Declaration of Restricitive Covenants

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#2640/2641 Dunbar Dev. Corp. October 4, 2001 Page 2 Ground Lease. At the time HUD was still the funding source, Dunbar's consultants advised that City ownership of the senior housing land was not feasible based on HUD regulations and policies. Once HUD was no longer in the picture, the City's bond consultants pursued the ground lease option with the new underwriters and were successful in bringing the ground lease back. As currently proposed, the developer will sell Lot 2 to the City for $1, and the City will lease the land back to the developer for 99 years at $1 per year. The lease language will include conditions ensuring the site will be used for senior housing for the term of the lease. Deferral of Park and S & W Connection Fees. A question raised by the developer, especially now that the City will have ownership of the land, is whether the City will 'sunset' the deferred sewer & water fees (±$40,000) and deferred Park fees (+$160,000) at the end of the lease, rather than making them due and payable with 99 years of interest at 7% per year. Mr. Dunbar has indicated it has been his understanding throughout the process that the fees would be deferred for as long as the use of the property remained senior housing. Since the development agreement now includes a 99-year ground lease that requires the use to remain senior housing, he believes the fees should not have to be repaid. If the City now requires the fees to be repaid over a shorter time frame, and with interest, this is a substantial change to the initial agreement, and adversely affects his financing package, as well as the project's cash flow and rental rates. If the fees do not 'sunset', the deferred amount due with interest at the end of 99 years would be $162 million. Options the Council may want to consider include a long-term deferral without interest; a shorter term deferral without interest, say 10-15 years, at which time the fees become immediately due; and a short term deferral followed by a 5-10 year payment plan. If the fees were forgiven, the City could repay itself with a portion of the final 5 years of the tax increment revenue generated by the development. Senior Housing Building Plans Finalized. The senior housing floor plans and elevation views have been included in your packet for your final review and approval. Building materials include a rockface CMU along the exposed foundation, brick exterior for the lower levels of the front facade (2 levels of 3-story segment, 1 level of 2-story segment), and lap siding for the front upper story as well as for the side and rear facades (see plans, Exhibits H-I-J). Also included are the landscaping plan as well as grading, road, drainage and utility plans. A signage plan including the design of the entrance monuments has been submitted. An exterior lighting plan has yet to be submitted. Wally Case of DSU will be reviewing the landscape plan to confirm its conformity with the landscaping standards of the RPUD District. The Fire Marshal and the Long Lake Fire Chief have also reviewed the final plans and no site plan or building layout changes are anticipated as a result of their review. No detailed plans have been submitted for the office building. If the office eventually is built per the originally approved concept plan, a simple plan review/approval by Council would be necessary before a building permit could be issued. If something other than the office is ultimately proposed, this would require an amendment to the PUD, a more extensive review process.