Revised Version 5-11-01 - NO ground lease

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having its principal office at 2750 Kelley Parkway, Orono, Minnesota(the "HRA"), DUNBAR DEVELOPMENT CORPORATION, a Minnesota corporation ("Dunbar") and ORONO SENIOR HOUSING, LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: WHEREAS, the Developer, the City, the HRA and Dunbar contemplate that the Developer and Dunbar will develop the property described in Exhibit A hereto (the "Development Property") as a 62-unit apartment building for seniors (the "Project"); and WHEREAS, Dunbar will acquire the Development Property and convey the Development Property to the Developer under the terms and conditions of Section 3.3 hereof; and WHEREAS, the HRA will issue its Tax Increment Revenue Note in the form of Exhibit B hereto (the "TIF Note") in payment of a portion of the costs of acquiring the Development Property; and WHEREAS, the balance of the costs of the Project will be financed by the issuance by the City of its Multifamily Housing Revenue Bonds GNMA Collateralized Mortgage Loan-Orono Woods Project), Series 2001A (the "Housing Bonds") and its Subordinate Multifamily Housing Revenue Note (Orono Woods Project), Series 2001B (the "Subordinate Housing Note") to be issued as described in Section 3.1 hereof; and WHEREAS, the HRA has created and established Tax Increment Financing District No. 1-1 as a housing tax increment financing district (the "TIF District") and a coterminus Housing Project Area No. 1 pursuant to a development program and a tax increment financing plan (the "TIF Plan") adopted pursuant to Minnesota Statutes, Sections 469.001 through 469.047 and Sections 469.174 through 469.179 (collectively, the "Acts"); and WHEREAS, the Project and the TIF Note are contemplated and authorized by the TIF Plan; and WHEREAS, the Project, the Housing Bonds and Subordinated Housing Note are contemplated and authorized by a Senior Housing Program (the "Housing Program") adopted by the City Council pursuant to Minnesota Statutes, Chapter 462C; and WHEREAS, the Project is to be developed as a planned unit development pursuant to the terms of a Planned Unit Development Agreement No. 2 for , dated as of June_, 2001, between the City and the Developer(the "PUD Agreement"). WHEREAS, the proposed Project qualifies as a"housing development project" within the meaning of Minnesota Statutes, Sections 469.002, Subd. 15 and 469.017, and will promote and carry out the objectives of the Housing Program and the TIF Plan, will be in the vital best interests of the City and will promote the health,