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HomeMy WebLinkAboutEDA Packet - 10-26-23 M eeting L ocation: M unicipal Center 7100 147th Street West Apple Valley, M innesota 55124 October 26, 2023 EC O N O MIC D EVELO PMEN T A UT HO RIT Y S PEC IA L MEET IN G T EN TAT IVE A G EN D A 6:30 P M 1.Call to Order 2.Approve Agenda 3.Approve Consent Agenda Items Consent Agenda Items are considered routine and will be enacted with a single motion, without discussion, unless a commissioner or citizen requests to have any item separately considered. It will then be moved to the regular agenda for consideration. A.Approve Minutes of J anuary 26, 2023, Regular Meeting 4.Regular Agenda Items A.Adopt Resolution Authorizing Execution of Subordination Agreement (Bigos-Galante, LLC) B.Adopt Resolution Approving the Amendment of a Loan Agreement Related to the Apple Valley Economic Development Authority's Health C are Facilities Revenue Refunding Bonds (Augustana Health Care C enter of Apple Valley Project), Series 2016A and 2016B 5.ED A Items and Communications (For items ED A wishes to discuss) 6.Staff Updates 7.Adjourn Regular meetings are broadcast, live, on C harter C ommunications C able C hannel 180 and on the C ity's website at www.applevalleymn.gov I T E M: 3.A. E D A ME E T I NG D AT E :October 26, 2023 S E C T I O N:Consent A genda Description: A pprove Minutes of J anuary 26, 2023, Regular Meeting S taff Contact: B reanna Vincent, Planning Department Assistant Department / Division: Community Development Department AC T I O N RE Q UE S T E D: Approve minutes of regular meeting of J anuary 26, 2023. S UM M ARY: T he minutes of the special Economic Development A uthority meeting are attached for your review and approval. B AC K G RO UND: State statute requires the creation and preservation of meeting minutes which document the official actions and proceedings of public governing bodies. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Minutes ECONOMIC DEVELOPMENT AUTHORITY City of Apple Valley Dakota County, Minnesota January 26, 2023 Minutes of the Regular Meeting of the Economic Development Authority of Apple Valley, Dakota County, Minnesota, held January 26, 2023, at 6:15 p.m., at Apple Valley Municipal Center. PRESENT: President Tom Melander, Commissioners Clint Hooppaw, Tom Goodwin, John Bergman, Ruth Grendahl, Ken Johnson, and Jodi Kurtz ABSENT: None City staff members present: City Administrator Tom Lawell, Community Development Director Tim Benetti, Planner/Economic Development Specialist Alex Sharpe, Finance Director Ron Hedberg, City Attorney Michael Dougherty, and Department Assistant Breanna Vincent APPROVAL OF AGENDA President Melander asked staff if there were any changes to the agenda. – None. MOTION: of Goodwin, seconded by Grendahl, approving the agenda. Ayes - 7 - Nays - 0. CONSENT AGENDA MOTION: of Grendahl, seconded by Bergman, approving the minutes of the meeting on May 26, 2022 and the 2023 Meeting Calendar. Ayes – 7 – Nays – 0. REGULAR AGENDA A. Adopt Resolution Approving 2023 Board Officers MOTION: of Goodwin, seconded by Hooppaw, for board officers to remain the same. Ayes – 7 - Nays – 0. B. Adopt Resolution Approving 2023 EDA Budget Finance Director Hedberg provided a brief presentation. Commissioner Bergman commented that he believes the City should continue working with Greater MSP. Commissioner Goodwin agreed. Economic Development Authority City of Apple Valley Dakota County, Minnesota January 26, 2023 Page 2 MOTION: of Hooppaw, seconded by Goodwin, to approve the 2023 EDA Budget. Ayes – 7 - Nays – 0. STAFF UPDATES City Administrator Tom Lawell welcomed Tim Benetti who is the new Community Development Director. He also noted some updates in the Orchard Place development such as the Lunds & Byerlys, HealthPartners, and a vet clinic. Staff is in touch with the land owners to ensure that they are consistent with the Comprehensive Plan. President Melander asked if Apple Valley was still being considered for the chip manufacturer. City Administrator Lawell stated that we are still being considered but deferred to staff for details. Economic Development Specialist/Planner Alex Sharpe stated that he attended the EDAM conference earlier today and Minnesota is still a top contender for the facility. This is something the City should be pursuing. ADJOURNMENT MOTION: by Hooppaw, seconded by Bergman, to adjourn at 6:31 p.m. Respectfully Submitted, Breanna Vincent, Department Assistant Approved by the Apple Valley Economic Development Authority on October 26, 2023 Ruth Grendahl, Vice - President I T E M: 4.A. E D A ME E T I NG D AT E :October 26, 2023 S E C T I O N:Regular A genda Description: A dopt Resolution A uthorizing Execution of S ubordination Agreement (Bigos-Galante, L L C) S taff Contact: Ron Hedberg, Finance Director Department / Division: Finance Department AC T I O N RE Q UE S T E D: Adopt resolution authorizing execution of Subordination Agreement (Bigos-Galante, LLC). S UM M ARY: Bigos-Galante, LLC , is requesting the Apple Valley Economic Development Authority (ED A) to provide its consent to the financing of the Parkside Galante building and also t o consent to the subordination of the authority agreements to the mortgage on the property. T he development agreement requires that the ED A consent to any mortgage placed on the property. Bigos-Galante LLC , is also requesting the Authority to consent to the reassignment of the rights to the T IF Note to the lender providing the financing. T he Apple Valley City Council is also scheduled to consider action on both requests at its October 26, 2023 meeting. B AC K G RO UND: On N ovember 14, 2016, the Apple Valley Economic Development Authority (ED A) entered into an Amended and Restated Development Assistance Agreement with Bigos-Galante, LLC, to provide financial support in the amount of up to $2,666,000 for substantial site improvements involved in the construction of the Parkside Galante Apartments. T he support provided comes in the form of "Pay as You Go” Tax Increment Financing (T IF). Bigos- Galante, LLC , is requesting that the ED A provide consent to financing of the Parkside Galante building and consenting to the subordination of the authority agreements to the mortgage on the property. Bigos-Galante, LLC, is also requesting that the ED A consent to the reassignment of the rights to the T IF Note to the lender providing the financing. T he Parkside Development consisted of two phases, the first phase was the construction of the Gabella building and the second phase consisted of the Galante building constructed on Galante Lane. T he construction of Parkside Galante is complete and the final certificate of occupancy was issued on J uly 25, 2019. T he development agreement provided for a minimum assessed valuation for the Phase II, Parkside Galante project at $13,830,000 and the current market value as determined by the C ounty Assessor as of J anuary 1, 2023, is $25,553,800. P ay as you Go T I F F inancing – T I F Note T he Development Assistance Agreement included a “Pay as You G o” T IF financing provision where the developer could be reimbursed for eligible development costs related to the construction of Parkside Galante Apartments in the second phase of the T IF 15 Parkside District. T he T IF Note was issued on September 23, 2018 to Bigos-Galante, LLC. T he “Pay as You Go" financing calls for repayment from the annual tax increment collected from the project and is dependent on the property owner making the annual property tax payments. T he terms of the T IF Revenue N ote include an interest rate of 5% and the amount of the note is $2,666,000. T he annual payment on the T IF Note is set at 70% of the available Tax Increment generated by the project and are applied first to interest and then towards the principal balance until the balance is retired. T he first year of increment repayment was in 2019. Attachments included: Resolution Consenting to Assignment of Tax Increment Revenue Note and Development Agreement and Authorizing Execution of Consent T hereto and Execution of Subordination Agreement Assignment of Tax Increment Revenue Note and Development Agreement Subordination Agreement Reissued T IF Note B UD G E T I M PAC T: No additional budget impacts will be experienced. AT TAC HM E NT S : Resolution Agreement Agreement Exhibit 129379537v1 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-23- ____ HELD: October 26, 2023 RESOLUTION CONSENTING TO ASSIGNMENT OF TAX INCREMENT REVENUE NOTE AND DEVELOPMENT AGREEMENT AND AUTHORIZING EXECUTION OF CONSENT THERETO AND EXECUTION OF SUBORDINATION AGREEMENT BE IT RESOLVED by the Board of Commissioners (the "Board") of the Apple Valley Economic Development Authority (the "Authority"), as follows: 1. Recitals: (a) The Authority, the City of Apple Valley, Minnesota (the "City"), 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, one of which is known as Galante at Parkside ("Galante"). (b) The Authority, the City and the Developer amended and restated the Original Agreement in its entirety and entered into an Amended and Restated Development Assistance Agreement dated July 10, 2014, as amended by a First Amendment to Amended and Restated Development Assistance Agreement, dated as of October 9, 2014, affected by that certain Partial Assignment of Development Agreements, dated October 9, 2014 by and between the Developer and the Authority to IMH Gabella, LLC, as Assignee ("IMH"), as further amended by that certain Second Amendment to Amended and Restated Development Assistance Agreement, dated on or about November 14, 2016, affected by that certain Partial Assignment of Development Agreements by IMH to Bigos-Galante, LLC undated, but recorded November 17, 2016 as Document No. 3162174 and a Partial Assignment of Development Agreements with Bigos Gabella, LLC ("Bigos"), undated, but signed and notarized on or about December 17, 2016 (collectively, the "Development Agreement"). (c) Under the terms of the Development Agreement, a Tax Increment Revenue Note (Galante Project), No. R-1, dated September 23, 2018, in the principal amount of $2,666,000 (the "TIF Note") was issued to Bigos by the Authority. (d) It is the intent of Bigos to obtain financing from JLL Real Estate Capital, LLC, a Delaware limited liability company (the "Lender") to finance certain costs of and for Galante and in connection therewith Bigos is requesting the Authority consent to that certain Assignment of Tax Increment Revenue Note and Development Agreement (the "Assignment"), between Bigos, the Lender and the City, by executing that certain Consent of the Apple Valley Economic Development Authority (the "Consent"). 129379537v1 2 (e) In order for Bigos to obtain the financing, the Lender is requiring the Authority and the City enter into a Subordination Agreement (the "Subordination Agreement") by and among the Authority, the City and the Lender, pursuant to which the Development Agreement shall be subordinate to the lien, covenants, restrictions, terms and providers of the "Loan Documents" (as defined in the Subordination Agreement"). (f) Bigos shall bear full responsibility for all legal fees related to the Assignment and Subordination Agreement. (g) The Board finds that it is in the best interest of the City and its residents that the Authority consent to the Assignment and authorize the execution of the Subordination Agreement. 2. Consent; Execution. (a) The Board's consent to the Assignment and approval of the Subordination Agreement is conditioned upon Bigos assuming full responsibility for all legal fees related to the Assignment and Subordination Agreement. (b) The Board hereby approves and consents to the Assignment, the Consent, and the Subordination Agreement in substantially the forms submitted, and the President and Secretary of the Board are hereby authorized and directed to execute the Consent and the Subordination Agreement on behalf of the Authority. The approval hereby given 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 same. The execution of the documents referred to herein by the appropriate officer or officers of the Authority shall be conclusive evidence of its consent thereto. Adopted by the Board of Commissioners of the Apple Valley Economic Development Authority, Minnesota, this 26th day of October, 2023. _______________________________________ Thomas O. Melander, President ATTEST: ___________________________ Pamela J. Gackstetter, Secretary 129379537v1 3 Member _______________ introduced the foregoing resolution and moved its adoption. The motion for the adoption of the foregoing resolution was duly seconded by Member ___________________, and upon vote being taken thereon, the following voted in favor: and the following voted against the same: whereupon said resolution was declared duly adopted. 129379537v1 STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) I, the undersigned, being the duly qualified and acting Secretary of the Apple Valley Economic Development Authority, DO HEREBY CERTIFY that the attached resolutions is a true and correct copy of an extract of minutes of a meeting of the Board of Commissioners of the Apple Valley Economic Development Authority duly called and held, as such minutes relate to a Resolution Consenting to Assignment of Tax Increment Revenue Note and Development Agreement and Authorizing Execution of Consent thereto and Execution of Subordination Agreement. WITNESS my hand as such Secretary of the Apple Valley Economic Development Authority this ____ day of October, 2023. _______________________________________ Pamela J. Gackstetter, Secretary 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Prepared by, and after recording return to: James J. Schwert, Esq. Fox Rothschild LLP City Center – Suite 3600 33 South Sixth Street Minneapolis, MN 55402 SUBORDINATION AGREEMENT GOVERNMENTAL ENTITIES 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 1 SUBORDINATION AGREEMENT GOVERNMENTAL ENTITY FOR REGULATORY AGREEMENT REGULATORY AGREEMENT ONLY/NO SUBORDINATE DEBT THIS SUBORDINATION AGREEMENT FOR REGULATORY AGREEMENT (this “Agreement”) is effective as of the 26th day of October, 2023, by the APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota (the “Authority”), and the CITY OF APPLE VALLEY, a municipal corporation organized and existing under the laws of the State of Minnesota (the “City”) (the Authority and the City being referred to herein as the “Governmental Entities”), and BIGOS- GALANTE, LLC, a Minnesota limited liability company (“Borrower”), for the benefit of JLL REAL ESTATE CAPITAL, LLC, a Delaware limited liability company, a national banking association, its successors and assigns (“Lender”). RECITALS: A. Simultaneously herewith Lender is making a loan to Borrower in the original principal amount of $__________ (“Loan”) pursuant to a Multifamily Loan and Security Agreement between Lender and Borrower (as supplemented or amended from time to time, the “Loan Agreement”) and evidenced by a Multifamily Note by Borrower to Lender (as supplemented or amended from time to time, the “Note”). The Loan is to be secured by a Multifamily Mortgage, Assignment of Rents, Security Agreement and Fixture Filing that will be recorded among the records of Dakota County, Minnesota (“Official Records”) (as supplemented or amended from time to time, the “Mortgage”) of certain improved real property located in Apple Valley, Dakota County, Minnesota, as more particularly described on Exhibit A attached hereto (“Property”). The Loan Agreement, the Note and the Mortgage, together with all other documents executed with respect to the Loan, are hereinafter collectively referred to as the “Loan Documents”. B. The Authority and the Borrower are parties to the following documents (collectively, the “Authority Agreements”): Amended and Restated Development Assistance Agreement, by and among the Authority, the City, and IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (“175-AVN”), dated July 10, 2014, and recorded on September 25, 2014, as Document No. 3031137 in the Official Records, as previously amended by that certain First Amendment to Amended and Restated Development Assistance Agreement, dated effective as of October 9, 2014, and recorded on October 21, 2014, as Document No. 3035036 in the Official Records, as affected by those certain Partial Assignments of Development Agreements by and between 175-AVN, as assignor, and IMH Gabella, LLC, a Delaware limited liability company, as assignee, dated as of October 9, 2014 and recorded on October 21, 2014, as Document Nos. 3035344 and 3035345 in the Official Records, as amended by that certain Second Amendment to Amended and Restated Development Assistance Agreement dated November 14, 2016 (“Second Amendment”), recorded on November 17, 2016 as Document No. 3162172 in the Official Records, and as affected by that certain Partial Assignment of Development Agreement (“Partial Assignment”) by and between IMH Gabella, LLC, a Delaware limited liability company, and 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 2 Bigos-Galante, LLC, a Minnesota limited liability company (“Bigos-Galante”), dated as of November 14, 2016, and recorded on November 17, 2016 as Document No. 3162174 in the Official Records, as such Second Amendment and Partial Assignment are affected by that certain Affidavit Regarding Scrivener’s Error (“Affidavit”), dated December 2, 2016, recorded December 5, 2016 as Document No. 3164905 in the Official Records and affected by that certain Partial Assignment of Development Agreement dated December 21, 2016, recorded December 28, 2016 as Document No. 3169261 in the Official Records entered into by and between IM-Gabella, LLC, a Delaware limited liability company and Bigos-Gabella, LLC, a Minnesota limited liability company (“Second Partial Assignment”) (the “Regulatory Agreement”). C. As a condition to making the Loan, Lender requires that the lien of the Mortgage be superior to the lien of the Regulatory Agreement. Lender will not make the Loan unless Governmental Entities and Borrower agree to subordinate their rights and obligations under the Regulatory Agreement. D. Borrower and Governmental Entities hereby agree to subordinate the Regulatory Agreements on and subject to the terms, conditions and requirements set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Recitals. The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2. Subordination. The Governmental Entities hereby agree that the Regulatory Agreement is and shall at all times continue to be, subordinate, subject and inferior to the rights of Lender under the Loan Documents and that the liens, rights (including approval and consent rights), remedies, payment interests, priority interests, and security interests granted to Governmental Entities pursuant to or in connection with the Regulatory Agreement are hereby expressly acknowledged to be in all respects and at all times, subject, subordinate and inferior in all respects to the liens, rights (including approval and consent rights), remedies, payment, priority and security interests granted to Lender pursuant to the Loan Documents and the terms, covenants, conditions, operations and effects thereof. Notwithstanding the above, (i) Borrower, or Lender, in the event of a foreclosure or exercise of Lender's remedies under the Loan Documents, may only receive payments under the TIF Note if Borrower or Lender, as applicable, is in compliance with the terms of the Regulatory Agreement and (ii) the Governmental Entities may exercise the remedies set forth in Section 9.2 of the Regulatory Agreement at any time in the event of a default under Section 9.1 or breach of the terms of the Regulatory Agreement. 3. Financing, Encumbrance and Approval. Governmental Entities hereby approve and acknowledge the financing evidenced by the Mortgage. Governmental Entities further agree that any transfer of the Property in connection with foreclosure of the Mortgage or a deed in lieu thereof shall not require Governmental Entities’ consent but shall require notice to Governmental 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 3 Entities, provided that any subsequent Purchaser of the Property assumes the obligations of the Borrower under the Regulatory Agreement in order to maintain the benefits thereof. 4. Lender Notice of Default. In consideration of Governmental Entities’ agreements contained in this Agreement, Lender agrees that in the event of any default by Borrower under the Loan Documents, Governmental Entities shall be entitled to receive a copy of any notice of default given by Lender to Borrower under the Loan Documents. Neither the giving nor the failure to give a notice to Governmental Entities pursuant to this Section 4 will affect the validity of any notice given by Lender to the Borrower. 5. Governmental Entities Notice of Default. Governmental Entities shall give Lender a concurrent copy of each material notice (including without limitation each notice of default) given by Governmental Entities under or with respect to the Regulatory Agreement, and agree that Lender, at Lender’s sole election, shall have the right (but not the obligation) to cure any default by Borrower under the Regulatory Agreement on its and/or Borrower’s behalf. Governmental Entities hereby represent that to their knowledge, without investigation, there is no current default under the Regulatory Agreement. 6. Governmental Entities' and Borrowers' Rights. Except as set forth in Section 2 of this Agreement, nothing in this Agreement is intended to abridge or adversely affect any right or obligation of Borrower and/or Governmental Entities, respectively, under the Regulatory Agreement, provided that the Regulatory Agreement may be released but may not be modified or amended, changed or otherwise altered without the prior written consent of Lender so long as the Loan is secured by the Property, and so long as the Loan is secured by the Property, notwithstanding the terms of the Regulatory Agreement to the contrary, neither Borrower nor Governmental Entities will, without Lender’s prior written consent, exercise or seek any right or remedy under the Regulatory Agreement or available at law or in equity which will or could result in (i) a transfer of possession of the Property or the control, operations or management thereof, (ii) the collection or possession of rents or revenues from or with respect to the Property by any party other than Borrower or Lender; (iii) appointment of a receiver for the Property; (iv) the application of insurance or condemnation proceeds other than as approved by Lender pursuant to the Loan Documents; (v) the removal or replacement of the existing property manager of the Property; or (vi) a material adverse effect on Lender’s security for the Loan. 7. Foreclosure by Lender. In the event of foreclosure, deed in lieu of foreclosure, or similar disposition of the Property by Lender, no consent shall be required from Governmental Entities, provided that any subsequent Purchaser of the Property assumes the obligations of the Borrower under the Regulatory Agreement in order to maintain the benefits thereof. 8. Entire Agreement. This Agreement represents the entire understanding and agreement between the parties hereto with regard to the subordination of the Regulatory Agreement to the lien or charge of the Loan Documents, and shall supersede and cancel any prior agreements with regard to this subject matter. 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 4 9. Binding Provisions. The covenants and agreements contained in this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the respective parties to this Agreement. 10. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 11. Modifications. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. 12. Notices. All notices required or permitted hereunder shall be deemed to have been received either (i) when delivered by hand and the party giving such notice has received a signed receipt thereof, or (ii) three (3) days following the date deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed as follows (or addressed in such other manner as the party being notified shall have requested by written notice to the other party): If to Governmental Entities: Apple Valley Economic Development Authority 7100 147th Street Apple Valley, MN 55124 City of Apple Valley 7100 147th Street Apple Valley, MN 55124 With a copy to: Taft Stettinius & Hollister LLP 2200 IDS Center 80 South 8th Street Minneapolis, MN 55402 Attn: Mary Ippel Email: Mippel@taftlaw.com If to Lender: JLL Real Estate Capital, LLC 2177 Youngman Avenue St. Paul, MN 55116 Attention: _____________ Deal ID No.:___________ Facsimile: _____________ 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 5 With a copy to: Fannie Mae Drawer AM 3900 Wisconsin Avenue, N.W. Washington, DC 20016 Attention: Multifamily Operations – Asset Management Deal ID No.:___________ Facsimile: _____________ With a copy to: ______________________ ______________________ ______________________ Attention: _____________ Deal ID No.:___________ Facsimile: _____________ With a copy to: ______________________ ______________________ ______________________ Attention: _____________ Deal ID No.:___________ Facsimile: _____________ If to Borrower: Bigos-Galante, LLC 8325 Wayzata Boulevard, Suite 200 Golden Valley, MN 55426 With a copy to: _______________________ _______________________ _______________________ _______________________ 13. Further Instruments. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, any and all such further instruments and documents as may be 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page 6 reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 14. Valid Authorization. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. 15. Counterparts. This Agreement may be executed in counterparts each of which shall be deemed an original and all of which when taken together constitute one and the same instrument, binding on all of the parties. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN THE REGULATORY AGREEMENTS BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF THE MORTGAGE. 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITIES APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota By: _____ Name: _______________________ Its: _______________________ STATE OF MINNESOTA ) ) COUNTY OF __________________ ) The foregoing instrument was acknowledged before me this ___ day of _______________, 2023, by _____________________________, _________________________ of APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota, on behalf of the authority. ______________________________ Notary Public Printed Name: _________________ My Commission Expires: _____________________ 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page A-2 CITY OF APPLE VALLEY, a municipal corporation organized and residing under the laws of the State of Minnesota By: _____ Name: _______________________ Its: _______________________ STATE OF MINNESOTA ) ) COUNTY OF __________________ ) The foregoing instrument was acknowledged before me this ___ day of ________________, 2023, by _____________________________, _________________________ of the CITY OF APPLE VALLEY, a municipal corporation organized and residing under the Laws of the State of Minnesota, on behalf of the City. ______________________________ Notary Public Printed Name: _________________ My Commission Expires: _____________________ 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page A-3 BORROWER: BIGOS-GALANTE, LLC, a Minnesota limited liability company By: Name: Theodore J. Bigos Title: Chief Manager STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of _______________, 2023, by Theodore J. Bigos, Chief Manager of BIGOS-GALANTE, LLC, a Minnesota limited liability company, on behalf of the limited liability company. ______________________________ Notary Public Printed Name: _________________ My Commission Expires: _____________________ 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page A-4 LENDER: JLL REAL ESTATE CAPITAL, LLC, a Delaware limited liability company By: Name: Title: STATE OF MINNESOTA COUNTY OF ___________________ This instrument was acknowledged before me ___________________________ , 2023 by ______________________________________________________ as _____________________________________ of JLL REAL ESTATE CAPITAL, LLC, a Delaware limited liability company. ______________________________ Notary Public Printed Name: _________________ My Commission Expires: _____________________ 129357509v3 Subordination Agreement (Governmental Entity) Bigos-Galante Page A-5 EXHIBIT A Legal Description Lot 1, Block 1, Parkside Village Galante, according to the recorded plat thereof, Dakota County, Minnesota 129346745v3 ASSIGNMENT OF TAX INCREMENT REVENUE NOTE AND DEVELOPMENT AGREEMENT THIS ASSIGNMENT OF TAX INCREMENT REVENUE NOTE AND DEVELOPMENT AGREEMENT (this “Assignment”) is made as of October 26, 2023 by and among BIGOS-GALANTE, LLC, a Minnesota limited liability company (the “Borrower”), and JLL REAL ESTATE CAPITAL, LLC, a Delaware limited liability company (“JLL”), and FANNIE MAE, its successors and/or assigns as successor in interest immediately following and contemporaneously with the closing of the DUS Loan (defined below) (“Fannie Mae,” and, together with JLL, collectively, the “Lender”), and is agreed to by the APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA, a public body corporate and politic and political subdivision organized under the laws of the State of Minnesota (the “Authority”) and the CITY OF APPLE VALLEY, MINNESOTA, a municipal corporation organized under the laws of the State of Minnesota (the "City") to confirm that this assignment is a permitted assignment under the Development Agreement, as defined below, and to consent to Sections 7 and 11 of this Assignment. RECITALS IMH Special Asset NT 175-AVN, LLC, an Arizona limited liability company (“Prior Owner”), the City, and the Authority were parties to that certain Amended and Restated Assistance Agreement dated as of July 10, 2014 and recorded on September 25, 2014 as Document No. 3031137 in the Office of the Dakota County Recorder, as amended by that certain First Amendment to Amended and Restated Development Assistance Agreement dated as of October 9, 2014 and recorded on October 21, 2014 as Document No. 3035036 in the Office of the Dakota County Recorder and as assigned to IMH Gabella, LLC, a Delaware limited liability company (“IMH”), by those certain Partial Assignments of Development Agreements dated October 9, 2014 and recorded October 21, 2014 as Document Nos. 3035344 and 3035345 in the Office of the Dakota County Recorder and further amended by that certain Second Amendment to Amended and Restated Development Assistance Agreement dated as of November 14, 2016 and recorded November 17, 2016 as Document No. 3162172 as affected by that certain Partial Assignment of Development Agreements by IMH to Borrower dated as of November 14, 2016 and recorded November 17, 2016 as Document No. 3162174 (the “Development Agreement”). Pursuant to the Development Agreement, Prior Owner agreed to construct a 134-unit housing facility (the “Project”) on the property owned in fee by the Borrower as legally described on attached Exhibit A (herein the “Real Property”) and the Authority agreed to provide certain tax increment assistance to the Real Property. In connection with the Development Agreement, the Authority issued to Borrower that certain Tax Increment Revenue Note (Galante Project), dated September 23, 2018, in the principal amount of $2,666,000.00 (the “TIF Note”). JLL intends to make a mortgage loan on the date hereof to Borrower in the approximate, not to exceed, original principal amount of $24,000,000 (the “DUS Loan”), as evidenced and secured by, among other documents (i) a Multifamily Note from the Borrower to JLL in the amount of the DUS Loan, dated as of the date hereof (the “DUS Note”); and (ii) that certain first-lien 129346745v3 priority Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Minnesota) between Borrower and JLL, dated as of the date hereof (the “DUS Mortgage”). The DUS Loan will be assigned to Fannie Mae from JLL after the making of the DUS Loan. The DUS Note and the DUS Mortgage, along with any and all other documents, agreements, or instruments which evidence or secure the indebtedness evidenced by the DUS Note, are hereinafter collectively referred to as the “DUS Loan Documents.” The Borrower intends to use the proceeds of the DUS Loan to refinance the Real Property. In the event of any conflict between the terms hereof and the DUS Loan Documents, the terms and conditions of the DUS Loan Documents shall control. As a condition to the DUS Loan, Lender has required Borrower to cause the execution and delivery of this Assignment. NOW, THEREFORE, in consideration of the DUS Loan and intending to be legally bound, Borrower does hereby covenant, agree, warrant, represent, assign, set over and transfer, to the extent assignable and transferable, as set forth herein: 1. At Closing, the TIF Note must be delivered to Lender as a condition to closing of the DUS Loan. Borrower agrees to deliver such original fully executed TIF Note to Lender, endorsed to Lender, to be held by Lender as collateral for the DUS Loan at closing. 2. Subject to this Assignment’s terms and conditions and receipt of the consent of the Authority and the City required under the Development Agreement attached hereto, Borrower hereby pledges and grants Lender a security interest in the TIF Note and collaterally assigns, transfers and sets over unto Lender all of its current and future right, title and interest in and to the TIF Note and all rights and benefits therefrom, including, without limitation, the payments under the TIF Note, as security for the full, timely and faithful repayment by Borrower of the DUS Loan, and performance by Borrower of its obligations under the DUS Loan Documents, such assignment to be effective upon the making of the DUS Loan. Borrower hereby agrees to execute such additional documentation as required by Lender in order to give full force and effect to such assignment to Lender of the TIF Note. 3. The Borrower hereby acknowledges and agrees that, from and after the date hereof, all payments made by the Authority under the TIF Note shall be paid to Borrower as security for the full, timely and faithful repayment by Borrower of the DUS Loan, and performance by Borrower of its obligations under the DUS Loan Documents. Upon a foreclosure or exercise of Lender’s remedies under the DUS Loan Documents, the Lender may notify the Authority and the Authority shall make payments under the TIF Note directly to or at the direction of Lender for the remaining term of the DUS Loan, by the Authority sending payments to Lender at the address as provided in Section 15. The Borrower hereby irrevocably and unconditionally directs and authorizes the Authority to pay for the benefit of the Borrower directly and exclusively to the Lender or its assigns all sums due under the TIF Note, subject to the terms thereof, and Borrower hereby irrevocably and unconditionally authorizes and directs the Authority to recognize the claims of the Lender without investigating the reason for any action taken or the validity of or the amount of indebtedness owing to the Lender or the existence of any Event of Default (as defined and set forth in the DUS Loan Documents); and to the extent such sums are paid to the Lender, the Borrower agrees that the Authority shall have no further liability to the Borrower for the same. The sole receipt by the Lender of any sum paid by the Authority shall be in discharge and release 129346745v3 of that portion of any amount owed by the Authority. The Lender acknowledges that the Authority’s rights and remedies against the Borrower under the Development Agreement are unaffected by this Assignment. 4. Borrower hereby collaterally assigns to Lender its right, title and interest to and under the Development Agreement as security for the full, timely and faithful repayment by Borrower of the DUS Loan, and performance by Borrower of its obligations under the DUS Loan Documents, such assignment to be effective upon the making of the DUS Loan. Borrower hereby agrees to execute such additional documentation as required by Lender in order to give full force and effect to such assignment to Lender of its rights under the Development Agreement. 5. Borrower agrees to faithfully observe and perform all of the obligations and agreements of the TIF Note and Development Agreement, if any. Borrower shall not permit or consent to the amendment, modification, cancellation or surrender of the Development Agreement or the TIF Note without the prior written consent of Lender. Borrower also hereby covenants and agrees no to do any act which would destroy or impair the Security afforded to Lender under this Assignment. Any default by Borrower under the terms and conditions of the Development Agreement or the TIF Note beyond applicable notice, grace and or cure period thereunder shall be an “Event of Default” under the Loan Documents. 6. Lender will not be deemed in any manner to have assumed any of the obligations related to the Development Agreement or TIF Note, nor shall Lender be liable to the Authority or the City by reason of any default by any party under the Development Agreement or TIF Note, unless and until the Lender succeeds to Borrower’s interest as the “Developer” under the Development Agreement, provided that Lender’s liability shall be strictly limited to acts and omissions of Lender occurring during Lender's period of ownership and operation of the Real Property and the improvements located thereon by Lender. Borrower agrees to indemnify and to hold Lender harmless of and from any and all liability, loss or damage which it may or might incur by reason of any claims or demands against it based on its alleged assumption of Borrower’s duty and obligation to perform and discharge the terms, covenants and agreements in the Development Agreement or the TIF Note. 7. After the occurrence of an Event of Default (as defined and set forth in the DUS Loan Documents), subject to applicable grace or cure periods: a. Lender may elect to exercise any and all of Borrower’s rights and remedies under the TIF Note, without any interference or objection from Borrower, and Borrower shall cooperate in causing the Authority to comply with all the terms and conditions of the TIF Note; b. Lender may exercise Borrower’s rights under the TIF Note and perform all acts in the same manner and to the same extent as Borrower might do; c. Lender may exercise Borrower’s rights under the provisions of the Development Agreement and perform all acts in the same manner and to the same extent as Borrower might do, solely as they relate to the Real Property; and 129346745v3 d. Lender may exercise any remedies provided to it in the DUS Loan Documents. 8. All of the foregoing powers herein granted to Lender shall be liberally construed against the Borrower. Lender acknowledges that the Authority’s and City's rights and remedies against the Borrower under the Development Agreement are unaffected by this Assignment. Lender need not expend its own funds in the exercise of such power, but if it does, such amounts shall be considered as advances for and on behalf of Borrower secured by this Assignment and also secured by the DUS Loan Documents. Any amounts so advanced shall bear interest at the then current rate prescribed in the DUS Loan Documents. 9. Nothing herein contained shall be construed as constituting a waiver or suspension by Lender of its right to enforce payment of the debts under the terms of the DUS Loan Documents. No Lender is the agent, partner or joint venturer of the Borrower, the Authority or the City. 10. Subject to this Assignment’s terms and conditions, this Assignment may be enforced from time to time by Lender at its discretion, with or without order of any court, as Lender shall determine. Lender shall have no obligation to enforce or continue to enforce this Assignment. Any failure on the part of the Lender promptly to exercise any option hereby given or reserved shall not prevent the exercise of any such option at any time thereafter. Lender may pursue and enforce any remedy or remedies accorded it herei n independently of, in conjunction or concurrently with, or subsequent to its pursuit and enforcement of any remedy or remedies which it may have under the DUS Loan Documents. 11. Borrower warrants and represents to Lender that: a. Subject to receipt of the consent of the Authority and the City attached hereto it has the right to execute and deliver this Assignment under the terms of the Development Agreement and the TIF Note. The execution of this Assignment and performance and observance of its terms hereof have been duly authorized by necessary company action and do not contravene or violate any provision of Borrower’s organizational documents. b. It has made no prior assignments of the TIF Note or Development Agreement, all prior assignments by Prior Owner have been terminated as of the date of this Assignment, and to the extent Borrower has assigned the TIF Note or Development Agreement to another third-party, such assignments are null and void. c. As of the date hereof (i) the Development Agreement and the TIF Note are in full force and effect, subject to no defenses, setoffs or counterclaims whatsoever; and (ii) there exists no event, condition or occurrence that would cause the Development Agreement or the TIF Note to be subject to any defenses, setoffs or counterclaims whatsoever. d. To Borrower’s knowledge, there exists no event, condition or occurrence which constitutes, or which with notice and/or the passage of time would constitute, a breach of or default under any terms or conditions of any of the Development Agreement 129346745v3 or the TIF Note. Borrower also hereby covenants and agrees not to do any act which would destroy or impair the security to Lender of this Assignment. e. Borrower has filed all taxes required to be filed and paid all taxes shown thereon to be due, including interest and penalties, which are not being contested in good faith and by appropriate proceedings, and Borrower has no knowledge of any objections or claims for additional taxes in respect to federal tax or excise profit tax returns for prior years. f. The outstanding principal balance of the TIF Note is $2,553,873.26. Borrower has not received from the Authority any notice of the Authority’s intention to prepay all or any portion of the TIF Note in advance of the regularly scheduled payments thereunder. g. The Borrower acknowledges and agrees that the Authority and the City are relying on, and are authorized to rely on, the representations, certifications, covenants, and acknowledgements given by Borrower is this Section 11 in connection with the Authority’s and the City's execution of those certain Consent to Collateral Assignment of Tax Increment Note and Development Agreement dated as of an even date herewith. 12. When the context so requires, the singular shall include the plural and conversely, and use of any gender shall include all genders. 13. This Assignment shall be governed by and be construed in accordance with the laws of the State of Minnesota. Whenever possible, each provision of this Assignment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Assignment shall be prohibited by or be invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Assignment. 14. Lender hereby agrees that upon payment in full of all amounts due and owing under the DUS Loan Documents, that this Assignment shall terminate and Lender shall take all reasonable actions necessary to return the TIF Note to Borrower, including, but not limiting terminating this Assignment and endorsing the TIF Note to Borrower. 15. Notices required hereunder shall be by registered or certified mail or hand delivered, addressed as follows: If to Borrower at: Bigos-Galante, LLC 8325 Wayzata Blvd, Suite 200 Golden Valley, Minnesota 55426 Attn: Ted Bigos, Luke Hedberg Email: tbigos@tbigos.com; lhedberg@tbigos.com With a copy to: Felhaber Larkson 220 S. 6th Street, Suite 2200 Minneapolis, Minnesota 55402 129346745v3 Attn: Will Tansey Email: wtansey@felhaber.com If to Lender at: JLL Real Estate Capital, LLC 2177 Youngman Avenue St. Paul, Minnesota 55116 Attention: Loan Servicing Email: loanservicing@am.jll.com If to the Authority: Apple Valley Economic Development Authority 7100 14th Street Apple Valley, MN 55124 If to the City: City of Apple Valley, Minnesota 7100 147th Street Apple Valley, MN 55124 With a copy to: Taft Stettinius & Hollister LLP 2200 IDS Center 80 South 8th Street Minneapolis, Minnesota 55402 Attn: Mary Ippel Email: Mippel@taftlaw.com or to such other address specified in writing by one party to the other in accordance herewith. 16. Waiver of Trial By Jury. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS ASSIGNMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH OF BORROWER AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 17. This Assignment constitutes the granting of a security interest under the UCC as adopted in the State of Minnesota, as amended from time to time, and this Assignment constitutes a security agreement perfecting Lender's interest hereunder. Borrower hereby authorizes Lender to file Uniform any financing statements, continuation statements, termination statements and amendments as Lender may require in order to protect and preserve Lender's lien priority and security interest in this Assignment (and to the extent Lender has filed any such financing statements, continuation statements or amendments prior to the Effective Date, such filings by Lender are hereby authorized and ratified by Borrower). 18. Borrower will deliver to Lender a copy of each notice delivered by the Authority or the City pursuant to the Development Agreement and the TIF Note, including any notice relating 129346745v3 to any default, alleged default, or potential default of Borrower, under and pursuant to the Development Agreement and the TIF Note. 19. Notification to Persons Obligated on Development Agreement and TIF Note. The Lender may, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Borrower, notify any and all persons obligated to Borrower under the Development Agreement and TIF Note that payment thereof is to be made directly to the Lender. After the making of such a request or the giving of any such notification, the Borrower shall hold any proceeds of the Development Agreement and TIF Note received by the Borrower as trustee for the Lender without commingling the same with other funds of the Borrower and shall turn the same over to the Lender in the identical form received, together with any necessary endorsements or assignments. The Lender shall apply the proceeds of the Development Agreement and TIF Note to the obligations under the DUS Loan Documents. [SIGNATURE PAGE TO FOLLOW] 129346745v3 IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed as of the day and year first above written. BORROWER: BIGOS-GALANTE, LLC, a Minnesota limited liability company By:________________________ Theodore J. Bigos Its: Chief Manager 129346745v3 150100920.1 LENDER JLL REAL ESTATE CAPITAL, LLC, a Delaware limited liability company By: ________________________ Its: ________________________ With a copy to: Fannie Mae Attention: Multifamily Operations – Asset Management Drawer AM 3900 Wisconsin Avenue, N.W. Washington DC 20016 129346745v3 150100920.1 AUTHORITY’S AGREEMENT AND CONSENT The Apple Valley Economic Development Authority, Minnesota (the “Authority”) a public body corporate and politic and political subdivision organized under the laws of the State of Minnesota, hereby consents to the assignment and endorsement of that certain Development Agreement (as defined above, “Development Agreement”) and the Tax Increment Revenue Note (as defined above, the "Note") to JLL Real Estate Capital, LLC, a Delaware limited liability company (together with its successors and/or assigns including without limitation, Fannie Mae, the “Lender”), pursuant to the terms of the Assignment of Tax Increment Revenue Note and Development Agreement from Developer to Lender, dated as of October 26, 2023 for the purpose of (i) securing refinancing from Lender to Developer, (ii) the assignment of the Development Agreement to Lender as provided in the Assignment and (iii) the redirection of the payments under the TIF Note directly to the Lender in the accordance with the Assignment after Lender’s written demand delivered to the Authority in the manner set forth in the Development Agreement. Dated: As of October__, 2023 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA ________________________ Its: President ________________________ Its: Secretary 129346745v3 150100920.1 CITY'S AGREEMENT AND CONSENT The City of Apple Valley, Minnesota (the "City") a municipal corporation organized under the laws of the State of Minnesota, hereby consents to the assignment and endorsement of that certain Development Agreement (as defined above, “Development Agreement”) to JLL Real Estate Capital, LLC, a Delaware limited liability company (together with its successors and/or assigns including without limitation, Fannie Mae, the “Lender”), pursuant to the terms of the Assignment of Tax Increment Revenue Note and Development Agreement from Developer to Lender, dated as of October 26, 2023 for the purpose of (i) securing refinancing from Lender to Developer and (ii) the assignment of the Development Agreement to Lender as provided in the Assignment. Dated: As of October__, 2023 CITY OF APPLE VALLEY, MINNESOTA ________________________ Its: Mayor ________________________ Its: City Clerk 129346745v3 150100920.1 EXHIBIT “A” LEGAL DESCRIPTION OF REAL PROPERTY Lot 1, Block 1, Parkside Village Galante, according to the recorded plat thereof, Dakota County, Minnesota 129518747v1 No. R-1 $2,666,000 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 Bigos-Galante, 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. This Note replaces and supersedes the Note issued on September 23, 2018, in all respects. 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 (the "Original Agreement"), as amended by a First Amendment to Amended and Restated Development Assistance Agreement dated as of October 9, 2014 (the "First Amendment", and together with the Original Agreement, the "Agreement"), by and between the Authority, the City of Apple Valley, Minnesota (the "City") and IMH Special Asset NT 175-AVN, LLC ("175-AVN"), and as assigned to IMH Gabella, LLC by 175-AVN, pursuant to a Partial Assignment of Development Agreements, dated October 9, 2014 (the "Assignment"). The Agreement was further amended by a Second Amendment to Amended and Restated Development Assistance Agreement by and between the Authority, the City, and IMH Gabella, LLC, dated as of November 14, 2016 (the "Second Amendment" and together with the "Agreement", the "Development Assistance Agreement"). 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, 2019, 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. 129518747v1 2 The Payment Amounts due hereon shall be payable solely from 70% of the tax increments (the "Tax Increments") from the Phase 2 Development Property and the Phase 2 Minimum Improvements (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 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"). 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 Assistan ce 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. 129518747v1 3 IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional, 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 _______________, 2023. ________________________ ________________________ President Secretary 129518747v1 4 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note, as originally issued on _______________, 2023, was on said date registered in the name of Bigos-Galante, 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 OWNER DATE OF REGISTRATION SIGNATURE OF EDA SECRETARY Bigos-Galante, LLC 8325 Wayzata Boulevard, Suite 200 Golden Valley, MN 55426 ___________, 2023 , I T E M: 4.B. E D A ME E T I NG D AT E :October 26, 2023 S E C T I O N:Regular A genda Description: A dopt Resolution A pproving the A mendment of a L oan Agreement Related to the A pple Valley E conomic Development Authority's Health Care Facilities Revenue Refunding Bonds (A ugustana Health Care Center of A pple Valley Project), S eries 2016A and 2016B S taff Contact: Ron Hedberg, Finance Director Department / Division: Finance Department AC T I O N RE Q UE S T E D: Adopt Resolution Approving the Amendment of a Loan Agreement Related to the Apple Valley Economic Development Authority's Health Care Facilities Revenue Refunding Bonds (Augustana Health C are Center of Apple Valley Project), Series 2016A and 2016B. S UM M ARY: T he A pple Valley Economic D evelopment Authority (ED A) is asked to approve an amendment to the Health C are Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project), Series 2016A and 2016B. T he bond provisions included a maximum insurance deductible allowed, the amendment provides for Augustana to increase the maximum insurance deductible. T he borrower (Augustana Health C are Center), and the trustee for the bonds has approved the amendment and legal counsel with Taft Stettinius & Hollister has reviewed on the ED A's behalf and find the amendment acceptable. B AC K G RO UND: T he Health C are Facilities Revenue Refunding Bonds (Augustana Health C are C enter of Apple Valley Project), Series 2016A and 2016B were issued in 2016 to refinance the 2006A, 2011A, 2011B and 2012 balances at that time. T hose refunded bonds were issued to finance the construction, renovation, and equipping of a 200-unit skilled nursing facility at 14650 Garrett Avenue in Apple Valley. Because the conduit bonds were issued through the ED A, the ED A would need to approve any amendments. T he amendment includes an increase in the maximum deductible allowed and provides Augustana with additional ability to obtain acceptable insurance rates. T hese revenue bonds are not an obligation of the A pple Valley ED A and the issue does not count against our debt limit or in any way is the C ity or ED A responsible for their repayment. B UD G E T I M PAC T: T here is no budget impact to the C ity or ED A for this bond amendment. AT TAC HM E NT S : Resolution Agreement 129349870v1 1 EXTRACT OF MINUTES OF MEETING OF THE BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY Pursuant to due call and notice thereof, a regular or special meeting of the Board of Commissioners of the Apple Valley Economic Development Authority was duly held at the Municipal Center in the City of Apple Valley, on ___________, __________, 2023, at 6:30 P.M. The following commissioners were present: and the following were absent: Commissioner _____________________ then introduced and read the following written resolution and moved its adoption: APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-___-___ A RESOLUTION APPROVING THE AMENDMENT OF A LOAN AGREEMENT RELATED TO THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY’S HEALTH CARE FACILITIES REVENUE REFUNDING BONDS (AUGUSTANA HEALTH CARE CENTER OF APPLE VALLEY PROJECT), SERIES 2016A AND TAXABLE SERIES 2016B WHEREAS, on February 29, 2016, the Apple Valley Economic Development Authority (the “Authority”) issued its $17,610,000 Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project) Series 2016A and $120,000 Taxable Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project) Series 2016B (collectively, the “Bonds”), pursuant to an Indenture of Trust dated as of February 1, 2016 (the "Indenture"), between the Authority and U.S. Bank National Association, predecessor-in-interest to U.S. Bank Trust Company, National Association, as trustee (the “Trustee”); and WHEREAS, pursuant to the Amended and Restated Loan Agreement dated as of February 1, 2016 (the "Loan Agreement"), between the Authority and Augustana Health Care Center of Apple Valley, formerly known as Augustana Home of St. Paul, a Minnesota no nprofit corporation (the "Borrower"), the Authority loaned the proceeds of the Bonds to the Borrower for the purpose of (i) refunding and redeeming certain prior obligations which financed costs of 129349870v1 2 acquisition, construction, renovation, and equipping of an existing 200-bed skilled nursing facility located at 14650 Garrett Avenue in the City of Apple Valley, Minnesota (the "Project"), and (ii) paying certain costs of issuance of the Bonds, and (iii) funding a debt service reserve fund; and WHEREAS, the Loan Agreement provides for the Borrower to pay the Trustee, for the account of the Authority, such amounts as are sufficient to pay the principal of, premium, if any, and interest on the Bonds when due and to pay all costs of operation and maintenance of the Project, including adequate insurance, taxes, and special assessments; and WHEREAS, under the provisions of the Act (defined below), and as provided in the Loan Agreement and the Indenture, the Bonds are not payable from, nor charged upon, any funds of the Authority other than amounts received from the Borrower pursuant to the Loan Agreement and held by the Trustee in the funds and accounts that are pledged to the payment thereof and do not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Authority or the City of Apple Valley (the "City"), and no owners of the Bonds will ever have the right to compel the exercise of the taxing power of the Authority or the City to pay any of the Bonds or the interest thereon, nor to enforce payment thereof against any property of the Authority or the City; and WHEREAS, under the Indenture, the Authority has pledged its interest in the Loan Agreement to the Trustee as security for the payment of principal of, premium, if any, and interest on the Bonds; and WHEREAS, Section 5.09 the Loan Agreement requires the Borrower to maintain certain insurance coverage while the Bonds are outstanding, and the Borrower and the Trustee have agreed to amend the maximum permitted insurance deductible for an insurance policy that satisfies the coverage requirements of the Loan Agreement because the Borrower was informed by its insurance consultant that obtaining adequate insurance with the existing deductible was not feasible in the Minnesota insurance market, and have asked the Authority to enter into an amendment to effect such changes, as evidenced by a First Amendment to Amended and Restated Loan Agreement (the “Amendment”); NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Authority, as follows: 1.Authority. The Authority is authorized to enter into the Amendment under the Constitution and the laws of the State of Minnesota, including Minnesota Statutes, Sections 469.152 through 469.165, as amended (the "Act"). 2.Documents Presented. A substantially final form of the Amendment, which amends the insurance deductible requirements applicable to the Borrower under the Loan Agreement, has been submitted to the Authority. 3.Approval, Execution, and Delivery of Documents. The form of the Amendment is approved in substantially the form submitted, and the President and the Secretary of the Board of Commissioners of the Authority, are hereby authorized to execute and deliver the Amendment, together with such other documents as appropriate in connection with the 129349870v1 3 Amendment. In the event of absence or disability of the President and/or the Secretary, any of the documents authorized by this Resolution to be executed and delivered may be executed without further act or authorization of the Board of Commissioners by any member of the Board of Commissioners or any duly designated acting official, or by such other officer or officers of the Board of Commissioners as, in the opinion of counsel to the Authority, may act in their behalf. 4.Changes in Forms Approved; Absent and Disabled Officers. The approval hereby given includes approval of such modifications of, deletions from, and/or additions to the approved documents as may be deemed necessary and appropriate by the officers authorized to execute the documents on behalf of the Authority, and said officers are hereby authorized to approve said changes on behalf of the Authority. The execution of any instrument by the appropriate officer or officers of the Authority herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. Adopted by the Board of Commissioners of the Apple Valley Economic Development Authority on ____________, 2023. _______________________________________ Thomas O. Melander, President ATTEST: Pamela J. Gackstetter, Secretary The motion for the adoption of the foregoing resolution was seconded by Commissioner ________________________ and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. 129349870v1 STATE OF MINNESOTA ) ) SS COUNTY OF DAKOTA ) I, the undersigned, being the duly qualified and acting Secretary of the Apple Valley Economic Development Authority (the "Authority"), do hereby certify that attached hereto is a compared, true, and correct copy of a Resolution Approving the Amendment of a Loan Agreement Related to The Apple Valley Economic Development Authority’s Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project), Series 2016A and Taxable Series 2016B, adopted by the Board of Commissioners of the Authority on ____________, 2023, at a meeting thereof duly called and held, as on file and of record in my office, which resolution has not been amended, modified, or rescinded since the date thereof, and is in full force and effect as of the date hereof, and that the foregoing extract of minutes as to the adoption of such resolution is a true and accurate account of the proceedings taken in passage thereof. WITNESS my hand on _______________, 2023. _____________________________ Pamela J. Gackstetter, Secretary 129349879v1 ______________________________________________________________________________ $17,610,000 Apple Valley Economic Development Authority Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project) Series 2016A and $120,000 Apple Valley Economic Development Authority Taxable Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project) Series 2016B FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT Dated as of ____________, 2023 Between APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY and AUGUSTANA HEALTH CARE CENTER OF APPLE VALLEY ______________________________________________________________________________ This instrument was drafted by Taft Stettinius & Hollister LLP 2200 IDS Center 80 South Eighth Street Minneapolis, Minnesota 55402-2157 129349879v1 FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT This FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this “First Amendment”) is made and entered into as of ____________, 2023, between the APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic and a political subdivision of the State of Minnesota (the “Issuer”), and AUGUSTANA HEALTH CARE CENTER OF APPLE VALLEY, formerly known as Augustana Home of St. Paul, a Minnesota nonprofit corporation (the “Borrower”). WITNESSETH: WHEREAS, the Issuer and the Borrower previously entered into an Amended and Restated Loan Agreement dated as of February 1, 2016 (the “Original Loan Agreement”), pursuant to which the Borrower agreed to make loan repayments in amounts and at times that would be sufficient to pay when due the principal of, premium, if any, and interest on the Issuer’s $17,610,000 Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project), Series 2016A (the “Series A Bonds”) and $120,000 Taxable Health Care Facilities Revenue Refunding Bonds (Augustana Health Care Center of Apple Valley Project), Series 2016B (the “Series B Bonds” and, with the Series A Bonds, the “Bonds”), which were issued pursuant to the Trust Indenture dated as of February 1, 2016 (the “Indenture”), between the Issuer and U.S. Bank National Association, the predecessor-in-interest to U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), to provide for the refunding of certain prior obligations of the Issuer that financed the Borrower’s acquisition and renovation of an existing 200-bed skilled nursing home facility located at 14650 Garrett Avenue in the City of Apple Valley, Minnesota; and WHEREAS, pursuant to Section 12.01 of the Indenture and Section 8.05 of the Original Loan Agreement, the Issuer and the Borrower desire, with the Trustee’s consent, to amend Section 5.09 of the Original Loan Agreement to increase the maximum permitted insurance deductible for an insurance policy that meets the coverage requirements of the Original Loan Agreement; and WHEREAS, this First Amendment shall form a part of the Original Loan Agreement for all purposes and every Holder of the Bonds under the Indenture shall be bound hereby; and WHEREAS, the capitalized terms used but not defined herein have the meanings set forth in the Indenture; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows: 129349879v1 2 ARTICLE I MODIFICATIONS TO INSURANCE REQUIREMENTS Section 1.01 Amendment to Section 5.09. Section 5.09 of the Original Loan Agreement shall be amended and restated as follows (additions are underlined and deletions are marked in strikethrough font for convenience). Section 5.09. Insurance. The Borrower shall maintain, or cause to be maintained, at its cost and expense, insurance as follows: (a) Insurance against loss and/or damage to the Project Facilities 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 and extended coverage in an amount not less than 90% of the full insurable replacement value of the Project Facilities, less an amount equal to the fair market value of the Land, but any such policy may have a deductible amount of not more than $100,000 or two percent (2%) of building values, whichever is greater$50,000. 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 co-insurance provisions or otherwise, without the prior consent thereto in writing by the Trustee. The term “full insurable replacement value” shall mean the actual replacement cost of the Project Facilities (excluding foundation and excav ation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment. All policies evidencing insurance required by this subparagraph (a) with respect to the Project Facilities shall be carried in the names of the Borrower and the Trustee as their respective interests may appear and shall contain standard mortgagee clauses which provide for Net Proceeds of insurance resulting from claims per casualty thereunder to the Project Facilities which are less than $1,000,000 for loss or damage covered thereby to be made payable directly to the Borrower, and Net Proceeds from such claims which are equal to or in excess of $1,000,000 to be made payable directly to the Trustee. The Net Proceeds of such insurance required by this subparagraph (a) with respect to the Project Facilities shall be applied as provided in Sections 5.10 and 5.11 hereof. The Net Proceeds of such insurance required by this subparagraph (a) with respect to the facilities of the Borrower other than Project Facilities shall be payable to the Borrower. (b) Comprehensive general public liability insurance, including personal injury liability, and, if the Borrower owns or leases any automobiles, automobile insurance, including owned, non-owned and hired automobiles, against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, for public liability not arising from ownership or operation of automobiles (or other motor vehicles), and in the minimum amount of $500,000 for each occurrence and for each year for liability arising out of ownership or operation of automobiles (or other motor vehicles) and shall be endorsed to show the Trustee and Authority as an additional insured. Any such policy may have a deductible amount of not more than $100,000 or two percent (2%) of building values, whichever is greater$50,000. 129349879v1 3 (c) Such other insurance, including workers’ compensation insurance respecting all employees of the Borrower, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Borrower may be self-insured with respect to all or any part of its liability for workers’ compensation. All insurance required in this Section shall be taken out and maintained in reasonable insurance companies selected by the Borrower which are authorized under the laws of Minnesota to assume the risks covered thereby. The Borrower will deposit with the Trustee annually on January 1 of each year, beginning January 1, 2017, a Certificate of the Authorized Borrower Representative stating that the required insurance is in force and effect. Each policy shall contain a provision that the insurer shall not cancel or modify it without giving written notice to the Borrower and the Trustee at least thirty (30) days before the cancellation or modification becomes effective. Not less than seven days prior to the expiration of any policy, the Borrower shall furnish the Trustee evidence satisfactory to the Trustee that the policy has been renewed or replaced by another policy conforming to the provisions of this Section, or that there is no necessity therefore under the terms hereof. In lieu of separate policies, the Borrower may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Borrower shall deposit with the Trustee a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Project Facilities. [The balance of this page is intentionally left blank.] 129349879v1 4 ARTICLE II MISCELLANEOUS Section 2.01 Binding-Effect. This First Amendment inures to the benefit of and is binding upon the Issuer, the Borrower, the Trustee, and their respective successors and assigns. Section 2.02 Invalidity. In the event any provision of this First Amendment is determined to be invalid or unenforceable by any court of competent jurisdiction, that determination does not invalidate or render unenforceable any other provision of this First Amendment. Section 2.03 Counterparts. This First Amendment may be simultaneously executed in several counterparts, each of which will be regarded as an original and all of which will constitute but one and the same instrument. Section 2.04 Captions. The captions or headings in this First Amendment are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this First Amendment. Section 2.05 Limitation on Liability of the Issuer. No agreements or provisions contained in this First Amendment nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project may give rise to any pecuniary liability of the Issuer or a charge against its general credit or taxing powers, or obligate the Issuer financially in any way except with respect to the revenues under the Original Loan Agreement pledged to the payment of the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement in this First Amendment may subject the Issuer to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be recovered from the Project or revenues therefrom, as provided in the Original Loan Agreement, and no execution on any claim, demand, cause of action or judgment may be levied upon or collected from the general credit, general funds or taxing power of the Issuer. The Bonds do not constitute a debt of the Issuer within the meaning of any constitutional, statutory or charter limitation. Section 2.06 Terms of Agreement. Except as herein amended, all other terms and provisions of the Original Loan Agreement, as originally executed, remain in full force and effect as of the date hereof and govern the Bonds (including, without limitation, the indemnification provisions in the Original Loan Agreement). The Issuer and the Borrower hereby reaffirm that their respective representations in Section 2.01 and Section 2.02 of the Original Loan Agreement are true and accurate as of the date hereof, except to the extent that such representations concern the Bonds, the Official Statement, or any transactions related thereto, in which case they are reaffirmed as of the date of the Original Loan Agreement. Section 2.07 Electronic Signatures. Except as modified herein, all of the terms and to the fullest extent permitted by applicable law and except for the certificate of authentication on the Bonds (which must be manually signed by an authorized representative of the Trustee) and instruments of transfer of the Bonds, the parties agree that the electronic signature of a party to 129349879v1 5 this First Amendment is as valid as an original signature of such party and is effective to bind such party to this First Amendment. For purposes hereof: (i) “electronic signature” means a manually signed original signature that is then transmitted by electronic means or a digital signature of an authorized representative of any party provided by AdobeSign or DocuSign (or such other digital signature provider as specified by such party) in English and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other replicating image attached to an electronic mail or internet message, then such signature is a valid and binding signature of the authorized representative of such party. [The balance of this page is intentionally left blank.] 129349879v1 S-1 IN WITNESS WHEREOF, the Issuer and the Borrower have caused this First Amendment to be duly executed in their respective names, all as of the date first above written. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By ____________________________________ Thomas O. Melander, President By _________________________________ Pamela J. Gackstetter, Secretary [Signature page to First Amendment to Amended and Restated Loan Agreement between the Apple Valley Economic Development Authority and Augustana Health Care Center of Apple Valley] 129349879v1 S-2 AUGUSTANA HEALTH CARE CENTER OF APPLE VALLEY By ______________________________________ Its Vice President of Finance and Chief Financial Officer [Signature page to First Amendment to Amended and Restated Loan Agreement between the Apple Valley Economic Development Authority and Augustana Health Care Center of Apple Valley] 129349879v1 S-3 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee under the Indenture, hereby consents to the First Amendment. U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION By ______________________________________ Its [Signature page to First Amendment to Amended and Restated Loan Agreement between the Apple Valley Economic Development Authority and Augustana Health Care Center of Apple Valley]