, City Attorney Sharon Hills, Community Development Director Bruce Nordquist, Public Works Director Todd Blomstrom, Finance Director Hedberg, City Planner Tom Lovelace, Planner Kathy Bodmer, Planner Margaret Dykes, and Department Assistant Murphy. Meeting was called to order at 8:02 p.m. by President Goodwin. APPROVAL OF AGENDA MOTION: of Grendahl, seconded by Hamann-Roland, approving the agenda. Ayes - 6 - Nays - 0. APPROVAL OF MINUTES MOTION: of Hooppaw, seconded by Hamann-Roland, approving the minutes of the special meeting of January 23, 2014, as written. Ayes - 6 - Nays — 0. CONSENT AGENDA President Goodwin asked if the Commission or anyone in the audience wished to pull any item from the consent agenda. There were no requests. MOTION: of Hooppaw, seconded by Bergman, approving all items on the consent agenda with no exceptions. Ayes - 6 - Nays — 0. CONSENT AGENDA ITEMS MOTION: of Hooppaw, seconded by Bergman, approving staffs submission of a pre- application for 2014 Metropolitan Council Livable Communities Demonstration Account (LCDA). Ayes - 6 - Nays — 0. MOTION: of Hooppaw, seconded by Bergman, approving participation agreement with Greater MSP for use of Salesforce.com Communities Portal Database. Ayes - 6 - Nays — O. END OF CONSENT AGENDA Economic Development Authority City of Apple Valley Dakota County, Minnesota May 8, 2014 Page 2 APPROVAL OF SCOPE OF SERVICE FOR DOWNTOWN DEVELOPMENT ORDINANCE Planner Kathy Bodmer summarized a draft Scope of Service that would be used to direct the preparation of an ordinance and design guidelines to facilitate business development in downtown Apple Valley. Previous planning studies had focused on development of the 1/2-mile area surrounding the Red Line Transit Station areas. The draft Scope of Service had been revised to include the entire downtown and shifts the focus of the ordinance from transit oriented development (TOD) to a Downtown Development Ordinance (DDO). Discussion followed. MOTION: of Grendahl, seconded by Hamann-Roland, approving going out for RFP (Request For Proposals) for Scope of Service for Downtown Development Ordinance. Ayes - 6 - Nays — 0. MOTION: of Hamann-Roland, seconded by Grendahl, approving Scope of Service for Downtown Development Ordinance. Ayes - 6 - Nays —0. AUTHORIZE STAFF TO PROCEED WITH UPDATING AGREEMENTS FOR A TWO PHASED APPROACH TO PARKSIDE VILLAGE Planner Kathy Bodmer stated IMH Special Asset NT 175-AVN, LLC and Titan Development I, LLC received approval on January 24, 2013 to construct the Parkside Village development on the northeast corner of Galaxie Avenue and 153rd Street West. The project involves the construction of two apartment buildings with a total of 322 units. In connection with the development of the property, the property owner, IMH, LLC, requested tax increment financing (TIF) to offset acquisition costs including the installation of utilities and land improvements. The associated tax increment finance and development documents were executed with the expectation that the project would be constructed in a single phase. Development assistance would not be provided unless the property owners develop the project in accordance with the approved development agreements. The property owner and developer are requesting that the City amend the project approvals to allow the project to be constructed in two phases, with the 196-unit Gabella building north of Kelley Park to be constructed first and the 126-unit Galante building adjacent to Galaxie Avenue to be constructed in the future. EDA authorization is requested to ensure the EDA supports this change. Discussion followed. MOTION: of Hooppaw, seconded by Bergman, authorizing staff to proceed with updating agreements for a two phased approach to Parkside Village. Ayes - 6 - Nays — 0. STAFF UPDATES Discussion led to special meetings, previously scheduled meetings and attendance availability. Economic Development Authority City of Apple Valley Dakota County, Minnesota May 8, 2014 Page 3 Executive Director Lawell commented that tonight's meeting was a special meeting and that the previously scheduled meeting for May 22nd would be cancelled. ADJOURNMENT MOTION: of Grendahl, seconded by Hooppaw, to adjourn. Ayes - 6 - Nays - 0. The meeting was adjourned at 8:31 p.m. Respectfully Submitted, Murphy, Departme Approved by the Apple Valley Economic Development Authority on 000 .006 e City of Apple Valley Attachment(s) 1. Draft Resolution 2. Grant Application ITEM: EDA MEETING DATE: SECTION: bA 5A July 10, 2014 Regular PROJECT NAME: 2014 Metropolitan Council Livable Communities Demonstration Account ("LCDA") Grant Application PROJECT DESCRIPTION Grant Application for Site Acquisition for Lot 1, Block 1, Village at Founders Circle (aka "the triangle") for proposed Village Pointe Plaza project STAFF CONTACT: Margaret Dykes, Planner PROJECT NUMBER: PC14-16-M DEPARTMENT/DIVISION: Community Development Department Proposed Action • Approve the 2014 LCDA Grant Application for the Village Pointe Plaza project. Project Summary/Issues On May 8, 2014, the Apple Valley EDA ("EDA") authorized staff to submit a Metropolitan Council LCDA Grant Application pre-application for the Village Pointe Plaza proposal (the "Project"). The Project proposes a pedestrian-friendly, integrated mix of uses with 78 units of senior-owned housing, retail, office, and a boutique grocery on the 3.65-acre lot southwest of the intersection of Galaxie Avenue and 153 Street W. The grant application request of $1,148,639 will be used for site acquisition of the property, which is now owned by the City. The City acquired the property from Dakota County after the site went through the tax forfeiture process. The City paid the County the $1,148,639 for the site to prevent auction or further languishing in the marketplace. If the Metropolitan Council approves the grant, the funds will be used to purchase the site from the City and convey the site to the developer, Cooperative Lifestyle Group, LLC, a partnership of Ecumen and Lifestyle Communities, LLC. By reducing site acquisition costs, the developer will be able to move forward with an intensive, vertical mixed-use project to provide lifecycle housing, and neighborhood commercial uses with an innovative structured parking solution on the most prominent center parcel in the Central Village. Budget Impact If the grant funds are approved, the $1,148,639 will be used by the EDA to acquire the subject site from the City. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA — 14 - RESOLUTION IDENTIFYING THE NEED FOR LIVABLE COMMUNITIES DEMONSTRATION ACCOUNT FUNDING AND AUTHORIZING AN APPLICATION FOR G NT FUNDS VILLAGE POINTE PLAZA SITE ACQUISTION ASSISTANCE WHEREAS, the City of Apple Valley, Minnesota ("the City") is a participant in the Livable Communities Act's Housing Incentives Program for 2014 as determined by the Metropolitan Council, and is therefore eligible to apply for Livable Communities Demonstration Account funds; and WHEREAS, the City established the Apple Valley Economic Development Authority (the "EDA") in 1990 to promote the economic, commercial, housing, and industrial development and redevelopment of the City; and WHEREAS, the EDA supports the Livable Communities Act's Housing Incentives Program; WHEREAS, the EDA has identified a proposed project within the City that meets the Demonstration Account's purposes and criteria and is consistent with and promotes the purposes of the Metropolitan Livable Communities Act and the policies of the Metropolitan Council's adopted metropolitan development guide; and WHEREAS, the EDA has the institutional, managerial and financial capability to ensure adequate project administration; and WHEREAS, the EDA certifies that it will comply with all applicable laws and regulations as stated in the grant agreement; and WHEREAS, the EDA agrees to act as legal sponsor for the project contained in the grant application submitted on June 30, 2014; and WHEREAS, the EDA acknowledges Livable Communities Demonstration Account grants are intended to fund projects or project components that can serve as models, examples or prototypes for development or redevelopment projects elsewhere in the region, and therefore represents that the proposed project or key components of the proposed project can be replicated in other metropolitan-area communities; and WHEREAS, only a limited amount of grant funding is available through the Metropolitan Council's Livable Communities Demonstration Account during each funding cycle and the Metropolitan Council has determined it is appropriate to allocate those scarce grant funds only to eligible projects that would not occur without the availability of Demonstration Account grant funding. D AFT NOW, THEREFORE, BE IT RESOLVED that, after appropriate examination and due consideration, the Commissioners of the EDA: 1. Finds that it is in the best interests of the EDA's development goals and priorities for the proposed project to occur at this particular site and at this particular time. 2. Finds that the project component(s) for which Livable Communities Demonstration Account funding is sought: (a) will not occur solely through private or other public investment within the reasonably foreseeable future; and (b) will occur within three years after a grant award only if Livable Communities Demonstration Account funding is made available for this project at this time. 3. Represents that the EDA has undertaken reasonable and good faith efforts to procure funding for the project component for which Livable Communities Demonstration Account funding is sought but was not able to find or secure from other sources funding that is necessary for project component completion within three years and states that this representation is based on the following reasons and supporting facts: The site is a tax forfeiture parcel that has been acquired by the City of Apple Valley to prevent auction or further languishing in the marketplace. The City was required to pay $1,148,639 to Dakota County. With the grant funds, which is the same amount paid by the City to Dakota County, the EDA will purchase the site from the City and convey the site to the developer, Cooperative Lifestyle Group, LLC, a partnership of Ecumen and Lifestyle Communities, LLC. By reducing site acquisition costs, the developer will be able to move forward with an intensive, vertical mixed-use to provide lifecycle housing, and neighborhood commercial uses with an innovative structured parking solution on the most prominent center parcel in the Central Village. 4. Authorizes the Apple Valley Community Development Director to submit on behalf of the EDA an application for Metropolitan Council Livable Communities Demonstration Account grant funds for the project components identified in the application, and to execute such agreements as may be necessary to implement the project on behalf of the EDA. ATTEST: ADOPTED this 10th day of July, 2014. Pamela J. Gackstetter, Secretary Thomas C. Goodwin, President Status: Editing Applicant Information Phone :* 952-953-2569 Phone Fax: Organization Information Name:* Jurisdictional Agency (if different): Organization Type: Organization Website: Address:* 7100 147TF1 ST 1 at Grant Programs are you LCDA Development most interested in ?* Application 00296 - 2014 LCDA Development - Final 01434 - Apple Valley Central Village - Village Pointe Plaza LCDA Development . Primary Contact: Name :* Margaret Salutation First Name Title :* Planner Department: Community Development Email :* mdykes@ci.apple-valley.Mn.us ci.apple-valley. Address :* Apple Valley Municipal Center. 7100 147th Street W. Submitted Date: Apple Valley Minnesota City State /Province APPLE VALLEY EDA Economic Development Authority Middle Name. Page 1 of 28 • 55124 Postal Code /Zip Dykes Last Name Ext. 6/30/2014 City State/Province County:* Dakota Phone:* 952 Fax: 1-A. Project Identification 2,000 characters APPLE VALLEY Minnesota 55124 Postal Code/Zip Ext. Pa ge 2 of 28 Describe the proposed project* Explain the elements of the project that will commence construction within the 3-year term of the grant DO NOT include references to or benefits from past or future phases of this project or adjacent projects; those will be addressed in question 5 on this page_ Village Pointe Plaza is the latest phase of the Central Village development, a compact mixed-use development in downtown Apple Valley. The project will deliver a pedestrian-friendly, integrated mix of uses with 78 units of senior-owned housing, retail, office, and a boutique grocery store on a vacant 3.65-acre lot within a 1/2-mile walk to Apple Valley Transit Station and the METRO Red Line. The site is prominent in Apple Valley, and development has been sought for over 10 years. Summarize the requested grant-funded activities.* Describe the grant funded activities. If you are requesting placemaking elements, explain how the requested items go beyond amenities to define the place and attract both people and investments. Note: the location of all requested items must be clearly visible on the required site plan. The funds will be used to offset site acquisition costs. The site is a tax forfeiture parcel that has been acquired by the City of Apple Valley to prevent auction or further languishing in the marketplace. With the grant funds, the Apple Valley EDA will purchase from the City and convey the site to the developer, Cooperative Lifestyle Group, LLC, a partnership of Ecumen and Lifestyle Communities, LLC. 2,000 characters How will the project meet the statutory goals and policy objectives of the Livable Communities Act?* Describe how the proposed Project will address LCDA statutory objectives and regional goals (see http://www.metrocounciLorgICommunities/Serviceskivable-Communities-Grants.aspx OR click on HELP in the Command Bar for the text of MN Stats. 473.25) • Interrelate development and transit — The site is within % mile of a regional transit facility, Apple Valley Transit Station. • Intensify land use for more compact development — The project will have 78 units of ownership housing for active seniors and approximately 42,000 sq. ft. of commercial uses on a 3.65-acre site. 2,000 characters 6/30/2014 VB. Project phasing Were there previous phases to this project?* If yes, how did the previous phase(s) contribute to the current phase? The Central Village is a neo-traditional planned neighborhood in the City's existing Downtown. The City designed the Central Village area to develop over a 10 to 15 year period to become a fully built out urban-style neighborhood for living, shopping and walking that replaces what might have been: low density, single-story mid-sized boxes of commercial uses and warehouse space. The previous phases of the Central Village are higher intensity uses. Existing development in the Central Village includes: Grandstay Hotel, Shops on Galaxie, Vivo Kitchen restaurant, RE/Max Real Estate, Legacy Square townhomes (1 05 units), and Haralson Apartments (36 units of affordable supportive housing). A response is required if the answer to the previous question was 'yes.' Will there be distinct No future phases to the project?* If yes, describe the future phase(s), their outcomes, and how they will be distinguished from the proposed current phase You MAY NOT include any outcomes from any future phases when you complete the housing, jobs, net tax capacity, or other outcome-based questions in this application. Current and future phases must be clearly distinguishable. There will be future development in the Central Village area, but the Village Pointe Plaza project will be done in one phase. Future Central Village development includes: • Parkside Village Apartments- 322 units - start 2014; • Rernington Cove Apartments - 101-units - start 2014; • Central Village West office building - approx. 100,000 sq. ft. - start 2015; • Dakota County CDA housing site - 168-units - start 2017. A response is required if the answer to the previous question was 'yes.' 1-c. Project location and characteristics No Street address of project site 1 5342 Founders Lane City* Summarize the previous land use(s) on the project site.* The site had been used for farming prior to master planning and subdivision in 2006. 5,000 characters max Current site characteristics & condition" If 'other,' describe Apple Valley Select the city in which the project site is listed. NOTE: Only the names of cities participating in the Livable Communities program are included in the list. Vacant Select as many as apply; if 'Other, explain below. Press Control+Click to select more than one 0 Enter an integer only; use 0 if none Page 3 of 28 6/30/2014 How many buildings exist within the project site?* What is the maximum height (in stories) of buildings currently on the site?* Describe the physical condition of the existing buildings on the site.* •11 There are no building constructed on the Village Pointe Plaza site. 2,000 characters max 2-A. Grantee contact Who will be the Project Manager at the city, county or local development authority for this project? Project manager (PM)* Bruce Nordquist PM phone* PM email* 2-B. Grant signatoty(ies) 0 Enter an integer only 952-953-2576 Enter numerals only - no punctuation _ Name, as it should appear on the grant agreement Mary Hamann-Roland Pamela J. Gackstetter 2-C. Project contacts Name Song Lo Dena Meyer Tim Nichols Title Project Manager Director of Business Development Co-manager bnordquist@ci.ajDple-valley.mn.us Enter in valid email format: someone@grantee_email_address.suffix After you have completed this field, click on Save in the Command Bar at the top right comer of the page. Organization ONE OONE Development, I LP- Ecumen ONETWOONE Development, LLC Phone 612-247- 4939 651-766- 4440 612-750- 2130 • Title Mayor City Clerk Page 4 of 28 Email Role song@songlolaw.corn Developer DenaMeyer@ecumen.org Developer tfn. nichols@gmail.com Developer 613012014 3-A. LCDA request Uses for this LCDA Requested Description of use request amount Site aquisition AFTER the To offset site acquisition costs required by Dakota County. With the grant, the $1,148,639.00 date of award Apple Valley EDA will purchase from City and convey to developer. $1,148,639.00 4-A. Prior Grant Funding Awarded Grant source 4-13. Use of HUD Financing Will the project use HUD financing?* Has the project received an 'invitation to apply' letter from HUD? What is the status of the HUD financing? In process, depending on outcome of LCDA grant application. 2,000 characters 4-C. Local sources Are local taxes being used to support the project?* If yes - for what portion of the project will the taxes be used. If no - why not? The City plans to be reimbursed from the development. 2,000 characters Yes No No Is local bonding authority being used in support of the No project?* Amount Status / explanation $0.00 If yes - what portion of the project will the bonds finance? If no - why not? The Apple Valley EDA/City plan to use debt service to cover existing bonds. Grant ID # Page 5 of 28 6/30/2014 2,000 characters Describe any other local sources that are being used in support of the project.* Special assessment obligations remain outstanding and the City is ready to consider spreading these obligations for up to 20 years. 2000 , characters. 4-D. Use of Tax Credits Will the project use tax credits No as part of the financing?* If yes, what type of tax credits will be used? Control+Click to select more than one at is the status of tax credit financing? Though no tax credits will be used,the financing does include a limited equity component that keeps the future purchase price of built units affordable. 2,000 characters If awarded, does the applicant or any tier sub-recipient intend No on using LCDA grant funds as ''' a loan?* 4-E. Use of TIF Is the project site within a tax increment finance district?* If no, will a TIF district be created? Is the TIF analysis complete? To what is the increment pledged? A response to this question is required lithe answers to either of the first two questions is 'Yes.' 5-A. Project Design Cohesiveness No Optimal function and compatibility* No A response to this question is required if the answer to the previous question is A response to this question is required if the answers to either of the two previous questions is 'Yes.' Page 6 of 28 6/30/2014 Page 7 of 28 Why have you selected this particular project design? Describe HOW Project elements are designed to optimize their function and compatibility to each other and to the entire Project, through location and orientation of buildings, location of parking or other Project design characteristics. The parcel is a key center of the Central Village, and the City desires a vibrant, active, mixed-use development, which will be delivered by the project. The three buildings that comprise the project are purposefully placed at the three edges of the site, defining the corners of major roadways. The project mixes plazas that connect to the existing infrastructure, and enhanced landscaping frames the area. Mixed uses and outward-facing activity will support pedestrian connections with way-finding devices like kiosks, site furnishings, and signage to provide direction. 2,000 characters Land use and element cohesiveness INSIDE the project site* Describe how land uses and elements within the Project are selected, arranged or designed to optimize their compatibility and support of each other and the Project. Integrating a .rnix of housing, commercial/retail, office and a boutique grocer with good multi-modal circulation and sustainable infrastructure that is supported by viable economic strategies will make both the site and the Central Village a destination that creates a sense of place and an anchor for Apple Valley. 2,000 characters Compatibility with surroundings and ADJACENT land uses Describe how land uses and elements within the Project are selected, arranged or designed to be compatible with and support adjacent land uses or neighborhoods. The location of the buildings and at-grade structured parking deemphasizes the car, but also opens up the horizontal vistas within the development. This provides the required surface parking addressing the need for parking as the area continues to mature and intensify. But the design also creates a more accessible, inviting pedestrian system in the Central Village. People can travel to the site by car, but are invited to explore on foot. 2,000 characters 3. Sustainable design Be specific - note also that any design features cited here must be shown on either your site plan or in your elevation submittals Does the project go beyond the local standard for Yes sustainable design practices? If yes, how? The site combines below-grade garage parking, at-grade structured parking with housing above that is connected and shares parking and amenities with commercial uses and a boutique grocer. The Central Village development was already designed to be a compact development that made it easy to connect to transit, and the project builds on that foundation. 2,000 characters - - a response is required here if the answer to the previous question was 'Yes.' 6/30/2014 6 -A. Number of Current Uses on the Project Site Residential - number of units Total Retail & other commercial - number of businesses Total 0 Office - number of businesses Existing units 78 Total residential units 0 0 Total commercial businesses Restaurants - number of businesses 0 Total 1 Total number of restaurants 0 Total 1 Total number of office businesses Industrial - number of businesses 5 0 Total 0 Total number of industrial businesses Government / institutional - number of uses Open space - number of uses 0 Total 0 Total number of government / public uses 0 Usek existing Total 0 Total number of open spaces 0 Units Units removed added 0 4 Businesses Businesses Businesses existing removed added 0 1 Existing Businesses Businesses businesses removed added 1 Existing Businesses Businesses businesses removed added 0 0 Existing Businesses Businesses businesses removed added 0 0 Uses Uses Uses existing removed added �0 0 Uses to be removed 78 Uses to be added Page 8 of 28 613012014 6-B. Net Size Changes in the Project Site Residential, in square feet Total Retail & other commercial uses, in square feet Total 25000 Total commercial square footage Restaurant uses, in square feet 0 Total Office space, in square feet Total Industrial uses, in square feet Open space, in square feet Total commercial/industrial SF Total square footage 0 0 133650 Existing Removed Added 133650 Total residential square footage 0 Existing Existing 5000 Total restaurant square footage 0 Existing 11600 Total office square footage 0 Existing Total 0 Total industrial square footage Government or institutional uses, in square feet 0 Existing Total 0 Total government/public square footage 0 Total 0 Total open space square footage 175250 Excluding open space 0 25000 Removed Added 0 5000 Removed Added 0 11600 Removed Added 0 0 Removed Added 0 0 Removed Added 0 0 Existing SF to be SF to be SF removed added 41600 Includes (from above) retail & other commercial, restaurant, office, and industrial Page 9 of 28 6130/2014 6-c. Reaching Potential How will the project use land more efficiently and maximize the potential of the project site?* The proposal of a high-density housing development on top of structured parking and incorporating the boutique neighborhood grocery store and commercial/office/retail maximized the practical density and use of this site. 2,000 characters 6-D. Other proposed land uses Is a hotel included in the redevelopment plan? If yes, how many rooms are planned? 6-E. Land Use Intensity What is the gross square footage of the project site?* Is any portion of the site non- buildable according to •the acceptable reasons in the application guide?* If yes, what is the NET BUILDABLE area in square feet within the project site? No 0 158994 No Excluded area 158994 If any area has been excluded, describe why. Refer to the application guide to determine eligible exclusions N. 7-A, Project connections to regional transit Page 10 of 28 Regional Transit Connections Describe how the Project will strengthen regional transit connections — both existing and planned.* The project is within V2 mile of the Apple Valley Transit Station (AVTS), and the METRO Red Line. The Central Village Area is already located in a compact suburban downtown core with existing sidewalks and trails. The project will become a destination on a neighborhood level by reinforcing connection between established developments in the Central Village, as well as the greater Downtown area. Site design, furnishings, and way-finding elements such as place-making kiosks, directional signage, and landscaping will enhance the pedestrian experience. 6/30/2014 2,000 characters Describe how the project will link to the local and regional transportation systems, based on their relation with the project:* The project will include internal connections to existing sidewalks. Additional trails and sidewalks are slated to be constructed to further enhance non-auto connectivity including a planned trail south of the site by contract with the Dakota County Community Development Agency that will pass through a City stormwater pond to connect to the AVTS. 2,000 characters 7-B. Connections to transit Type Description Sidewalks and trails are in place along most streets in Central Village and Downtown connecting existing Sidewalks housing and businesses, and the project site to AVTS. Sidewalks are installed on site perimeters as new development or redevelopment occurs. Paths and trails are in place along Cedar Avenue, County Road 42, and other principal streets providing Paths/trails bikeway access between the project site, AVTS, BRT stops and employment, commercial and government centers. The City has installed 10 bike racks at several key locations. Private businesses are encouraged to install Bike racks racks, and there are nearly 1,200 bike spaces in the City. Street The City street grid in the area consists of short blocks with sidewalks providing accessibility for residents and employees. Transit shelters No transit shelters are proposed for the project site. AVTS is an enclosed heated and cooled station. Pedestrian No pedestrian waiting facility is proposed for the project site at this time. Ho Wever, if ridership requires it, the waiting facilities City will work with the local transit provider (MVTA) for a transit stop on the site. Other None 7-C. Other connections 7-D. Use connections Description 500 characters How will proposed land uses within the P\project site connect, support or complement future phases? Future Phases: 500 characters Describe how the Project will increase or improve connections between jobs and housing. Connection Improvement:* Internal pedestrian and bike connections will be constructed from the buildings on the project site to existing City sidewalks. P age 11 of 28 6/30/2014 Connection type Early master planning of the Central Village resulted in the site being bounded by a paired one-way coupler system — Founders Lane and 153rd St. W. The existing collector road was split in 2004 to support a pedestrian-oriented development. Streets - new No new streets are needed for the project. Streets - No streets will be realigned for the project. ect. Sidewalks Sidewalks exist on the site. Paths/trails Paths and trails exist in Downtown Apple Valley. Other None Streets - existing 7-E. Other major infrastructure needed Major infrastructure None 8-A. Consistency with Comprehensive Plan 2,000 characters If no, describe how the plan and the project will be made consistent. 2,000 characters 8-B. Relation to area plans and zoning Explanation Is the proposed redevelopment consistent with the planned land use identified in the local comprehensive Yes plan that has approved by the Metropolitan Council and with any adopted area or neighborhood plans?* If yes, describe how it is consistent with the comprehensive plan and any adopted area or neighborhood plant The site is guided Mixed Use, which allows for a mix of medium- and high-density housing, retail, office, commercial, public uses, and parks. The development in these areas is to be organized in a compact, walkable way; improve environmental conditions, like water quality; and connect to transit systems, and the broader community. The project includes high-density housing, compact retail and commercial uses, and reduced parking standards on a site that is near regional and local transit connections. The development also fulfills the 2002 Central Village Master Plan by developing a compact, vertical mixed use center of the Central Village. Page 12 of 28 6/30/2014 is the project within the boundaries of or subject to an area, neighborhood, corridor or other similar plan adopted by the municipality within which the project is located?* Describe how the project implements the plan: 2,000 characters 9-A. Natural Resources If yes, how many square feet of green space will be added? If yes, identify the corridor: Yes If yes, what is the name of the The Central Village Plan. plan? " . If yes, what is the type of the • Neighborhood Plan plan? Is the site within a designated development district or an Yes approved development (PUD)? If yes, what is the name of the Planned Development 739 district or PUD? What is the status of the site City ty Approval Pending If needed, please provide additional information on the status of the site plan. The development team has presented preliminary plans to the City Council. The project will require final site plan and building review and approval. The developer will submit final plans for review upon approval of the LCDA grant. • Conserve water supply?* Yes Improve water quality? Yes Provide green space?* No Conserve Natural Resources Inventory and Assessment No acres?* Conserve areas within an identified metro conservation No corridor area?* 250 characters - a response is required if the answer to the previous question is 'Yes.' 250 characters - a response is required if the answer to the first question in this section is 'Yes.' The project includes multi-story, multi-use buildings, reduced setbacks to create street presence, the creation of pedestrian and transit-oriented development; and parking structures. 250 characters - a response is required if the answer to the first question in this section is 'Yes.' 250 characters - a response is required if the answer to the previous question is 'Yes.' No Page 13 of 28 6/30/2014 Enhance other natural connec Conserve natural vegetation types?* If yes, identify the vegetation types: Include other types of natural resources conservation or native planting restoration activities?* 9-B. Housing Density Removing existing housing Will the project remove existing housing?* If yes, what type(s), affordability level(s) and quantity of housing will be removed? Will the proposed project create or retain housing?* Housing density/acre If yes, what is the current housing density? If yes, what is the planned density? Affordable housing Will the project include affordable housing? If yes, what mechanisms will be employed to assure long- term affordability? 2,000 characters No Yes If yes, describe: The project will incorporate native plantings in the landscaping design. How will the redevelopment project conserve water or conserveirestore native vegetation, based on the answers above?* The project will use Green Communities Criteria for achieving sustainable practices that include the use of water-conserving fixtures, Energy Star Building Performance standard, Energy Star appliances and lighting fixtures, low VOC paints, and sustainable building practices. No Yes 0 per acre 21.0 per acre Yes Summarize the housing to be built in this phase of the proposed project. 78 units of cooperative ownership housing for active seniors who are 55 years and older. Page 14 of 28 20% of the units will be affordable to those making 50% AMI. The cooperative legal structure provides a perpetual affordable mechanism, and limits the fixed annual appreciation to no more than 2% to the shares price for every new buyer in perpetuity, making the units affordable for at least the term of the 40-year HUD insured mortgage. This mechanism creates an artificially deflated share payment allowing subsequent owners to purchase the units at a significantly lower market price. 6/30/2014 How many individual buildings are planned? How many stories? 3-4 Planned housing type(s) Select all that apply Select all that apply 3 None of the above Press Control+Click to select all that apply Minnesota Sustainable Building Guidelines Press Control+Click to select all that apply How does the project support the city's Housing Action Plan? The project provides Iifecycle housing for active senors that wish to live in a compact, transit-oriented development. The proposed development is consistent with the City's goal of providing a range of • different housing styles to provide more life-cycle housing within the community and a return to providing ownership housing in the Central Village: 2,000 characters - SAVE YOUR WORK after completing this question. 9-C. Current housing mix on site Housing type None None Condominium, Senior Independent Living Press Control+Click to select all that apply •• # units 9-D. Housing currently on adjacent parcels Current affordability 0 0 Page 15 of 28 Current housing Multi-family rental Ownership town/row houses Senior 9-E. Planned Housing Mix # units Current affordability 36 Affordable @ 30% AMI 105 Market Rate 134 Market Rate # units Affordability 5 Affordable @ 50% AMI 8 Affordable © 50% AMI 22 Market Rate 29 Market Rate 3 Affordable @ 50% AMI 11 Market Rate # Bedrooms One BR Two BR One BR Two BR Three BR Three BR Tenure (ownlrent) Own Own Own Own Own Own Street name Founders Lane Founders Lane Founders lane 6/30/2014 10-A. LCDA Metrics Proposed parking Number of parking spaces:* Dedicated vs, shared parking Number of parking spaces:* Stalls per dwelling unit Calculations based on previous entries Total housing units proposed 78 Proposed commercial/industrial square footage Commercial square footage per parking stall 110 Surface spots 78 41600 As entered in question 6-A, Planned Land Use Floor Area Ratio and Dwelling Units per Acre Gross site square footage 158994 (As entered on page 6-E) Excluded area 158994 (As entered on page 6-E) Total square footage 175250 for proposed uses Excluding open space Gross FAR 1. 1 Net,FAR 0 Gross dwelling units per acre 21.37 Net dwelling units per acre 0 Dedicated Dedicated residential non-residential exclude on street exclude on street 256.79 Indudes both shred and dedicated non-residential parking 11-At Transit and Multimodal Transportation 2,000 characters 52 78 22 240 Above ground Below ground structured structured On-street 110 52 1.0 Number of housing units (entered in question 9-F) divided by dedicated residential parking from above Shared parking exclude on-street) How does the redevelopment project promote multi-modal transportation, e.g., biking, walking, transit, etc.?* There will be walking paths throughout and through the project connecting to existing sidewalks. Page 16 of 28 Total excluding on-street 162 Dedicated commercial parking plus shared parking What transit routes are within 114 mile of the project site?* MVTA Routes 420, 440. AVTS is within 1/2 mile of site, which allows access to the METRO Red Line, and MVTA routes 480, 477, 475, and 442. 6/30/2014 2,000 characters B. Aviation Is the Project located within 3 miles of an airport?* if yes, is the project consistent with the airport safety zone plans? If yes, is the Project consistent with airport noise zone plans? Use on-site stormwater management techniques?* Conserve surface water?* Conserve groundwater?* Use other water management development practices?* If other, describe: 2,000 characters Atter redevelopment, how much rainfall (in inches per event) will the site be able to retain AND infiltrate on site?* Discharge into sewers No 11-B. Storm Water and Drinking Water A. The redevelopment project will... Connect to the municipal sanitary sewer infrastructure? Yes No Yes Yes Yes The site has already been engineered and developed for stormwater management, which includes a two-cell regional treatment pond already in place. The two-cell systdm consists of an upper pond to remove sediment,and a lower infiltration pond. Though on-site infiltration is not required, the developer has said they will use all available water conservation and infiltration mechanisms. Will the Project require a high construction-related volume discharge of contaminated groundwater into the sanitary sewer system (greater and 100 gallons per minute)?* Is the project site located in a drinking water supply management area designated Yes by the Minnesota Department of Health?* 0 Enter the numbers only, in inches (2 decimal places allowed;do not enter the word,or symbol for inches) No Page 17 of 28 If yes, how will the cleanup and redevelopment improve water quality in a drinking water supply management area? The City has implemented a wellhead protection plan that has been approved by the Minnesota Department of Health. The water supply for Apple Valley is obtained from 16 primary wells and 3 other 6/30/2014 Page 18 of 28 wells. The wells are not susceptible to contamination because they meet well construction standards and do not present a pathway for contamination to readily enter the water supply. A response to this question is required if the answer to the first question in this section is 'Yes.' 2,000 characters 11-C. Green space and parks Does the project ADD green space?* If yes, what kind(s) of green space? If yes, how and where will the green space fit into the project plan? A response to this question is required if the answer to the first question in this section • is 'Yes.' 2,000 characters Does the project enhance connections to existing green spaces and other natural Yes areas, within the project footprint OR adjacent to it? If yes, how? Site design will be pedestrian friendly, and will reinforce connections to adjacent parks (Kelley Park, for example) and other local green space amenities already in place, including an 8-acre stormwater pond that will have a trail connection allowing access through that area. 2,000 characters - a response is required if the answer to the previous question is 'Yes.' Does the project use natural resources and features, where feasible and appropriate, as No community assets and amenities?" If yes, how? The site is vacant_ 2,000 characters - a response to this question is required if the answer to the previous question was 'Yes.' Will a new park or trail be created as part of the redevelopment?* If yes, describe: A response to this question is required if the answer to the first question in this section is 'Yes. 2,000 characters What types of parks, trails or open space are within 112 mile of the project site. Select all that apply. No Press ContrOI+Click to select as many as apply. A response to this question is required if the previous answer was 'Yes.' No Local park, Local trail 6/30/2014 If other, describe: 2,000 characters How is the project site connected to the parks, trails or open space identified above? 2,000 characters 2000 , characters 2,000 characters 2,000 characters The site is adjacent to the 153 Street bikeway that connects to Kelley Park. The planned Dakota County Regional Greenway trail will be constructed approximately % mile from the project site. A response to this question is required if the answer to the first question in this section is 'Yes. 2,000 characters Is the project site directly adjacent to a REGIONAL park No or natural area?* How does the project provide or enhance natural buffers to REGIONAL parks, trails or open space? 12-A. Tools and Processes A. Public process Describe the public input process to date" The City Council and Apple Valley Economic Development Authority reviewed the preliminary plan and expressed support. To date, no public comments have been received because a formal application for approval has not been submitted. Formal application will be submitted pending LCDA grant approval. At that time, a public hearing will, be held at the Planning Commission for review of the entitlements when the development moves forward. Did the Project change in response to public involvement?* If yes, specifically how? No Page 19 of 28 How have elected officials or city council supported the Project?* The City Council and Apple Valley Economic Development Authority reviewed the preliminary plan and expressed support. B. Public opposition Describe any known public opposition to the project:* 6/30/2014 None identified to date. 2,000 characters C. Regulatory processes Describe city review or regulatory processes used or developed for this Project, such as zoning codes, form-based codes, design or development standards.* The site is zoned Planned Developnient 739, which allows for an integrated mixed-use development that is pedestrian- and transit-oriented consistent with the Apple Valley Central Village Plan. The Central Village plan requires the following: • The use of parking structures and on-street parking spaces. - The creation of multi-use, multi-story buildings of 3-4 stories in height with retail on the first floor and office and/or residential on the floors above. • Reduced setbacks that create a street presence. The existing zoning and Central Village plan already allow the proposed project innovation. 2,000 characters Will it be necessary to modify or create local regulations to No allow Project innovation?* If yes, in what specific ways? 2,000 characters at is the status of those changes? 2,000 characters 13-A. Regular Jobs Job type New FT job New FT job New FT job New FT job New FT job New FT job New FT job New FT job New PT job New PT job New FT job New FT job New PT job Position Title Housing Marketing Coordinator Housing Manager Housing Concierge Housing Maintenance Workers Grocery head manager Grocery manager Grocery manager Grocery store floor staff Grocery store floor staff Grocery store floor staff Retail manager Office manager Office staff Annual wage per position $45,000.00 $60,000,00 $25,000.00 $25,000.00 $75,000.00 $60,000.00 $60,000.00 $38,000.00 $21,840.00 $10,400.00 $45,760.00 $45,760.00 $23,400.00 # Jobs 1.0 1.0 1.0 2.0 1.0 1.0 1.0 25.0 25.0 15.0 1.0 1.0 11.0 FTEs at living wage? tn 1.0 0 0 1.0 1.0 1.0 25.0 0 0 1.0 1.0 0 Page 20 of 28 # FTEs 1n 1.0 1.0 2.0 1.0 1.0 1.0 25.0 0 0 1.0 1.0 0 613012014 New PT job Retail staff 13-B. Temporary jobs Approximately how many construction and cleanup jobs 200 will be utilized during the redevelopment?* 13-C. Methodology Describe the methods used to estimate the new and/or retained jobs identified above.* Future tenants and developer have supplied the estimated number of jobs.. Page 21 of 28 $15,600.00 12.0 0 0 98.00 32.00 35.00 6/30/2014 14-A. Site Control Status - Property Owner(s) Property Owner City of Apple Valley 14-B. Site Control Status - Anticipated Transactions, by Parcel Property Seller Buyer Purchase Purchase Purchase price Site Access Foreclosure? Conclusion? Option month Yr control date expiration date ID # 01- City of Apple Valley Purchase Economic 2015 01/30/2015 No Development $1,148,639.00 option 81750- Apple 01-010 Valley Authority Address 7100 147th Street W. 14-C. Site Control Status - Comments regarding ownership Are the current owner, developer or future owners Yes related in any way?" If yes, explain how they are related. The Apple Valley Economic Development Authority is a separate muncipal corporation, but members of the Apple Valley City Council sit on the EDA. Additional comments regarding ownership The Apple Valley EDA will convey the property to the private development group for the project upon completion of all necessary agreements. After the acquisition of the parcels noted above, will you have 100% of the land Yes necessary to commence this development? If no, what percentage of the necessary land will still need to be purchased? Do you intend to use any portion of the funds requested in this application to reimburse another entity for property acquired within the twelve months prior to the application due date?* If yes, identify the entity to be reimbursed Enter the number only Yes NOTE; Conditions apply. See the application guide. The City of Apple Valley City Apple Valley Page 22 of 28 State Zip Minnesota • 55124 TOD funds awarded for site acquisition may be used only to finance the value of the property as appraised by an independent appraiser within six months of the application due date. 6/30/2014 Will the purchase price exceed the independently-appraised No value?* If yes, describe how the land value was established 2,000 characters If you are requesting funds for land acquisition, will the requested amount cover the total cost of the property? If the requested amount will not cover the total amount of the property, what is the percentage of the total cost of the property financed by the requested LCDA funds? All sources of funding must also appear in the Sources and Uses attachment What other sources of funding will be used to acquire the Private development resources necessary property? 14-12 Site Control Status - Developer(s) Organization name Address 15-A. Development Costs Residential ONLY Commercial/industrial ONLY OTHER development Special equipment Appraisal No 33.0% 15-B. Development Costs - Adjustments City State Zip Contact Phone Email name ONETVVOONE 3530 Lexington Shoreview Minnesota 55126 Tim 612-750- tfn.nichols@gmail.com Development, LLC Avenue No., Ste. 100 Nichols 2130 $125,000.00 $2,415,000.00 $14,857,920.00 $1,650,080_00 Site prep Soft costs Construction New infrastructure $375,000.00 $2,669,364.00 $7,800,300.00 $866,700.00 Site prep Soft cots Construction New infrastructure $0.00 $0.00 $0.00 $0.00 Site prep Soft costs Construction New infrastructure Page 23 of 28 $0.00 Cost adjustment (-1- or -) 6130/2014 Market study Other explanation Total adjusted costs $0.00 15-C. Development Costs - Calculations Total Development Costs Total Construction Cost Residential Development Cost per square foot Total Development Cost per dwelling unit Commercial/industrial cost per square foot PIN 01 Description Mixed use commercial Cooperative Senior Housing $19,048,000.00 Residential $22,658,220.00 $142.52 $244,205.13 $281..52 16-A. Current Net Tax Capacity 16-B. Projected Net Tax Capacity Future property 3a - Commercial Industrial - over $150,000 la - Residential - first $500,.000 $11,711,364.00 Commercial/industrial 133650 $ 0.00 Other development Total Residential square footage - Proposed land uses 41600 78 Commerdalfindustrial SF entered in 6-A Total units entered on page 9 Taxable Mkt Value Class $1,111,600.00 Tax exempt $4,800,000.00 $29,200,000,00 $30,759,364.00 Page 24 of 28 Moo Cost adjustment (+ or -) $0.00 Cost adjustment (+ or -) $0.00 Cost adjustment (+ or -) NTC this item $0.00 $Q.00 Expected Fair Market Value of this Projected net tax capacity, property class this item $96,000.00 $292,000.00 $388,000.00 6/30/2014 17-A. Innovation and demonstra ion value What are the innovative elements of the project?* The project provides a cost-effective, compact plan that integrates a mixed of uses on a small site within Y2 mile of the AVTS and METRO Red Line. The high-density 78-unit active senior housing cooperative provides owner-occupied limited equity housing to the area This component is complimented by the boutique grocery store, office and retail commercial space, from which there will be job creation and new retailing choices in the marketplace. The project will incorporate environmentally sensitive design elements into the site and promote connectedness of community and place-making kiosks, pedestrian- friendly walking paths throughout as well as through the site. The structured parking allows for horizontal sightlines into, across and through the Development that will enhance visibility and accessibility of the site and the Central Village as a whole. 2,000 characters What elements demonstrate practices, partnerships or design that could be replicated elsewhere?* Compact, mixed-use development with ample pedestrian connections to nearby transit. The partnership between the City of Apple Valley, the Apple Valle EDA, and the private developer supports the project uses and design. 17-B. Catalytic value Will the project move forward to commence construction by 1213112017 without LCDA funding?* If yes, what changes would need to be made to the project to maintain that schedule, if LCDA funding is not awarded? No Will the project catalyze further private investment in Yes the area?* 2,000 characters Page 25 of 20 If yes, how will the project attract private investment to the surrounding community? The subject lot is generally considered by the private market to be the most difficult to develop in the Central Village because it is bounded by 3 major roads, which means every side of the development is visible and must be held to a higher design standard. By developing the site, it signals to the market that the Central Village is a viable and vibrant development area. There are available adjacent parcels that are shovel-ready and it is anticipated these sites will be developed within the ng 5 years. 2,000 characters 6/30/2014 MA. Identify Partners Identify the partners involved in the proposed project* Other - describe: 2,000 characters Describe any collaboration among the parties selected above who are involved with the reidevelopment One2One Development, LLC, is a unique partnership of Lifestyle Communities, LLC and Ecumen. One2One Development has a combined expertise and resources in the developing, marketing and managing senior housing cooperatives. Lifestyle Communities is a developer with a focus on active adult (55 and better) housing, and has unique expertise in developing cooperative housing communitiesthroughout the Twin Cities and beyond. They understand and have been successful in the development and financial structuring of over 30 cooperatives making a meaningful impact in the lives of nearly 3,000 individuals that reside in these cooperative communities. Their partner, Ecumen, is a non-profit 501(c) (3) corporation with over 150 years of providing housing and services to the aging population. Headquartered in Shoreview, MN, they are led by a 15-member board of trustees, and one of the largest non-profit providers of older-adult services in Minnesota, as well as one of the top 20 in the nation. They are uniquely positioned to market and manage senior housing cooperatives such as the one proposed in this development. The property is owned by the City of Apple Valley, which will convey the property to the Apple Valley Economic Development Authority, who will then convey to the developer. 2,000 characters 19-A, Pre-Development Activities local government, non-profit partners, Developer Activity Current conditions in the redevelopment area have been assessed Visioning process completed Concept planning completed Feasibility studies completed Alternatives analysis completed Project phasing approved Redevelopment alternatives analysis completed Specific redevelopment project identified Site control achieved Financing options identified Page 26 of 28 Done? Yes Yes Yes No Yes 04/30/2014 NA NA Yes 04/30/2014 Yes 01/31/2014 Yes 04/30/2014 Date 04/30/2014 04/30/2014 04/30/2014 Yes Yes 6/30/2014 Phase !environmental site assessment completed Phase II environmental site assessment completed Hazardous materials survey completed Response Action Plan approved Detailed design concept completed Historic preservation review completed Design plans completed Site plan completed Storm Water Pollution Prevention Plan completed City entitlements secured (e.g_ site plan approval, zoning approvals, etc.) Construction documents completed Construction financing secured 19-B. Development Activities Activity Hazardous materials abatement completed Demolition completed Cleanup implementation started Cleanup complete Final site grading complete Construction started Construction completed Certificate of Occupancy obtained 19-C. Multiple Types of Development For developments with more than one type of use (e.g., residential and commercial), describe any differences from the dates listed above regarding the projected construction and expected occupancy schedule, by type. 2,000 characters 20. Attachments Attachment Site map from Make-a-Map: project boundaries must be clearly identified. (PDF) Site Map 2 from 'Make-a-Map. Project boundaries must be clearly identified, (PDF) Overview map, from r (PDF) A site plan showing the Project in detail. See instructions above. (PDF) Done? NA NA NA NA No No No No Description Village Pointe Plaza Site Map Village Pointe Plaza Site Map 2 Village Pointe Plaza Overview Map Village Pointe Plaza Site Plan No 12/01/2014 No 01/30/2015 NA Yes NA Yes No 04/30/2014 NA Yes 04/30/2014 Yes 04/30/2014 No 11/28/2014 No 02/27/2015 No 11/2812014 No 11/28/2014 Date completed 05/15/2015 05/15/2015 05/15/2016 06/30/2015 File Name LCDA App Site Map - Village Point Plaza.pdf LCDA App Site Map 2 - rtdf Village Pointe Plaza.pdf LCDA App Overview Map - Village Pointe Plaza.pdf " Site Plan - Village Pointe . pdf Plaza.pdf Page 27 of 28 Type N!A Yes Yes Yes Yes File Size pdf 588 KB 1.5 MB 2.2 MB 3.6 mB 6/30/2014 A local resolution of support from the municipality in which the Project will be located. NOTE: This may be submitted up to 30 days after the application due date. (PDF) Sources and uses (Microsoft Excel) 21. Other attachments File Name Developer Letter- Village Pointe Plaza.pdf (1.3 MB) Developer Proforrna - Village Pointe Plaza.pdf (348 KB) Village Pointe Plaza Floor Plans.pdf (2.6 MB) Village Pointe Plaza Rendering.pdf (1.6 MB) Village Pointe Plaza Sources 2014 LCDA Sources Uses xisx and Uses Spreadsheet Village Pointe Plaza.xlsx Description Village Pointe Plaza developer letter Developer Proforma April 2014 Village Pointe Plaza floor plans Village Pointe Plaza Rendering Page 28 of 28 1.3 MB 348 KB 2.6 MB 1.6 MB 75 KB File Size 6/30/2014 0_ a) (1) a) co 0 a) 0 c CO CO 0 0 CO = C C O 0 :(f) (/) CT 0 O 0 CO CO - 0 V C C CO CO co co 0 a) co 2 175 a) 5 cn E 0) .sp CO 0 0 _c c 0 0 co (r) (0 0 0 0 0 0 (0 ▪ 0 (0 E co E L 0 0 T.) o 0 0 (1) 2 cy) 0) (0 ) 0'5° 0 0_ co 0 0 0) CO 0) E co 0 0 0 0) 0 . 0 0) C) 06 co 0 O • 0 • Qa a O 8 6- - 7 (3) (Q 4° 0 c 0 t/) t.) M6 �W` c 0 �qq VA 6V 0) 0 0 0 cri 0 0 c 0 co 0 co as 0 CO 0 0 U -cct; TO N C J i- cLi �✓ L o .) P- 0 chart .................. 135 • -o a) cD c • -J ▪ c C) • 2 Ea 0 • .— (I) U) C • -0 CO a Q_ c Q_ a t?» O tt LJ 11 E E 0 0 co LL E1 0 a) as 5 LO 2 o r- < ft a) ... a .---. - CD 1-- • 0- 0 .six tx� • ..a..,,. �W � .., en;: �s `s,E�°i�, is ��� c >. sc.,.: a, a, ...,,,<,�; •,.x ^.,:.axe.... .:t `aim,• <: ➢� .,.. ,: .. ..., s e N a) = C g C E O �— U a.) t cti J J M � L �� a) Z C9 111 111 0 Q F— v a) 0 N 0 11 ci d J 0 O LO 0 Cal 0 0 L) Cal 0 VJ W EXISTING SIGNAL GA LAXLE ,r�.xZ�:,;.;aa sty. sti�3fiEk�3.; •. v 1_ 0 , E 0\ E .f:2 0 w 0- Ci 1 r-- r - L_ I I I „.,. , „ , , „, . .„ • , ” Llj A. • z 0 ...... ....... ........ . . . . . . . . 0 cL 0 co CN • • (11101i#1 Illtftgft L) LtJ 4 PROJECT NAME: 000 0000 00000 0000 000 City of Apple Valley Parkside Village Gabella STAFF CONTACT: Ron Hedberg, Finance Director Bruce Nordquist, AICP, Community Development Dir. Kathy Bodmer, AICP, Planner APPLICANT: IMH Special Asset NT 175 — AVN, LLC and Titan Development 1, LLC APPLICATION DATE: May 12, 2014 ITEM: SB ECONOMIC DEVELOPMENT AUTHORITY MEETING DATE: July 10, 2014 SECTION: Regular PROJECT DESCRIPTION Request for revised and reauthorized agreements to allow construction of Parkside Village Gabella multiple family building, consisting of 196 units, north of Kelley Park. 60 DAYS: July 10, 2014 DEPARTMENT/DIVISION: Finance Community Development Department PROJECT NUMBER: PC12-31-ZSBG 120 DAYS: September 9, 2014 Proposed Action(s) 1. Financial Assistance Items (City Council and EDA Actions): a. Adopt the Resolution approving the revised Business Subsidy Agreement. b. Adopt the Resolution approving the revised Development Assistance Agreement. Project Summary The owners of the Parkside Village development, IMH Special Asset NT 175 — AVN, LLC and Titan Development 1, LLC, received approval to construct the Parkside Village development with a total of 322 units January 2013. The project included the 196-unit Gabella building north of Kelley Park and the 126- unit Galante building along Galaxie Avenue. The owners have been working to secure financing for the project and have found that lenders do not support financing the construction of 322 units all at once, as originally proposed and approved. At its May 8, 2014, meeting, the Developer requested and the EDA supported a reconsideration of the timing and financial structure of the project. Splitting the development into two phases, with construction of the 196-unit Gabella building in August and construction of the 126- unit Galante building in the future would achieve the following shared objectives of the City, EDA and developer: • The developer requested a fair financial splitting of the projected into two phases based on the number of units in each building. • Rather than splitting the assistance in a simple 60/40 split according to the number of units, staff, legal counsel and Northland Securities revised the distribution of funding to an approximately 50/50 split to provide an incentive to complete the second building. • Construction of the Gabella and Galante buildings will comply with all requirements of the January 24, 2013, approvals. • Construction will proceed in a timely manner with construction of the Gabella building north of Kelley Park expected to begin in August. Background The owners of the Parkside Village development, IMH Special Asset NT 175 — AVN, LLC and Titan Development I, LLC, request splitting the Parkside Village project into two phases, with construction of the 196-unit Gabella building to begin this summer and construction of the Galante building, the 126-unit building along Galaxie Avenue, to occur in the future. The attached draft agreements are revised to allow for a two-phase project. No other changes to the project are proposed; the building would be constructed in accordance with the previously approved zoning amendments, development agreement and building permit authorization. Business Subsidy Agreement. The Business Subsidy Agreement is revised so that the business subsidy will be divided between the two projects. Funds are the amount of money the City has received from Dakota County for penalty and interest (PM) on past due special assessments. The subsidy is intended to increase the City's tax base by increasing the value of the property, create living wage jobs, and enhance the City's residential/business districts. So far, the property owner has paid $1,282,890 of back taxes and special assessments. As a result, the City has made one reimbursement of P&I in the amount of $122,653. A second reimbursement of $99,447, for the 2013 payment year, will be released upon execution of these agreements. When the final plat is filed for the Gabella development parcel, all past due taxes and special assessments will be paid on the property which is estimated to be $1,090,994. Development Assistance Agreement. The Development Assistance Agreement is revised so that the TIF assistance is spread between the two projects. Originally the TIF was set up with an up-front reimbursement of $1.15M and $5.35M pay-go reimbursement for both buildings. The assistance has been split as follows: TIF Note (Pay-Go) Up Front Reimbursement Originally Approved Project (322 units) $5,350,000 $1,150,000 Phase 1 Gabella (196 units) $2,684,000 $576,000 Phase 11 Galante (126 units) $2,666,000 $574,000 Planned Development Agreement. The Planned Development Agreement is revised to allow for two phases of development. No other changes are made to the previously approved zoning amendments, conditions, or building and development plans. Final Plat of Parkside Village Gabella and Development Agreement. The final plat of Parkside Village Gabella is consistent with the Parkside Village Preliminary Plat, but only the lots associated with the Gabella building are platted. Four former lots and the vacated portion of right-of-way of Fontana Trail are platted into a single parcel. In addition, right-of-way is dedicated so that Gabella Street intersects with Foliage Avenue north of the apartment building. A 30' drainage and utility easement is dedicated along the east property line abutting Foliage Avenue for the relocation of a 24" storm sewer line. Site Plan/Building Permit Reauthorization. The approval for the site plan and building permit expired January 24, 2014, so the petitioners are requesting a reauthorization of the approved plans. No changes to the previously approved plans are requested. The Gabella building consists of two u-shaped buildings with a center one-story community area containing a fitness center, internet cafe, club room/party room, yoga studio and game room. Outside of the community space will be an outdoor swimming pool and patio/barbeque area. The four-story, 196-unit building, will be located north of Kelley Park across 152" Street. Access to the Gabella parcel will be taken from the north from Gabella Street. At 196 units on a 5.2-acre site, the development has a density of 37.7 units/acre. Previous EDA Action At its May 8, 2014, meeting, the Apple Valley Economic Development Authority authorized staff to negotiate the amendment of documents to allow for a two-phase project. Budget Impact Overall budget impact remains the same as previously approved; only the timing and allocation of the TIF resources between the two phases would be adjusted. While a 60/40 split was requested by the developer, the documents are amended to allow closer to a 50/50 split. This will provide the owner with incentive to complete the second building. Attached is a memo from the City's Finance Director providing further financial discussion including analysis from Northland Security. Attachment(s) 1. Location Map 5. Draft Resolution Approving 2. Gabe lla Site Plan Development Assistance Agreement 3. Gabe lla Elevation Drawing 6. Draft Resolution Approving Business 4. Parkside Village Rendering Subsidy Agreement View to West 100 0000 0000 000 City of Apple Valley TO: Economic Development Authority, and Tom Lawell, Executive Director MEMO Finance Department FROM: Ron Hedberg, Finance Director DATE: July 7, 2014 SUBJECT: IMH request for phasing of Parkside Project Tax Increment Assistance Background: • On January 24, 2013 the City Council and EDA approved Business Assistance Agreements for Parkside Village. This approved project included two separate apartment buildings totaling 322 units and with a combined value of $35,000,000. • On May 8, 2014 the EDA provided direction for staff to update these agreements for a two phased approach to the Parkside Village project. Introduction: Staff has worked with IMH to come up with an agreement acceptable to both that does not change the overall terms of the original agreement except for the timing of the two buildings. Kathy Bodmer's staff memo includes a description of the new requested project. There is no further action required related to the creation of the TIF district, those actions were completed in January 2013. The action requested by IMH would provide for the separation of the project into phases and requires multiple assistance agreements. Discussion: The project includes the development of approximately 8 acres, which will be comprised of two multifamily buildings, totaling 322 units. The total development costs are estimated to exceed $35,000,000. The developer is seeking assistance of up to $6,500,000 to offset acquisition cost including the installation of utilities and land improvements. The original agreement included a portion ($5,350,000 to be set up as a pay as you go TIF note with the remaining portion ($1,150,000) coming in the form of up front TIF assistance. Both forms of assistance are to be provided or recovered through future TIF collections. Based on the value of the development at $35,190,000, the project as contemplated would generate tax increment of approximately $24,145,000 over the life of the District, with 10% being retained by the City for administrative costs, the next 20% being retained by the City to recover the upfront assistance and the remaining 70% being returned to the property owner in the form of pay as you go assistance. The TIF needed for the repayment of the Pay Go assistance and the upfront assistance is approximately Economic Development Authority Memo IMH Project Split July 7, 2014 $10,962,000 and the notes should be fully retired by 2038. Once the notes are retired any available increment generated from this district may be used for eligible housing expenses. The overall elements of the original agreement include the following: • IMH entered into a Confession of Judgment (COJ) on the parcels providing for the repayment of delinquent property taxes and special assessments over 5 year or 10 year period. Once platted, the property owner is required to pay off the remaining balances on the COJ for the Gabella development parcels. For Phase I, the COJ balances for 2014 is $1,090,994. For Phase II the COJ balance is $575,639 for 2014 which will be amortized and collected through the confession of judgment process and would be required to be paid off when those parcels are developed. In addition to the annual payment on the COJ, IMH must remain current on the current year's property taxes and special assessment installments. • 70% of available tax increment returned to developer as a pay as you go payment, the remaining 30% of available tax increment is retained by the city for recovering the upfront assistance provided and administrative costs. • The amount of assistance provided on the two phases equal the total amount provided for in the previously approved agreement. The allocation between the two phases places more assistance on the second phase as an incentive for the completion of the Galante building. Minimum Value constructed % of Available TIF returned toward the Pay Go Note Amount of Pay Go TIF Notes Amount of upfront assistance recovered by City/EDA from TIF Revenues Phase 1 — Gabella Phase II — Galante Total Original Project $21,365,000 $13,830,000 $31,195,000 $35,195,000 $2,684,000 $576,000 70% 70% 70% 70% 2,666,000 $5,350,000 $5,350,000 $574,000 $1,150,000 $1,150,000 Action Required This memo is provided as additional support of Kathy Bodmer's memo regarding the agreements required to accomplish the splitting the original project into two phases. 4 cn w ro E a x c " cu o c cu E Q) co u c w EE E o ci) (.(3 Mi 4- 0 V. g 0 0 a) a cu E co s— CO et, ..0 o rn r(1 0 LO , 10 . M 0, 0 0 0 CO 0 L9 8 0 re, en 0 tr, . In CO cl m 0 .to° tr t.n ,o ,-4 r o ° 1 7N ft, . kil .. r..1 r- .- hi' Lri v-° rs4 ,cis ri, i vc -,F e 4 ...4 e•g• 0 c*' o co cx) cn cr, ev N- 0 , 0 0 . . k0 0 . . CO 0 0 0 0 ,-I . . ,--4 m 0 0 0 ,--, 00 01 Li, M 00 ,-- 0. m m , 0 Ln , , --4 0 , t.n 0 0 0 m 0 m r.... , Lti ,, t' . o ,... . 1., hl I CI, 0 Lf1 Lrl 0 111 1 N 0 0 0 00 La1 CO M ,..., cri° r■ ni a' Ns, te 6 ...ri ,..„ , SJ M 0 t s , ,,1 1 cri ‘.6 cr-' r`4 , 15 . ,..., oo ko Lel *--, co m N 1 0 o 1° LO . L0 CO 1 d:, N )D 0 ,.., 1/40 Ni 0)) N. Tr . . ',.. rn . Lf1 N r In ,--4 co ..q. ,ri Ni co N r■i" N , --4 .--1 c.," Lr, eNr L'nr . 0, 0, 0 01 01 r-1 0 LEI LM 0 CO CO 0 00 CO P-1 0 . tO es 0 0 .1 0, N N EN ,..., N - t .,..- L ,-; (\,,,, N. tri' Ni ts:S r 06' 000 v., N ' ` - rn ci" ,t" ko° a' ' 03 , 03 . e , o, 54) N t.0 01 1/40 '.., ,,- ..,, -... ..,-, v:, L0) l0 N 0 N 00 ts) vs N.1 N car ,--i' 0r. 0 , - )r ,-, r` Ci Ci . cu 0 8 '0 ? 000 m m m0me,p, § to o (5. r0 d'V r•J 0 CD 1/40 ° to !xi oo Li! m Ln r-d , 5 * 2 . N. co N M 0, NI 01 CO N *-1 fr1 LU 0 a. co z z (.9 0 z O Lu 7ci > > 13 Z W z 0 0 a . n 3 S .Q 0 6 s E < 02 0 E E u a. 0 0 0 z 0 a- 11 u 0 0 ‘1 ro a. tn. 0 0 z , A % y r ' y } � / 0 building WHEREAS, pursuant to the Minnesota Business Subsidy Act, set forth in Minnesota Statutes, Sections 116J.993 to 116J.995 ("Act"), the Apple Valley Economic Development Authority ("EDA") is authorized to grant a business subsidy for the public purpose of increasing the City of Apple Valley's tax base; WHEREAS, IMH Special Asset NT 175 — AVN, LLC, an Arizona limited liability company, ("IMH") desires to construct two multiple family residential buildings in the City (one with 126 units and the other with 196 units), which will increase the Citys tax base; NOW, THEI that it approves the term ATTEST: A RESOLUTION APPROVING BUSINESS SUBSIDY AGREEMENT WHEREAS, the EDA finds it is in the OPTED t APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-14- Pamela J. Gackstetter, Secretary WHEREAS, IMH executed Confessions of Ju ment (Nos. 3514- 523-3525, 3527-3529) for delinquent real estate taxes on property located in the City for tax years 2007 through 2011, a portion of which are for statutory penalties and interest incurred on st due special assessments levied by the City ("P&I"); WHEREAS, the EDA desires to disburse to IMH all P&I received by the City as a business subsidy to IMH, subject to the tern provisions set forth in the Business Subsidy Agreement, a copy of which is attached to tbis Resolution ("Agree ): and st inlere ::g or EDA enter into the ment to fiirther economic development in the City. RESOLVED; by the Board of Commissioners of the EDA s of the Agreement. , 2014. Tom Goodwin, President ie City and its residents that the BUSINESS SUBSIDY AGREEMENT THIS BUSINESS SUBSIDY AGREEMENT ("Agreement") is made this day of , 2014, by and between the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota, and IMH Special Asset NT 175 — AVN, LLC, an Arizona limited liability company ("IMH"). WHEREAS, IMH owns real property legally described on Exhibit "A," attached hereto ("Property"); WHEREAS, IMH desires to construct buildings located on a portion of the Property in order to attract new tenants and create new jobs in the City of Apple Valley; WHEREAS, IMH cannot make the improvements economically feasible without a subsidy; WHEREAS, in accordance with this Agreement, the Apple Valley Economic Development Authority desires to subsidize the improvements, as hereinafter defined, in an amount not to exceed $1,131,322.00; and NOW, THEREFORE, in consideration of the mutual undertakings, the parties to this Agreement agree as follows: ARTICLE 1 Definitions Section 1.1. Definitions. In addition to the defined terms set forth throughout this Agreement, the following terms are defined as follows: "Act" means the Minnesota Business Subsidy Act, set forth in Minnesota Statutes Section 116J.993-.995 and any successor statute. "Benefit Date" means the date on which Recipient provides written proof to the EDA of satisfying the job and wage goals set forth in Section 2.5 for the Gabe lla Property. Upon acceptance of the proof by the EDA, the "Benefit Date" shall be certified by the EDA and the Recipient in substantially the form set forth at Exhibit "B". "City" means the City of Apple Valley, a Minnesota municipal corporation. "Confessions of Judgment" means the Confessions of Judgment (Nos. 3514-3517, 3523-3525, 3527-3529) executed by IMH for delinquent real estate taxes on the Property for tax years 2007 through 2011, collectively. True and accurate copies of the Confessions of Judgment are attached hereto as Exhibit "C". "Development Assistance Agreement" means the Development Assistance Agreement, of even date hereof, by and among the EDA, City and Recipient. "Development Property" means collectively the Gabella Property and the Galante Property, as defined herein. "Disbursement Date" means the date(s) of disbursement of all or a portion of the subsidy by the EDA to the Recipient. "EDA" means the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota. "Gabella Property" means that portion of the Property legally described as Lots 1, 2 and 3, Block 2 and Lot 1, Block 3, THE LEGACY OF APPLE VALLEY NORTH, Dakota County, Minnesota, together with that portion of Fontana Trail vacated by the City on January 25, 2013. "Galante Property" means the portion of the Property legally described as Lot 1, Block 7 and Lot 1, Block 8, THE LEGACY OF APPLE VALLEY NORTH, Dakota County, Minnesota, together with that portion of Fortino Street vacated by the City on January 25, 2013. "Improvements" means collectively the Phase I and Phase II Improvements, as defined herein. 2 "Phase I Improvements" means the following improvements to the Gabe lla Property: constructing two u-shaped multiple family residential buildings containing a total of 196 units connected with a one-story community area with shared amenities (i.e., swimming pool, fitness center, internet cafe, club room/party room, yoga studio and game room) and related improvements in accordance with City-approved site plan. "Phase II Improvements" means the following improvements to the Galante Property: constructing a 4-story, 126-unit multiple family residential building and related improvements in accordance with City-approved site plan. "Loan" means the funds disbursed by the EDA to Recipient in relation to the Improvements in an amount not to exceed One Million One Hundred Thirty-One Thousand Three Hundred Twenty-Two and 00/100ths Dollars ($1,131,322.00). "Note" means the Promissory Note entered into between the EDA and the Recipient in substantially the form set forth in Exhibit "D". "Parties" means the EDA and the Recipient, collectively. "Recipient" means IMH Special Asset NT 175 — AVN, LLC, an Arizona limited liability company. "Remainder Property" means the Property, as defined herein, except for the Gabe lla and Galante Properties, as defined herein. ARTICLE 2 Business Subsidy Section 2.1. Business Subsidy Requirements. The provisions of this Article establish the requirements set forth in the Act (Minnesota Statutes Sections 116J.993-.995 and any successor statute). Section 2.2. Incorporation of the Act. Recipient acknowledges and agrees that the provisions of the Act apply to this Agreement and are incorporated herein by reference. Section 2.3. Subsidy. The subsidy consists of the Loan provided to the Recipient. The funds for the Loan shall not exceed the amount received from Dakota County as and for the statutory penalty and interest on special assessment taxes, which were assessed against the Property in tax years 2007 through 2011. Section 2.4. Public Purposes. The public purposes and goals of the subsidy are to increase the tax base of the City by increasing the value of the Property, to create jobs with a livable wage and to enhance the character of the City's residential/business districts. Section 2.5. Goals. The measurable, specific and tangible goals for the subsidy are set forth as follows (collectively referred to as "Goals"): 3 (a) Construction. The Recipient shall complete the Phase I Improvements (i.e., obtain certificate of occupancy for the Gabe lla Building) by April 30, 2016. By April 30, 2017, Recipient shall commence construction on the Phase II Improvements and complete such improvements by December 31, 2018 (i.e., obtain certificate of occupancy for the Galante Building). (b) Job Creation. As a result of constructing the Phase I Improvements, the Recipient shall create a minimum of One Hundred Fifty (150) full-time equivalent jobs that pay an average wage in excess of $30.00 per hour. The Recipient shall create an additional minimum of Fifty (50) full-time equivalent jobs that pay an average wage in excess of $30.00 per hour in construction of the Phase II Improvements. Section 2.6. Loan Repayment. If some or all of the Goals set forth in Section 2.5 of this Agreement are not satisfied, the Recipient shall make payment to the EDA as required in Article 4 of this Agreement. Section 2.7. Necessity of Subsidy. The subsidy is needed because the Recipient cannot make the Improvements economically feasible without the subsidy. Section 2.8. Commitment. The Recipient intends to continue operations in the City for at least five (5) years following the Benefit Date. In accordance with this commitment, the Recipient agrees to the following: (a) Remainder Property. The Recipient shall not sell, transfer or otherwise convey all or part of the Remainder Property prior to December 31, 2018, unless the Recipient obtains the prior written consent of the EDA after public hearing in accordance with Minn. Stat. § 116J.994, subd. 3(e). On or after January 1, 2019, the Recipient may convey all or part of the Remainder Property without the consent of the EDA. (b) Development Property. The Recipient shall not sell, transfer or otherwise convey all or part of the Development Property for at least five (5) years following the Benefit Date, unless the Recipient obtains the prior written consent of the EDA after a public hearing in accordance with Minn. Stat. § 116J.994, subd. 3(e) and complies with the property assignment and transfer provisions in the Development Assistance Agreement. Section 2.9. Other Financing. In addition to the assistance provided under this Agreement, the Recipient has received or expects to receive as part of this project, the following financial assistance from other "grantors" as defined in the Act: Tax increment Financing from the EDA in an amount not to exceed $5,350,000.00. Section 2.10. Reporting Requirements. (a) Reporting Time Period. The Recipient shall submit to the EDA information regarding the Goals from the date this Agreement is signed until one of the following dates, whichever is later: (1) for two years after the Benefit Date or (2) until all of the Goals are met. 4 (b) Reporting Form. Recipient shall make its report on forms developed by the Minnesota Department of Employment and Economic Development, pursuant to Minn. Stat. § 116J.994, subd. 7. (c) Reporting Documentation. The report must include: (1) (2) ( (4) ( (6) ( ( The type, public purpose, and amount of subsidies; The hourly wage of each job created with separate bands of wages; The sum of the hourly wages and cost of health insurance provided by the Recipient with separate bands of wages; The date the job and wage goals will be reached; A statement of the Goals and an update on achievement of those Goals; The name and address of the parent corporation of the Recipient, if any; A list of all financial assistance by all grantors for the Improvements; and Any other information the EDA may request. (d) Submission Deadline and Penalty. The report must be submitted to the EDA no later than March 1 of each year for the previous year. If the report is not submitted by March 1, the EDA shall mail a warning to the Recipient within one week of the required submission date. If, after 14 days of the postmark date of the warning, the Recipient fails to submit its report to the EDA, the Recipient must pay to the EDA a penalty of $100.00 for each subsequent day until the report is submitted. The maximum penalty shall not exceed $1,000.00. ARTICLE 3 Disbursement of Funds Section 3.1. Disbursement of Funds. A portion of the delinquent real estate taxes included in the Confessions of Judgment are for statutory penalties and interest incurred on past-due special assessments levied by the City (hereinafter "P & I"). The EDA hereby agrees to cause the City to disburse to Recipient P & I received by the City according to the following schedule: (a) The City has previously disbursed P & I to Recipient in the amount of $122,653.00. (b) Upon issuance of a building permit for the Gabella Property, the EDA will direct the City to disburse the following: (1) the P & I in its possession, and (2) all P & I from the Gabella Property within sixty (60) days of receipt from Dakota County. (c) If a building permit is issued to the Recipient for the Galante Property by April 30, 2017, the EDA will direct the City to disburse the following: (1) the P & I in the City's possession and (2) all P & I received thereafter from Dakota County within sixty (60) days of receipt. (d) The City will retain any P & I in its possession after the disbursements in Section 3.1(a) and (b) if a building permit for the Galante Property is not issued by April 30, 2017. 5 Section 3.2. Conditions of Disbursement. In addition to the conditions set forth in Section 3.1 of this Agreement, the EDA is under no obligation to direct the City and the City is under no obligation to disburse funds if the following conditions are not satisfied: (a) Recipient must meet, or be on track to meet, as determined by the EDA in its sole discretion, the Goals, as set forth in Section 2.5 of this Agreement; and herein. (b) Recipient must not be in default under this Agreement, as defined in Section 7.1 ARTICLE 4 Loan Terms and Conditions Section 4.1. Basic Terms. Subject to Article 5 of this Agreement, the principal amount of the Loan shall be equal to the P & I disbursed to the Recipient. The Loan shall bear interest at a rate of six percent (6%) per annum, and interest shall commence to accrue as of each disbursement date and continue until satisfied or paid in full. The Loan shall be evidenced by the Note, the terms of which are incorporated fully herein by reference. Section 4.2. Repayment. If the Recipient does not pull a building permit for the Gabella Property or complete construction of the Phase I Improvements and obtain a certificate of occupancy for the Gabella Property on or before December 31, 2016, all of the Loan, including principal and interest, must be repaid on or before December 31, 2017. If the Recipient obtains a certificate of occupancy for the Gabella Property and pulls a building permit for the Galante Property by April 30, 2017, but fails to complete construction of the Phase II Improvements and obtain a certificate of occupancy for the Galante Property by December 31, 2018, the unforgiven portion of the Loan, including principal and interest, must be repaid on or before December 31, 2019. Section 4.3. Termination of Article 4 of this Agreement. If the Loan is fully forgiven pursuant to Section 5.1(b) of this Agreement, the provisions of Sections 4.1 and 4.2 of this Agreement shall terminate with the remainder of this Agreement remaining in full force and effect. ARTICLE 5 Loan Forgiveness Section 5.1. Loan Forgiveness Schedule. (a) Phase 1 Improvements. If Recipient meets the construction and job creation Goals for the Phase I Improvements/Gabella Property and no event of default exists at the time such Goals are met, the EDA shall forgive the principal amount of the Loan for funds disbursed pursuant to Section 3.1(a) and (b) of this Agreement and all related interest. The failure to meet the construction and job creation Goals for the Phase II Improvements/Galante Property shall not constitute an event of default for purposes of this paragraph. 6 (b) Phase II Improvements. If Recipient meets the construction and job creation Goals for the Phase II Improvements/Galante Property and no event of default exists at the time such Goals are met, the EDA shall forgive the Loan in its entirety. ARTICLE 6 Additional Recipient Obligations Section 6.1. Additional Reporting Requirements. In addition to the reporting requirements set forth in Section 2.10 of this Agreement, Recipient shall provide to the EDA information for incorporation into any progress reports, as required by any state or local government political agency, to monitor implementation of this Agreement for compliance with state and local guidelines. Section 6.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59, which relates to civil rights and discrimination, shall be considered a part of this Agreement as though fully set forth herein, and the Recipient shall comply with each such provision throughout the term of this Agreement. Section 6.3. Workers Compensation Insurance. The Recipient shall obtain and maintain workers compensation insurance as required by Minnesota Statutes, Section 176.181, subd. 2. ARTICLE 7 Default Section 7.1. Events of Default. The Recipient shall be in default under this Agreement upon the happening of any one or more of the following events: (a) the Recipient fails to meet any of the Goals, as set forth in Section 2.5 of this Agreement; (b) the Recipient fails to timely make all payments required under the Confessions of Judgment; (c) the Recipient is in breach in any material respect, of any obligation or agreement under this Agreement, with the exception of any default under sections 7.1(a), (b) and (i) for which no written notice is required, and remains in breach in any material respect for sixty (60) business days after written notice thereof to the Recipient by the EDA; (d) if any material covenant, warranty, or representation of the Recipient shall prove to be untrue in any material respect, provided such covenant, warranty or representation of the Recipient remains untrue in any material respect for sixty (60) business days after written notice thereof to the Recipient by the EDA; 7 (e) the Recipient fails to pay its debts as they become due, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, files a petition under any chapter of the Federal Bankruptcy Code or any similar law, state of federal, now or hereafter existing, becomes "insolvent" as that term is generally defined under the Federal Bankruptcy Code, files an answer admitting insolvency or inability to pay its debts as they become due in any involuntary bankruptcy case commenced against it, or fails to obtain a dismissal of such case within sixty (60) days after its commencement or convert the case from one chapter of the Federal Bankruptcy Code to another chapter, or be the subject of any order for relief in such bankruptcy case, or be adjudged a bankrupt or insolvent, or has a custodian, trustee, or receiver appointed for it, or has any court take jurisdiction of its property, or any part thereof, in any proceeding for the purpose of reorganization, arrangement, dissolution or liquidation, and such custodian, trustee, or receiver is not discharged, or such jurisdiction is not relinquished, vacated or stayed within sixty (60) days of the appointment; (f) a final judgment is entered against the Recipient that the EDA reasonably deems will have a material, adverse impact on the Recipient's ability to comply with the Recipient's obligations under this Agreement; (g) the Recipient fails to maintain its existence in good standing in the State of Minnesota with the Minnesota Secretary of State; (h) the Recipient fails to submit to the EDA a completed report as required by Section 2.10 in this Agreement; (i) the Recipient sells, transfers, assigns, leases or otherwise disposes of the Property in violation of Section 2.8 of this Agreement; (j) the Recipient merges or consolidates with any other entity without the prior written approval of the EDA; or (k) there is a loss, theft, substantial damages, or destruction of all or any part of the Development Property or Improvements that is not remedied to the EDA's satisfaction within sixty (60) business days after written notice thereof by the EDA to the Recipient. Section 7.2. Rights and Remedies Upon Default. (a) In the event of default, the EDA shall have the right, at its option, and without demand or notice, which is hereby waived, to declare all or any part of the Loan, less any principal and interest forgiven in accordance with Article 5 of this Agreement, immediately due and payable. (b) Notwithstanding this section, the EDA shall have all rights and remedies available to it under any other provision of this Agreement or the Act. 8 (c) The Recipient agrees to pay the costs and expenses incurred by the EDA in enforcing its rights under this Agreement, including, but not limited to, the EDA's attorneys' fees. Section 7.3. Waiver. The failure or delay of the EDA to take any action or assert any right or remedy, or the partial exercise by the EDA of any right or remedy shall not be deemed to be a waiver of such action, right or remedy if the circumstances creating such action, right or remedy continue or repeat. ARTICLE 8 Recipient's Acknowledgments, Representations and Warranties Section 8.1. Acknowledgements. The Recipient hereby acknowledges that: (a) Nothing contained in this Agreement, nor any act of the EDA, shall be deemed or construed to create between the EDA and the Recipient any relationship (except as borrower and lender), including, but not limited to, that of principal and agent, limited or general partnership or joint venture. (b) There are no other beneficiaries to this subsidy other than Recipient. Section 8.2. Representations and Warranties. The Recipient hereby represents and warrants that: (a) Recipient 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. (b) Recipient has reviewed this Agreement with an attorney, accountant, financial advisor or other appropriate professional and fully understands the legal and tax implications of this Agreement. (c) To the best of the Recipient's knowledge, no member, officer, or employee of the EDA, or its officers, employees, designees, or agents, who exercises or has exercised any functions or responsibilities with respect to the Improvements during his or her tenure shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the Improvements or in any activity, or benefit there from, which is part of the Improvements. (d) The Phase I Improvements shall be carried out as promised to the City and the EDA. If Recipient constructs the Phase II Improvements, such improvements shall be carried out as promised to the City and the EDA. (e) To the best of the Recipient's knowledge, it has obtained or will obtain all federal, state, and local government approvals, reviews and permits required by law to be obtained in 9 connection with the Improvements and has undertaken and completed all actions necessary for it to lawfully execute this Agreement. (f) To the best of the Recipient's knowledge, it has fully complied with all applicable local, state and federal laws pertaining to its business and will continue such compliance throughout the term of this Agreement. If at any time notice of noncompliance is received by the Recipient, the Recipient agrees to take any reasonable action necessary to comply with the local, state or federal law in question. ARTICLE 9 Miscellaneous Provisions Section 9.1. Release and Indemnification Covenants. Recipient agrees to protect and defend the EDA and its officers, employees, designees and agents, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action, or other proceeding whatsoever, other than intentional acts, by any person or entity, arising or purportedly arising from the Improvements. Section 9.2. Immunity. Nothing in this Agreement shall be construed as a waiver of the EDA of any immunities, defenses or other limitations on liability to which the EDA is entitled by law. Section 9.3. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Recipient and the EDA. Section 9.4. Notices and Demands. Any notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by U.S. Mail or delivered personally to: (a) as to the EDA: (b) as to the Recipient: Apple Valley Municipal Center 7100 147 St. W. Apple Valley, Minnesota 55124 Attn: Thomas Lawell, Executive Director with copy to: Dougherty, Molenda, Solfest, Hills & Bauer, P.A. 7300 West 147 Street, Suite 600 Apple Valley, Minnesota 55124 Attn: Michael G. Dougherty IMH Special Asset NT 175 — AVN, LLC 7001 N. Scottsdale Rd., Suite 2050 Scottsdale, Arizona 85253 Attn: John McVey 10 And IMH Special Asset NT 175-AVN, LLC 4700 South Syracuse Street, Suite 375 Denver, CO 80237 Attn: Stuart Davis with copy to: Larkin Hoffman Daly & Lindgren, Ltd. 1500 Wells Fargo Plaza 7900 Xerxes Avenue Minneapolis, Minnesota 55431 Attn: Peter J. Coyle or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the other party as provided in this section. Section 9.5. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors and assigns of the Parties. Section 9.6. Merger. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 9.7. Choice of Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. Section 9.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.9. Headings. The Parties agree the headings and sub-headings used in this Agreement are solely for convenience of reference, are no part of this Agreement, and are not be considered in construing or interpreting this Agreement. Section 9.10. Entire Agreement. This Agreement, with the exhibits hereto, constitutes the entire agreement between the Parties pertaining to its subject matter and it supersedes all prior contemporaneous agreements, representations and understandings of the Parties pertaining to the subject matter of this Agreement. Section 9.11. Separability. Wherever possible, each provision of this Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other 11 government entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other related document. IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be duly executed and delivered this day of , 2013. APPROVAL OF TE S AND CONDITIONS HEREIN BY: APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota By: Tom Goodwin Its: President By: Pamela J. Gackstetter Its: Secretary IMH SPECIAL ASSET NT — 175 AVN, LLC, an Arizona limited liability company By: 12 Its: CITY OF APPLE VALLEY By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk THIS INSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST, HILLS & BAUER P.A. 7300 West 147 Street, Suite 600 Apple Valley, Minnesota 55124 (952) 432-3136 (MGD: #66-32849) 13 EXHIBIT A Lot 1, Block 1; Lots 1, 2 and 3, Block 2; Lot 1, Block 3; Lot 1, Block 7; Lot 1, Block 8; Lot 1, Block 9; and Lots 1 and 2, Block 10, THE LEGACY OF APPLE VALLEY NORTH, Dakota County, Minnesota. 14 EXHIBIT B BENEFIT DATE CERTIFICATION Pursuant to the Business Subsidy Agreement, made between Apple Valley Economic Development Authority and IMH Special Asset NT 175 - AVN, LLC, (hereinafter, the "Parties ") on the day of , 201 , IMH Special Asset NT 175 - AVN, LLC, was approved for a subsidy in an amount of up to One Million One Hundred Thirty -one Thousand Three Hundred Twenty -two and No /100 Dollars ($1,131,322.00) from Apple Valley Economic Development Authority. This subsidy is subject to the terms and conditions set forth in the aforementioned Business Subsidy Agreement. IN WITNESS WHEREOF, the Parties do hereby acknowledge the Benefit Date as defined in Minnesota Statutes § 116J.993, Subd. 2, is , 20 (the "Benefit Date"). APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Tom Goodwin Its: President By: Pamela J. Gackstetter Its: Secretary IMH SPECIAL ASSET NT 175 — AVN, LLC, as Arizona limited liability company By: Its: 15 EXHIBIT C [Place holder for Confessions of Judgment] 16 , 201 [First Disbursement Date] EXHIBIT D PROMISSORY NOTE IMH Special Asset NT 175 — AVN, LLC, an Arizona limited liability company (the "Maker"), for value received, hereby promises to pay to the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota (the "EDA"), or its assigns (the EDA and any assigns are hereinafter referred to as the "Holder"), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of One Million One Hundred Thirty-One Thousand Three Hundred Twenty-Two and 00/100ths Dollars ($1,131,322.00) or so much thereof as may be advanced under this Note, with interest as hereinafter provided. The principal of this Note is payable as follows: 1. The principal shall bear interest at a rate of six percent (6%) per annum and interest shall commence to accrue as of each disbursement date. 2. Any outstanding principal and interest is due and payable on or before December 31, 2017 or December 31, 2019 pursuant to the terms of the Loan Agreement. 3. This Note is given pursuant to the Business Subsidy Agreement entered into by the Maker and the EDA on , 2014 (the "Loan Agreement"). All of the agreements, conditions, covenants, provisions, and stipulations contained in the Loan Agreement, or any instrument securing this Note are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence for this Note. If a default occurs under the Loan Agreement, or any instrument securing this Note, then the Holder of this Note may at its right and option, without notice, declare immediately due and payable the principal balance of this Note, together with any costs of collection including attorney fees incurred by the Holder of this Note in collecting or enforcing payment hereof, whether suit be brought or not, and all other sums due hereunder, or under any instrument securing this Note. The Maker agrees that the Holder of this Note may, without notice to the Maker of this Note and without affecting the liability of the Maker of this Note, accept additional or substitute security for this Note, or release any security or any party liable for this Note or extend or renew this Note. 4. The remedies of the Holder of this Note as provided herein, and in the Loan Agreement, or any other instrument securing this Note, shall be cumulative and concurrent and may be pursued singly, successively or together and, at the sole discretion of the Holder of this Note, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 17 The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder of this Note and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 5. This Note shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 6. This Note, with the Loan Agreement, constitutes the entire Note between the parties pertaining to its subject matter and it supersedes all prior contemporaneous Notes, representations, and understandings of the parties pertaining to the subject matter of this Note. 7. Wherever possible, each provision of this Note and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Note or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or any other related document. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. IN WITNESS WHE the day of , 201 . OF, the Maker has caused this Note to be duly executed as of IMH SPECIAL ASSET NT 175 —AVN, LLC By: 18 Its: By: Its: Member adoption: 6338121v1 EXTRACT OF MINUTES OF MEETING OF THE BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA HELD: July 10, 2014 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 on Thursday, the 10th day of July, 2014, at :00 o'clock .m. The following members were present: and the following were absent: introduced the following resolution and moved its RESOLUTION AUTHORIZING EXECUTION OF AN AMENDED AND RESTATED DEVELOPMENT ASSISTANCE AGREEMENT A. WHEREAS, the City of Apple Valley, Minnesota (the "City"), the Apple Valley Economic Development Authority (the "Authority"), and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (the "Developer") have entered into a Development Assistance Agreement, dated as of February 1, 2013 ("Original Agreement"), in connection with the construction of an approximately 322 unit multifamily rental housing facility consisting of two buildings, by the Developer and each building being located in the City; and B. • WHEREAS, the City, the Authority and the Developer have agreed to amend and restate the Original Agreement in its entirety and have determined to enter into an Amended and Restated Development Assistance Agreement (the "Development Agreement") to provide the Developer with financing assistance for the Project in two separate phases. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the Apple Valley Economic Development Authority, Minnesota (the "Authority"), 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 Authority. 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 Authority officials authorized by this resolution to execute the Development Agreement. The execution of the Development Agreement by the appropriate officer or officers of the Authority 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 10 day of July, 2014 by the Apple Valley Economic Development Authority Board of Commissioners. Attest: 6338121v1 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 July, 2014. 6338121v1 3 Secretary This document drafted by: 6327790v2 AMENDED AND RESTATED DEVELOPMENT ASSISTANCE AGREEMENT BY AND AMONG THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA THE CITY OF APPLE VALLEY, MINNESOTA AND IMH SPECIAL ASSET NT 175-AVN, LLC BRIGGS AND MORGAN Professional Association 2200 First National Bank Building St. Paul, Minnesota 55101 ARTICLE I DEFINITIONS 3 .... ...... . ..... . ............. . .......... ........ ......... .................. ............. ........ Section 1.1 Definitions ............... . ............. ..... ................... ..... ...................... 3 ARTICLE II REPRESENTATIONS AND WAR NTIES Section 2.1 Representations and Warranties of the City Section 2.2 Representations and Warranties of the Authority Section 2.3 Representations and Warranties of the Developer ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Section 3.2 Section 3.3 Section 3.4 , Section 3.5 Section 3.6 Table of Contents 10 Phase 1 Development Property 10 Phase 2 Development Property 11 Site Improvements, Minimum Improvements and Legal and Administrative Expenses 12 Reimbursement: Phase 1 TIF Note 12 Reimbursement: Phase 2 TIF Note 13 Compliance with Low and Moderate Income Requirements 14 16 Construction of Minimum Improvements 16 Construction Plans 16 Commencement and Completion of Construction of the Phase 1 Minimum Improvements 17 Commencement and Completion of Construction of the Phase 2 Minimum Improvements 17 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1 Section 4.2 Section 4.3 Section 4.4 ARTICLE V INSU Section 5.1 Section 5.2 Section 5.3 Section 5.4 ARTICLE VII MORTGAGE FINANCING Section 7.1 Section 7.2 Section 7.3 Section 7.4 Section 7.5 Section 7.6 ARTICLE VI ASSESSMENT AGREEMENTS AND OTHER COVENANTS Section 6.1 Section 6.2 Page 7 7 7 8 NCE 18 Insurance 18 Condemnation 19 Reconstruction or Payment 20 Relationship to Mortgagee 20 21 Execution of Assessment Agreements.......... ........................... .......... 21 Real Property Taxes 22 23 Limitation Upon Encumbrance of Property 23 Approval of Mortgage 23 Notice of Default; Copy to Mortgagee .............. ................ . ...... 23 Mortgagee's Option to Cure Defaults 24 Authority's and City's Option to Cure Default on Mortgage 24 Subordination and Modification for the Benefit of Mortgagees 24 NSFER; ARTICLE VIII PROHIBITIONS AGAINST ASSIGNMENT AND T INDEMNIFICATION 26 Section 8.1 Transfer of Substantially All Assets ...... ..... ............... ... 26 6327790v2 1 • Page 6327790v2 Table of Contents (continued) Section 8.2 Prohibition Against Transfer of Property and Assignment of Agreement........... . ............ .............. ..... ..... . ..... . ........... .............. 26 Section 8.3 Approvals 27 ARTICLE IX EVENTS OF DEFAULT 28 Section 9.1 Events of Default Defined 28 Section 9.2 Remedies on Default 28 Section 9.3 No Remedy Exclusive 29 Section 9.4 No Implied Waiver 29 Section 9.5 Agreement to Pay Attorney's Fees and Expenses 29 Section 9.6 Indemnification of the Authority and the City 29 Section 9.7 Phase 2 Minimum Improvements 30 ARTICLE X ADDITIONAL PROVISIONS 31 Section 10.1 Restrictions on Use 31 Section 10.2 Conflicts of Interest 31 Section 10.3 Titles of Articles and Sections ...... ..... 31 Section 10.4 Notices and Demands 31 Section 10.5 Counterparts 32 Section 10.6 Law Governing 32 Section10.7 Expiration............................ ....... . ...... ...... . . .... . ..................... . 32 Section 10.8 Provisions Surviving Rescission or Expiration 32 Section 10.9 Assignment 32 EXHIBIT A-1 DESCRIPTION OF PHASE 1 DEVELOPMENT PROPERTY A-1-1 EXHIBIT A-2 DESCRIPTION OF PHASE 2 DEVELOPMENT PROPERTY.. ....... A-2-1 EXHIBIT B-1 FORM OF PHASE 1 TIF NOTE B-1-1 EXHIBIT B-2 FORM OF PHASE 2 TIF NOTE B-2-1 EXHIBIT C SITE IMPROVEMENTS AND MINIMUM IMPROVEMENTS C-1 EXHIBIT D-1 COMPLIANCE CERTIFICATE FOR PHASE 1 MINIMUM IMPROVEMENTS D-1-1 EXHIBIT D-2 COMPLIANCE CERTIFICATE FOR PHASE 2 MINIMUM IMPROVEMENTS D-2-1 EXHIBIT E-1 FORM OF PHASE 1 ASSESSMENT AGREEMENT E-1-1 EXHIBIT E-2 FO OF PHASE 2 ASSESSMENT AGREEMENT E-2-1 EXHIBIT F FORM OF MORTGAGE F- 1 6327790v2 WITNESSETH: AMENDED AND RESTATED DEVELOPMENT ASSISTANCE AGREEMENT THIS AMENDED AND RESTATED AGREEMENT, made as of the day of , 2014, by and among the Apple Valley Economic Development Authority, Minnesota (the "Authority"), a political subdivision organized under the laws of the State of Minnesota, the City of Apple Valley, Minnesota (the "City"), a municipal corporation organized and existing under the laws of the State of Minnesota, and IMH Special Asset NT 175- AVN, LLC, an Arizona limited liability company (the "Developer"), WHEREAS, the City and the Developer have entered into a Development Assistance Agreement, dated as of , 2013 ("Original Agreement"), in connection with the construction of an approximately 322 unit multifamily rental housing facility consisting of two buildings, by the Developer and each phase being located in the City; and WHEREAS, the City and the Developer have agreed to amend and restate the Original Agreement in its entirety; and WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.133, as amended, 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 469.1794, as amended, (hereinafter the "Tax Increment Act"), the City has heretofore established, within the Development District, Tax Increment Financing District No. 15 (the "Tax Increment District") and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") therefor 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 City and the Authority have 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 City and the Authority believe that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City, the health, safety, morals and welfare of residents of the City, 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. 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: 6327790v2 2 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 Development Assistance Agreement, as the same may be from time to time modified, amended or supplemented; Assessment Agreements mean the Phase 1 Assessment Agreement and the Phase 2 Assessment Agreement; Assessor's Minimum Market Value means the agreed minimum market value of the Phase 1 Development Property and the Phase 2 Development Property, as applicable, and the Phase 1 Minimum Improvements and the Phase 2 Minimum Improvements, as applicable, and for calculation of real property taxes as determined by the Assessor for the County pursuant to each respective Assessment Agreement; Authority means the Apple Valley Economic Development Authority; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; County means Dakota County, Minnesota; Developer means IMH Special Asset NT 175-AVN, LLC, its successors and assigns; Development District means the real property included in the City's Master Development District; Development Program means the Master Development Program, as amended, approved in connection with the Development District; City means the City of Apple Valley, Minnesota; Compliance Certificates means the Compliance Certificates in substantially the form attached hereto as Exhibit D-1 for the Phase 1 Development Property and D-2 for the Phase 2 Development Property; Construction Plans means the plans, specifications, drawings and related documents of the construction work to be performed by the Developer on the Project and the Development Property and the plans (a) shall be as detailed as the plans, specifications drawings and related documents which are submitted to the building inspector of the City, and (b) shall include at least the following: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) grading and drainage; and (8) landscape; 6327790v2 3 Development Property means the means the Phase 1 Development Property and the Phase 2 Development Property; First Mortgage means any Mortgage granted to secure any loan made pursuant to either a mortgage commitment obtained by the Developer from a commercial lender or other financial institution to fund any portion of the construction costs and initial operating capital requirements of the Minimum Improvements, or all such Mortgages as appropriate; Legal and Administrative Expenses means the fees and expenses incurred by the City and/or 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; Minimum Improvements means the Phase 1 Minimum Improvements and the Phase 2 Minimum Improvements; Mortgage means any mortgage or security agreement in which the Developer or a predecessor in interest has granted a mortgage or other security interest in the Development Property, or any portion or parcel thereof, or any improvements constructed thereon, and which is a permitted encumbrance pursuant to the provisions of Article VIII; Net Proceeds means any proceeds paid by an insurer to the Developer, the City under a policy or policies of insurance required to be provided and maintained by the Developer pursuant to Article V of this Agreement and remaining after deducting all expenses (including fees and disbursements of counsel) incurred in the collection of such proceeds; Note Payment Date means August 1, 2017 and each August 1 and February 1 of each year thereafter to and including February 1, 2042; 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; Person means any individual, corporation, partnership, joint venture, association, joint- stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof; Phase 1 Assessment Agreement means the agreement, in the form of the agreement contained in Exhibit E-1 attached hereto and made a part of this Agreement, between the Developer and the City and certified by the City Assessor, entered into pursuant to Article III of this Agreement; Phase 2 Assessment Agreement means the agreement, in the form of the agreement contained in Exhibit E-2 attached hereto and made a part of this Agreement, between the Developer and the City and certified by the City Assessor, entered into pursuant to Article III of this Agreement; Phase 1 Development Property means the real property described in Exhibit A-1 of this Agreement upon which the Phase 1 Minimum Improvements will be constructed; 6327790v2 Event of Default means any of the events described in Section 9.1 hereof; 4 Phase 2 Development Property means the real property described in Exhibit A-2 of this Agreement upon which the Phase 2 Minimum Improvements will be constructed; Phase 1 Minimum Improvements means the substantial completion of the Site Improvements and the improvements contemplated by and in accordance with this Agreement and the Construction Plans and as generally described as a 196 unit multifamily rental housing facility (Gabe lla Building); Phase 2 Minimum Improvements means the substantial completion of the Site Improvements and the improvements contemplated by and in accordance with this Agreement and the Construction Plans and as generally described as a 126 unit multifamily rental housing facility (Galante Building); Phase 1 Site Improvements means the site improvements undertaken or to be undertaken on the Phase 1 Development Property in connection with the Phase 1 Minimum Improvements, more particularly described in Exhibit C attached hereto; Phase 2 Site Improvements means the site improvements undertaken or to be undertaken on the Phase 2 Development Property in connection with the Phase 2 Minimum Improvements, more particularly described in Exhibit C attached hereto; Phase 1 TIF Note means the Tax Increment Revenue Note (Gabe lla Project) to be executed by the Authority and delivered to the Developer pursuant to Article III hereof, a copy of which is attached hereto as Exhibit B-1; Phase 2 TIF Note means the Tax Increment Revenue Note (Galante Project) to be executed by the Authority and delivered to the Developer pursuant to Article III hereof, a copy of which is attached hereto as Exhibit B-2; Prime Rate means the rate of interest from time to time publicly announced by U.S. Bank National Association in Minneapolis, Minnesota, as its "reference rate" or any successor rate, which rate shall change as and when that prime rate or successor rate changes; Project means the construction of the Phase 1 Minimum Improvements and the construction of the Phase 2 Minimum Improvements on the Development Property; Site Improvements means the Phase 1 Site Improvements and the Phase 2 Site Improvements; 6327790v2 State means the State of Minnesota; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended; Tax Increment District means Tax Increment Financing District No. 15 located within the Development District, a description of which is set forth in the Tax Increment Financing Plan, which was qualified as a housing district under the Tax Increment Act; 5 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 70% 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; Termination Date means the earlier of (i) February 1, 2042, (ii) the date the TIF Notes are paid in full, (iii) the date on which the Tax Increment District expires or is otherwise terminated, or (iv) the date this Agreement and the Assessment Agreements are terminated or rescinded in accordance with their respective terms; TIF Notes means the Phase 1 TIF Note and the Phase 2 TIF Note; 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 City) which directly result in delays. 6327790v2 6 ARTICLE II REPRESENTATIONS AND WA IP NTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and has the power to enter into this Agreement and carry out its obligations hereunder, and the execution of this Agreement has been duly and properly authorized by the City. (2) The Tax Increment District is a "housing district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11, 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 City proposes, subject to further provisions of this Agreement, to reimburse the Developer for a portion of the costs of the Minimum Improvements as further provided in this Agreement. ( The City makes no representation or warranty, either expressed 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' purposes or needs. Section 2.2 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 a "housing district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11, 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 a portion of the costs of the Minimum Improvements 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. 6327790v2 7 Section 2.3 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a Arizona limited liability company, is authorized to conduct business in the State, has the power and the authority to enter into this Agreement and to perform its obligations hereunder and, by doing so, is not in violation of any provisions of its articles of organization, operating agreement or member control agreement or the laws of the State. (2) The Developer shall cause the Minimum Improvements to be constructed and the Site Improvements 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 Minimum Improvements would not be undertaken by the Developer, and in the opinion of the Developer would not have been or be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. (4) The Developer will use its best efforts to obtain, or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Project may be lawfully constructed. (5) 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 and the City with respect to any litigation commenced with respect to the Project. ( The Developer will cooperate fully with the Authority and the City 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 will obtain to finance construction of the Minimum Improvements, together with the equity funds available to the Developer, together with the financing provided by the Authority and the City pursuant to this Agreement, will be sufficient to enable the Developer to successfully complete the construction of the Minimum Improvements. ( The construction of the Phase 1 Minimum Improvements shall commence no later than October 15, 2014 and barring Unavoidable Delays, the Phase 1 Minimum Improvements will be substantially completed by March 31, 2016. 6327790v2 (10) The construction of the Phase 2 Minimum Improvements shall commence no later than April 30, 2016 and barring Unavoidable Delays, the Phase 2 Minimum Improvements will be substantially completed by December 31, 2017. (11) 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. 6327790v2 9 (1) It is the intent of the parties that the City reimburse the Developer for $576,000 of the cost of the Phase 1 Minimum Improvements as provided in (2) below, subject to satisfaction of the following conditions precedent: 6327790v2 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Phase 1 Development Property. (A) The Developer shall be in material compliance with all the terms and provisions of this Agreement; (B) The Developer shall have obtained a building permit and commenced construction of the Phase 1 Minimum Improvements in accordance with the Developer Construction Plans approved by the City pursuant to Section 4.2 of this Agreement; (C) Execution of the Phase 1 Assessment Agreement relating to the Phase 1 Development Property and the Phase 1 Minimum Improvements, by the City, the County and the Developer pursuant to Section 6.1 of this Agreement; (D) If a Mortgage has been recorded against the Phase 1 Development Property, delivery to the City of an agreement by the holder of the First Mortgage agreeing to be bound by the Assessor's Minimum Market Value set forth in the Phase 1 Assessment Agreement relating to the Phase 1 Minimum Improvements; (E) The Developer shall have provided the City with paid invoices of costs of the Phase 1 Minimum Improvements in an amount not less than the sum to be advanced as provided in (2) below; and (F) Execution and recording of a First Mortgage securing the City in the form attached hereto as Exhibit F on , The Legacy of Apple Valley North, which mortgage shall be released upon a certificate of occupancy having been issued for the Phase 1 Minimum Improvements. (2) $488,500 of the $576,000 shall be advanced when the Borrower has satisfied the conditions precedent set forth in (1) above as applicable for the Phase 1 Minimum improvements. $87,500 shall be advanced for the Phase 1 Minimum Improvements when the Borrower has satisfied the conditions precedent set forth in (1) above and a certificate of occupancy for the Phase 1 Minimum Improvements has been issued. ( In the event that an Event of Default occurs under Article IX and it is not cured by the Developer as provided in Article IX, the Developer agrees that upon the demand of the City it shall, within 30 days of such demand, repay the City the $576,000 for the Phase 1 Minimum Improvements, which amount shall be reduced by the amount that the City has reimbursed itself from tax increments from the Tax Increment District in accordance with the interfund loan resolution adopted by the City. 10 (1) It is the intent of the parties that the City reimburse the Developer for $574,000 of the cost of the Phase 2 Minimum Improvements as provided in (2) below, subject to satisfaction of the following conditions precedent: 6327790v2 Section 3.2 Phase 2 Development Property. (A) The Developer shall be in material compliance with all the terms and provisions of this Agreement; (B) The Developer shall have obtained a building permit and commenced construction of the Phase 2 Minimum Improvements in accordance with the Developer Construction Plans approved by the City pursuant to Section 4.2 of this Agreement; (C) Execution of the Phase 2 Assessment Agreement relating to the Phase 2 Development Property and the Phase 2 Minimum Improvements, by the City, the County and the Developer pursuant to Section 6.1 of this Agreement; (D) If a Mortgage has been recorded against the Phase 2 Development Property, delivery to the City of an agreement by the holder of the First Mortgage agreeing to be bound by the Assessor's Minimum Market Value set forth in the Phase 2 Assessment Agreement relating to the Phase 2 Minimum Improvements; (E) The Developer shall have provided the City with paid invoices of costs of the Phase 2 Minimum Improvements in an amount not less than the sum to be advanced as provided in (2) below; and (F) Execution and recording of a First Mortgage securing the City in the form attached hereto as Exhibit F on , The Legacy of Apple Valley North, which mortgage shall be released upon a certificate of occupancy having been issued for the Phase 2 Minimum Improvements. (2) $486,500 of the $574,000 shall be advanced when the Borrower has satisfied the conditions precedent set forth in (1) above as applicable for the Phase 2 Minimum Improvements. $87,500 shall be advanced for the Phase 2 Minimum Improvements when the Borrower has satisfied the conditions precedent set forth in (1) above and a certificate of occupancy for the Phase 2 Minimum Improvements has been issued. ( In the event that an Event of Default occurs under Article IX and it is not cured by the Developer as provided in Article IX, the Developer agrees that upon the demand of the City it shall, within 30 days of such demand, repay the City the $574,000 for the Phase 2 Minimum Improvements, as applicable, which amount shall be reduced by the amount that the City has reimbursed itself from tax increments from the Tax Increment District in accordance with the interfund loan resolution adopted by the City. 11 Section 3.3 Site Improvements, Minimum Improvements and Legal and Administrative Expenses. (1) The parties agree that the Site Improvements and Minimum Improvements to be constructed by the Developer are essential to the successful completion of the Project. The cost of the constructing of Site Improvements and the Minimum Improvements shall be paid by the Developer. (2) The Authority shall reimburse the Developer for the lesser of $2,684,000 or the cost of the Phase 1 Site Improvements and the Phase 1 Minimum Improvements actually incurred and paid by the Developer (the "Phase 1 Reimbursement Amount"), as further provided in Section 3.3 hereof. ( The Authority shall reimburse the Developer for the lesser of $2,666,000 or the cost of the Phase 2 Site Improvements and the Phase 2 Minimum Improvements actually incurred and paid by the Developer (the "Phase 2 Reimbursement Amount"), as further provided in Section 3.4 hereof. (4) The Developer has deposited with the Authority the sum of $50,000 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 $50,000 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 3.4 Reimbursement: Phase 1 TIF Note. The Authority shall reimburse the Developer for a portion of the costs of the Phase 1 Site Improvements and Phase 1 Minimum Improvements through the issuance of the Authority's Phase 1 TIF Note in substantially the form attached to this Agreement as Exhibit B-1, subject to the following conditions: (1) The Phase 1 TIF Note shall be dated, issued and delivered when the Developer shall have demonstrated in writing to the reasonable satisfaction of the Authority and the City and the City's Building Inspector that the construction of the Phase 1 Minimum Improvements have been substantially completed and that the Developer has incurred and paid all costs of the Phase 1 Minimum Improvements and the Phase 1 Site Improvements, as described in and limited by Section 3.2 and shall have submitted paid invoices for the costs of the Phase 1 Site Improvements and the Phase 1 Minimum Improvements in an aggregate amount of at least $2,684,000. (2) The unpaid principal amount of the Phase 1 TIF Note shall bear simple, non- compounding interest from the date of issuance of the Phase 1 TIF Note, at 5.0% per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The principal amount of the Phase 1 TIF Note and the interest thereon shall be payable solely from the Tax Increments. 6327790v2 12 ( On each Phase 1 Note Payment Date and subject to the provisions of the Phase 1 TIF Note, the Authority shall pay, against the principal and interest outstanding on the Phase 1 TIF Note, any Tax Increments received by the Authority during the preceding six months, subject to (7) below. All such payments shall be applied first to accrued interest and then to reduce the principal of the Phase 1 TIF Note. (4) The Phase 1 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 of and interest on the Phase 1 TIF Note. If, on any Phase 1 Note Payment Date, the Tax Increments for the payment of the accrued and unpaid interest on the Phase 1 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 Phase 1 Note Payment Date there are Tax Increments in excess of the amounts needed to pay the accrued interest then due on the Phase 1 TIF Note (5) The Authority's obligation to make payments on the Phase 1 TIF Note on any Phase 1 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 9.2. (6) The Phase 1 TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B-1. In the event of any conflict between the terms of the TIF Note and the terms of this Section 3.3, 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. (7) The Tax Increments shall be applied pro rata to the Phase 1 TIF Note and the Phase 2 TIF Note. Section 3.5 Reimbursement: Phase 2 TIF Note. The Authority shall reimburse the Developer for a portion of the costs of the Phase 2 Site Improvements and Phase 2 Minimum Improvements through the issuance of the Authority's Phase 2 TIF Note in substantially the form attached to this Agreement as Exhibit B-2, subject to the following conditions: (1) The Phase 2 TIF Note shall be dated, issued and delivered when the Developer shall have demonstrated in writing to the reasonable satisfaction of the Authority and the City and the City's Building Inspector that the construction of the Phase 2 Minimum Improvements have been substantially completed and that the Developer has incurred and paid all costs of the Phase 2 Minimum Improvements and the Phase 2 Site Improvements, as described in and limited by Section 3.2 and shall have submitted paid invoices for the costs of the Phase 2 Site Improvements and the Phase 2 Minimum Improvements in an aggregate amount of at least $2,666,000. (2) The unpaid principal amount of the Phase 2 TIF Note shall bear simple, non- compounding interest from the date of issuance of the Phase 2 TIF Note, at 5.0% per annum. 6327790v2 13 Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The principal amount of the Phase 2 TIF Note and the interest thereon shall be payable solely from the Tax Increments. ( On each Phase 2 Note Payment Date and subject to the provisions of the Phase 2 TIF Note, the Authority shall pay, against the principal and interest outstanding on the Phase 2 TIF Note, any Tax Increments received by the Authority during the preceding six months, subject to (7) below. All such payments shall be applied first to accrued interest and then to reduce the principal of the Phase 2 TIF Note. (4) The Phase 2 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 of and interest on the Phase 2 TIF Note. If, on any Phase 2 Note Payment Date, the Tax Increments for the payment of the accrued and unpaid interest on the Phase 2 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 Phase 2 Note Payment Date there are Tax Increments in excess of the amounts needed to pay the accrued interest then due on the Phase 2 TIF Note ( The Authority's obligation to make payments on the Phase 2 TIF Note on any Phase 2 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 9.2. (6) The Phase 2 TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B-2. In the event of any conflict between the terms of the TIF Note and the terms of this Section 3.4, 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. (7) The Tax Increments shall be applied pro rata to the Phase 1 TIF Note and the Phase 2 TIF Note. Section 3.6 Compliance with Low and Moderate Income Requirements. (1) The Authority, the City and the Developer understand and agree that the Tax Increment District will constitute a "housing district" under Section 469.174, Subd. 11 of the Tax Increment Act. Accordingly, in compliance with Section 469.1761, Subd. 3 of the Tax Increment Act, the Developer agrees that the Project must satisfy, or be treated as satisfying, the income requirements for a qualified residential rental project as defined in Section 142(d) of the Internal Revenue Code. The parties further agree that no more than 20% of the square footage of the Project (which is the only building receiving assistance from Tax Increments) may consist of commercial, retail, or other nonresidential uses. The Developer must meet the above requirements as follows: 6327790v2 14 (A) At least 20% of the residential units in the Project must be occupied or held for occupancy by persons whose incomes do not exceed 50% of the County median income; and (B) The limits described in clause (A) must be satisfied through the Termination Date. Income for occupants of units described in clauses (A) shall be adjusted for family size in accordance with Section 142(d) of the Internal Revenue Code and related regulations. (2) On or before each January 1 and July 1, commencing on July 1, 2016 for the Phase 1 Minimum Improvements, the Developer or an agent of the Developer must deliver or cause to be delivered to the Authority, the City and an agent of the Authority and the City, if designated by the Authority and the City, a Compliance Certificate executed by the Developer covering the preceding six (6) months together with written evidence satisfactory to the Authority and the City of compliance with the covenants in this Section. This evidence must include a statement of the household income of each of the qualifying renters, a written determination that each qualifying renter's household income falls within the qualifying limits of this Section (and Section 142(d) of the Internal Revenue Code), and certification that the income documentation is correct and accurate (and that the determination of qualification was made in compliance with Section 142(d) of the Internal Revenue Code). The Authority and the City may review, upon request, all documentation supporting the Developer submissions and statements. In determining compliance with this Section, the Developer must use the County median incomes for the year in which the payment is due on the Phase 1 TIF Note, as promulgated by the Minnesota Housing Finance Agency based on the area median incomes established by the United States Department of Housing and Urban Development. ( On or before each January 1 and July 1, commencing on July 1, 2018 for the Phase 2 Minimum Improvements, the Developer or an agent of the Developer must deliver or cause to be delivered to the Authority, the City and an agent of the Authority and the City, if designated by the Authority and the City, a Compliance Certificate executed by the Developer covering the preceding six (6) months together with written evidence satisfactory to the Authority and the City of compliance with the covenants in this Section. This evidence must include a statement of the household income of each of the qualifying renters, a written determination that each qualifying renter's household income falls within the qualifying limits of this Section (and Section 142(d) of the Internal Revenue Code), and certification that the income documentation is correct and accurate (and that the determination of qualification was made in compliance with Section 142(d) of the internal Revenue Code). The Authority and the City may review, upon request, all documentation supporting the Developer submissions and statements. In determining compliance with this Section, the Developer must use the County median incomes for the year in which the payment is due on the Phase 2 TIF Note, as promulgated by the Minnesota Housing Finance Agency based on the area median incomes established by the United States Department of Housing and Urban Development. 6327790v2 15 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1 Construction of Minimum Improvements. The Developer agrees that it will cause the Minimum Improvements on the Development Property to be constructed substantially in conformance with the approved Construction Plans. The Developer agrees that the scope and scale of the Minimum Improvements to be constructed shall not be significantly less than the scope and scale of the Minimum Improvements as detailed and outlined in the Construction Plans. Section 4.2 Construction Plans. The Developer shall cause to be provided to the City Construction Plans, which shall be subject to approval by the City as provided in this Section 4.2. The Construction Plans shall provide for the Minimum Improvements to be constructed on the Development Property, and shall be in conformity with this Agreement, and all applicable state and local laws and regulations. The City shall approve the Construction Plans in writing if: (a) the Construction Plans conform to the terms and conditions of this Agreement; (b) the Construction Plans conform to the terms and conditions of the Development Program; (c) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (d) the Construction Plans are adequate for purposes of this Agreement to provide for the construction of the Minimum Improvements; and (e) no Event of Default under the terms of this Agreement has occurred; provided, however, that any such approval of the Construction Plans pursuant to this Section 4.2 shall constitute approval for the purposes of this Agreement only and shall not be deemed to constitute approval or waiver by the City with respect to any building, zoning or other ordinances or regulation of the City, and shall not be deemed to be sufficient plans to serve as the basis for the issuance of a building permit if the Construction Plans are not as detailed or complete as the plans otherwise required for the issuance of a building permit. 6327790v2 16 The Construction Plans must be rejected in writing by the City within thirty (30) days of submission or shall be deemed to have been approved by the City. If the City rejects the Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within thirty (30) days after receipt by the Developer of written notification of the rejection, accompanied by a written statement of the City specifying the respects in which the Construction Plans submitted by the Developer fail to conform to the requirements of this Section 4.2. The provisions of this Section 4.2 relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the City; provided, however, that in any event the Developer shall submit Construction Plans which are approved prior to commencement of construction of the Minimum Improvements. Approval of the Construction Plans by the City shall not relieve the Developer of any obligation to comply with the terms and provisions of this Agreement, or the provision of applicable federal, state and local laws, ordinances and regulations, nor shall approval of the Construction Plans by the City be deemed to constitute a waiver of any Event of Default. If the Developer desires to make any material change in the Construction Plans after their approval by the City, the Developer shall submit the proposed change to the City for its approval. If the Construction Plans, as modified by the proposed change, conform to the approval criteria listed in this Section 4.2 with respect to the original Construction Plans and do not constitute a material modification to the scope, size or use of the Project or to the site plan therefor, the City shall approve the proposed change. Such change in the Construction Plans shall be deemed approved by the City unless rejected in writing within ten (10) days by the City with a statement of the City's reasons for such rejection. Approval of Construction Plans hereunder is solely for purposes of this Agreement and shall not constitute approval for any other City purpose. Section 4.3 Commencement and Completion of Construction of the Phase 1 Minimum Improvements. The Developer shall cause construction of the Phase 1 Minimum Improvements to be commenced on or before October 1, 2014, and, subject to Unavoidable Delays, the Developer shall substantially complete the Phase 1 Minimum Improvements on or before March 31, 2016. All work with respect to the Phase 1 Minimum Improvements to be constructed or provided by the Developer on the Phase 1 Development Property shall be in substantial conformity with the Construction Plans for the Phase 1 Minimum Improvements as submitted by the Developer and approved by the City. The Developer agrees that it shall cause designated representatives of the City to be allowed to enter upon the Phase 1 Development Property during the construction of the Phase 1 Minimum Improvements to inspect such construction during normal working hours, on reasonable advance written notice of such inspection. Section 4.4 Commencement and Completion of Construction of the Phase 2 Minimum Improvements. The Developer shall cause construction of the Phase 2 Minimum Improvements to be commenced on or before April 30, 2016, and, subject to Unavoidable Delays, the Developer shall substantially complete the Phase 2 Minimum Improvements on or before December 31, 2017. All work with respect to the Phase 2 Minimum Improvements to be constructed or provided by the Developer on the Phase 2 Development Property shall be in substantial conformity with the Construction Plans for the Phase 2 Minimum Improvements as submitted by the Developer and approved by the City. The Developer agrees that it shall cause designated representatives of the City to be allowed to enter upon the Phase 2 Development Property during the construction of the Phase 2 Minimum Improvements to inspect such construction during normal working hours, on reasonable advance written notice of such inspection. 6327790v2 17 Section 5.1 Insurance. ARTICLE V INSU NCE (1) The Developer will provide and maintain or cause to be maintained at all times during the process of constructing the Minimum Improvements (and, from time to time at the request of the City or the Authority, furnish the requesting party with certificates of insurance on): (A) Builder's risk insurance, written on the so called "Builder's Risk - Completed Value Basis" in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available on the so called "all risk" form of policy; the interest of the Authority and the City shall be protected by naming the Authority and the City as an additional named insured; (B) Commercial general liability insurance (including operations, premises, "X.C.U." where applicable, Products/Completed Operations, Contractual Liability, Broad Form Property Damage and Independent Contractors with limits against bodily injury and property damage of not less than $1,000,000, together with excess umbrella limits of not less than $1,000,000; and (C) Worker's compensation insurance, with statutory coverage. (2) Upon completion of construction of the Minimum Improvements and prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, insurance as follows: • (A) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full insurable replacement value of the Minimum Improvements. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of coinsurance provisions or otherwise, without the prior consent thereto in writing by the City. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment. All policies evidencing insurance required by this subparagraph (i) with respect to the Minimum Improvements shall be carried in the name of the Developer. The City and the holder of the First Mortgage will be represented on such policies, as their respective interests may appear. 6327790v2 (B) Commercial general public liability insurance, including personal injury liability for injuries to persons and/or damages to property, including any injuries 18 6327790v2 resulting from the operation of automobiles or other motorized vehicles on or about the Development Property, in the minimum amount for each year of $1,000,000 (together with excess umbrella limits of not less than $1,000,000). (C) Such other insurance, including worker's compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for worker's compensation. (3) All insurance required in this Article V shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State to assume the risks covered thereby. The Developer shall deposit annually with the Authority and the City a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V, each policy shall contain a provision that the insurer shall not cancel or materially modify it without giving written notice to the Developer and the Authority and the City at least thirty (30) days before the cancellation or modification becomes effective. As soon as reasonably possible, the Developer shall furnish the City evidence satisfactory to the Authority and the City that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V, or that there is no necessity therefor under the terms hereof. In lieu of separate policies, the Developer may maintain a single policy, or blanket or umbrella policies, or a combination thereof, which provide the total coverage required herein, in which event the Developer shall deposit with the Authority and the City a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (4) The Developer agrees to notify the Authority and the City immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. Subject to the provisions of any First Mortgage, Net Proceeds of any insurance shall be paid directly to the Developer, and the Developer will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as they existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the Net Proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. ( The Developer shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the Net Proceeds of insurance received by the Developer for such purposes are sufficient, provided that this requirement shall not apply if the City has been reimbursed the amounts paid to the Developer pursuant to Section 3.1 from tax increments from the Tax Increment District or the Developer pays the City the unreimbursed portion of the amounts paid to the Developer pursuant to Section 3.1. Section 5.2 Condemnation. In the event that title to and possession of the Minimum Improvements or any other material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or other person (except the City), so long as the Assessment Agreement shall remain in effect, the Developer shall, with 19 reasonable promptness after such taking, notify the Authority and the City as to the nature and extent of such taking. Section 5.3 Reconstruction or Payment. Upon receipt of any Condemnation Award or property insurance proceeds, the Developer shall use the entire Condemnation Award to reconstruct the Minimum Improvements (or, in the event only a part of Minimum Improvements have been taken, then to reconstruct such part) upon the Development Property or elsewhere within the Tax Increment District; provided, however, that the Developer may instead elect to pay to the City out of the Condemnation Award or property insurance proceeds, if and to the extent any such Condemnation Award or property insurance proceeds are sufficient to reimburse the City and the Authority for all public redevelopment costs incurred by the Authority and the City in connection with the Project. Section 5.4 Relationship to Mortgagee. The provisions of Section 5.1 shall be subject to the subordination, modification and waiver provisions of Section 7.5 but shall otherwise remain in full force and effect with respect to the Developer's obligations to maintain insurance, notify the Authority and the City of any casualty and reconstruct the Minimum Improvements upon such casualty unless provision is made to the satisfaction of the Authority and the City for the reimbursement of all public redevelopment costs incurred by the Authority and the City in connection with the Project. 6327790v2 20 (1) Simultaneously with the execution of this Agreement, the Developer and the City shall execute the Phase 1 Assessment Agreement, as set forth in Exhibit E-1, pursuant to the provisions of Minnesota Statutes, Section 469.177, Subdivision 8, specifying the Assessor's Minimum Market Value for the Phase 1 Development Property and the Phase 1 Minimum Improvements for calculation of real property taxes. Specifically, the Developer shall agree to a market value for the Phase 1 Development Property described therein and the Phase 1 Minimum Improvements which will result in a market value as of January 2, 2017 of not less than $21,365,000 (such minimum market value at the time applicable is herein referred to as the "Assessor's Minimum Market Value"). Nothing in the Phase 1 Assessment Agreement shall limit the discretion of the Assessor to assign a market value to the property in excess of such Assessor's Minimum Market Value nor prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in such market value for property tax purposes, provided however, that the Developer shall not seek a reduction of such market value below the Assessor's Minimum Market Value in any year so long as the Phase 1 Assessment Agreement shall remain in effect. The Phase 1 Assessment Agreement shall remain in effect until December 31, 2042. The Phase 1 Assessment Agreement shall be certified by the Assessor for the County as provided in Minnesota Statutes, Section 469.177, Subdivision 8, upon a finding by the Assessor that the Assessor's Minimum Market Value represents a reasonable estimate based upon the plans and specifications for the Phase 1 Minimum Improvements to be constructed on the Phase 1 Development Property and the market value previously assigned to the Phase 1 Development Property. Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the Phase 1 Assessment Agreement shall be filed for record in the office of the county recorder or registrar of titles of Dakota County, and such filing shall constitute notice to any subsequent encumbrancer or purchaser of the Phase 1 Development Property (or part thereof), whether voluntary or involuntary, and such Phase 1 Assessment Agreement shall be binding and enforceable in its entirety against any such subsequent purchaser or encumbrancer, including the holder of any mortgage recorded against the Phase 1 Development Property. (2) On or before the date the Developer receives the building permit for construction of the Phase 2 Minimum Improvements, the Developer and the City shall execute the Phase 2 Assessment Agreement, as set forth in Exhibit E-2, pursuant to the provisions of Minnesota Statutes, Section 469.177, Subdivision 8, specifying the Assessor's Minimum Market Value for the Phase 2 Phase 2 Development Property and the Phase 2 Phase 2 Minimum Improvements for calculation of real property taxes. Specifically, the Developer shall agree to a market value for the Phase 2 Development Property described therein and the Phase 2 Minimum Improvements which will result in a market value as of January 2, 2018 of not less than $13,830,000 (such minimum market value at the time applicable is herein referred to as the "Assessor's Minimum Market Value"). Nothing in the Phase 2 Assessment Agreement shall limit the discretion of the Assessor to assign a market value to the property in excess of such Assessor's Minimum Market Value nor prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in such market value for property tax purposes, provided however, that the 6327790v2 ARTICLE VI ASSESSMENT AGREEMENTS AND OTHER COVENANTS Section 6.1 Execution of Assessment Agreements. 21 Developer shall not seek a reduction of such market value below the Assessor's Minimum Market Value in any year so long as the Phase 2 Assessment Agreement shall remain in effect. The Phase 2 Assessment Agreement shall remain in effect until December 31, 2042. The Phase 2 Assessment Agreement shall be certified by the Assessor for the County as provided in Minnesota Statutes, Section 469.177, Subdivision 8, upon a finding by the Assessor that the Assessor's Minimum Market Value represents a reasonable estimate based upon the plans and specifications for the Phase 2 Minimum Improvements to be constructed on the Phase 2 Development Property and the market value previously assigned to the Phase 2 Development Property. Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the Phase 2 Assessment Agreement shall be filed for record in the office of the county recorder or registrar of titles of Dakota County, and such filing shall constitute notice to any subsequent encumbrancer or purchaser of the Phase 2 Development Property (or part thereof), whether voluntary or involuntary, and such Phase 2 Assessment Agreement shall be binding and enforceable in its entirety against any such subsequent purchaser or encumbrancer, including the holder of any mortgage recorded against the Phase 2 Development Property. Section 6.2 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 Developers' obligations have been assumed by any other person with the written consent of the Authority and 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 le a tax; ( It will not seek any tax deferral or abatement, either presently or prospectively authorized under Minnesota Statutes, Section 469.1813, or 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. 6327790v2 22 Section 7.1 Limitation Upon Encumbrance of Property. Prior to the completion of the Minimum Improvements, as determined by the Authority and the City, neither the Developer nor any successor in interest to the Development Property or any part thereof shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Development Property, other than permitted encumbrances, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Development Property, other than permitted encumbrances, except: 6327790v2 ARTICLE VII MORTGAGE FIN CING (A) for the purposes of obtaining funds to complete the Site Improvements and the Minimum Improvements (including, but not limited to, labor and materials, equipment, professional fees, real estate taxes, construction interest, organization and other indirect costs of development, costs of constructing the Minimum Improvements, an allowance for contingencies, costs of issuance of any bond or note issue to fund construction or acquisition of the Project, amounts required to fund any bond or note reserves relating to construction or acquisition of the Project, and amounts required to fund any required escrow accounts); and (B) only upon the prior written approval of the Authority and the City in accordance with Sections 7.1 and 7.2. Neither the City nor the Authority shall not approve any Mortgage which does not contain terms that conform to the terms of Section 7.5, except as provided in Section 7.6 of this Agreement. Section 7.2 Approval of Mortgage. The City and the Authority shall approve a Mortgage if: (1) the City and the Authority first receives a copy of all mortgage documents; (2) the mortgage loan, together with other funds available to the Developer, will, in the reasonable judgment of the City and the Authority, be sufficient to construct the Minimum Improvements; ( neither the City nor the Authority are entitled under Section 9.2 to exercise any of the remedies set forth therein as a result of an Event of Default; (4) the City and the Authority determine that the terms of the Mortgage conform to the terms of Section 7.5. If no action is taken by the City or the Authority to reject the mortgage documents within twenty-one (21) days, they shall be deemed approved. Section 7.3 Notice of Default; Copy to Mortgagee. Whenever the City and the Authority shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in his obligations or covenants under the Agreement, the City and the Authority shall at the same time forward a copy of such notice or demand to each holder of any 23 Mortgage authorized by the Agreement at the last address of such holder shown in the records of the City and the Authority. Section 7.4 Mortgagee's Option to Cure Defaults. After any breach or default referred to in Section 7.3, each such holder of a Mortgage shall (insofar as the rights of the City and the Authority are concerned) have the right, at its option, to cure or remedy such breach or default (or such breach or default to the extent that it relates to the part of the Development Property covered by its mortgage) and to add the cost thereof to the Mortgage debt and the lien of its Mortgage; provided, however, that if the breach or default is with respect to construction of the Minimum Improvements, nothing contained in this Section or any other Section of this Agreement shall be deemed to require such holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Minimum Improvements, provided that any such holder shall not devote the Development Property to a use inconsistent with the Development Program or this Agreement without the agreement of the City and the Authority. Section 7.5 Authority's and City's Option to Cure Default on Mortgage. Any Mortgage authorized pursuant to this Article VII, and executed by the Developer or any subordination agreement relating to such mortgage entered into by the City and the Authority with respect to the Development Property or any improvements thereon shall provide that, in the event that the Developer is in default under such Mortgage and the holder of the Mortgage notifies the Developer of such default, the holder of the Mortgage shall also notify the City and the Authority in writing of: (1) the fact of the default; (2) the elements of the default; and (3) the actions required to cure the default. If the default is an "Event of Default" under such Mortgage, which shall entitle such holder thereof to foreclose upon the Development Property, the Minimum Improvements or any portion thereof, and any applicable grace periods have expired, the City and the Authority shall have, and each Mortgage executed by the Developer or any subordination agreement relating to such Mortgage entered into by the City and the Authority, with respect to the Development Property or any improvements thereon shall provide that the City and the Authority shall have such an opportunity to cure the "Event of Default" within such reasonable time period as the holder shall deem appropriate. 6327790v2 Section 7.6 Subordination and Modification for the Benefit of Mortgagees. (1) In order to facilitate the obtaining of financing for the construction of the Minimum Improvements by the Developer, the City and the Authority agree to subordinate their rights under this Agreement and for the purposes described in Section 7.1(A) of this Agreement, but only provided that the First Mortgage provides that if the holder of the First Mortgage shall foreclose on the Development Property, the improvements thereon, or any portion thereof, or accept a deed to the Development Property in lieu of foreclosure, it shall consent to the Assessor's Minimum Market Value set forth in the Assessment Agreement and provided that 24 such subordination shall not relieve the Developer of its obligation hereunder to restore the Development Property in the event of damage, destruction or condemnation of all or any part of the Development Property. (2) In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the City and the Authority agree that they shall agree to any reasonable modification of this Article VII or Article V, intercreditor agreement or waiver of its rights hereunder to accommodate the interests of the holder of the First Mortgage, provided, however, that the City and the Authority determine, in their reasonable judgment, that any such modification(s) will adequately protect the legitimate interests and security of the City and the Authority with respect to the Project and the Development Program. The City also agrees to consider such modification(s) of this Article VII with respect to other holders, and to agree to such modifications if the City and the Authority deem such modification(s) necessary and reasonably. (3) The City and the Authority agree that if required by the holder of the First Mortgage as a condition to granting the First Mortgage it will not declare an Event of Default pursuant to Sections 9.1(3) and (4) provided that the provisions of Section 7.6(1) are complied with by the holder of the First Mortgage. 6327790v2 25 ARTICLE VIII PROHIBITIONS AGAINST ASSIGNMENT AND T NSFER; INDEMNIFICATION Section 8.1 Transfer of Substantially All Assets. As security for the obligations of the Developer under this Agreement, the Developer represents and agrees that prior to the Termination Date, the Developer will not dispose of all or substantially all of its assets comprising the Project to any Person unless the transferee Person assumes in writing all of the obligations of the Developer under this Agreement and the Assessment Agreement. Section 8.2 Prohibition Against Transfer of Property and Assignment of Agreement. The Developer represents and agrees that prior to the Termination Date: (1) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to the construction of Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease (other than in the normal course of business), or any trust or power, or transfer in any other mode or form of or with respect to the 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 Authority and the City. (2) The Authority and the City shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such transfer or assignment that: 6327790v2 (A) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority and the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer. (B) Any proposed transferee, by instrument in writing satisfactory to the Authority and the City and in form recordable among the land records, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority and the City, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject (unless the Developer agrees to continue to fulfill those obligations, in which case the preceding provisions of this Section 8.2(2)(B) shall not apply); provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority and the City) deprive the Authority and the City of any rights or remedies or controls with respect to the Development Property or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect 26 to, 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 Authority and the City of or with respect to any rights or remedies or controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the Authority and the City would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority and the City to the contrary, no such transfer or approval by the Authority and 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 construction of the Minimum Improvements, from any of its obligations with respect thereto. (C) There shall be submitted to the Authority and the City for review and prior written approval all instruments and other legal documents necessary to demonstrate the qualifications of any successor or assigns to fulfill the obligations under this Agreement and acceptance of the terms herein. Section 8.3 Approvals. Notwithstanding Section 8.1 and 8.2, any approval of a transfer of interest in the Developer, this Agreement, or all or a part of the Development Property required to be given by the Authority and the City under this Article VIII may be denied only in the event that the Authority and the City reasonably determines that the ability of the transferee to perform the Developer's obligations under this Agreement and its obligation, to pay ad valorem real property taxes assessed with respect to the Development Property, or the overall financial security provided to the Authority and the City under the terms of this Agreement, or the likelihood of the Minimum Improvements being successfully constructed and operated and maintained pursuant to the terms of this Agreement, will be materially impaired by the action for which approval is sought. If no action is taken by the City or Authority to reject the transfer of interest contemplated by this Article VIII within twenty-one (21) days such transfer shall be deemed approved. 6327790v2 27 6327790v2 (4) If the Developer shall: ARTICLE IX EVENTS OF DEFAULT Section 9.1 Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement 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. ( 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 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 as 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, 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. ( If the Developer shall be in default under the Development Agreement for Parkside Village between the Developer and the City. Section 9.2 Remedies on Default. Whenever any Event of Default referred to in Section 9.1 occurs and is continuing, the Authority or the City, as specified below, may take any one or more of the following actions after the giving of sixty (60) days' written notice to the Developer, but only if the Event of Default has not been cured within said sixty (60) days: 28 (1) The Authority and the City may suspend their performance under this Agreement and the TIF Note until it receives assurances from the Developer, deemed reasonably adequate by both the Authority and the City, that the Developer will cure its default and continue its performance under this Agreement. (2) The Authority and the City may draw upon any guarantee or security provided to the City and the Authority pursuant to any terms of this Agreement to the extent allowed by such guarantee or security. Notes. ( The Authority and the City may cancel and rescind the Agreement and the TIF (4) The Authority and the City 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 9.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or the City 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 9.4 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 9.5 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs, and the Authority or the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement 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 City the reasonable fees of such attorneys and such other expenses so incurred by the Authority or the City. 6327790v2 Section 9.6 Indemnification of the Authority and the City. (1) The Developer releases the Authority and the City, its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees (collectively the "Indemnified Parties") from, covenants and agrees that the Indemnified Parties shall not be liable for, and 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 reckless misconduct of the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now 29 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 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 or the City in this Agreement or to any actions undertaken by the Authority or the City which are not contemplated by this Agreement but shall, in any event and without regard to any fault on the part of the Authority or the City, apply to any pecuniary loss or penalty (including interest thereon from the date the loss is incurred or penalty is paid by the Authority or the City 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 a "housing district" under Section 469.174, Subdivision 11, of the Act or to violate limitations as to the use of Tax Increments as set forth in Section 469.176, Subdivision 4d. (3) All covenants, stipulations, promises, agreements and obligations of the Authority and the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and the City and not of any governing body member, officer, agent, servant or employee of the Authority and the City, as the case may be. Section 9.7 Phase 2 Minimum Improvements. Notwithstanding anything contained herein to the contrary, it shall not be an Event of Default if the Developer does not construct the Phase 2 Minimum Improvements. However, if the Developer does not commence and complete construction of the Phase 2 Minimum Improvements as required by Section 2.3(1), the Authority and the City are not obligated to reimburse the Developer for the costs identified in Section 3.2 and 3.3 related to the Phase 2 Minimum Improvements. 6327790v2 30 Section 10.1 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 a multifamily rental housing facility and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 10.2 Conflicts of Interest. No member of the governing body or other official of the Authority or the City 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 or the City shall be personally liable to the Authority or the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 10.3 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 10.4 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 ( in the case of the Authority is addressed to or delivered personally to the Authority at: 6327790v2 ARTICLE X ADDITIONAL PROVISIONS (1) in the case of the Developer is addressed to or delivered personally to: IMH Special Asset NT 175-AVN, LLC 7001 N. Scottsdale Road, #2050 Scottsdale, AZ 85253 Attn: John McVey (2) in the case of the City is addressed to or delivered personally to the City at: City of Apple Valley, Minnesota Apple Valley Municipal Center 7100 147 Street West Apple Valley, Minnesota 55124-7519 Attn: City Finance Director 31 6327790v2 Apple Valley Economic Development Authority, Minnesota Apple Valley Municipal Center 7100 147 Street West Apple Valley, Minnesota 55124-7519 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 10.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.6 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 10.7 Expiration. This Agreement shall expire on the Termination Date. Section 10.8 Provisions Surviving Rescission or Expiration. Sections 9.5 and 9.6 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 10.9 Assignment. This Agreement may be assigned only with the consent of both the Authority and the City which such consents shall not be unreasonably withheld. The TIF Notes may only be assigned pursuant to the terms of each respective TIF Note. 32 IN WITNESS WHEREOF, the Authority and the City have 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 on its behalf, on or as of the date first above written. STATE OF MINNESOTA ) ) SS COUNTY OF 6327790v2 S-1 CITY OF APPLE VALLEY, MINNESOTA By Its Mayor By Its City Clerk The foregoing instrument was acknowledged before me this day of 20 , by , the Mayor and the City Clerk, respectively of the City of Apple Valley, Minnesota. Notary Public This is a signature page to the Development Assistance Agreement by and among the Apple Valley Economic Development Authority, the City of Apple Valley and IMH Special Asset NT 175-AVN, LLC. STATE OF MINNESOTA ) )SS COUNTY OF DAKOTA ) 6327790v2 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA By Its President By Its Secretary The foregoing instrument was acknowledged before me this day of 2014, 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 among the Apple Valley Economic Development Authority, the City of Apple Valley and IMH Special Asset NT 175 -AVN, LLC. S -2 STATE OF MINNESOTA ) )SS COUNTY OF ) IMH SPECIAL ASSET NT 175 -AVN, LLC By Its The foregoing instrument was acknowledged before me this day of 2014, by , the of IMH Special Asset NT 175 -AVN, LLC. Notary Public This is a signature page to the Development Assistance Agreement by and among the Apple Valley Economic Development Authority, the City of Apple Valley and IMH Special Asset NT 175 -AVN, LLC. 6327790v2 S -3 6327790v2 DESCRIPTION OF PHASE 1 DEVELOPMENT PROPERTY Lot 1, Block 2 Lot 2, Block 2 Lot 3, Block 2 Lot 1, Block 3 EXHIBIT A -1 Parkside Village, Dakota County, Minnesota. All in the Legacy of Apple Valley North, Dakota County, Minnesota. A -1 -1 6327790v2 DESCRIPTION OF PHASE 2 DEVELOPMENT PROPERTY Lot 1, Block 7 Lot 1, Block 8 EXHIBIT A -2 Parkside Village, Dakota County, Minnesota. All in the Legacy of Apple Valley North, Dakota County, Minnesota. A -2 -1 EXHIBIT B -1 FO ' OF PHASE 1 TIF NOTE No. R -1 $ 6327790v2 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT REVENUE NOTE (GABELLA PROJECT) 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 IMH Special Asset NT 175 -AVN, LLC, 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 $2,684,000 as provided in that certain Amended and Restated Development Assistance Agreement, dated as of July 1, 2014, as the same may be amended from time to time (the "Development Assistance Agreement "), by and between the Authority, the City of Apple Valley, Minnesota, and IMH Special Asset NT 175 -AVN, LLC The unpaid principal amount of the Note shall bear simple, non - compounding interest from the date of issuance of the Note at 5.0% 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, 2017, and on each August 1 and February 1 thereafter to and including February 1, 2042 (as determined in accordance with the Development Assistance Agreement), 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 70% of the tax increments (the "Tax Increments ") from the Development Property (as defined in the Development Assistance Agreement) within the Authority's Tax Increment Financing District Tax Increment Financing District No. 15 (the "Tax Increment District ") within its Master Development District which are paid to the Authority and which the Authority is entitled to B -1 -1 retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). Notwithstanding the foregoing, the Tax Increments shall be applied pro rata to this Note and the Tax Increment Note if issued for the Galante Project as set forth in the Development Assistance Agreement. This Note shall terminate and be of no further force and effect 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 9.2(3) thereof; (iii) on the date the Tax Increment District is terminated; or (iv) on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The Authority makes no representation or covenant, expressed 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, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been timely cured; and, 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 consents 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, 6327790v2 B-1-2 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, statutory or charter limitation thereon. 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 6327790v2 B-1-3 IMH Special Asset NT 175-AVN, LLC 7001 N. Scottsdale Road, #2050 Scottsdale, AZ 58253 6327790v2 NAME AND ADDRESS OF REGISTERED OWNERS CERTIFICATION OF REGIST It is hereby certified that the foregoing Note, as originally issued on 20 , was on said date registered in the name of IMH Special Asset NT 175-AVN, 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. REGIST TION EDA SECRETARY DATE OF B-1-4 , 20 , 20 , 20 , 20 • TION SIGNATURE OF 6327790v2 FO EXHIBIT B-2 OF PHASE 2 TIF NOTE No. R-1 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT REVENUE NOTE (GALANTE PROJECT) 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 IMH Special Asset NT 175-AVN, LLC, 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 $2,666,000 as provided in that certain Amended and Restated Development Assistance Agreement, dated as of July 1, 2014, as the same may be amended from time to time (the "Development Assistance Agreement"), by and between the Authority, the City of Apple Valley, Minnesota, and IMH Special Asset NT 175-AVN, LLC The unpaid principal amount of the Note shall bear simple, non-compounding interest from the date of issuance of the Note at 5.0% 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, 2018, and on each August 1 and February 1 thereafter to and including February 1, 2042 (as determined in accordance with the Development Assistance Agreement), 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 70% of the tax increments (the "Tax Increments") from the Development Property (as defined in the Development Assistance Agreement) within the Authority's Tax Increment Financing District Tax Increment Financing District No. 15 (the "Tax Increment District") within its Master Development District which are paid to the Authority and which the Authority is entitled to B-2-1 retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). Notwithstanding the foregoing, the Tax Increments shall be applied pro rata to this Note and the Tax Increment Note if issued for the Gabe lla Project as set forth in the Development Assistance Agreement. This Note shall terminate and be of no further force and effect 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 9.2(3) thereof; (iii) on the date the Tax Increment District is terminated; or (iv) on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The Authority makes no representation or covenant, expressed 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, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been timely cured; and, 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 consents 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, 6327790v2 B-2-2 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, statutory or charter limitation thereon. 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 6327790v2 B-2-3 It is hereby certified that the foregoing Note, as originally issued on 20 , was on said date registered in the name of IMH Special Asset NT 175-AVN, LLC, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNERS REGISTRATION EDA SECRETARY IMH Special Asset NT 175-AVN, LLC 7001 N. Scottsdale Road, #2050 Scottsdale, AZ 58253 6327790v2 CERTIFICATION OF REGIST TION DATE OF SIGNATURE OF B-2-4 , 20 , 20 20 , 20 6327790v2 EXHIBIT C SITE IMPROVEMENTS AND MINIMUM IMPROVEMENTS Landscaping, including irrigation Foundations and Footings Grading/earthwork Engineering Survey Environmental Testing Soil Borings Site Preparation Onsite Utilities Storm Water/Ponding Outdoor Lighting Onsite Road, Curb, Gutter, Driveway, Sidewalk and Streetscape Improvements Underground Parking Costs of the Minimum Improvements C-1 6327790v2 EXHIBIT D-1 COMPLIANCE CERTIFICATE FOR PHASE 1 MINIMUM IMPROVEMENTS The undersigned IMH Special Asset NT 175-AVN, LLC, does hereby certify that as of the date of this Certificate not less than 20% of the residential units in the Phase 1 Minimum Improvements located at in Apple Valley, Minnesota are occupied or held for occupancy by persons whose income is 50% or less of the Dakota County median income. units in the Phase 1 Minimum Improvements are occupied by persons whose income is 50% or less of the Dakota County median income. Dated this day of , 20 . IMH SPECIAL ASSET NT 175-AVN, LLC By Its [Attach household income verification as required by Section 3.6 of the Development Assistance Agreement by and among the Apple Valley Economic Development Authority, the City of Apple Valley, and IMH Special Asset NT 175-AVN, LLC.] D-1-1 6327790v2 EXHIBIT D-2 COMPLIANCE CERTIFICATE FOR PHASE 2 MINIMUM IMPROVEMENTS The undersigned IMH Special Asset NT 175-AVN, LLC, does hereby certify that as of the date of this Certificate not less than 20% of the residential units in the Phase 2 Minimum Improvements located at in Apple Valley, Minnesota are occupied or held for occupancy by persons whose income is 50% or less of the Dakota County median income. units in the Phase 2 Minimum Improvements are occupied by persons whose income is 50% or less of the Dakota County median income. Dated this day of , 20 IMH SPECIAL ASSET NT 175-AVN, LLC By Its [Attach household income verification as required by Section 3.6 of the Development Assistance Agreement by and among the Apple Valley Economic Development Authority, the City of Apple Valley, and IMH Special Asset NT 175-AVN, LLC.] D-2-1 FO EXHIBIT E-1 OF PHASE 1 ASSESSMENT AGREEMENT THIS AGREEMENT, dated as of this day of , 20 , is by and among the City of Apple Valley, Minnesota (the "City") and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (the "Developer"). WITNESSETH WHEREAS, on or before the date hereof the City and Developer have entered into an Amended and Restated Development Assistance Agreement dated as of July 1, 2014 (the "Agreement") regarding certain real property located in the City (the "Development Property") which property is legally described on Exhibit A attached hereto and made a part hereof. WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will construct a 196 unit apartment multifamily rental housing facility (the "Project") on the Development Property in accordance with plans and specifications approved by the City. WHEREAS, the City and Developer desire to establish a minimum market value for the Development Property and the improvements constructed or to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8. WHEREAS, the Developer has acquired the Development Property. WHEREAS, the City and the Assessor for Dakota County, Minnesota (the "Assessor") have reviewed construction plans for the Project. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. As of January 2, 2016 and until the termination of this Agreement the minimum market value which shall be assessed for the Project shall be not less than $21,365,000. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on (i) the earlier of December 31, 2041 or (ii) the date on which the Tax Increment District expires or is otherwise terminated. 3. This Agreement shall be promptly recorded by the Developer and hereby made a part hereof with the County Recorder of Dakota County, Minnesota. 4. The Assessor has reviewed the plans and specifications for the improvements and the market value previously assigned to the land upon which the improvements are to be constructed, and that the "minimum market value" as set forth above is reasonable. 5. Neither the preamble nor provisions of this Agreement are intended to, or shall they be construed as, modifying the terms of the Agreement between the City and the Developer. 6327790v2 E-1-1 6. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. IN WITNESS WHEREOF, the City and the Developer have caused this Agreement to be executed in their names and on their behalf all as of the date set forth above. (SEAL) STATE OF MINNESOTA ) ) ss COUNTY OF DAKOTA ) 6327790v2 E-1-2 CITY OF APPLE VALLEY, MINNESOTA By Its Mayor By Its City Clerk The foregoing instrument was acknowledged before me this day of , 20 , by , the Mayor and , the City Clerk, of the City of Apple Valley on behalf of said City. Notary Public Signature page for Assessment Agreement by and between the City of Apple Valley, Minnesota and IMH Special Asset NT 175-AVN, LLC. STATE OF MINNESOTA ) ) ss. COUNTY OF This Instrument Drafted By: Briggs and Morgan, P.A. 2200 First National Bank Building St. Paul, MN 55101 6327790v2 E-1-3 IMH SPECIAL ASSET NT 175-A , LLC By Its The foregoing instrument was acknowledged before me this day of 20 , by , the of IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company, on behalf of said corporation. Notary Public Signature page for Assessment Agreement by and between the City of Apple Valley, Minnesota and IMH Special Asset NT 175-AVN, LLC. Project Name: Gabe lla Building 6327790v2 EXHIBIT A TO PHASE 1 ASSESSMENT AGREEMENT LEGAL DESCRIPTION OF PHASE 1 DEVELOPMENT PROPERTY Description: Lot 1, Block 2, Lot 2, Block 2, Lot 3, Block 2 and Lot 1, Block 3 All in Parkside Village, Dakota County, Minnesota A-1 The undersigned, having reviewed the Phase 1 Assessment Agreement dated as of , 2014 between the City of Apple Valley and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (the "Assessment Agreement"); the plans and specifications for the Project, as defined in the Assessment Agreement; and the market value currently assigned to land upon which the improvements are to be constructed and being of the opinion that the minimum market value contained in the Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the property described as: Commonly known name of property: Legal Description of property: hereby certifies that the market value of assigned to such land and improvements is reasonable. Nothing herein shall limit the discretion of the County Assessor or any other public official or body having the duty to determine the market value of the Development Property for ad valorem tax purposes, to assign to the Development Property a market value in excess of the minimum market value specified above and in this Agreement. STATE OF MINNESOTA COUNTY OF DAKOTA 6327790v2 CERTIFICATION BY COUNTY ASSESSOR E-1-4 County Assessor for Dakota County This instrument was acknowledged before me on , 20 , by , the County Assessor of Dakota County. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF by CONSENT TO ASSESSMENT AGREEMENT The , of (the "Bank"), does hereby consent to all terms, conditions and provisions of the foregoing Assessment Agreement and agrees that, in the event it purchases the Development Property at a foreclosure sale or acquires the Development Property through a deed in lieu of foreclosure or otherwise in satisfaction of the indebtedness owed by the Developer, it and its respective successors and assigns, shall be bound by all terms and conditions of the Assessment Agreement, including but not limited to the provision which requires that the minimum market value of the Development Property shall be not less than $21,365,000 as of January 2, 2017 and subsequent assessments through the January 2, 2041 assessment. IN WITNESS WHEREOF, we have caused this Consent to Assessment Agreement to be executed in its name and on its behalf as of this day of , 20_. 6327790v2 E-1-5 By Its This instrument was acknowledged before me this day of , 20 , , the of , a , on behalf of the Notary Public THIS AGREEMENT, dated as of this day of , 20 , is by and among the City of Apple Valley, Minnesota (the "City") and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (the "Developer"). 6327790v2 FO EXHIBIT E-2 OF PHASE 2 ASSESSMENT AGREEMENT WITNESSETH WHEREAS, on or before the date hereof the City and Developer have entered into an Amended and Restated Development Assistance Agreement dated as of July 1, 2014 (the "Agreement") regarding certain real property located in the City (the "Development Property") which property is legally described on Exhibit A attached hereto and made a part hereof. WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will construct a 126 unit multifamily rental housing facility (the "Project") on the Development Property in accordance with plans and specifications approved by the City. WHEREAS, the City and Developer desire to establish a minimum market value for the Development Property and the improvements constructed or to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8. WHEREAS, the Developer has acquired the Development Property. WHEREAS, the City and the Assessor for Dakota County, Minnesota (the "Assessor") have reviewed construction plans for the Project. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. As of January 2, 2018 and until the termination of this Agreement the minimum market value which shall be assessed for the Project shall be not less than $13,830,000. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on (i) the earlier of December 31, 2041 or (ii) the date on which the Tax increment District expires or is otherwise terminated. 3. This Agreement shall be promptly recorded by the Developer and hereby made a part hereof with the County Recorder of Dakota County, Minnesota. 4. The Assessor has reviewed the plans and specifications for the improvements and the market value previously assigned to the land upon which the improvements are to be constructed, and that the "minimum market value" as set forth above is reasonable. 5. Neither the preamble nor provisions of this Agreement are intended to, or shall they be construed as, modifying the terms of the Agreement between the City and the Developer. E-2-1 6. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. IN WITNESS WHEREOF, the City and the Developer have caused this Agreement to be executed in their names and on their behalf all as of the date set forth above. (SEAL) STATE OF MINNESOTA ) ) ss COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of , 20 , by , the Mayor and , the City Clerk, of the City of Apple Valley on behalf of said City. Signature page for Assessment Agreement by and between the City of Apple Valley, Minnesota and IMH Special Asset NT 175-A , LLC. 6327790v2 E-2-2 CITY OF APPLE VALLEY, MINNESOTA By Its Mayor By Its City Clerk Notary Public STATE OF MINNESOTA COUNTY OF This Instrument Drafted By: Briggs and Morgan, P.A. 2200 First National Bank Building St. Paul, 55101 6327790v2 ) ss. IMH SPECIAL ASSET NT 175-AVN, LLC By Its The foregoing instrument was acknowledged before me this day of 20 , by , the of IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company, on behalf of said corporation. E-2-3 Notary Public Signature page for Assessment Agreement by and between the City of Apple Valley, Minnesota and IMH Special Asset NT 175-AVN, LLC. LEGAL DESCRIPTION OF PHASE 2 DEVELOPMENT PROPERTY Project Name: Galante Building Description: Lot 1, Block 7, and Lot 1, Block 8 All in Parkside Village, Dakota County, Minnesota 6327790v2 EXHIBIT A TO PHASE 2 ASSESSMENT AGREEMENT A-1 The undersigned, having reviewed the Phase 2 Assessment Agreement dated as of , 2014 between the City of Apple Valley and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (the "Assessment Agreement"); the plans and specifications for the Project, as defined in the Assessment Agreement; and the market value currently assigned to land upon which the improvements are to be constructed and being of the opinion that the minimum market value contained in the Assessment Agreement appears reasonable, hereby certifies as follows: CERTIFICATION BY COUNTY ASSESSOR The undersigned Assessor, being legally responsible for the assessment of the property described as: Commonly known name of property: Legal Description of property: hereby certifies that the market value of assigned to such land and improvements is reasonable. Nothing herein shall limit the discretion of the County Assessor or any other public official or body having the duty to determine the market value of the Development Property for ad valorem tax purposes, to assign to the Development Property a market value in excess of the minimum market value specified above and in this Agreement. STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) 6327790v2 County Assessor for Dakota County This instrument was acknowledged before me on , 20 , by , the County Assessor of Dakota County. Notary Public E-2-4 STATE OF MINNESOTA ) ) ss. COUNTY OF by 6327790v2 CONSENT TO ASSESSMENT AGREEMENT The of (the "Bank"), does hereby consent to all terms, conditions and provisions of the foregoing Assessment Agreement and agrees that, in the event it purchases the Development Property at a foreclosure sale or acquires the Development Property through a deed in lieu of foreclosure or otherwise in satisfaction of the indebtedness owed by the Developer, it and its respective successors and assigns, shall be bound by all terms and conditions of the Assessment Agreement, including but not limited to the provision which requires that the minimum market value of the Development Property shall be $13,830,000 as of January 2, 2018 and subsequent assessments through the January 2, 2041 assessment. IN WITNESS WHEREOF, we have caused. this Consent to Assessment Agreement to be executed in its name and on its behalf as of this day of , 20 . This instrument was acknowledged before me this day of , 20 , , the of a , on behalf of the E-2-5 By Its Notary Public MORTGAGE by Business Entity together with the following (a) (b) (c) (d) (e) FO MORTGAGE REGISTRY TAX DATE: , 201 DUE: $ THIS MORTGAGE ("Mortgage") is given by IMH Special Asset NT 175-AVN, LLC, a limited liability company under the laws of Arizona, as mortgagor ("Borrower"), to the City of Apple Valley, a Minnesota municipal corporation, as mortgagee ("Lender"). In consideration of the receipt of Dollars ($ ) (the "Indebtedness") from Lender, Borrower hereby mortgages, with power of sale, the real property in Dakota County, Minnesota, legally described as follows: Check here if all or part of the described real property is Registered (Torrens) fl all hereditaments and appurtenances belonging thereto (the "Property"), subject to exceptions: Covenants, conditions, restrictions (without effective forfeiture provisions) and declarations of record, if any; Reservations of minerals or mineral rights by the State of Minnesota, if any; Utility and drainage easements which do not interfere with present improvements; Applicable laws, ordinances, and regulations; and The lien of real estate taxes and installments of special assessments not yet due and payable. Borrower covenants with Lender as follows: 1. Repayment of Indebtedness. If Borrower (a) either (i) substantially completes the Minimum Improvements to the Development Property, as defined in and in accordance with the 6327790v2 EXHIBIT F OF MORTGAGE (Top 3 inches reserved for recording data) F-1 terms of the Amended and Restated Development Assistance Agreement dated July 1, 2014, by and among Apple Valley Economic Development Authority, a public body corporate and politic and a political subdivision of the State of Minnesota (the "Authority"), Lender and Borrower and all amendments thereto (the "Development Assistance Agreement") as evidenced by the issuance of certificates of occupancy for the Minimum Improvements, or (ii) pays the Indebtedness to Lender ; (b) pays all interest on the Indebtedness that may come due as provided in the Development Assistance Agreement; (c) repays to Lender, at the times and with interest as specified, all sums advanced in protecting the lien of this Mortgage; and (d) keeps and performs all the covenants and agreements contained herein, then Borrower's obligations under this Mortgage will be satisfied, and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower's responsibility to record any satisfaction of this Mortgage at Borrower' s expense. 2. Statutory Covenants. Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn. Stat. 507.15, and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference: 3. Additional Representations, Covenants and Agreements of Borrower. Borrower makes the following additional representations, covenants and agreements with Lender: (a) Borrower hereby restates and re-affirms all representations, warranties and covenants of Borrower contained in the Development Assistance Agreement. (b) Borrower acknowledges and agrees that neither Lender nor the Authority is in default under the Development Assistance Agreement. (c) If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation, the money paid pursuant to such condemnation or conveyance in lieu thereof shall be applied to payment of the amounts due by Borrower to Lender under the Development Assistance Agreement, even if such amounts are not then due to be paid. Such amounts first will be applied to unpaid accrued interest, if any, and next to the principal to be paid as provided in the Development Assistance Agreement in the inverse order of their maturity. Such payment(s) will not postpone the due date of the installments to be paid pursuant to the Development Assistance Agreement or change the amount of such installments. The balance of the money paid pursuant to such condemnation or conveyance in lieu thereof, if any, will be the property of Borrower. (d) Borrower will pay any other expenses and attorneys' fees incurred by Lender pursuant to the Development Assistance Agreement or as reasonably required for the protection of the lien of this Mortgage. 6327790v2 (a) To warrant the title to the Property; (b) To pay the Indebtedness as herein provided; (c) To pay all taxes; (d). That the Property shall be kept in repair and no waste shall be committed; and (e) To pay principal and interest on prior mortgages (if any). F-2 4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties, Lender may make such payments. The sums so paid shall be additional Indebtedness, bear interest from the date of such payment at the rate of eight percent (8%) per annum, be an additional lien upon the Property, and be immediately due and payable upon written demand. This Mortgage secures the repayment of such advances. 5. Default. In case of default (i) in the payment of sums to be paid under the Development Assistance Agreement or this Mortgage, when the same becomes due, (ii) in any of the covenants set forth in this Mortgage, (iii) under the terms of the Development Assistance Agreement, or (iv) under any addendum attached to this Mortgage, Lender may declare the unpaid balance of the Indebtedness and the interest accrued thereon, together with all sums advanced hereunder, immediately due and payable without notice, and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn. Stat. Ch. 580, and out of the monies arising from such sale, to retain all sums secured hereby, with interest and all legal costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which costs, charges, and fees Borrower agrees to pay. 6. Transfer Restrictions. Borrower may not sell, assign, or otherwise transfer all or any part of Borrower's interest in the Property, and a controlling interest in Borrower may not be transferred without the written consent of Lender, which consent may be granted or withheld in the sole discretion of Lender. 7. Hazardous Substances. Borrower shall not bring, store, generate, or treat hazardous substances, toxic wastes, or petroleum products on the Property. Borrower hereby indemnifies, defends, and holds Lender harmless from any and all claims, demands, actions, causes of action, liabilities or rights which may be asserted against Lender with respect to such substances, wastes, or products. This obligation shall survive the satisfaction or foreclosure of this Mortgage. 8. Governing Law; Severability. This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Development Assistance Agreement conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Development Assistance Agreement which can be given effect without the conflicting provision. 9. Binding Effect. Terms of this Mortgage will run with the Property and bind the parties hereto and their successors in interest. 6327790v2 [Signature page follows] F-3 6327790v2 (Stamp) THIS INSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST HILLS & BAUER P.A. 7300 West 147th Street, Suite 600 Apple Valley, Minnesota 55124 (952) 432-3136 (MDK: 66-32849) F-4 Borrower IMH Special Asset NT 175-AVN, LLC By: Its: STATE OF ) ss. COUNTY OF On this day of , 20 , before me, a Notary Public within and for said County, personally appeared to me personally known, who being by me duly sworn, did say that he/she is the of IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company, named in the instrument, and that said instrument was signed on behalf of said limited liability company by authority of the limited liability company and acknowledged said instrument to be the free act and deed of the limited liability company. (signature of notarial officer) Title (and Rank): My commission expires: (month/day/year)