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HomeMy WebLinkAboutDunbar Development dor v L Met Covnc SAC, O,i, ,f ? REQUEST FOR COUNCIL ACTION • Date: October 4, 2001 Item No.: Department Approval: Administrator Approval: Agenda Section: Zoning Name: Michael P. Gaffron Title: Planning Director Item Description: #2640/2641 Dunbar Development Corp., 2060 Wayzata Blvd. - Status Update (Final Council Approvals Scheduled for Oct. 22) - Review Senior Housing Final Building/Site/Landscaping Plans The Dunbar senior housing/office building project approval process is nearly complete,and final Council actions are tentatively scheduled for the October 22 meeting. In order that Council have as much time as possible to review the final documents, plans and conditions of approval, this item is placed on Council's agenda for discussion October 8 to identify any remaining issues or concerns. This will allow staff 2 weeks to address any outstanding items so that final approvals can be efficiently handled on October 22. List of Exhibits A - Draft Development Agreement B - Draft PUD 2A (Office) Developers Agreement C - Draft PUD 2B (Senior Housing) Developers Agreement D - Draft Preliminary Plat Approval Resolution E - Draft Final Plat Approval and General Development Plan Approval Resolution F - Draft Rezoning and PUD No. 2 Ordinance G - Miller Johnson Steichen Kinnard - Housing revenue Bonds Summary of Terms H - Senior Housing Building Floor Plans and Elevations I - Site Plan, Grading & Erosion Control Plan, Utility Plan J - Senior Housing Landscape Plan Project Staging Planned. Dunbar has had difficulty finding tenants for the office building. As a result, he is splitting the project into 2 phases: Phase 1, the senior housing building, will be commenced late this fall. Phase 2,the office building,will not commence until at least sometime in 2002. Most site work for the office will be delayed as well. Dunbar is also considering whether a senior assisted living project might be more feasible than the office on Lot 1,and whether additional acreage might be added to the site... HUD Financing No Longer Proposed. The HUD programs which Dunbar originally intended to make use of, ha\e not been funded by the Feds and there is no relief on the immediate horizon. As of mid August, his plan has been to find private financing for the $8 million Senior Housing Revenue Bonds. We have received information that Miller Johnson Steichen Kinnard, Inc. will be underwriting the Bonds. Their summary of terms is attached as Exhibit G. K U � • 1 #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 9.9 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 generat. d 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. • #2640/2641 Dunbar Dev. Corp. October 4, 2001 Page 3 Watershed District Approval Pending. The applicant has submitted stormwater management plans to the Minnehaha Creek Watershed District for approval. As of this writing it is anticipated the MCWD will act on the application on October 25. This is after the anticipated City final approval date of October 22, which obviously presents a timing problem unless Council wants to grant a conditional approval. The only risk in granting conditional approval is that the MCWD could potentially require stormwater plan changes that affect the site layout, in which case the Council would have to review and approve the changes. This appears to be a minimal risk, although we are still waiting for confirmation that the existing pond will handle this development proposal. Comprehensive Plan Approval Set for October 24. Met Council staff are nearing completion of their review of Orono's 2000-2020 CMP(including the Senior Housing amendment) and intend to place the Plan on the Met Council's October 24 Consent Agenda for approval. Again, this is after the October 22 anticipated City approvals;however,we should have a copy of the Met Council final staff report by October 22, which should indicate whether there are any last minute problems. Mn/DOT Plat Review Raises Minor Issues. In a letter received September 28, Mn/DOT has raised a few issues regarding access location and design,drainage,noise impacts on residential uses from Wayzata Boulevard,and the need for temporary easements for reconstruction of the Brown/12 intersection. Staff and the developer are working with Mn/DOT to resolve these minor issues. City Responsible for Certain Off-site Improvements. As part of the TIF financing,the City has agreed to be responsible for certain off-site improvements related to this project. These include: - Street lighting along Wayzata Boulevard matching Long Lake's existing lights Burial of power lines along Wayzata Boulevard Sidewalks adjacent to Wayzata Boulevard Turn-lane improvements as may be required by Mn/DOT Installation of semaphore at intersection of Brown Road North and Wayzata Blvd. - Minor upgrade to sewer lift station These City expenditures are expected to occur mostly in 2002 and are expected to be paid back from TIF proceeds. DOCUMENTS Following is a brief review of each of the(attached)draft documents Council will be presented with for action on October 22: Resolution: Preliminary Plat Approval(Exhibit D). It has been the Council's intent to not grant any final approvals until the end of the review process, and since preliminary plat approval is functionally a commitment to plat acceptance, we have yet to grant preliminary plat approval. Council will be asked to adopt this resolution prior to the Final Plat approval resolution. Resolution: Approval of General Development Plan &Final Plat(Exhibit E). This Resolution documents the process and agreements that have resulted General Development Plan approval and Final Plat approval, and grants those approvals subject to the referenced agreements. • #2640/2641 Dunbar Dev. Corp. October 4, 2001 Page 4 PUD 2A Agreement(Office) (Exhibit B). This Agreement documents the conditions of approval for development of the Office site(Phase 2). It establishes approval conditions for the specific site plans, approved uses, nature of the building and site improvements including access, parking, utilities, etc. It requires that the developer or his contractor provide financial security (Letter of Credit) prior to issuance of building permits for construction of site improvements or building construction. Because development of the Office site will be delayed, it requires that Council must approve the final building plans before permits can be issued. It also defines what development aspects are the responsibility of the City and which are the responsibility of the Developer. PUD 2B Agreement(Senior Housing) (Exhibit C). This Agreement documents the conditions of approval for development of the Senior Housing site (Phase 1). It establishes approval conditions for the specific site plans, building plans, landscaping, grading, access, lighting & signage, etc. It also documents the use of TIF funding and the City's intent and conditions regarding the duration of the Senior Housing use. The agreement establishes City or Developer responsibility for various aspects of the development, and requires a Letter of Credit prior to issuance of building permits. Development Agreement Relating To Orono Woods Apartments (Exhibit A). This is the primary agreement between the City,the HRA and Orono Senior Housing LLC that establishes and documents the various financing arrangements including TIF financing, Housing Bonds, etc. This document was prepared by the City's financial consultants, Steve Rosholt of Faegre& Benson LLP and includes the various representations and covenants; details the City obligations for housing bonds and subordinated housing note,deferment of fees,acquisition ofthe property,and construction of public improvements; establishes limitations on encumbrance, prohibitions against assignment and transfer; establishes conditions of the TIF Note and remedies in the event of default. Attached to this document is the ground lease between the HRA and Orono Senior Housing LLC with appropriate terms and conditions. Additional miscellaneous documents relating to the TIF financing, certificate of completion and partial release format, income certification form, etc. Ordinance: Rezoning, PUD Documentation (Add 10.53 Subd. 9) (Exhibit F). This Ordinance accomplishes the rezoning of Lot 1 from B-1 to B-6,and Lot 2 from B-1 to RPUD,with a concurrent additional section added to the Zoning Code formally establishing the zoning for "Planned Unit Development No. 2 - Dunbar PUD". The allowable uses within Lots 1 and 2 are individually established by ordinance,with development standards as documented in the General Development Plan Approval resolution. COUNCIL ACTION REQUESTED 1. Staff requests that Council review the site plan, landscaping, signage and building plans for the Senior Housing site (Phase 1) attached as Exhibits H-I-J, and advise staff and/or the developer of any issues that need to be addressed before the October 22nd meeting. #2640/2641 Dunbar Dev. Corp. October 4, 2001 Page 5 2. Council is asked to review the various attached approval documents and advise staff of any specific issues,apparent discrepancies or unclear language that should be addressed prior to the October 22 meeting. 3. Council is asked to specifically address the issue of deferred fees. 4. Council should determine whether final approvals will be granted on October 22 if neither Comp Plan approval nor Watershed District approval are finalized by that date. Draft: 9/24/01 DEVELOPMENT AGREEMENT Relating to ORONO WOODS APARTMENTS (Including Tax Increment Financing District No. 1-1) Between CITY OF ORONO ORONO HOUSING AND REDEVELOPMENT AUTHORITY and ORONO SENIOR HOUSING, LLC This Instrument Drafted by: Faegre & Benson LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402-3901 Telephone: (612) 336-3000 DEVELOPMENT AGREEMENT THIS AGREEMENT, made and entered into as of this day of October, 2001, by and among the CITY OF ORONO, a Minnesota municipal corporation having its principal office at 2750 Kelley Parkway, Orono, Minnesota(the "City"), the ORONO HOUSING AND REDEVELOPMENT AUTHORITY, a body corporate and politic having its principal office at 2750 Kelley Parkway, Orono, Minnesota(the "HRA") and ORONO SENIOR HOUSING, LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: WHEREAS, the Developer, the City and the HRA 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, the Developer will cause the Development Property to be acquired and conveyed to the HRA under the terms and conditions of Section 3.3 hereof; and WHEREAS, the HRA will lease the Development Property to the Developer for use as senior housing pursuant to the Ground Lease attached hereto as Exhibit B (the "Ground Lease"); and WHEREAS, the HRA will issue its Tax Increment Revenue Note in the form of Exhibit C 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 Senior Housing Revenue Bonds (Orono Woods Project), Series 2001A (the "Housing Bonds") and its Subordinate Multifamily Senior 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 1 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 Agreement dated as of October_, 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, safety, morals and welfare of its residents, and are in accord with the public purposes and provisions of the applicable state and local laws. NOW, THEREFORE, in consideration of the mutual covenants and obligations of the HRA, the City and the Developer, the parties hereby represent, covenant and agree as follows: [The balance of this page intentionally left blank.] 2 ARTICLE I. DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION Section 1.1 Definitions. In this Agreement, the following terms have the following respective meanings unless the context hereof clearly requires otherwise: (a) Acts. Minnesota Statutes, Sections 469.001 through 469.047 and 469.174 through 469.179. (b) Certificate of Completion. The certificate of completion set forth in Exhibit D hereto. (c) City. The City of Orono, Hennepin County, Minnesota. (d) Completion Year. The earlier of(1) the year 2002 and (2) the year (if any) in which the Certificate of Completion for the Improvements is issued. (e) Developer. Orono Senior Housing, LLC, a Minnesota limited liability company, its successors and assigns. (f) Development. The Development Property and the Improvements to be constructed thereon by the Developer in accordance with the terms of this Agreement, as they may at any time exist. (g) Development Property. The real property which is the site of the Improvements, as legally described in Exhibit A hereto. (h) Event of Default. An Event of Default, as defined in Section 7.1. (i) Financing Documents. The following documents to be executed and delivered in connection with the issuance and sale of the Housing Bonds and the Subordinate Housing Note: (j) Ground Lease. The Ground Lease attached as Exhibit B hereto, as the same may be amended from time to time. (k) Housing Bonds. The Multifamily Senior Housing Revenue Bonds (Orono Woods Project), Series 2001A and the Taxable Multifamily Senior Housing Revenue Bonds, Series 2001B to be issued pursuant to Section 3.1 hereof and the Financing Documents. (1) Housing Plan. The development program for the HRA's Housing Project Area No. 1, which contains the TIF District. 3 II (m) HRA. The Orono Housing and Redevelopment Authority, and any successor to its functions. (n) Improvements. The 62-unit apartment building and appurtenant facilities described in the PUD Agreement. (o) Mortgage and Holder. The term "Mortgage" shall include the mortgages referenced in Article V of this Agreement and any other instrument creating an encumbrance or lien upon the Development or any part thereof as security for a loan. The term "Holder" in reference to a Mortgage includes any insurer or guarantor(other than the Developer) of any obligation or condition secured by such Mortgage or deed of trust. (p) Permitted Encumbrances. The encumbrances on the Development Property which are permitted to exist and the time the Development Property is conveyed to the HRA, which encumbrances shall consist only of and such other encumbrances as the City and HRA may approve in writing. (q) Project. The Development Property and the Improvements to be constructed thereon pursuant to this Agreement. (r) Project Costs. Project Costs means: (a) Costs incurred directly or indirectly for or in connection with the acquisition, construction, installation or equipping of the Project, including other costs incurred in respect of the Project for preliminary planning and studies; architectural, legal, engineering, account, consulting, development, supervisory and other services; land, labor, services and materials and recording of documents and title work. (b) Premiums attributable to any surety bonds and insurance required to be taken out and maintained during the construction period with respect to the Development Property and the Improvements. (c) Taxes, assessments and other governmental charges in respect of the Project that may become due and payable during the construction period. (d) Costs incurred directly or indirectly in seeking to enforce any remedy against any contractor or subcontractor in respect of any actual or claimed default under any contract relating to the Improvements. (e) Financial, legal, accounting, printing and engraving fees, charges and expenses and all other such fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the Housing Bonds and Subordinate Housing Note including, without limitation, the fees and expenses of the City and 4 � Y HRA and the fees and expenses of the trustee, the paying agent, the registrar and the authenticating agent properly incurred under the Financing Documents that may become due and payable during the construction period. (f) Any other costs, expenses, fees and charges properly chargeable to the cost of acquisition, construction, installation and equipping of the Project. (s) PUD Agreement. The Agreement dated 2001 between the Developer and the City relating to development of the Development Property and an adjacent parcel as a planned unit development. (t) Subordinate Housing Note. The Subordinate Multifamily Senior Housing Note (Orono Woods Project), Series 2001C to be issued pursuant to Section 3.1 hereof and the financing Documents. (u) Tax Increment Financing District (TIF District). Tax Increment Financing District No. 1-1 consisting of the Development Parcel, created by the HRA pursuant to the TIF Act and described in the TIF Plan adopted therefor. (v) Tax Increment Financing Plan (TIF Plan). The plan for development of the TIF District adopted by the HRA pursuant to the TIF Act. (w) Tax Increment Note or TIF Note. The Note to be issued by the HRA pursuant to Section 6.1 hereof and which is substantially in the form of Exhibit C hereto. (x) Term. The period beginning on the date of this Agreement and ending on the February 1, 2022; provided, however, that the Term shall not extend beyond the termination date of the TIF District under the TIF Act or the date, if any, of cancellation or recission of this Agreement under Section 7.2(a) hereof. (y) TIF Act. Minnesota Statutes, Sections 469.174 through 469.179. (z) Unavoidable Delays. Delays which are the direct result of strikes, fire, war, material shortage, causes beyond the party's control or other casualty, or acts of any federal, state or local government unit, except those acts anticipated or contemplated under this Agreement. 5 Section 1.2 Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement: A. Development Property B. Ground Lease C. Tax Increment Note D. Certificate of Completion E. Form of Income Certification F. Investor Letter Section 1.3 Rules of Interpretation. (a) This Agreement shall be interpreted in accordance with and governed by the laws of the state of Minnesota. (b) The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof. (c) References herein to any particular article, section or subdivision hereof are to the article, section or subdivision of this Agreement as originally executed. (d) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. [The balance of this page intentionally left blank.] 6 1 7 y ARTICLE II. REPRESENTATIONS AND COVENANTS Section 2.1 By the Developer. The Developer makes the following representations and covenants: (a) The Developer has the legal authority and power to enter into this Agreement. (b) The Developer reasonably expects to obtain financial resources which, when combined with the assistance hereunder, will be sufficient to enable the completion of the Improvements. (c) The Developer will, subject to the provisions of Article IV hereof, construct, operate and maintain the Improvements in accordance with the terms of this Agreement, the PUD Agreement, the Housing Plan, the TIF Plan and all local, state and federal laws and regulations, and will construct or pay the costs of construction of any site improvements, utilities, parking facilities, or landscaping improvements which are necessary in connection with the construction and operation of the Improvements. (d) At such time or times as may be required by law, the Developer will have complied with all local, state and federal environmental laws and regulations, will have obtained any and all necessary environmental reviews, licenses or clearances under, and will be in compliance with the requirements of the National Environmental Policy Act of 1969, the Minnesota Environmental Policy Act, and the Critical Area Act of 1973. (e) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all local, state and federal laws and regulations which must be obtained or met before the Improvements may be constructed. (f) The Developer acknowledges that the TIF District is a "housing district," as defined in Section 469.174, Subdivision 11, of the TIF Act and, as such, is subject to the limitations provided in Minnesota Statutes, Section 469.174, Subdivision 11 and Section 469.1761, Subdivision 3 (together, the "Restrictions"). The Developer covenants that it will with respect to the Improvements observe and comply, and that it will cause and require any of its permitted successors and assigns to observe and comply, with such Restrictions. In particular, and without limitation, the Developer covenants that at no time prior to the expiration of the Term shall the fair market value (determined using cost of construction, capitalized income, or other appropriate method of estimating market value) of any portion of the Improvements which are, within the meaning of Section 469.174, Subdivision 11, constructed for commercial uses or for uses other than low and moderate income housing constitute more than 20% of the total fair market value of the Improvements. 7 ! The Developer represents and covenants that throughout the Term the TIF District shall continue to qualify as "housing district" under the TIF Act; specifically, that not less than 20% of the rental housing units of the Improvements shall be rented to persons/families that at occupancy have annual income less than 50% of area median gross income. The Developer further represents and covenants that throughout the Term the housing units shall be rented only to persons 62 years of age or older. At least annually, the Developer agrees to provide evidence reasonably satisfactory to the HRA of compliance with the applicable income and age limitations, including without limitation the total number of rental units during any reporting period and income and age verifications substantially in the form of the attached Exhibit E respecting units rented to tenants meeting those limits. (g) It is intended and agreed that the covenants provided in this Section 2.1 shall remain in effect throughout the Term and shall be covenants running with the land. Except as expressly set forth in Section 5.5 hereof, the obligations under such provisions shall not be subordinated to the rights of any party having an interest in the Development Property. Section 2.2 By the City. The City makes the following representations as the basis for the undertaking on its part herein contained: (a) The City is authorized by law to enter into this Agreement and to carry out its obligations hereunder. (b) The City will, in a timely manner, subject to all notification requirements, review and act upon all submittals and applications of the Developer and will cooperate with the efforts of Developer to secure the granting of any permit, license, or other approval required to construct and operate the Improvements; provided, however, that nothing contained in this subparagraph 2.2(b) shall be construed to limit in any way the reasonable and legitimate exercise of the City's discretion in considering any submittal or application. (c) The Development Property is zoned for purposes which include the Development as proposed. The City has issued all necessary planned unit development, conditional use permits and plat approval for the Development Property. Section 2.3 By the HRA. The HRA makes the following representations as the basis of the undertakings on its part: (a) The HRA is authorized by law to enter into this Agreement and to carry out its obligations hereunder; (b) The HRA shall cooperate with the City and the Developer with regard to the issuance of any additional permits required by the Developer to construct the Improvements. (c) The HRA will issue the TIF Note in consideration of Dunbar's conveyance of the Development Property in accordance with Section 3.03. 8 / 1 ARTICLE III. CITY OBLIGATIONS FOR HOUSING BONDS AND SUBORDINATED HOUSING NOTE; DEFERMENT OF FEES; ACQUISITION OF DEVELOPMENT PROPERTY; CONSTRUCTION OF PUBLIC IMPROVEMENTS Section 3.1 Housing Bonds and Subordinated Housing Note. The City agrees to issue the Housing Bonds and Subordinated Housing Note pursuant to the Housing Act in an aggregate amount, not to exceed $8,070,000, which is estimated by the Developer to be sufficient to pay the estimated Project Costs; provided, however, that the aggregate principal amount of the Housing Bonds shall not exceed $7,800,000 and the principal amount of the Subordinated Housing Note shall not exceed $250,000. The obligation of the City to issue the Housing Bonds and Subordinated Housing Note is subject to the following conditions: (a) The Financing Documents, in form and substance satisfactory to the City and the City Attorney, have been duly executed and delivered by the Developer and the other parties thereto. (b) The Developer shall have executed and delivered the Ground Lease and the PUD Agreement. (c) Faegre & Benson LLP, as bond counsel, shall have delivered its opinion that the Housing Bonds and Subordinated Housing Note were validly issued and that the interest thereon is exempt from federal income taxation. (d) The City shall have received opinions of counsel to the Developer and the other parties to the Financing Documents, in form and substance satisfactory to it, to the effect that the Ground Lease and Financing Documents are valid and binding obligations of such parties, enforceable in accordance with their terms. (e) The Developer shall have entered into a contract for construction of the Improvements with , in form and substance satisfactory to the City, and providing for a guaranteed maximum price of not more than $ (f) All conditions precedent to the execution and delivery of the Financing Documents shall have been satisfied without regard to any waivers which the City has not approved. 10 Neither the City nor the HRA shall be responsible for the failure of the Developer, Dunbar or any other person to satisfy the foregoing conditions and the City and HRA make no representations or warranties that such conditions can or will be met. The City and HRA have no obligation to issue any additional obligations to refund the Housing Bonds or Subordinated Housing Note or to provide any additional funds for completion of the Development or otherwise. Section 3.2. Park Dedication and Utility Connection Charges. The City agrees that park dedication fees in the amount of$ and utility connection fees in the amount of $ otherwise payable with respect to the Development are deferred and shall be payable only in the event that the Developer permits the Development to be occupied by tenants who are not 62 years of age or older. In that event such fees shall be immediately due and payable together with interest on the deferred amounts computed at the rate of 7.00% per annum from the date hereof. Section 3.3. Conveyance of Development Property; Execution of Ground Lease. On or prior to , 2001 the Developer shall convey fee simple title to the Development Property to the HRA by warranty deed, subject only to Permitted Encumbrances. In consideration of such conveyance the HRA shall execute and deliver the TIF Note to Developer. Upon execution and delivery of the Financing Documents, the HRA shall execute and deliver the Ground Lease. [The balance of this page intentionally left blank.] 11 ARTICLE IV. CONSTRUCTION OF IMPROVEMENTS Section 4.1 Construction of Improvements. The Developer agrees to construct the Improvements and complete the Project in accordance with the PUD Agreement on or prior to , 2002. This covenant to construct the Improvements shall run with the land. When the Project is completed, as evidenced by a Certificate of Completion, the Development Property shall be released from the requirements of this Article IV and shall no longer be encumbered by the obligations imposed under this Article IV. Section 4.2 Building Plans. When the Developer completes the design for the Improvements, it may submit the plans and specifications to the City as part of its application for a building permit. If the proposed Improvements for that phase are substantially consistent with the definition of the Improvements set forth herein and the Developer has complied with all other applicable requirements for the issuance of a building permit, the permit shall be issued in accordance with standard City practices. The City shall not be required to provide a building permit or otherwise permit construction of any improvements on the Development Property if, in its reasonable judgment, such improvements would interfere with the ability of the Developer to complete the Improvements described herein within applicable land-use regulations. Any change in the approved plans for a phase which substantially alters the construction of the Improvements shall be subject to approval by the City. Section 4.3 Completion of Construction. All construction shall be in conformity with the plans. Periodically during construction, but at intervals of not less than 30 days, the Developer shall make reports in such detail as may reasonably be requested by the City concerning the actual progress of construction. Section 4.4 Certificate of Completion. Promptly after notification by the Developer of completion of the Improvements, the City shall inspect the construction to determine whether it has been completed in accordance with the terms of this Agreement. In the event that the City determines that the construction has been completed in accordance with the plans and applicable regulations, the City shall furnish the Developer with a Certificate of Completion in the form provided in Exhibit D. Such certification by the City shall be a conclusive determination of satisfaction and termination of the agreements and covenants in Article IV of this Agreement with respect to the obligation of the Developer to construct the Improvements. The Certification of Completion provided for in this Section 4.4 shall be in recordable form. If the City shall refuse or fail to provide certification in accordance with the provisions of this Section 4.4, the City shall within 15 days of such notification provide the Developer 12 � 1 1 with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Improvements in accordance with the applicable plans and applicable regulations, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the City, for the Developer to take or perform in order to obtain such certification. The City shall issue the Completion Certificate the Improvements conform to the applicable plans and applicable regulations. [The balance of this page intentionally left blank.] 13 ARTICLE V. LIMITATION UPON ENCUMBRANCE; PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; SUBORDINATION Section 5.1 Limitation Upon Encumbrance of Development. Prior to the issuance of the Certificate of Completion, 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, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attached to the parcel of the Development Property other than this Agreement, the PUD Agreement and the Financing Documents. Section 5.2 Representation as to Development. The Developer represents and agrees that its undertakings pursuant to the Agreement are for the purpose of implementation of the Development and not for speculation in landholding. The Developer further recognizes that, in view of the importance of the Development to the general welfare of the City and the substantial financing and other public aids that have been made available by the HRA and the City for the purpose of making the Development possible, the qualifications and identity of the Developer are of particular concern to the HRA and the City. The Developer further recognizes that it is because of such qualifications and identity that the HRA and City are entering into this Agreement, and, in so doing, are further willing to rely on the representations and undertakings of the Developer for the faithful performance of all undertakings and covenants agreed by Developer to be performed. Section 5.3 Prohibition Against Transfer of Property and Assignment of Agreement. For the reasons set out in Section 5.2 of this Agreement, the Developer represents and agrees that, prior to the issuance of the Certificate of Completion as certified by the City: (a) Except for leases and other tenancies in the rental units of the Improvements, any other purpose authorized by this Agreement, the Developer, except as so authorized, 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 any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the City; and (b) The City shall be entitled to require, except as otherwise provided in this Agreement, as conditions to any such approval under this Section 5.3 that: (i) Any proposed transferee shall have the qualifications and financial responsibility, as reasonably determined by the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer or, in the event the transfer is of or relates to part of the Development, such obligations to the extent that they relate to such part. (ii) Any proposed transferee, by 14 instrument in writing satisfactory to the City and in form recordable among the land records, shall for itself and its successors and assigns, and specifically for the benefit of the HRA and the City, have expressly assumed all (or the applicable portion) of the obligations of the Developer under this Agreement and agreed to be subject to such obligations, restrictions and conditions or, in the event the transfer is, of, or relates to part of the Development, such obligations, conditions, and restrictions to the extent that they relate to such part; provided, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development or any part thereof, shall, for whatever reason, not have assumed such obligations or agreed to do so, shall not, unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the City, relieve or except such transferee or successor from such obligations, conditions, or restrictions, or deprive or limit the HRA and the City of or with respect to any rights or remedies or controls with respect to the Development or the construction of the Improvements; it being the intent of this Section 5.3, together with other provisions of this Agreement, that to the fullest extent permitted by law and equity and excepting only in the manner and to the extent specifically provided otherwise in the Agreement no transfer of, or change with respect to, ownership in the Development or any part thereof, or any interest therein, however consummated or occurring, whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the HRA or the City, of any rights or remedies or controls provided in or resulting from this Agreement with respect to the Development and the construction of the Improvements that the HRA and the City would have had, had there been no such transfer or change. (iii) There shall be submitted to the City for review all instruments and other legal documents involved in effecting transfers described herein, and if approved by the City, their approval shall be indicated to the Developer in writing. In the absence of specific written agreement by the City to the contrary, no such transfer or approval by the City thereof shall be deemed to relieve the Developer from any of its obligations with respect thereto. Section 5.4 Approvals. Any approval required to be given by the City under this Article V may be denied only in the event that the City reasonably determine that the ability of the Developer to perform its obligations under this Agreement will be materially impaired by the action for which approval is sought. Section 5.5 Subordination and Modification for the Benefit of Mortgagees. (a) In order to facilitate the obtaining of temporary or permanent financing for the construction or purchase of the Development, or individual phases thereof, by the Developer, the City agrees to subordinate its rights under this Agreement to the Holder of any Mortgage entered into for th purpose of obtaining such financing, but only provided that the Mortgage or subordination agreement provides that if the Holder of the Mortgage shall foreclose on the Development Property or the Improvements thereon, or on the Developer's interest in the Ground Lease, or any portion thereof, or accept a deed to such property in lieu of foreclosure, it shall consent to be bound by the provisions of Section 2.1(f). 15 (b) In order to facilitate the obtaining of financing for the acquisition and construction of the Development, the City agrees that it shall agree to any reasonable modification of this Article V or waiver of its rights hereunder to accommodate the interests of the Holder of the Mortgage, provided, however, that the City determines, in its reasonable judgment, that any such modification(s) will adequately protect the legitimate interests and security of the HRA and the City with respect to the Development. [The balance of this page intentionally left blank.] 16 S ' ARTICLE VI. TAX INCREMENT NOTE Section 6.1 Issuance of Tax Increment Note. The Developer represents that it has incurred and will incur significant costs in acquiring the Development Property which are estimated to be at least $ . In consideration of this Agreement, the HRA agrees to reimburse up to $ of these costs, together with interest accruing thereon at 7.00% per annum, as provided in and subject to the provisions of the TIF Note substantially in the form of Exhibit C hereto. The HRA shall issue the TIF Note and deliver the same to the Developer or the Developer's designee, as registered owner of the TIF Note, contemporaneously with the execution and delivery of a warranty deed conveying the Development Property to the HRA. The Developer covenants and agrees not to sell, transfer or convey the TIF Note without the express written consent of the HRA, which consent shall not be unreasonably withheld if the transferee executes and delivers to the HRA and the City an investment letter substantially in the form of Exhibit F hereto; provided, however, that the Developer may, without such consent, pledge or grant a security interest in the TIF Note to a lender as security for a loan. The Developer acknowledges that neither the City nor the HRA make any representations as to the adequacy of tax increments available to pay the TIF Note. The TIF Note shall be payable solely from tax increment from the TIF District received by the HRA to the extent provided in Section 6.2 hereof and neither the City nor the HRA shall be liable on the TIF Note, nor shall the TIF Note be payable out of any funds or properties of the City or HRA except for said tax increment. Section 6.2 Tax Increment Available for TIF Note. The Note shall be paid solely from tax increment from the TIF District as set forth in the TIF Note. Only the amounts specifically required to be paid thereon shall be due and payable, regardless of whether the TIF Note has been paid in full. 17 ARTICLE VII. EVENTS OF DEFAULT Section 7.1 Events of Default Defined. The following shall be deemed Events of Default under this Agreement and the term shall mean, whenever it is used in this Agreement, unless the context otherwise provides, the failure by the Developer to observe and substantially perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder, after written notice to the Developer as provided in this Agreement. Section 7.2 Remedies on Default. Whenever any Event of Default occurs, the HRA and the City may, in addition to any other remedies or rights given the HRA and the City under this Agreement, (1) without notice suspend their performance under this Agreement until they receive assurances from the Developer, deemed adequate by the HRA and the City, that the Developer has cured its default (or will do so within a reasonably acceptable period) and will continue its performance under this Agreement, and (2) after provision of 60 days written notice to the Developer of the Event of Default, but only if the Event of Default has not been cured within said 60 days, or if the Event of Default cannot be cured within 60 days, the Developer does not provide assurances reasonably satisfactory to the City and the HRA that the Event of Default will be cured as soon as reasonably possible, take any one or more of the following actions: (a) cancel or rescind this Agreement or the TIF Note, or both; (b) withhold the Certificate of Completion; or (c) take whatever action at law or in equity as may appear necessary or desirable to the HRA or the City to enforce performance and observance of any obligation, agreement, o covenant of Dunbar the Developer under this Agreement. Section 7.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the HRA 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. In order to entitle the HRA, the City or the Developer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article VII. 18 � l Section 7.4 No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by another 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. [The balance of this page intentionally left blank.] 19 ARTICLE VIII. ADDITIONAL PROVISIONS Section 8.1 Conflicts of Interest; Representatives Not Individually Liable. No HRA or City officer who is authorized to take part in any manner in making this Agreement in his or her official capacity shall voluntarily have a personal financial interest in this Agreement or benefit financially therefrom. No member, official, or employee of the HRA or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the HRA or the City or for any amount which may become due to the Developer or successor or on any obligations under the terms of this Agreement. Section 8.2 Notice of Status and Conformance. At such time as all of the provisions of this Agreement have been fully performed by the Developer, the HRA and the City upon not less than ten days prior written notice by Developer agree to execute, acknowledge and deliver without charge to Developer or to any person designated by Developer a statement in writing in recordable form certifying the extent to which this Agreement has been fully performed and the obligations hereunder fully satisfied. Section 8.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is sent by mail, postage prepaid, return receipt requested or delivered personally: (a) As to the City: City of Orono City Administrator Orono, Minnesota (b) As to the HRA: Executive Director Orono HRA Orono, Minnesota (c) As to the Developer: 20 (d) As to Dunbar: 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 others as provided in this Section 8.3. Section 8.4 Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. [The balance of this page intentionally left blank.] 21 • IN WITNESS WHEREOF, the HRA and the City have caused this Agreement to be duly executed in their names and behalf and the Developer has caused this Agreement to be duly executed as of the day and year first above written. CITY OF ORONO, MINNESOTA By Mayor By City Clerk ORONO HOUSING AND REDEVELOPMENT AUTHORITY. By , Executive Director By , Chair ORONO SENIOR HOUSING, LLC By Its 22 ti STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of October, 2001, by and , the Mayor and City Clerk of the City of Orono, Minnesota, a municipal corporation under the laws of the State of Minnesota, on behalf of the city. Notary Public STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of October, 2001, by and , the Executive Director and Chair of the Orono Housing and Redevelopment Authority, a public body corporate and politic, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2001, by , the of Orono Senior Housing, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public MI 796288 01 23 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY , according to the recorded plat thereof, Hennepin County, Minnesota. A-1 EXHIBIT B GROUND LEASE between ORONO HOUSING AND REDEVELOMENT AUTHORITY, as Landlord and ORONO SENIOR HOUSING, LLC, as Tenant Dated as of , 2001 7.1 Surrender. 8 7.2 Vesting. 8 7.3 Tenant's Equipment. 8 7.4 Acceptance. 9 7.5 Merger. 9 ARTICLE 8 -NOTICES AND ESTOPPELS 9 8.1 Notices 9 8.2 Estoppels. 10 ARTICLE 9-DEFAULT 10 9.1 Events of Default 10 9.2 Termination. 11 9.3 Payments. 11 9.4 Injunctive Relief. 11 9.5 Forbearance. 11 9.6 Costs. 12 9.7 Waiver of Default. 12 9.8 Tenant's Liability 12 ARTICLE 10 - MISCELLANEOUS 12 10.1 Relationship 12 10.2 Number and Gender. 12 10.3 Captions 13 10.4 Time. 13 10.5 Construction. 13 11.6 Law. 13 10.7 Binding. 13 10.8 Short Form 13 10.9 Severability. 13 10.10 Counterparts. 13 10.11 Interest Rate. 13 -ii- EXHIBIT A Legal Description of the Development Property EXHIBIT B Permitted Encumbrances -iii- THIS GROUND LEASE, made on or as of the day of ,2001,by and between ORONO HOUSING AND REDEVELOPMENT AUTHORITY, a public body corporate and politic and a governmental subdivision under Minnesota law, and ORONO SENIOR HOUSING, LLC ("ORONO SENIOR HOUSING, LLC"). The Authority and Orono Senior Housing,LLC,in consideration of the covenants herein contained, hereby agree as follows: ARTICLE 1 DEFINITIONS 1.1 Definitions. In this Lease: "City" means the City of Orono, Minnesota. "Commencement Date" means that date upon which all of the parties hereto have executed this Lease. "Development" means the Development Property and the Improvements to be constructed pursuant to the Development Agreement. "Development Agreement" means the Development Agreement dated as of October_, 2001 between the City, the Landlord and the Tenant. "Development Property" means the real property that is the subject of the Development Agreement, which is legally described in Exhibit A. "Event of Default" means any one or more of the events listed under Section 10.2. "Financing Documents" means any of the following documents to be executed and delivered in connection with the issuance and sale of the Housing Bonds and the Subordinate Housing Note to be _ as described in the Development Agreement. "Holder" means the holder of any Mortgage. "Improvements" means the 62-unit senior housing apartment building to be constructed by Tenant upon and within the Development Property pursuant to the Development Agreement. "Landlord" means the Authority, its successors and assigns. -1- "Lease" means this lease agreement for the Development Property entered into pursuant to the Development Agreement. "Mortgage" means any mortgage or deed of trust on Tenant's interest in this Lease, the Development Property and the Improvements permitted under Article 5 of this Lease. "Permitted Encumbrances" means the matters described in Exhibit C. "Rent" means any amounts due from Tenant to Landlord under the terms of this Lease. "Tenant" means Orono Senior Housing, LLC and its permitted assigns. "Tenant's Equipment" means all movable equipment, furniture and other trade fixtures installed or placed in the Development by or for the account of Tenant or any occupant of the Development. "Term" means the period of time set out in Section 2.4. "Termination Date" means , 2100. "Unrelated Third Party" means an individual or entity that is not (i) an individual ("Related Individual") who is an owner or officer of Tenant or a Related Company, (ii) any subsidiary or parent of Tenant (each of which is a "Related Company"), or (iii) a general partnership, limited partnership or limited liability partnership ("Related Partnerships") in which a Related Individual or Related Company is a partner, or (iv) a corporation or limited liability corporation in which a Related Individual, Related Company or Related Partnership is an owner, shareholder, officer, member or manager. 1.2 Exhibits. The following exhibits are attached to and by this reference made a part of this Lease: (1) "Exhibit A" - Legal Description of the Development Property (2) "Exhibit B" - Permitted Encumbrances -2- ARTICLE 2 LEASE AND TERM 2.1 Grant. Upon the terms and conditions of this Lease, Landlord demises and leases the Development Property to Tenant and Tenant leases and accepts the Development Property from Landlord subject to the Permitted Encumbrances. 2.2 Covenants. Landlord covenants to observe and perform all of the covenants and conditions to be observed and performed by Landlord under this Lease. Tenant covenants to pay the Rent when due under this Lease and to observe and perform all of the terms and conditions and covenants to be observed and performed by Tenant under this Lease. 2.3 Quiet Enjoyment. Landlord covenants that Tenant, on paying the Rent, shall peacefully have, hold and enjoy the Development Property subject to the terms of this Lease, subject only to the Permitted Encumbrances. 2.4 Term. The term of this Lease commences on the Commencement Date and expires at 11:59 p.m. on the Termination Date, unless terminated earlier as provided in this Lease. 2.5 Purchase of Development Property. On the Termination Date, if there is no uncured Event of Default by Tenant under this Lease at the time of exercise, Tenant may purchase the Landlord's entire interest in the Development Property on the following conditions: (1) Tenant shall give Landlord not less than thirty (30) days prior written notice exercising its right to purchase the Development Property, (2) the closing shall take place on a mutually convenient date at the principal office of Landlord or such other location as the parties agree, (3) the purchase price for the Landlord's entire interest in the Development Property shall be One Dollar ($1.00), (4) at closing, Landlord shall convey fee title in the Development Property to Tenant by quit claim deed, assignments and other appropriate instruments of conveyance, such conveyance to be subject only to (i) the Permitted Encumbrances, (ii) at Landlord's option, a restriction running with the land for such period as the Landlord may specify to the effect that the Development may be used only for residential housing purposes available for occupancy by persons 62 years of age and older, and (iii) any liens and encumbrances created -3- or consented to by Tenant or arising from the failure of Tenant to perform or observe by its agreements under this Lease, (5) this Lease shall automatically terminate on closing, (6) Tenant shall reimburse Landlord for all reasonable out of pocket costs and expenses incurred by Landlord in connection with the conveyance. 2.6 Title to Improvements. Title to the Improvements hereafter erected or located on the Development Property by or on behalf of the Tenant shall remain the property of Tenant, except that if(1) Tenant does not purchase the Development Property pursuant to Section 2.5 of this Lease, all Improvements located on the Development Property on the Termination Date shall become the property of Landlord, or (2) Landlord terminates this Lease pursuant to Section 9.2(1) hereof, then Landlord may repossess the Development, as provided in said Section 9.2(1). ARTICLE 3 RENT 3.1 Rent. Tenant shall pay Rent to Landlord on of each calendar year until the Termination Date in the amount of$1. 3.2 Net Lease. It is the intention and purpose of Landlord and Tenant that this Lease shall be a "Net Lease" to Landlord. All costs and expenses of whatever character or kind, general and special, ordinary and extraordinary, foreseeable or unforeseeable, and of every kind and nature whatsoever that may be necessary in or about the operation of the Improvements shall be responsibility of Tenant. 3.3 Manner of Payment. Rent payable to Landlord shall be paid to Landlord in immediately available funds of the United States of America at the office of Landlord set out in Section 9.1 or at such place and to such party as Landlord may from time to time designate. Except as otherwise provided, Rent that has accrued prior to the expiration or earlier termination of this Lease shall be absolutely net to Landlord throughout the Term without offset or deduction. Tenant's obligation to pay Rent that has accrued prior to the expiration or earlier termination of this Lease shall survive the expiration or earlier termination of this Lease. -4- ARTICLE 4 TENANT'S COVENANTS 4.1 Tenant's Equipment. All Tenant's Equipment shall be the property of Tenant, Tenant's tenants or any lessor of such equipment. Landlord shall have no interest in Tenant's Equipment. Landlord shall not be responsible for any loss or damage to Tenant's Equipment except to the extent caused by Landlord's wrongful act or negligence. 4.2 Maintenance. Tenant shall at Tenant's expense maintain the Improvements and, to the extent imposed by law on adjacent property owners, the adjacent sidewalks and curbs in good order and condition, ordinary wear excepted, and in compliance with legal requirements. 4.3 Repairs. Tenant shall make all necessary or appropriate capital and operating repairs and replacements and renewals to the Improvements, interior and exterior, structural and non-structural, ordinary and extraordinary, and foreseen and unforeseen sufficient for proper operation thereof using materials of good quality. The need for or appropriateness of such repairs, replacements and renewals and the quality of the materials used in accomplishing the same shall be in accordance with the reasonable standards of prudent operators of similar facilities. 4.4 Nondiscrimination; Restrictions on Use. Tenant covenants that during the Term, (i) it shall permit the Development to be used only for residential housing and may rent units in the Development only to persons who are 62 years of age or older, and (ii) it shall not discriminate upon the basis of race, color, creed, religion, ancestry, national origin or sex, affectional preference, disability, marital status or status with regard to public assistance, in the sale, lease, or rental or in the use or occupancy of the Development Property or any improvements erected or to be erected thereof, or any part thereof. ARTICLE 5 FINANCING 5.1 Mortgages. Tenant's interest in this Lease, the Development Property, the Improvements, or any combination thereof may be encumbered only as provided by the Financing Documents and the Development Agreement. 5.2 Notice. If any Holder registers with Landlord its name and address in writing by registered or certified mail, Landlord shall by registered or certified mail, return receipt requested, addressed as registered with Landlord, give such Holder a copy of any notice or other communication with respect to any claim that a default exists or is about to exist under this Lease and a copy of any notice changing Landlord's address. Any notice given to a -5- Holder shall be deemed duly served when personally delivered to an officer of Holder or mailed in accordance with Section 8.1. 5.3 Performance. If Tenant fails to make any payment or perform any act required of Tenant under this Lease, then any Holder may(but shall not be obligated to) to the extent permitted under its Mortgage make such payment or perform such act with the same effect as if made or performed by Tenant. Entry by a Holder upon the Development for such purpose or partial performance of the Mortgage shall not waive or release Tenant from any obligation or default under this Lease except for an obligation or default fully performed or cured by Holder. 5.4 New Lease. (a) If(i) this Lease is rejected or disaffirmed pursuant to bankruptcy law or other law affecting creditor's rights, (ii) Holder gives written request to Landlord not later than 30 days after the effective date of such rejection or disaffirmance, (iii) Holder pays to Landlord all of Landlord's expenses (including reasonable attorneys' fees) incidental thereto, and (iv) Holder pays all Rent accrued as of the date of rejection or disaffirmance, then Landlord shall execute and deliver a new lease with Holder or its nominee, purchaser, assignee or transferee, as the case may be, for the remainder of the Term with the same terms as are contained herein except for charges and encumbrances caused or suffered by Tenant. (b) Any new lease entered into pursuant to this Section 5.4 shall be superior to all rights, liens and interest intervening between the date of this Lease and the date of such new lease. Upon the request of the new tenant, Landlord shall execute and deliver a memorandum of the new lease in recordable form so that notice of the new lease may be placed of record by the new tenant. (c) The rights hereunder of Holders shall be exercisable by such Holders in the order of the priority of lien or other security interest of their respective Mortgages. (d) At Tenant's expense, upon written request of Tenant, any Holder, or any prospective Holder, Landlord shall deliver to them or any of them a separate written instrument signed and acknowledged by Landlord setting forth and confirming the provisions of this Section 5.4, and acknowledging to them or any of them in writing the receipt by Landlord of any notice or instrument given, sent or delivered to Landlord pursuant to the provisions of this Section 5.4. -6- (e) When a new lease is entered into such Holder or (if reasonably approved by Landlord pursuant to the Development Agreement) its designee (such holder or designee the "Acquiring Holder," and the Mortgage of such Acquiring Holder the "Acquiring Holder's Leasehold Mortgage"), the liens on and estates and other interests in the Development Property or this Lease of all persons holding directly or indirectly under or through Tenant (including the Acquiring Holder's Leasehold Mortgage), other than liens, estates and interests which are subordinate to the Acquiring Holder's Leasehold Mortgage, shall immediately and without documentation continue in effect, attach to the new lease and be reinstated as to each other to the same extent, and in the same manner, order and priority, as if(i) the new lease were this Lease, (ii) this Lease had not been terminated, and (iii) the Acquiring Holder had acquired the leasehold estate under this Lease by assignment on the date the term of the new lease commences. Each lien, estate or interest which could have been extinguished by the foreclosure of the Acquiring Holder's Leasehold Mortgage shall be deemed to be subordinate to the Acquiring Holder's Leasehold Mortgage. (f) Notwithstanding any provision of this Section 5.4 apparently to the contrary, Landlord shall not be required to provide any notice to any Holder under this Section 5.4 unless such Holder has provided Landlord written notice of its existence in accordance with Section 5.2 hereof. (g) Upon request of a Holder, Landlord will enter into an agreement with such Holder confirming the provisions of this Section 5.4 for the benefit of such Holder and acknowledging the Holder's Mortgage and the assignments made therein. 5.5 Further Assurances. Landlord agrees to execute such amendments to this Lease and further agreements as may reasonably be requested by any Holder, provided such amendments and further agreements do not impose any material obligations or liabilities upon Landlord, or affect the rights of Landlord hereunder in any material respect. 5.6 Termination of Lease. No cancellation, surrender, abandonment, acceptance of surrender or modification or amendment of this Lease shall be binding upon any Holder or affect the lien of any Mortgage if done without the prior written consent of said Holder (provided (x) that no consent shall be required to a surrender on the Termination Date or earlier termination hereof, and (y) consents to any modification or amendment to this Lease shall not be unreasonably withheld or delayed by such Holder). -7- ARTICLE 6 ASSIGNMENT AND SUBLETTING 6.1 Assignments. Tenant and its successors and assigns shall not assign or sublet all or substantially all of Tenant's interest in this Lease or the Development without the prior written consent of Landlord, except as otherwise provided in (a) the Development Agreement, (b) Article 5 hereof, or(c) Section 6.2 hereof. 6.2 Subleases. (a) Tenant may enter into subleases of the housing in the Improvements as provided in the Development Agreement without the need for Landlord consent. (b) Units in the Development may be subleased only for purposes of residential housing and no unit may be subleased to a person under 62 years of age. 6.3 Other Agreements. Tenant may enter into the Financing Documents and such other agreements affecting the Development Property as are contemplated by the Development Agreement. ARTICLE 7 END OF TERM 7.1 Surrender. Upon termination of this Lease or of Tenant's right of possession of the Development Property, Tenant shall immediately quit and surrender possession of the Development to Landlord in its then condition. 7.2 Vesting. Upon termination of this Lease, if Tenant does not exercise Tenant's option to purchase under Section 2.5, all right, title and interest of Tenant in the Development shall automatically vest in Landlord without the necessity of confirmation by any other document. However, upon the request of Landlord, such vesting shall be confirmed in separate recordable instruments in form and substance acceptable to Landlord. 7.3 Tenant's Equipment. Any of Tenant's Equipment remaining in the Development after termination of this Lease or of Tenant's right of possession of the Development Property shall be deemed conclusively to have been abandoned by Tenant and, after notice to Tenant and Tenant's failure to respond within twenty (20) business days after service thereof, may be appropriated, sold, destroyed, or disposed of by Landlord without further notice or obligation to compensate Tenant or account therefor. -8- 7.4 Acceptance. No modification, termination or surrender of this Lease or surrender of the Development Property or any part thereof or any interest therein by Tenant shall be valid or effective unless agreed to and accepted in writing by Landlord and any Holders, and no act by any representative or agent of Landlord or any Holder other than such written agreement and acceptance shall constitute acceptance thereof. 7.5 Merger. There shall be no merger of the leasehold estate created by this Lease with the fee estate in the Development Property by reason of the same party owning or holding any interest in such leasehold estate and any interest in such fee estate. No merger of the leasehold estate and fee estate shall occur unless and until all parties (including any Holder) having any interest in the leasehold estate created by this Lease and the fee estate in the Development Property shall join in and duly record a written instrument effecting such merger. ARTICLE 8 NOTICES AND ESTOPPELS 8.1 Notices. All notices and other communications from Landlord to Tenant or from Tenant to Landlord under this Lease shall be in writing and shall be deemed duly served if delivered personally to an officer of the party being served or if mailed by registered or certified mail, postage prepaid, addressed if to Landlord: if to Tenant: or such other address or addresses as Landlord or Tenant shall have designated in writing to the other. Notices which are mailed shall be deemed to have been given on the date received as evidenced by the customary registered or certified mail receipt. -9- 8.2 Estoppels. Landlord or Tenant shall at any time and from time to time upon not less than thirty (30) days prior notice from the other execute, acknowledge and deliver a written statement certifying (1) that this Lease is in full force and effect, subject only to such modification (if any) as may be set out therein, (2) the dates (if any) to which Rent is paid in advance, (3) that there are not, to such party's knowledge, any uncured defaults on the part of the other party, or specifying such defaults if any are claimed, and (4) such other matters as may be reasonably required by the requesting party. Any such statement may be relied upon by any prospective transferee or encumbrancer of all or any portion of the Development or any interest therein or any assignee of any such persons. If any party fails to timely deliver such statement, such party shall be deemed to have acknowledged that this Lease is in full force and effect, without modification except as may be represented by the other, and that there are no uncured defaults in the other's performance. ARTICLE 9 DEFAULT 9.1 Events of Default. Any one or more of the following events constitutes an Event of Default: (1) If Tenant shall have failed to pay when due Rent or any other amount payable by Tenant pursuant to this Lease within five (5) days following Tenant's receipt of written notice from Landlord stating that such payment was not made; or (2) If Tenant shall have failed to perform any of the other covenants, terms, conditions or provisions of this Lease or any of its obligations under the Development Agreement within thirty (30) days after Tenant's receipt of written notice specifying such failure; provided, however, with respect to those failures which cannot with due diligence be cured within said 30-day period, Tenant shall not be deemed to be in default hereunder if Tenant commences to cure such default within such 30-day period and thereafter continues the curing of such default with all due diligence; -10- 9.2 Termination. If an uncured Event of Default exists under this Lease, then Landlord may, subject to Section 9.5 hereof, exercise one or more of the following remedies in addition to any other rights and remedies provided at law or in equity: (1) Landlord may terminate this Lease by written notice to Tenant and may forthwith repossess the Development and recover as damages the amounts provided in Section 9.3, or (2) Landlord may terminate Tenant's right of possession and repossess the Development without demand or notice of any kind and without terminating this Lease, in which event Landlord may (but will not be obligated to) relet all or any part of the Development or any part thereof for the account of Tenant for such rent and upon such terms as Landlord deems advisable and may make any changes, additions, improvements, redecorations and repairs to the Development as Landlord deems advisable without affecting Tenant's liability under this Lease. 9.3 Payments. If pursuant to Section 9.2 this Lease is terminated or Landlord terminates Tenant's right of possession and repossesses the Development, Tenant shall pay to Landlord on demand the sum of: (1) all unpaid Rent owing at the time of termination or repossession, as the case may be, (2) all expenses (together with interest thereon at a rate of twelve percent (12%) per annum from the date paid by Landlord) incurred by Landlord in terminating, repossessing and reletting including but not limited to costs of changes, additions, improvements, redecorations and repairs, brokerage and legal fees, and the collection of Rent, and (3) any deficiency between the Rent, when due in accordance with this Lease, for the remainder of the Term and the payments, if any, received by Landlord from any reletting of the Development or portions thereof. 9.4 Injunctive Relief. If an uncured Event of Default exists under this Lease, Landlord shall have the right, in addition to any remedy available to Landlord under Section 9.2, to institute from time to time an action or actions for injunctive and/or other equitable relief. 9.5 Forbearance. If there is a Mortgage on Tenant's interest in this Lease or the Development Property, Landlord will not terminate this Lease or Tenant's right of possession of the Development Property pursuant to Section 9.2, if Holder or any purchaser or transferee of Tenant's interest in this Lease or the Development by reason of foreclosure or other proceedings or by deed or assignment in lieu of such proceedings (or an assignee of Holder -11- or such purchaser or transferee) shall, within one hundred eighty(180) days after acquiring Tenant's interest in this Lease or the Development, cure all defaults susceptible of being cured by such entity (or, if such cure would reasonably require more than one hundred eighty (180) days and thereafter promptly, effectively and continuously proceed to cure such default). Nothing in this Section shall affect Landlord's right to enforce any remedy under this Lease for an Event of Default except, so long as Holder is in the process of curing such Event of Default or foreclosing its Mortgage under this Section, the right to terminate this Lease or Tenant's right of possession of the Development. 9.6 Costs. Tenant shall indemnify Landlord against all costs and charges (including reasonable legal fees) lawfully and reasonably incurred in enforcing payment of Rent, and in obtaining possession of the Development after an Event of Default of Tenant or upon expiration or earlier termination of this Lease, or in enforcing any covenant, proviso or agreement of Tenant contained in this Lease. Landlord shall indemnify Tenant against all costs and charges (including legal fees) lawfully and reasonably incurred in enforcing any covenant, proviso or agreement of Landlord contained in this Lease. 9.7 Waiver of Default. No failure or delay by Landlord or Tenant to insist on strict performance of any term of this Lease or to exercise any right, power, or remedy upon a breach of this Lease shall constitute a waiver of such term or such breach. 9.8 Tenant's Liability. Notwithstanding anything to the contrary provided in this Lease, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Lease by Tenant, that (i) there shall be absolutely no personal liability on the part of Tenant, or its officers, directors, members, employees and agents, to Landlord with respect to any of the terms, covenants and conditions of this Lease, and (ii) Landlord shall look solely to recovering possession of the Development Property in the event of any breach by Tenant of any of the terms, covenants and conditions of this Lease to be performed by Tenant. ARTICLE 10 MISCELLANEOUS 10.1 Relationship. Nothing contained in this Lease shall create any relationship between the parties hereto other than that of lessor and lessee. Landlord and Tenant disclaim any intention to create a joint venture, partnership or agency relationship. 10.2 Number and Gender. The words "Landlord" and "Tenant" as used herein includes the plural as well as the singular. The use of specific gender includes any other gender as applicable. 10.3 Captions. The captions in this Lease are for convenience only and shall have no effect on the construction or interpretation of this Lease. -12- 10.4 Time. Time is of the essence of this Lease and each of its provisions. 10.5 Construction. The provisions of this Lease shall be construed as a whole according to their common meaning, and not strictly for or against Landlord or Tenant. 10.6 Law. This Lease shall be governed by and construed under the laws of Minnesota. 10.7 Binding. This Lease is binding upon and inures to the benefit of Landlord and Tenant and their respective successors and assigns and shall not be for the benefit of any third parties other than such successors and assigns. 10.8 Short Form. Landlord and Tenant agree upon request of the other to execute a Short Form of this Lease suitable for recording. 10.9 Severability. If any term of this Lease or application of it to any person or circumstance is invalid or unenforceable, the remainder of this Lease or the application of it to other persons or circumstances shall not be affected, and each provision of this Lease shall be valid and enforceable to the extent permitted by law. 10.10 Counterparts. This Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 10.11 Interest Rate. Any interest due from one party to another hereunder shall be at the interest rate specified herein or the maximum rate permitted by applicable law, if less. -13- IN WITNESS OF THIS LEASE, Landlord and Tenant have properly executed it as of the date set out at its head. LANDLORD ORONO HOUSING AND REDEVELOPMENT AUTHORITY By: Name: Its: Executive Director [SIGNATURE PAGE TO LEASE (DEVELOPMENT PROPERTY)] -14- TENANT ORONO SENIOR HOUSING, LLC, a Minnesota limited liability company By: Wedum Foundation, its Manager Member By: Name: Its: [SIGNATURE PAGE TO LEASE (DEVELOPMENT PROPERTY)] 0 -15- EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY M1:796288.01 A-1 EXHIBIT B PERMITTED ENCUMBRANCES m1:796288.01 EXHIBIT C FORM OF TIF NOTE No. R- 1 UNITED STATES OF AMERICA STATE OF MINNESOTA ORONO HOUSING AND REDEVELOPMENT AUTHORITY TAX INCREMENT REVENUE NOTE OF 2001 [1] The Orono Housing and Redevelopment Authority (the "HRA"), located in the City of Orono,Hennepin County,Minnesota,hereby acknowledges itself to be indebted and,for value received, hereby promises to pay to Orono Senior Housing, LLC, a Minnesota limited liability company, 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 (as defined in paragraph [2] hereof) and to pay interest on the unpaid portion of the Principal Unpaid Amount of this Note at the rate of interest of 7.00%per annum. Interest shall accrue on the Principal Amount from , , and shall be computed on the basis of a 360-day year consisting of 12 30-day months. This Note is the "TIF Note" described and defined in that certain Development Agreement, dated as of , 2001 (as the same may be amended from time to time, the "Development Agreement"), among the HRA, the City of Orono, Minnesota, and Orono Senior Housing, LLC, a Minnesota limited liability company,as the initial Developer under the Development Agreement. Each capitalized term which is used but not otherwise defined in this Note shall have the meaning given to that term in the Development Agreement. [2] The Principal Amount of this Note shall be $ [3] Subject to the terms hereof,amounts due on this Note shall be payable on each February 1 and August 1, commencing February 1, , and continuing through February 1, (the "Payment Dates"), and on each "Additional Payment Date" described in paragraph [5] hereof. All amounts of accrued interest on this Note which are not paid in full on any Payment Date shall also accrue additional interest from the date of such non-payment (the "Compound Interest") until paid at the rate of interest of 7.00% per annum. [4] On each Payment Date(or,if not a business day of the HRA,the first business day thereafter) the HRA shall pay by check or draft mailed to the person that was the Registered Owner of this Note at the close of the last business day of the HRA preceding such Payment Date an amount equal to the lesser of(1) the Available Tax Increments (which generally consist of C-1 90% of the tax increments from the HRA's Tax Increment Financing District No. 1-1 within its Housing Project Area No. 1) received by the HRA within the 6-month period preceding said Payment Date and(2)the sum of(i)the accrued and unpaid interest on the Principal Amount and (ii)the unpaid Principal Amount of this Note. All payments made by the HRA under this Note shall be applied first to pay the accrued and unpaid interest on the Principal Amount of this Note and second to pay the unpaid Principal Amount hereof. The HRA shall have the right on any Payment Date to prepay the principal amount of this Note in whole or in part without penalty or premium and without the prior written consent of the Registered Owner or the Developer. [5] This Note shall terminate and be of no further force and effect on any date upon which the HRA shall have terminated the Development Agreement or on the last Payment Date following payment thereon of the amounts due hereon, whichever occurs earliest. [6] The HRA makes no representation or covenant, express or implied, that the revenues described herein will be sufficient to pay, in whole or in part, the amounts which are or may otherwise become due and payable hereunder. Any amounts which have not become due and payable on this Note on or before the final Payment Date or Additional Pa)ment Date, as the case may be, shall no longer be a debt or obligation of the HRA whatsoever. [7] The HRA's payment obligations hereunder shall be further conditioned on the Developer's compliance with the terms and conditions of the Development Agreement and on the fact that there shall not at the time have occurred and be continuing an Event of Default under the Development Agreement, and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the HRA duly elects to terminate the Development Agreement pursuant to its terms, the HRA shall have no further debt or obligation under this Note whatsoever; provided that if, pursuant to an Event of Default, the HRA elects pursuant to Section 7.2 of the Development Agreement to withhold payment otherwise due hereon, said suspended payment shall become payable hereon upon cure of the Event of Default. Reference is hereby made to the provisions of the Development Agreement for a fuller statement of the obligations of the Developer and of the rights of the HRA thereunder, and said provisions are hereby incorporated by reference into this Note to the same extent as though set out in full herein. The execution and delivery of this Note by the HRA, and the acceptance thereof by the initial Registered Owner hereof, shall conclusively establish this Note as the "TIF Note" (and shall conclusively constitute discharge of the HRA's obligation to issue and deliver the same) under the Development Agreement. [8] This Note is a special and limited revenue obligation but not a general or moral obligation of the HRA and is payable by the HRA only from the sources and subject to the qualifications and limitations stated or referenced herein. Neither the full faith and credit nor the taxing powers of the HRA are pledged to or available for the payment of this Note, and no property or other asset of the HRA, save and except the above referenced Available Tax Increments, is or shall constitute a source of payment of the HRA's obligations hereunder. [9] This Note is issued by the HRA in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota C-2 Statutes, Sections 469.174 through 469.179, and including specifically but without limitation Section 469.178, Subdivision 4, thereof. [10] This Note may be assigned but upon such assignment the assignor shall promptly notify the HRA thereof in writing, and the assignee shall surrender this Note to the HRA 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 HRA. As a condition to any such transfer, the transferee shall have delivered to the HRA an executed Investor Letter in the form of Exhibit F to the Development Agreement. Each such assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. [11] IN WITNESS WHEREOF, the Maple Grove Housing and Redevelopment Authority has caused this Note to be executed by the manual signatures of its Chair and Executive Director, has caused the official seal of the HRA to be omitted herefrom, as permitted by law, and has caused this Note to be issued and dated as of , Chair Executive Director C-3 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note was as of the latest date listed below registered in the name of the last Registered Owner noted below, and that, at the request of said Registered Owner of this Note, the undersigned has as of said applicable date registered this Note as to principal and interest on 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 OF REGISTERED DATE OF SIGNATURE OF OWNER REGISTRATION HRA EXECUTIVE DIRECTOR Orono Senior Housing, LLC, a Minnesota Limited Liability Company , 1999 C-4 EXHIBIT D CERTIFICATE OF COMPLETION AND PARTIAL RELEASE The undersigned hereby certifies that Orono Senior Housing, LLC, a Minnesota limited liability company, and/or permitted assigns (the "Developer") has fully and completely complied with the Developer's obligations under Article IV of that document entitled "Development Agreement," dated October , 2001 between the City of Orono, the Orono Housing and Redevelopment Authority and Orono Senior Housing, LLC, a Minnesota limited liability company, and filed for record , 20 , as Document No. in the office of the Hennepin County Recorder with respect to construction of that phase of the Improvements (as defined in the Development Agreement) constructed on the real property described in Exhibit A hereto. As to the real property described in Exhibit A, the obligations of Article IV of the Development Agreement are terminated and satisfied and released of record. DATED: CITY OF ORONO, MINNESOTA By: Its Mayor By: Its City Clerk STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , by and , the Mayor and City Clerk of the City of Orono, Minnesota, a municipal corporation under the laws of the State of Minnesota, on behalf of the city. Notary Public MI 796288 01 D-1 EXHIBIT E Form of Income Certification Certification of Tenant Eligibility UNIT NUMBER: I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the Orono Woods Apartments development for which application is made, all of whom are listed below: 1. 2. 3. 4. 5. Name of Members Relationship Social of the to Head of Security Place of Household Household Age Number Employment Head - - Spouse - - Income Computation 6. Anticipated Annual Income. The anticipated total annual income from all sources of each person listed in item 1 above for the twelve month period beginning on the date of this certificate, including income described in (a) below, but excluding all income described in(b) below, is $ (a) The amount set forth above includes all of the following income (unless such income is described in (b) below; (i) all wages and salaries, overtime pay, commissions, fees, tips and bonuses before payroll deductions; (ii) net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (iii) interest and dividends (including income from assets as set forth in item 7(b) below); (iv) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; E-1 (v) payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay; (vi) the maximum amount of public assistance available to the above persons; (vii) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (viii) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (ix) any earned income tax credit to the extent it exceeds income tax liability. (h) The following income is excluded from the amount set forth above: (i) casual, sporadic or irregular gifts; (ii) amounts that are specifically for or in reimbursement of medical expenses; (iii) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; (iv) amounts of educational scholarships paid directly to student or educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in either case only to the extent used for such purposes; (v) hazardous duty pay to a member of the household in the armed forces who is away from home and exposed to hostile fire; (vi) relocation payments under Title H of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (vii) income from employment of children (including foster children) under the age of 18 years; (viii) foster child care payments; (ix) the value of coupon allotments under the Food Stamp Act of 1977; (x) payments to volunteers under the Domestic Volunteer Service Act of 1973; E-2 (xi) payments received under the Alaska Native Claims Settlement Act; (xii) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; (xiii) payments on allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; (xiv) payments received from the Job Partnership Training Act; (xv) income derived from the disposition of funds of the Grand River Bank of Ottawa Indians; and (xiv) the first $2,000 of per capita shares received from judgments awarded by the Indian Claims Commission or the Court of Claims or from funds held in trust for an Indian tribe by the Secretary of Interior. 7. Net Family Assets. If any of the persons described in item 1 above (or any person whose income or contributions were included in item 6 above) has any savings, stocks, bonds, equity in real property or other form of capital investment (excluding interests in Indian trust lands), provide: (a) the total value of all such assets owned by all such persons: $ ; (b) the amount of income expected to be derived from such assets in the 12-month period commencing on the date hereof: $ ; (c) the amount of such income included in item 6: $ ; E-3 8. Students (a) Will all of the persons listed in item 1 above be or have they been full-time students during five calendar months of this calendar year at an educational institution (other than a correspondence school) with regular faculty and students? Yes No (b) (Complete only if the answer to item 8(a) is "Yes") Is any such person(other than nonresident aliens) married and eligible to file a joint federal income tax return? Yes No The above information is full, true and complete to the best of my knowledge. I have no objections to inquiries being made for the purpose of verifying the statements made herein. The undersigned acknowledge that the lease executed by the undersigned may be canceled upon notice as provided therein if the undersigned have misrepresented any of the information set forth above. Date: Signature E-4 FOR COMPLETION BY PROJECT OWNER OR MANAGER ONLY: A. Calculation of eligible income: (1) Enter amount entered for entire household in item 6 above: $ (2) If the amount entered in item 7(a) above is greater than $5,000, enter the greater of(i) the amount entered in 7(b) less the amount entered in 7(c) or (ii) 10% of the amount entered in 7(a): $ (3) TOTAL ELIGIBLE INCOME (Line A(I) plus line A(2): $ B. The amount entered in A(3) (Total Eligible Income) is: Less than $ , which is an amount equal to 50% of median income for the Minneapolis-St. Paul SMSA. More than the above-mentioned amount. C. Number of apartment unit assigned: D. This apartment unit was was not last occupied for a period of at least 31 consecutive days by a person or persons whose aggregate anticipated annual income, as certified in the above manner, was less than or equal to the amount at which a person would have qualified under B above. E. Applicant: Qualifies as a Lower-Income Tenant. Does not qualify as a Lower Income Tenant, Owner or Manager E-5 EXHIBIT F INVESTOR LETTER Orono Housing and Redevelopment Authority Orono, Minnesota City of Orono, Minnesota Orono, Minnesota Re: Orono Housing and Redevelopment Authority Tax Increment Revenue Note Ladies and Gentlemen: The undersigned representative of (the "Purchaser"), being the purchaser of the Orono Housing and Redevelopment Authority Tax Increment Revenue Note of 2001, dated as of June , 2001 (the "Note"), does hereby certify, represent and warrant for the benefit of the addressees that: (a) The Purchaser is either a bank, savings and loan association, registered investment company, insurance company or other "Accredited Investor" as defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended. Purchaser (i) is duly and validly organized under the laws of its jurisdiction of incorporation or organization, (ii) is legally authorized to purchase the Note as lawful investment of the Purchaser, (iii) has such knowledge and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Note on the basis of the information and review of documents described in section (d) below and the investigation which the Purchaser has conducted and (iv) can bear the economic risk of the purchase of the Note. (b) The Purchaser has purchased the Note for its own account for investment purposes only or has become the registered owner thereof for security purposes and not for the account of any other person and not for distribution, assignment or resale; provided, however, the Purchaser may dispose of the Note or any portion thereof or interest therein in compliance with paragraph 10 of the Note and provided further that a sale of shares in any investment company that purchases the Note will not, in and of itself, constitute a distribution of the Note for the purposes of this section (b). F-1 (c) Neither the City of Orono, Minnesota(the "City"), the Orono Housing and Redevelopment Authority(the "HRA") nor its counsel shall be deemed to have made any representations with respect to the Note or the Development Agreement or tax increment financing district referred to therein as of any date, except as expressly provided in the Note or the Development Agreement. (d) The Purchaser has obtained and has read and reviewed such documents, instruments and information related to the issuance of the Note as the Purchaser has requested from the City and the HRA. The Purchaser has also reviewed such other information as requested and has been provided an opportunity to ask questions of, and has received answers from, representatives of the City and the HRA regarding the terms and conditions of the Note. We understand that the Note is payable solely from certain tax increment pledged to the payment thereof and understand that such tax increment may not be sufficient to pay stated principal and interest on the Note and that there may be other risks in such an investment which are not described therein. (e) The undersigned is a duly appointed, qualified and acting officer or representative of the Purchaser and authorized to make the certifications, representations and warranties contained herein and the purchase of the Note constitutes a lawful investment of the Purchaser. (0 The Purchaser acknowledges that the City, the HRA, the members of their respective governing bodies and their officers (each individually an "Issuer Party" and collectively the "Issuer Parties") have not undertaken to furnish information to the Purchaser or to ascertain the accuracy or completeness of any information that may have been furnished to the Purchaser by or on behalf of the City, the HRA or the prior holder of the Note relating to the tax increment pledged to payment of the Note and that none of the Issuer Parties have made any representations concerning the accuracy or completeness of any information supplied to the Purchaser or relating to the security for the Note. The Purchaser hereby waives any requirements of due diligence in investigation or inquiry on the part of any Issuer Parties and all claims, actions, or causes of action which the Purchaser may have directly or indirectly from or relating to any action which the Issuer Parties took or could have taken, in connection with the issuance and sale of the Note to the Purchaser. IN WITNESS WHEREOF, I have hereunder set my hand the day of Name: Title: F-2 Revised Draft 7/31/01 Revised Draft 9/27/01 CITY OF ORONO HENNEPIN COUNTY, MINESOTA PLANNED UNIT DEVELOPMENT NO. 2A AGREEMENT FOR ORONO AMBAR OFFICE BUILDING (Name of Development) ORONO AMBAR, LLC., A MINNESOTA CORPORATION (Name of Developer) THIS AGREEMENT, made and entered into this day of , 2001, by and between the City of Orono, a municipal corporation organized and existing under the laws of the State of Minnesota(hereinafter called "City"), and Orono Ambar, LLC, a Minnesota Corporation, its heirs, successors and assigns (hereinafter called "Developer"). WITNESSETH: WHEREAS, the Developer has made application to the City Council for approval of a Planned Unit Development rezoning application(PUD)including a comprehensive plan amendment, subdivision to create two buildable lots, and commercial site plan review, for the purpose of developing a 62-unit Senior Housing residential building and a 25,000 s.f. Professional Office building; and WHEREAS, on March 12, 2001 the City Council granted Concept Plan Approval for development of a 62-unit building for senior housing use (the "Senior Housing Building") and a 25,000 s.f. general office building(the"Office Building")per Resolution No.4619,on the condition that the Developer enter into this agreement to provide for conformance with the City's Planned Unit Development(PUD)ordinances,to provide for the installation and maintenance of improvements, and to establish and document the conditions of approval for the Tax Increment Financing (TIF) associated with the Senior Housing element of the development. • Page 1 of 14 NOW, THEREFORE, in consideration of the premises, and of the actual promises and conditions hereinafter contained, it is hereby agreed as follows: A. General Terms and Conditions 1. Property Description. Outlot F, Sugar Woods according to the plat thereof on file in the office of the Registrar of Titles of Hennepin County,Minnesota(sometimes herein referred to as the "Property"). The property description to which this Agreement for the Office Building component of the development applies is Lot 1, Block 1, Orono Ambar. 2. Zoning.The property is zoned as a Planned Unit Development under the Orono planned unit development ordinance with underlying B-6 zoning for the office building component on Lot 1. 3. Permitted Uses. Within Lot 1 the only permitted principal structure is the 25,000 gross s.f., 2 story office building with underground parking in the basement level and additional surface parking as depicted in the site plan (attached hereto as Exhibit A) and approved building plans and elevations(attached hereto as Exhibit B). The permitted use of the office building is general office uses which may include business and professional offices of a general nature, and may include a clinic for human care on an outpatient basis only. The office building shall not be used for general retail use,except that retail uses customarily accessory to the general office use may occur in no more than twenty percent (20%) of the office building gross floor area. Other uses shall not be allowed except by amendment of this PUD agreement. Within Lot 1 the only accessory structures allowed shall include: a) Trash enclosures attached to the principal structures, constructed of materials comparable to and compatible with those of the principal structure; and b)Monument identification signs per the approved plans. No other accessory structures are permitted except by amendment of this agreement. Users shall be obligated to conform to all applicable Orono ordinances and to the provisions of this PUD agreement. The foregoing uses are permitted pursuant to this PUD agreement. 4. Site Access. Internal circulation for Lot 1 shall be via a new private road to be developed within Lots 1 and 2, Block 1, Orono Ambar. The private road shall serve the uses for both Lots 1 and 2.The easterly access point for the private road shall be at Brown Road North per the site plan attached as Exhibit A. The easterly access point shall allow full entrance and exit movements to North Brown Road. Page 2 of 14 A single direct access to Highway 12 shall be developed at a location approximately 500 feet west of the intersection of Brown Road and Highway 12.This direct access shall be restricted to westbound right-in/right-out turning movements, and shall be subject to MnDOT design approval. A third access point located near the northwest corner of Lot 1 shall provide for future access to a future public road which may be constructed within Outlot D, Sugar Woods. At such time that a public road is constructed within said Outlot D, the City shall have the right to connect such public road to the internal road system within Lots 1 and 2 for the purpose of providing additional ingress/egress options for Lots 1 and 2 as well as provide ingress/egress options for properties west of Lot 1. The Developer shall grant to the City public road, drainage and utilities easements over the private road corridor including all surface parking areas,in order that future public use of the roadways is ensured in the event that a future connection to the west is established. Developer shall grant cross easements between Lots 1 and 2 to ensure full use of the internal private road system until such time that the City exercises its easement rights to convert all or a portion of the internal road system to a public road status. It is specifically agreed that the City is not obligated to maintain the private internal road system until such time that the City chooses to convert all or a portion of the internal road system to a public road, and construction of an access connection to a public road in Outlot D, Sugar Woods shall not automatically terminate the private road status of the internal road system. Off-site access improvements that are the responsibility of the developer shall include establishment of the right-in/right-out access curbing for the southerly access.Any turn-lane or acceleration lane improvements or re-striping that may be required by MnDOT for that access shall be the responsibility of the City. Other off-site access improvements that will be the responsibility of the City shall include establishment of the semaphore and related improvements at the intersection of Brown Road North and Highway 12. 5. Building Design and Construction. The office buildings on Lot 1 shall be constructed according to the plans on file with the City. On Lot 1, the plans indicate a two story office building with parking on the basement level. The second story is set back from the first story at the north end of the building to reduce impacts to the residential neighborhood to the north. Windows are also minimized on the north end of the office building to reduce impacts on neighboring properties. The roof is a standard shingle hip roof with pitch established at 5:12 to minimize the impacts of building height. The exterior of the office building shall be Page 3 of 14 of materials consistent with the approved plans attached as Exhibit D. Any accessory structures on Lot 1, if approved, shall be of the same exterior finish and colors as the office building. Construction of the office building on Lot 1 shall be in conformance with the building codes and regulations adopted by the City of Orono. Any changes to the gross square footage, footprint/wall/roof dimensions or defined building height shall require a prior amendment to this Agreement. 6. Landscaping.The landscaping plan attached to this Agreement as Exhibit E shall be strictly adhered to. Within Lot 1, the Developer shall establish and maintain suitable vegetative screening along the northerly boundary of the property sufficient to substantially block direct view of most vehicle headlights from the adjoining Sugar Woods residential properties. Within Lot 1, the Developer shall provide and maintain vegetative screening within the defined rear yard of the office building to minimize the visual impact on the adjoining residential properties. Within Lot 1,Developer shall minimize to the greatest extent possible the removal of existing trees and vegetation along the perimeters of the property,and where feasible shall retain existing trees along the southerly boundary during construction until their removal is necessary to complete the approved landscape plan. The construction limits shall be clearly marked with adequate fencing to prevent construction damage or disturbance of any trees and vegetation outside of the defined construction limits. Any retaining walls to be constructed on Lot 1 as shown on the approved plans shall be of decorative concrete keystone-type block construction of an earthtone color and shall be limited in height and length to the extent necessary to accomplish their intended purpose. 7. Lighting. Site lighting shall adhere to the approved lighting plan attached hereto as Exhibit F. All lighting fixtures shall be located and constructed so as to direct light away from the adjacent residential neighborhood. 8. Signage. Signage on the site shall be limited to the required traffic control signage, and to monument signs provided by the developer at each entrance to the site. The signage shall be limited to a company or development name and/or logo and street address on the monument signs. Design and materials of monument signage shall adhere to the approved Signage Plan attached hereto as Exhibit G. Parking and traffic control signage shall be installed subject to City staff and City Engineer approval, including required stop signs within the parking lots and service drive to ensure safety of pedestrians in parking areas and crossing points. Page 4 of 14 B. Installation and Maintenance of Improvements 9. Improvements: In accordance with the policies and ordinances of the City of Orono, the following described public or private improvements (hereinafter collectively called the "Improvements")shall be constructed,installed and maintained by the Developer according to the terms and conditions contained in this PUD Agreement: (a) Site grading, roadways and driveways, curb and gutter, parking lots, sidewalks, retaining walls and all necessary erosion control measures per the approved Grading, Drainage & Erosion Control Plan attached hereto as Exhibit B (hereinafter called "site grading improvements"); (b) Sanitary sewer and water lines and facilities (hereinafter called "sewer and water improvements")and storm sewer lines and facilities(hereinafter called"stormwater improvements") per the approved Utility Plan attached hereto as Exhibit C. Relocation of the existing gravity sewer line extending from Brown Road North to the lift station near the southeast corner of Lot 2, as required by the City pursuant to the letters attached hereto as Exhibits I and J, shall be the responsibility of Sidney B. Rebers, seller of Outlot F, Sugar Woods. (c) Underground natural gas,electric,cable and telephone service to be arranged by the Developer with the utility companies involved (hereinafter called the "other utility improvements"); (d) Landscaping and site revegetation improvements per the approved Landscaping Plan attached hereto as Exhibit E (hereinafter called "landscaping improvements"). (e) Traffic control signage subject to approval by the City Engineer and Public Services Director. (f) Any additional improvements listed within the Site Improvements Cost Estimate attached hereto as Exhibit H. 10. Construction Plans: Detailed for the lans and specificationscomplete installation of the P Improvements shall be submitted by the Developer for the approval of the City prior to issuance of applicable City permits. The Plans and Specifications shall conform to all current City standards for all applicable work and shall comply with the terms of this PUD Agreement. Page 5 of 14 11. Construction of Improvements: (a) Commencement Date - The construction of Improvements shall begin no later than December 31, 2002. (b) Completion Date-All Improvements shall be completed no later than December 31, 2003. (c) Contractors - The Developer shall select, retain and supervise the Contractor(s) responsible for Improvement construction. The City reserves the right to require satisfactory proof of successful experience and adequate financial status of any such contractor. Where required by City ordinance, the contractor shall first obtain a license from the City. (d) Pre-Construction Conference - Prior to the start of any construction, the Developer and the Developer's Contractor shall meet with the responsible City official to review construction plans and schedules. (e) Permits-Prior to the start of any construction,the Developer's Contractor shall apply for and receive all necessary permits from the City and/or government agencies having jurisdiction. (f) Permits-Prior to the start of any construction,the Developer's Contractor shall apply for and receive all necessary permits from the City and/or government agencies having jurisdiction. Required City permits relative to the Improvements include the following: Site Grading Permit; Utility Construction Permit; Sewer and Water Connection Permits. (g) Construction - The construction, installation and materials shall be in accordance with the plans and specifications approved by the City. (g) Insurance - The Developer will cause each person who constructs and installs any Improvement to maintain complete insurance coverage including Workmen's Compensation, Liability and Property Damage. Page 6 of 14 12. Performance Deposit: For the purposes of assuring to the City that the Improvements will be completed according to the terms of this agreement, and that the Developer will pay or will cause to have paid all claims for work done and materials and supplies furnished, the Developer or his General Contractor will deposit with the City prior to issuance of site grading and building permits an irrevocable letter of credit in a form satisfactory to the City providing that the City is able to draw upon such letter of credit in its sole discretion to complete the Improvements if the Developer fails to satisfactorily complete the work prior to the completion date specified in Section 11 above. The amount of such deposit is $ per the schedule attached to this document as Exhibit H. The amount of such deposit shall not be reduced before substantial completion of the Improvements. The letter of credit shall expire no sooner than six months after the completion date specified in Section 11 above. 13. Fees and Expenses: The Developer agrees to pay all City fees required per the current City Fee Schedule and further agrees to completely reimburse the City for all the variable additional expenses it incurs in regard to the review and approval of the Improvements including, but not limited to, direct City payroll and overhead, costs, and fees paid to consultants and other professionals, which are not covered by City application fees. 14. Maintenance. The Developer shall be responsible for maintenance of all privately owned Improvements including roads, sidewalks, and storm sewers, regardless whether easements for such improvements have been granted to the City. Developer shall permanently maintain site lighting, signage and landscaping consistent with the approved Plans for said improvements. Upon satisfactory completion of construction of sewer and water mains on the site, developer shall transfer ownership of said main lines to the City, and the City shall henceforth maintain said sewer and water mains. Developer shall be responsible for maintenance of all sewer and water lines that are defined as "connections" as indicated on the approved Utility Plan. Developer shall be responsible for ensuring that thea appearance and design pp s gn of the building are maintained per the approved building and construction plan, and shall be responsible for ensuring that the site amenities and features as shown on the approved site plan are maintained per said plan. 15. Developer Representations and Covenants. The Developer hereby makes the following representations and covenants: (a) The Developer has the legal authority and power to enter into this Agreement. Page 7 of 14 (b) The Developer reasonably expects to obtain financial resources sufficient to enable the completion of the Improvements. (c) The Developer will, subject to the requirements of Section B - Installation and Maintenance of Improvements hereof, construct, operate and maintain the Improvements in accordance with the terms of this Agreement and all local,state and federal laws and regulations, and will construct or pay the costs of construction of any site improvements, utilities, landscaping, stormwater management facilities, roads,parking facilities which are necessary in connection with the construction and such improvements. (d) At such time or times as may be required by law,the Developer will have complied with all local, state and federal environmental reviews, licenses, and will be in compliance with the requirements of federal, state, and local authority. (e) The Developer will obtain, in a timely manner, all required permits, licenses and approvals,and will meet, in a timely manner, all requirements of all local, state,and federal laws and regulations which must be obtained or met before the Improvements may be constructed. (f) It is intended and agreed that the covenants provided in this Section shall be covenants running with the land not the owner or developer. 16. City Representations and Covenants: The City makes the following representations as the basis for the undertaking on its part here in contained: (a) The City is authorized by law to enter into this Agreement and to carry out its obligations hereunder. (b) The City will,in a timely manner,subject to all notification requirements,review and act upon all submittals and application of the Developer and will cooperate with the effort of the Developer to secure the granting of any permit,license,or other approval required to construct and operate the Improvements;provided,however,that nothing contained in this subparagraph shall be construed to limit in any way the reasonable and legitimate exercise of the City's discretion in considering any submittal or application. Page 8 of 14 (c) The Development Property is zoned for purposes which include the Development as proposed. The city has issued all necessary commercial site plan review approvals, and plat approval of Orono Woods Addition. 17. Compliance. At any time and from time to time the Developer may request that the City provide the Developer a certificate certifying that that the terms and provisions of this Agreement have been complied with and that this PUD Agreement is in full force and effect with respect to the development for the purpose of facilitating sale, mortgage, insurance or other matters. To the extent that there be any bona fide defaults in such compliance, the Developer shall be afforded a reasonable time to bring the development into conformance, and thereafter the City shall be obligated to provide such certificate. 18. Binding Effect: The terms and provisions hereof shall be binding upon and inure to the benefit of the heirs,representatives, successors and assigns of the parties hereto and shall be binding deemed covenants running with the land. References herein to Developer, if there be more than one, shall mean each and all of them. This agreement at the option of the City shall be placed of record so as to give notice hereof to any subsequent purchasers and encumbrancers of all or any part of the property. 19. Notices: Whenever in this agreement it shall be required or permitted that notice or demand be given or served by either party to this agreement to or on the other party, such notice or demand shall be delivered personally or mailed by United States certified mail(return receipt requested)to the addresses set forth below. Such notice or demand shall be deemed timely given when delivered personally or when deposited in the mail in accordance with the above. Notice to City Notice to Developer City of Orono Frank Dunbar, Chief Manager Clerk/Administrator Orono Ambar, LLC P.O. Box 66 c/o Dunbar Development Corporation Crystal Bay, MN 55323 5000 Glenwood Avenue Golden Valley, MN 55422 Parties may substitute notice provisions upon notice to other parties. Page 9 of 14 20. Incorporation by Reference: All plans, special provisions, proposals, specifications and contracts for the Improvements furnished and let pursuant to this agreement shall be and hereby are made a part of this agreement by reference as fully as if set out herein in full. 21. Disclaimer by City: It is understood and agreed that the City, the City Council, and the agents and employees of the City shall not be personally liable or responsible in any manner to the Developer or Developer's contractors, subcontractors, materialmen, laborers, or any other person, firm or corporation, for any debt, claim, demand, damages, actions, or causes of action of any kind or character, arising out of or by reason of the execution of this agreement or the performance and completion of the Improvements. 22. Hold Harmless and Indemnification: The Developer shall indemnify and hold harmless the City,the City Council,and the agents and employees of the City from and against all claims, damages,losses or expenses,including attorney fees,which the City,City Council and agents and employees of the City may suffer or for which it may be held liable, arising out of or resulting from the assertion against them of any claims,debts or obligations in consequence of the performance of this agreement by the Developer, its employees, agents or sub- contractors, whether or not caused in part by a party indemnified hereunder. 23. Remedy for Default: Default by the Developer of any of the terms of this agreement shall automatically result in the suspension or withholding of all permits, licenses, occupancy certificates or other authorizations issued by the City in connection with the property included in this development.The remedies afforded to the City under this Section shall be in addition to any other remedies to which the City may be entitled by law or other agreement. Default by the City shall entitle the Developer to seek injunctive/mandatory relief through the courts, together with other relief as the law may provide. 24. Right of Entry. The Developer hereby grants to the City, its agents and its employees, the right to enter on the property for the specific purpose of constructing or completing any and all of the agreed upon Improvements should the Developer not complete those Improvements by the date specified in Section 11. 25. Controlling Agreement. To the extent that there is any difference or ambiguity between this Planned Unit Development Agreement and other agreements between the City and the Developer, this Planned Unit Development Agreement shall control. Page 10 of 14 IN WITNESS WHEREOF, the City and the Developer have caused this agreement to be duly executed on the day and year first above written. In Presence of: CITY OF ORONO By: (Mayor) By: (City Clerk) DEVELOPER By: (Title) Reviewed for Administration: Date: By: (Planning Director) By: (City Administrator) This instrument was drafted by: City of Orono 2750 Kelley Parkway P.O. Box 66 Crystal Bay, MN 55356 Page 11 of 14 LIST OF EXHIBITS Exhibit A Site Plan Exhibit B Grading, Drainage and Erosion Control Plan Exhibit C Utility Plan Exhibit D Building Plans & Elevations Exhibit E Landscaping Plan Exhibit F Lighting Plan Exhibit G Signage Plan Exhibit H Site Improvements Cost Estimate Exhibit I Letter by Hugh M. Maynard dated 4/24/01 regarding Sewer Replacement Exhibit J Agreement for Sewer Replacement (City to draft, Rebers to sign) Page 14 of 14 Revised Draft 7/30/01 Revised 8/13/01 Revised 9/24/01 CITY OF ORONO HENNEPIN COUNTY, MINESOTA PLANNED UNIT DEVELOPMENT NO. 2B AGREEMENT FOR ORONO WOODS APARTMENTS (Name of Development) ORONO SENIOR HOUSING L.L.C. (Name of Developer) THIS AGREEMENT, made and entered into this day of , 2001, by and between the City of Orono, a municipal corporation organized and existing under the laws of the State of Minnesota (hereinafter called "City"), and Orono Senior Housing, LLC, a wholly owned subsidiary of Wedum Foundation, a Minnesota non-profit corporation, its heirs, successors and assigns (hereinafter called "Developer"). WITNESSETH: WHEREAS, the Developer has made application to the City Council for approval of a Planned Unit Development rezoning application(PUD)including a comprehensive plan amendment, subdivision to create two buildable lots, and site plan review and approval, for the purpose of developing a 62-unit Senior Housing residential building; and WHEREAS,the Senior Housing component of the development meets the goals established by the City of Orono in its Community Management Plan for provision of lifecycle and affordable housing for residents 62 years of age and older; and WHEREAS, because the Senior Housing Building component of the Development meets housing goals established by the City of Orono, the City Council has agreed to provide financial assistance to the Developer for the Senior Housing component,via Tax Increment Financing. Under the terms of this agreement and the laws of the State of Minnesota, certain costs to be incurred by the Developer are eligible for TIF reimbursement, including but not necessarily limited to land Page 1 of 17 acquisition,road/curb/gutter and storm sewer improvements,grading and related site improvements, sewer connection fees,and park dedication fees. Certain additional costs to be incurred by the City in direct relation to the Senior Housing Building component are eligible for TIF reimbursement,such costs including but not necessarily limited to sidewalk expansion and replacement, public street lighting,burial of existing overhead power lines,installation of semaphore and related improvements at Brown Road North and Highway 12, and re-striping and/or widening of Highway 12 to accommodate the south access point; and WHEREAS, the City of Orono has adopted a development program and tax increment financing plan to finance a portion of the development costs for the Senior Housing component of the development; and WHEREAS, the City of Orono has created and established a Tax Increment Financing District (the "TIF District") pursuant to the authority granted by Minnesota Statutes; and WHEREAS, on March 12, 2001 the City Council granted Concept Plan Approval for development of a 62-unit building for senior housing use (the "Senior Housing Building") and a 25,000 s.f.general office building(the "Office Building")per Resolution No.4619,on the condition that the Developer enter into this agreement to provide for conformance with the City's Planned Unit Development(PUD) ordinances,to provide for the installation and maintenance of improvements, and to establish and document the conditions of approval for the Tax Increment Financing (TIF) associated with the development. NOW, THEREFORE, in consideration of the premises, and of the actual promises and conditions hereinafter contained, it is hereby agreed as follows: A. General Terms and Conditions 1. Property Description. Outlot F, Sugar Woods according to the plat thereof on file in the office of the Registrar of Titles of Hennepin County,Minnesota(sometimes herein referred to as the "Property"). The property description to which this Agreement for the Senior Housing component of the development applies is Lot 2, Block 1, Orono Ambar. 2. Zoning.The property is zoned as a Planned Unit Development under the Orono planned unit development ordinance with underlying RPUD zoning for the Senior Housing component on Lot 2. Page 2 of 17 3. Permitted Uses. Within Lot 2 the only permitted principal structure is the 3-story 62-unit Senior Housing Building with underground parking in the basement level and additional surface parking as depicted in the approved site plan (Exhibit A) and approved building plans and elevations(Exhibit D).This building is to be used solely for Senior Housing under the terms of this agreement. Within Lot 2 the only accessory structures allowed shall include: a) Trash enclosures attached to the principal structure, constructed of materials comparable to and compatible with those of the principal structure; and b)Monument identification signs per the approved plans. Within Lot 2, an accessory recreational structure such as a gazebo shall be allowed subject to City Council approval of the design, size and location but without the need to amend this PUD agreement. No other accessory structures are permitted except by amendment of this agreement. Users shall be obligated to conform to the provisions of this PUD agreement.The foregoing uses are permitted pursuant to this PUD agreement. 4. Site Access. Internal circulation for Lot 2 shall be via a new private road to be developed within Lots 1 and 2, Block 1, Orono Ambar. The private road shall serve the uses for both Lots 1 and 2.The easterly access point for the private road shall be at Brown Road North per the site plan attached as Exhibit A. The easterly access point shall allow full entrance and exit movements to North Brown Road. A single direct access to Highway 12 shall be developed at a location approximately 500 feet west of the intersection of Brown Road and Highway 12.This direct access shall be restricted to westbound right-in/right-out turning movements, and shall be subject to MnDOT design approval. A third access point located near the northwest corner of Lot 1 shall provide for future access to a future public road which may be constructed within Outlot D, Sugar Woods. At such time that a public road is constructed within said Outlot D, the City shall have the right to connect such public road to the internal road system within Lots 1 and 2 for the purpose of providing additional ingress/egress options for Lots 1 and 2 as well as provide ingress/egress options for properties west of Lot 1. The Developer shall grant to the City public road,drainage and utilities easements over the private road corridor including all surface parking areas,in order that future public use of the Page 3 of 17 roadways is ensured in the event that a future connection to the west is established. Developer shall grant cross easements between Lots 1 and 2 to ensure full use of the internal private road system until such time that the City exercises its easement rights to convert all or a portion of the internal road system to a public road status. It is specifically agreed that the City is not obligated to maintain the private internal road system until such time that the City chooses to convert all or a portion of the internal road system to a public road, and construction of an access connection to a public road in Outlot D, Sugar Woods shall not automatically terminate the private road status of the internal road system. Access improvements that are the responsibility of the developer shall include establishment of the right-in/right-out access curbing for the southerly access.Any turn-lane or acceleration lane improvements or re-striping that may be required by MnDOT for that access shall be the responsibility of the City. Other access improvements that will be the responsibility of the City shall include establishment of the semaphore and related improvements at the intersection of Brown Road North and Highway 12. 5. Building Design and Construction. The Senior Housing building on Lot 2 shall be constructed according to the plans on file with the City. The plans indicate a 2-3 story, 62- unit senior housing apartment building with parking on the basement level. The westerly 2/3 of the building is 3 stories in height, the easterly 1/3 is 2 stories in height. The building has a standard shingle hip roof system at an established pitch of 5:12 to minimize the impacts of building height. The exterior of the building shall be constructed from materials consistent with the approved plans attached as Exhibit D. Any accessory structures on Lot 2, if approved, shall be of the same exterior finish and colors as the senior housing apartment building. Construction of the building on Lot 2 shall be in conformance with the building codes and regulations adopted by the City of Orono. Any changes to the gross square footage, footprint/wall/roof dimensions, defined building height or number of dwelling units shall require a prior amendment to this Agreement. 6. Landscaping.The approved landscaping plan attached to this Agreement as Exhibit E shall be strictly adhered to. The Developer shall provide vegetative screening within the defined rear yard of the senior housing apartment building to minimize the visual impact on the adjoining residential properties. Within Lot 2, Developer shall minimize to the greatest extent possible the removal of existing trees and vegetation along the perimeters of the property,and where feasible shall retain existing trees along the southerly boundary during Page 4 of 17 construction until their removal is necessary to complete the approved landscape plan. The construction limits shall be clearly marked with adequate fencing to prevent construction damage or disturbance of any trees and vegetation outside of the defined construction limits. Retaining walls to be constructed on Lot 2 as shown on the approved plans shall be of decorative concrete keystone-type block construction of an earthtone color and shall be limited in height and length to the extent necessary to accomplish their intended purpose. 7. Lighting. Site lighting shall adhere to the approved lighting plan attached hereto as Exhibit F. All lighting fixtures shall be located and constructed so as to direct light away from the adjacent residential neighborhood. 8. Signage. Signage on the site shall be limited to the required traffic control signage, and to monument signs provided by the developer at each entrance to the site. The monument signage shall be limited to a company or development name and/or logo and street address. Design and materials of monument signage shall adhere to the approved Signage Plan attached hereto as Exhibit G. Parking and traffic control signage shall be installed subject to City staff and City Engineer approval, including required stop signs within the parking lots and service drive to ensure safety of pedestrians in parking areas and crossing points. B. Installation and Maintenance of Improvements 9. Improvements. In accordance with the policies and ordinances of the City of Orono, the following described public or private improvements (hereinafter collectively called the "Improvements")shall be constructed,installed and maintained by the Developer according to the terms and conditions contained in this PUD Agreement: (a) Site grading, roadways and driveways, curb and gutter, parking lots, sidewalks, retaining walls and all necessary erosion control measures per the approved Grading, Drainage & Erosion Control Plan attached hereto as Exhibit B (hereinafter called "site grading and roadway improvements"); (b) Sanitary sewer and water lines and facilities (hereinafter called "sewer and water improvements")and storm sewer lines and facilities(hereinafter called"stormwater improvements") per the approved Utility Plan attached hereto as Exhibit C. Relocation of the existing gravity sewer line extending from Brown Road North to the lift station near the southeast corner of Lot 2, as required by the City pursuant to the letter attached hereto as Exhibit I and the agreement attached hereto as Exhibit J, shall be the responsibility of Sidney B. Rebers, seller of Outlot F, Sugar Woods. Page 5 of 17 (c) Underground natural gas, electric, cable and telephone service to be arranged by Developer with the utility companies involved (hereinafter called the "other utility improvements"); (d) Landscaping and site revegetation improvements per the approved Landscaping Plan attached hereto as Exhibit E(hereinafter called"landscaping improvements"). (e) Traffic control signage subject to approval by the City Engineer and Public Services Director. (f) The following additional improvements which are detailed within the Site Improvements Cost Estimate attached hereto as Exhibit H: 1) 2) (TO BE ADDED UPON COMPLETION OF COST ESTIMATE) 3) etc. 10. Construction Plans: Detailed plans and specifications for the complete installation of the Improvements shall be submitted by the Developer for the approval of the City of Orono prior to issuance of applicable City permits. The Plans and Specifications shall conform to all current City standards for all applicable work and shall comply with the terms of this PUD Agreement. 11. Construction of Improvements: (a) Commencement Date - The construction of Improvements shall begin no later than December 31, 2001. (b) Completion Date-All Improvements shall be completed no later than December 31, 2002. (c) Contractors - The Developer shall select, retain and supervise the Contractor(s) responsible for Improvement construction. The City reserves the right to require satisfactory proof of successful experience and adequate financial status of any such contractor. Where required by City ordinance, the contractor shall first obtain a license from the City. Page 6 of 17 (d) Pre-Construction Conference - Prior to the start of any construction,the Developer and the Developer's Contractor shall meet with the responsible City official to review construction plans and schedules. (e) Permits-Prior to the start of any construction,the Developer's Contractor shall apply for and receive all necessary permits from the City and/or government agencies having jurisdiction. Required City permits relative to the Improvements include the following: Site Grading Permit; Utility Construction Permit; Sewer and Water Connection Permits. (f) Construction-The construction,installation and materials shall be in accordance with the plans and specifications approved by the City. (g) Insurance - The Developer will cause each person who constructs and installs any Improvement to maintain complete insurance coverage including Workmen's Compensation, Liability and Property Damage. 12. Performance Deposit: For the purposes of assuring to the City that the Improvements will be completed according to the terms of this agreement, and that the Developer will pay or will cause to have paid all claims for work done and materials and supplies furnished, the Developer or his designated General Contractor will deposit with the City prior to the City's issuance of site grading and building permits an irrevocable letter of credit in a form satisfactory to the City providing that the City is able to draw upon such letter of credit in its sole discretion to complete the Improvements if the Developer fails to satisfactorily complete the work prior to the completion date specified in Section 11 above. The amount of such deposit is $ per the schedule attached to this document as Exhibit H. The amount of such deposit shall not be reduced before substantial completion of the Improvements.The letter of credit shall expire no sooner than six months after the completion date specified in Section 11 above. 13. Fees and Expenses: The Developer agrees to pay all City fees required per the current City Fee Schedule and further agrees to completely reimburse the City for all the variable additional expenses it incurs in regard to the review and approval of the Improvements including, but not limited to, direct City payroll and overhead, costs, and fees paid to consultants and other professionals, which are not covered by City application fees. Page 7 of 17 14. Maintenance: The Developer shall be responsible for maintenance of all privately owned Improvements including roads, sidewalks, and storm sewers, regardless whether easements for such improvements have been granted to the City. Developer shall permanently maintain site lighting, signage and landscaping consistent with the approved Plans for said improvements. Upon satisfactory completion of construction of sewer and water mains on the site, Developer shall transfer ownership of said main lines to the City, and the City shall henceforth maintain said sewer and water mains. Developer shall be responsible for maintenance of all sewer and water lines that are defined as "connections" as indicated on the approved Utility Plan. Developer shall be responsible for ensuring that the appearance and design of the building are maintained per the approved building and construction plan, and shall be responsible for ensuring that the site amenities and features as shown on the approved site plan are maintained per said plan. C. Senior Housing Duration 15. City Intent and Conditions for Senior Housing Building. It is the intent of the City of Orono that the Senior Housing Building be used for the purpose of senior rental housing for persons age 62 and older for the longest practicable period of time,with rental priority given to area residents. In order to achieve this intent, the Developer agrees to the following conditions which are hereby established as part of this PUD Agreement: (a) In order to maximize the length of time that the City can exert control over the use of the Senior Housing for its intended purpose, the City intends to purchase Lot 2, Block 1, Orono Woods Addition from the Developer prior to the commencement of construction for the sum of $1 (one dollar) and other good and valuable considerations.The City will then lease said Lot 2 to the Developer/Building Owner for a period of ninety-nine (99) years, at an annual rent of $1. The lease shall include the following general terms: 1) The lease shall be written to prohibit rental to other than seniors during the term of the lease. 2) At the end of the 99-year lease term, the City will sell Lot 2 back to•the Developer/Owner for the sum of$1. (b) During the 99 year term of the lease, the building shall be owned and operated by a non-profit corporation. Page 8 of 17 (c) During the term of the TIF funding as described in this document,the Developer shall limit the rental price of 20%of the units per the TIF Agreement,and all 62 units shall be used only for housing of seniors age 62 and older,with rental preference given to Orono residents,per the terms and conditions of the"Senior Housing Restriction"and the "Orono Preference Requirement" as stated within that certain document entitled "Development Agreement Relating to Orono Woods Apartments (Including Tax Increment Financing District No. 1-1) Between City of Orono, Orono Housing and Redevelopment Authority and Orono Senior Housing, LLC" (hereinafter the "Development Agreement"). (d) In order to maximize the length of time that the Senior Housing will serve its intended purpose, the City will defer Sewer and Water Connection Fees in the amount of $40,838 and Park Dedication Fees in the amount of$161,200 that would otherwise be due at the time of development of the Senior Housing. Such fees (hereinafter "deferred improvement costs")shall be payable only in the event that the Developer violates the "Senior Housing Restriction" as set forth in the "Development Agreement". In that event such fees shall be immediately due and payable together with interest on the deferred amounts computed at the rate of 7%per annum from the date of said "Development Agreement". The deferred amounts plus 7% interest compounded annually shall be due and payable to the City at the termination of the 99 year lease,except that the Developer/Owner may further extend the deferral period in 5-year increments by contract with the City. 16. Developer Representations and Covenants. The Developer hereby makes the following representations and covenants: (a) The Developer has the legal authority and power to enter into this Agreement. (b) The Developer reasonably expects to obtain financial resources which, when combined with the assistance hereunder, will be sufficient to enable the completion of the Improvements. (c) The Developer will, subject to the requirements of Section B - Installation and Maintenance of Improvements hereof, construct, operate and maintain the Improvements in accordance with the terms of this Agreement,the requirements of the TIF District and all local, state and federal laws and regulations, and will construct or pay the costs of construction of any site improvements, utilities, Page 9 of 17 landscaping,stormwater management facilities,roads,or parking facilities which are necessary in connection with the construction and such improvements. (d) At such time or times as may be required by law,the Developer will have complied with all local, state and federal environmental reviews, licenses, and will be in compliance with the requirements of federal, state, and local authority. (e) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner,all requirements of all local, state,and federal laws and regulations which must be obtained or met before the Improvements may be constructed. (f) The Developer acknowledges that the TIF District is a "housing district" as defined in Section 469.174, Subdivision 11, of the TIF Act and, as such, is subject to the limitations provided in Minnesota Statutes, Section 469.174, Subdivision 11 and Section 469.1761, Subdivision 3 (together, the "Restrictions"). The Developer covenants that it will, with respect to the Improvements, observe and comply, and that it will cause the require any of its permitted successors and assigns to observe and comply with such Restrictions. In particular, and without limitation, the Developer covenants that at all times prior to the expiration of the Term the use of the property shall continue to qualify as a "housing district" under the TIF Act; specifically, that not less than 20% of the housing units shall be rented to tenants having annual income less than 50% of area median gross income. At least once annually,the Developer or Owner agrees to provide evidence satisfactory to the City of Orono of compliance with the applicable income limitation, including without limitation the total number of rental units during any reporting period and income verifications. (g) The Developer acknowledges that the "deferred improvement costs" shall be in addition to the requirements of the "TIF" financing. Such costs as identified in Section 15(c) above shall be deferred and no payment shall be made to the City of Orono by the Owner if the housing remains in ownership of the"non-profit operator" and the housing be limited to senior rental units for persons aged 62 and older. At such time that either condition no longer exists, the deferred amounts plus 7% per annum interest compounded annually shall be immediately due and payable in full. Page 10 of 17 (h) It is intended and agreed that the covenants provided in this Section shall remain in effect throughout the Terms and shall be covenants running with the land not the owner or developer. 17. City Representations and Covenants: The City makes the following representations as the basis for the undertaking on its part here in contained: (a) The City is authorized by law to enter into this Agreement and to carry out its obligations hereunder. (b) The City will,in a timely manner,subject to all notification requirements,review and act upon all submittals and application of the Developer and will cooperate with the effort of the Developer to secure the granting of any permit,license,or other approval required to construct and operate the Improvements;provided,however,that nothing contained in this subparagraph shall be construed to limit in any way the reasonable and legitimate exercise of the City's discretion in considering any submittal or application. (c) The Development Property is zoned for purposes which include the Development as proposed. The city has issued all necessary residential planned unit development (RPUD) approval, and plat approval of Orono Woods Addition. (d) The City has duly taken such steps as it is required to take to approve the TIF District and TIF Plan pursuant to and in accordance with the TIF Act and the City covenants to discharge such future obligation. The City acknowledges that, as a housing TIF District,the TIF District is subject to specific requirements and limitation under the TIF Act, including the requirements that: (1) The increment be expended in accordance with the TIF Plan (Section 469.176, Subdivision 4)and solely to finance the cost of"housing projects", as defined in Section 469.174, Subdivision 11, which may include the cost of public improvements directly related to the housing projects and allocated administrative expenses (469.176, Subdivision 4d) (2) The income limitations under Section 469.1761,the violation of which may limit the TIF District's duration to that of an economic development district (Section 469.1761, Subdivision 4) Page 11 of 17 x (3) The disqualification of a project if the fair market value of its improvements which are constructed for uses other than low and moderate income housing exceeds 20% of the total fair market value of the planned improvements in the development plan or agreement (Section 469.174, Subdivision 11). Compliance with some of these restrictions is within the control of the City and compliance with some of these restrictions is within the control of the Developer and/or Owner. (4) The City of Orono acknowledges that the"deferred improvement costs"shall be in addition to the requirements of the"TIF Act"by an additional 79 years. Such costs as identified in Section 15(c) above shall be deferred and no payment shall be made to the City of Orono by the Owner if the conditions the housing remain in ownership of the"non-profit operator"and the housing be limited to senior rental units for persons aged 62 and older. At such time that said requirements are no longer met,the deferred improvement costs plus interest accrued at the annual rate of 7%compounded annually shall be repaid immediately to the City of Orono. (e) The City covenants not to take any actions,including without limitation any approval of the expenditure by the City of increment from the TIF District not applied toward payment of the TIF Note, which would violate the TIF Act, invalidate the TIF District in whole or in part or adversely affect the tax increment payment obligations to the Developer under this Agreement or the TIF Note. Nothing in this subsection shall diminish the Developer's obligations under this Agreement or create any liability of the City respecting an Event of Default. The City shall promptly give the Developer written notice and copy of any lawsuit or similar proceeding,or any threat thereof, and of any communication from the Office of the State Auditor, the Department of Revenue, Hennepin County or other public official which questions the propriety or legality of the TIF District or the expenditure of its increment. 18. Compliance. At any time and from time to time the Developer may request that the City provide the Developer a certificate certifying that that the terms and provisions of this Agreement have been complied with and that this PUD Agreement is in full force and effect with respect to the development for the purpose of facilitating sale, mortgage, insurance or other matters. To the extent that there be any bona fide defaults in such compliance, the Developer shall be afforded a reasonable time to bring the development into conformance, and thereafter the City shall be obligated to provide such certificate. Page 12 of 17 19. Binding Effect: The terms and provisions hereof shall be binding upon and inure to the benefit of the heirs,representatives, successors and assigns of the parties hereto and shall be binding deemed covenants running with the land. References herein to Developer, if there be more than one, shall mean each and all of them. This agreement at the option of the City shall be placed of record so as to give notice hereof to any subsequent purchasers and encumbrancers of all or any part of the property. 20. Notices: Whenever in this agreement it shall be required or permitted that notice or demand be given or served by either party to this agreement to or on the other party, such notice or demand shall be delivered personally or mailed by United States certified mail(return receipt requested)to the addresses set forth below. Such notice or demand shall be deemed timely given when delivered personally or when deposited in the mail in accordance with the above. Notice to City Notice to Developer City of Orono James Cooper, Chief Manager Clerk/Administrator Orono Senior Housing, LLC P.O. Box 66 c/o Dunbar Development Corporation Crystal Bay, MN 55323 5000 Glenwood Avenue Golden Valley, MN 55422 cc: Wedum Foundation Parties may substitute notice provisions upon notice to all other parties. 21. Incorporation by Reference: All plans, special provisions, proposals, specifications and contracts for the Improvements furnished and let pursuant to this agreement shall be and hereby are made a part of this agreement by reference as fully as if set out herein in full. 22. Disclaimer by City: It is understood and agreed that the City, the City Council, and the agents and employees of the City shall not be personally liable or responsible in any manner to the Developer or Developer's contractors, subcontractors, materialmen, laborers, or any other person, firm or corporation, for any debt, claim, demand, damages, actions, or causes of action of any kind or character, arising out of or by reason of the execution of this agreement or the performance and completion of the Improvements. Page 13 of 17 23. Hold Harmless and Indemnification: The Developer shall indemnify and hold harmless the City,the City Council,and the agents and employees of the City from and against all claims, damages,losses or expenses,including attorney fees,which the City,City Council and agents and employees of the City may suffer or for which it may be held liable, arising out of or resulting from the assertion against them of any claims,debts or obligations in consequence of the performance of this agreement by the Developer, its employees, agents or sub- contractors, whether or not caused in part by a party indemnified hereunder. 24. Remedy for Default: Default by the Developer of any of the terms of this agreement shall automatically result in the suspension or withholding of all permits, licenses, occupancy certificates or other authorizations issued by the City in connection with the property included in this development.The remedies afforded to the City under this Section shall be in addition to any other remedies to which the City may be entitled by law or other agreement. Default by the City shall entitle the Developer to seek injunctive/mandatory relief through the courts, together with other relief as the law may provide. 25. Right of Entry. The Developer hereby grants to the City, its agents and its employees, the right to enter on the property for the specific purpose of constructing or completing any and all of the agreed upon Improvements should the Developer not complete those Improvements by the date specified in Section 11. 26. Controlling Agreement. To the extent that there is any difference or ambiguity between this Planned Unit Development Agreement and other agreements between the City and the Developer, this Planned Unit Development Agreement shall control. (The balance of this page intentionally left blank) Page 14 of 17 IN WITNESS WHEREOF, the City and the Developer have caused this agreement to be duly executed on the day and year first above written. In Presence of: CITY OF ORONO By: (Mayor) By: (City Clerk) DEVELOPER By: (Title) Reviewed for Administration: Date: By: (Planning Director) By: (City Administrator) This instrument was drafted by: City of Orono 2750 Kelley Parkway P.O. Box 66 Crystal Bay, MN 55356 Page 15 of 17 (NOTARIZATION PAGES) Page 16 of 17 (NOTARIZATION PAGES) Page 17 of 17 LIST OF EXHIBITS Exhibit A Site Plan Exhibit B Grading, Drainage and Erosion Control Plan Exhibit C Utility Plan Exhibit D Building Plans & Elevations Exhibit E Landscaping Plan Exhibit F Lighting Plan Exhibit G Signage Plan Exhibit H Site Improvements Cost Estimate Exhibit I Letter by Hugh M. Maynard dated 4/24/01 regarding Sewer Replacement Exhibit J Agreement for Sewer Replacement (City to draft, Rebers to sign) Page 18 of 17 FINDINGS 1. This application was reviewed as Zoning Files #2640-2641, the City of Orono has received application # for simultaneous review of the final plat of Orono Woods. 2. The property is located in the B-1 Limited Neighborhood Business District. The property consists of approximately 6.7 acres.2. 3. The City Council adopted Resolution No. on approving the G- s- al Concept Plan for a 23,000 s.f. two-story office building and a 62 unit ? 62 + senior housing building. The office building would be located on a • property approximately 2.7 acres in size. The residential use would be located on a lot approximately 4.0 acres in size. 4. Rezoning of the properties from B-1 General Business to B-6 and RPUD are essentially down zoning of the properties as the permitted uses in the B-6 and RPUD districts would have less potential impact on the adjacent residential properties. The proposed office use and senior residential component would not require the same traffic levels and development pattern as a retail environment. 5. A large stormwater pond is located adjacent to the property that is owned by MnDOT that has been designed with the capacity to handle stormwater flows from the property. In addition to the City of Orono, MnDOT shares approval from the stormwater management plan. 6. The property rises gradually from the pond. The proposed development has incorporated building and road design that takes advantage of the existing topography. The senior building has been designed to follow the general topography of the land. 7. The City of Orono had planned to have a service road connection between Brown Road and the properties to the west. A version of the service drive has been designed to allow for a future connection west. The Concept Plan would allow two way traffic to enter from Brown Road. This is the ideal primary ingress/egress to the property as a lighted intersection is planned for Highway Page 2 of 10 12 and Brown Road to allow for traffic to safely access Highway 12. A right-in right-out intersection would allow direct access from the site to Highway 12. Future connection to the west would potentially be to Brimhall with a lighted intersection at existing Highway 12. This would reduce the amount of through traffic on the residential property to the east. 8. Highway 12 is scheduled to be relocated to the south. The existing 12 would be reclassified and become a Hennepin County Road (Wayzata Boulevard). 9. Per Section 10.61, Subd. 10, required off-street parking is approved as follows: No. of Parking Stalls: Required = 1 per 200 s.f. Required = 1 per 200 s.f. of "net usable floor area for office use" Total stalls required = 97 Total stalls proposed = 97 No. of Parking Stalls: Required = 2 per dwelling unit (Section 10.61) Required = 140 spaces Total stalls proposed = 83 interior spaces ) 50 exterior spaces V UAV I ami �;w D� T1 The standards for a building designed for senior housing use may not require the same parking standards. The applicants have stated they do not feel all the parking proposed on site will be necessary for the use. 10. A 8' wide regional trail is located along Brown Road. The plans have provided pedestrian access to the trail via a path that would connect the main entrance to the west. A 6' sidewalk is located along the south property line. Connection to the sidewalk has been provided to the main entrance. A path/trail will also be provided to allow pedestrian access from the residential building to the office use on the adjacent property. 11. The 62 unit building on the 4 acre site would provide 15.5 units/acre of senior housing units at a variety of unit sizes and rental rates. The proposed RPUD zoning district would be the appropriate zoning district to provide the units/acre density requested. The RPUD district would allow the City of Orono to provide Page 3 of 10 • incentives to encourage projects which are consistent with housing goals. "Incentives may include modification of density and floor area ratio requirements for developments providing lifecycle housing and low and moderate cost housing." The City has the ability to ensure the housing need, for lifecycle ' o housing, is met. ( Z p�o U �'S �-k O o INC 12. The property was`platted as Outlot F, Sugarwoods the parcel immediately south of the Sugarwoods neighborhood. The only buffer between the single family residential use in Sugarwoods is a 40' wide platted outlot that is owned by the Sugarwoods homeowners association. Restrictions were placed on each lot within the Sugarwoods neighborhood that prohibits removal of trees greater than 2" in diameter within the rear setback for those lots located closest to the proposed development. The property is located on Highway 12 and the City of Long Lake is located south of Highway 12. Two lots that are located west of the project are developed as the Orono Shopping Center and Conoco gas station. 13. The ap. ic:nt has e'uested f +cial assi a ce from e ity of Or' o t. a ow +or af'.rda.le r; ts. Such met' ods i,clud: the reation of a ' F •'strict •'m' •r pro,*sig s or ei •urseme . 14. The developer has proposed to plat the senior housing project as condominiums. Each unit would have a separate legal description and tax statement. Under this type of plat the units would be owned by a non-profit agency and rented to the 5\p/° k .occupants under the agreements established for the building. CP‘r. Cfrlp !09' \ , CONCLUSIONS, ORDER AND CONDITIONS �J C� NOW, THEREFORE, BE IT RESOLVED that the City Council .-- •e City of Orono hereby approves the General Concept Plan for a 62 unit building fo 62 + .enior housing use and a 23,000 s.f. general office building subject to the following con.itions: 1. Plans and specifications for service line connections for sewer around the pond have been approved per the design by Loucks Associates dated 2. Final grading, drainage and erosion control plan showing existing and proposed contours, building locations, elevations, stormwater pond, utilities and erosion Page 4 of 10 control measures to be used during construction has been approved per the plans submitted by Loucks Associates dated 3. The Minnehaha Creek Watershed District and MnDOT has approved the stormwater plans and all appropriate permits have been issued to the applicant. 4. Final engineering details and design are approved for the retaining wall per the plans completed by Loucks Associates dated 5. Final sanitary sewer and watermain plans have been approved by the Public Works Department and City Engineer, per the plans completed by Loucks Associates dated 6. The sidewalk/trail connections shall be provided to the Brown Road trail along the east side of the property, from the property to the sidewalk along Highway 12, and between each of the proposed buildings. All trails shall be permanently owned and maintained by applicant/property owner to provide pedestrian access through the site. Applicant has granted trail easements to permit public use of the trails. 7. The parking lots shall be paved with concrete curb and gutter, driving lanes within parking lot shall have a 9-ton pavement section for trucks. A geotechnical evaluation of the soil shall be done in conjunction with the pavement design has been approved by the City Engineer. 8. Applicants' architect has submited final development plans to the Metro Council Environmental Services to determine the exact number of SAC units to be charged at the time of the issuance of a building permit. Metro Council Environmental Services has determined the total number of SAC units to be charged is 9. The City has determined the additional Sewer and Water Unit Adjustment Charges and system upgrade connection charges to be units, of which will be deferred for the period established within the Developers Agreement and conditions of the Land Lease from the City of Orono to the building owners. Page 5 of 10 10. Appropriate traffic and parking signage shall be installed subject to the Orono staff and City Engineer's review, including required stop signs within the parking lots and service drive to ensure safe parking areas and pedestrian crossing within the development. 11. The landscape areas as shown on the above referenced site plan shall consist of grass wherever feasible and shall adhere to the above referenced Revised Landscape Plan dated 2/21/01 in regards to planting species, sizes and locations. Because the final road design and traffic patterns have not been established the final landscaping plans shall be submitted with the Preliminary Plan set. All landscaping shall be conform to the standards established within the RPUD and B-6 districts. (Must be approved by DSU.) 12. Monument signs shall be provided at each entrance to the site. The signage shall be limited to a company name and/or logo and street address on the monument signs. Final signage plans shall submitted by the applicant and approved by the City Council. 13. Final lighting plan shall be subject to City staff approval and shall locate lighting so as to direct lights away from the adjacent residential neighborhood. 14. Erosion control shall adhere to "Best Management Practices for Protecting Water Quality in Urban Areas". All erosion controls as required by the City shall be in place prior to commencing excavation on the site. Construction limits shall not permit removal or regrading of mature trees outside of the defined construction limits. City Engineer shall hold the right to require additional erosion control measures during construction, as deemed necessary, to ensure there is no erosion of the finished grades and no sediment is deposited off site or into stormwater management facilities. 15. Additional improvements required are burying of power lines and installation of street lighting that would be character with the street lighting plans along Highway 12 in cooperation with the City of Long Lake's street lighting program. Final plans shall be submitted and approved by the City Council. If necessary the City of Long Lake shall be consulted to comment on the proposed street Page 6 of 10 lighting program. 16. Per the appropriate documents, including the ground lease and Development Agreements the financial assistance package for the senior housing site to ensure the property remains in use as a residential property for senior housing for long period of time have been approved. 17. Approval shall be subject to the Council's adoption of the RPUD district with the Final Plat Approval. 18. The Preliminary Plat approval is not an approval of the rezoning or Preliminary Plat. The rezoning and Comprehensive Plan Amendment shall not be approved until the Final Plat approval, subject to the Developer, and City enter into and execute a Developer's Agreement and ground lease. 19. The City Engineer has completed an estimate of improvement costs, including but not limited to landscaping, grading, erosion control, utilities, pavement, trails, retaining walls and pond/outlet control structure construction and the applicant shall submit to the City a financial guarantee of subject to a Developer's Agreement being executed by the developer and City of Orono. 20. Drainage and Utility Easements shall be dedicated to the public on the final plat 10' along all exterior property lines and 5' along the interior property line. 21. Additional Drainage and Utility Easements shall be dedicated to the public on the final plat over all utility lines and rights of way. 22. Final road easement to permit public ingress/egress over the service/frontage road shall be granted to the public. 23. Authorities granted by this resolution run with the property not with the owners, but are permissive only as set forth by the special conditions of this resolution will expire one year from the date of Council approval on that date ( , 2002). 24. Violation of or non-compliance with any of the terms and conditions of this resolution shall constitute a violation of the Zoning Code, shall automatically Page 7 of 10 terminate any authority granted herein, and shall be punishable as a misdemeanor. 25. The undersigned applicants have read, understood and hereby agree to the terms of this resolution and on behalf of themselves, their heirs, successors and assigns, hereby agree to the recording of this resolution in the Chain of Title of the property. Adopted by the Orono City Council on this th day of 2001. ATTEST: Linda S. Vee, City Clerk Barbara A. Peterson, Mayor Property Owner Property Owner Applicant STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this th day of , 2001 by Barbara A. Peterson and Linda S. Vee, Mayor and City Clerk of the City of Orono, a Minnesota municipal corporation, and said instrument was executed on behalf of the City. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) Page 8 of 10 On this day of , 20 before me a Notary Public within and for said county, personally appeared known to me to be the person(s) described in and who executed the foregoing instrument, and acknowledged that he(they) executed the same as his (their) free act and deed. NOTARY PUBLIC STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) On this day of , 20 before me a Notary Public within and for said county, personally appeared known to me to be the person(s) described in and who executed the foregoing instrument, and acknowledged that he(they) executed the same as his (their) free act and deed. NOTARY PUBLIC STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) On this day of _, 20 before me a Notary Public within and for said county, personally appeared known to me to be the person(s) described in and who executed the foregoing instrument, and acknowledged that he(they) executed the same as his (their) free act and deed. NOTARY PUBLIC Page 9 of 10 Draft 9/27/01 A RESOLUTION GRANTING GENERAL DEVELOPMENT PLAN APPROVAL FOR PLANNED UNIT DEVELOPMENT NO. 2 FOR ORONO AMBAR, L.L.C. AND APPROVING THE PLAT OF ORONO AMBAR - FILE #2640/2641 WHEREAS, the City of Orono is a municipal corporation organized and existing under the laws of the State of Minnesota; and WHEREAS,the City Council of the City of Orono(hereinafter"City Council")has adopted subdivision and land development regulations for the orderly, economic and safe development of land within the City; and WHEREAS, the City Council has considered the application by Orono Ambar, L.L.C. for subdivision and development by the Planned Unit Development process of property located within Outlot F, Sugar Woods, Hennepin County, Minnesota; and WHEREAS, on March 12, 2001 the City Council adopted Resolution No. 4619 granting General Concept Plan Approval for the proposed development, which approval includes the following elements: 1. Subdivision platting of Outlot F to create two developable building lots; 2. Rezoning of each newly created lot; Lot 1 rezoned from B-1 Retail Sales Business District to B-6 Highway Commercial District,and Lot 2 rezoned from B-1 to RPUD Residential Planned Unit Development District. 3. Comprehensive Plan amendment to re-guide Lot 2 from Commercial to Residential use. 4. Commercial site plan approval and conditions for proposed office building on Lot 1. 5. Residential site plan review and conditions for proposed senior housing building on Lot 2. 6. Use of TIF financing for development of Senior Housing on Lot 2; and WHEREAS,on , 2001 the Metropolitan Council granted approval of the Orono 2000-2020 Community Management Plan including the re-guiding of lot 2 from commercial to residential use; and Page 1 of 6 WHEREAS, the Developer has submitted an executed Development Agreement relating to the Orono Woods Apartments between City of Orono, Orono Housing and Redevelopment Authority (hereinafter "HRA"), and Orono Senior Housing LLC for the City Council's consideration and final execution,which agreement sets forth the terms and conditions for the development of Senior Housing on Lot 2, including acquisition of the land by the HRA, ground lease to the Developer, Tax Increment Financing and issuance by the City of Multifamily Senior Housing Revenue Bonds; and WHEREAS, the Developer has submitted executed Planned Unit Development Agreements 2A and 2B providing for the installation of certain improvements as a condition of site plan approval for the construction of an Office Building on Lot 1 and a Senior Housing Building on Lot 2 respectively,and which agreements document the general conditions for use and development of the property; and WHEREAS, the Developerer has submitted an executed Road,Drainage and Utility easement over the portions of driveways in Lots 1 and 2 that provide potential future frontage road connections between Brown Road, Wayzata Boulevard, and properties to the west; and WHEREAS, the Developer has completed all other requirements of the platting regulations of the City including: 1. Completion of all platting requirements of Preliminary Plat Resolution No. 2. Dedication on the plat of Drainage and Utility Easements, including dedication of a utility easement to allow for replacement of the existing municipal sewer line which must be relocated outside of the MnDOT right-of-way and onto Lot 2. 3. Submittal of Minnehaha Creek Watershed District(MCWD)permit(No. ) approving the grading and stormwater management facilities plan for Lots 1 and 2 per the Grading, Drainage and Erosion Control Plan, Sheet C3-1 dated 8/16/01. 4. Submittal of the necessary MnDOT approval for the right-in, right-out access to Wayzata Boulevard, and confirmation that the MnDOT stormwater pond located southeast of Lot 2 has the capacity to accommodate the proposed drainage from development on Lots 1 and 2.. Page 2 of 6 5. Submittal of an executed Temporary Construction Easement in favor of MnDOT along the easterly 15 feet of Lot 2 to accommodate the planned future changes to the intersection of Brown Road North and Wayzata Boulevard associated with the re- routing of Highway 12; and 6. Payment to the City of Park Dedication Fee for the development of Lot 1 in the amount of$ 7. Payment to the City for the legal review and filing of the plat agreements,easements and covenants in the amount of$ 8. Payment of the final plat fee in the amount of$ WHEREAS,for development staging purposes the Developer has divided the project into two phases,Phase 1 being the Senior Housing component on Lot 2,and Phase 2 being the Office component on Lot 1, the intent being to commence Phase 1 construction in late 2001 and Phase 2 construction in 2002; and WHEREAS, City staff and consultants have reviewed the plans for this comprehensive application and hereby specify approval of each enclosed plan and identify them as part of the official record for the Orono Ambar subdivision and Planned Unit Development No. 2: 1. Approval of site plan for Phase 1 & 2 per Site Plan per Sheet C2-1 dated 8/16/01. 2. Approval of Grading,Drainage and Erosion Control Plan for Phases 1 &2 per Sheet C3-1 dated 8/16/01, subject to the additional requirements of the MCWD in Permit No. 3. Approval of Utility Plan for Phases 1 & 2 per Sheet C4-1 dated 8/16/01, subject to the additional requirements specified by City Engineer Tom Kellogg in his letter dated 4. Approval of Grading, Street and Utility Detail for Phases 1 &2 per Sheets C9-1 and C9-2 dated 8/16/01. 5. Approval of Landscaping Plan for Phase 2 only per Sheet LA-1 dated 8/19/01. Page 3 of 6 6. Acceptance of floor plan and facade elevations for the Senior Housing building on Lot 2 (Phase 1 only) per Sheets A3.1 through A3.5 by MHWB Architects and Planners dated 9/19/01. 7. Approval of site Lighting and Signage Plans per Sheets and dated , 2001. 8. Preliminary approval of building design plans for the Office building on Lot 2(Phase 2) as described and documented in Resolution No. 4619. NOW,THEREFORE,BE IT RESOLVED that based on the findings of Resolution No. 4619, the City Council of the City of Orono does hereby approve the plat of Orono Ambar, Hennepin County, Minnesota and grants General Development Plan Approval for Planned Unit Development No. 2, subject to the following conditions: 1. General Development Plan Approval is granted subject to conditions established within Resolution 4619 and subject to the conditions established within the Development Agreement, PUD 2A and 2B Agreements, TIF financing documents, and other pertinent documents. 2. Upon the final approval and execution of the the resolution approving the plat of Orono Ambar, the City Council of Orono shall formally approve an ordinance amending the official zoning map of the City to rezone Lot 1,Orono Ambar from B-1 Retail Sales Business District to B-6 Highway Commercial District, and to rezone Lot 2, Orono Ambar, from B-1 Retail Sales Business District to RPUD Residential Planned Unit Development District,and amending the Orono Zoning Code by adding language establishing Planned Unit Development No. 2 (PUD-2) to include Lots 1 and 2, Orono Ambar. 3. Upon execution of the final plat of Orono Ambar, the City Council shall direct the Mayor and Clerk to execute other documents required by this subdivision and PUD rezoning, including but not limited to the following: "Development Agreement Relating to Orono Woods Apartments (Including Tax Increment Financing District No. 1-1)Between City of Orono,Orono Housing and Redevelopment Authority and Orono Senior Housing , LLC"; "Planned Unit Development No. 2A Agreement for Orono Ambar Office Building"; "Planned Unit Development No. 2B Agreement for Page 4 of 6 Orono Woods Apartments"; and any documents related to the TIF financing and issuance of the Multifamily Senior Housing Revenue Bonds. 4. Final building design plans for the Office building on Lot 1 (Phase 2)shall be subject to City Council review and approval prior to issuance of permits for said building. 5. The aforesaid plat shall be filed by the City of Orono with the Hennepin County Registrar of Titles Office on or before , 2002 together with a certified original copy of this resolution and executed copies of the agreements, easements, and covenants pertinent thereto. FURTHER, BE IT RESOLVED that the City Council hereby declares that the conditions of Resolution No. vacating an existing unused sanitary sewer easement within Outlot F, Sugar Woods, have been fulfilled, and said vacation shall be effective upon filing of Resolution No. with the Hennepin County Registrar of Titles Office. The approval granted by this Resolution shall expire if the plat has not been filed by the date specified above. In that event, it will be necessary to file a new application with the City of Orono for subdivision review. Page 5 of 6 Adopted by the City Council of Orono this day of , 2001. ATTEST: Linda S. Vee, City Clerk Barbara A. Peterson, Mayor STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on this day of ,2001 by Barbara A. Peterson and Linda S. Vee, Mayor and City Clerk of the City of Orono, a Minnesota municipal corporation, and said instrument was executed on behalf of the City. Notary Public Page 6 of 6 ORDINANCE NO. , SECOND SERIES AN ORDINANCE AMENDING THE MUNICIPAL CODE OF ORONO AND AMENDING THE OFFICIAL ZONING MAP BY REZONING PROPERTY WITHIN OUTLOT F, SUGAR WOODS, HENNEPIN COUNTY,MINNESOTA FROM B-1 RETAIL SALES BUSINESS DISTRICT TO B-6 HIGHWAY COMMERCIAL DISTRICT OR RPUD RESIDENTIAL PLANNED UNIT DEVELOPMENT DISTRICT AND ADDING SECTION 10.53 SUBDIVISION 9 REGARDING PLANNED UNIT DEVELOPMENT NO. 2 - FILE #2640 WHEREAS, the City of Orono is a municipal corporation organized and existing under the laws of the State of Minnesota; and WHEREAS, the City Council of the City of Orono has approved the replatting of Outlot F, Sugar Woods, Hennepin County, Minnesota into Lots 1 and 2, Orono Ambar, Hennepin County, Minnesota; and WHEREAS,the City Council has approved the rezoning of said Lots 1 and 2 per the findings, terms and conditions of Resolution No. adopted , 2001, and the ceratin PUD Agreement between Dunbar Development Corporation and the City of Orono dated , 2001. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ORONO DOES HEREBY ORDAIN: Section 1. The Municipal Code of Orono is amended by amending the official zoning map and zoning district boundaries for the property described as follows: Lot 1, Block 1, Orono Ambar, Hennepin County, Minnesota. Said property is hereby rezoned from B-1 Retail Sales Business District to B-6 Highway Commercial District. Section 2. The Municipal Code of Orono is amended by amending the official zoning map and zoning district boundaries for the property described as follows: Lot 2, Block 1, Orono Ambar, Hennepin County, Minnesota. Said property is hereby rezoned from B-1 Retail Sales Business District to RPUD Residential Planned Unit Development District. Page 1 of 3 Section 3. The Municipal Code of Orono is amended by adding Section 10.53, Subd.9 to read as follows: "Subd. 9. PLANNED UNIT DEVELOPMENT NO. 2 - DUNBAR PUD: A. Legal Description. The PUD is legally described as Lots 1 and 2, Block 1, Orono Ambar, Hennepin County, Minnesota. B. Lot 1, Block 2, Orono Ambar when referenced individually shall be hereinafter referred to as PUD NO.2A. Lot 2,Block 1,Orono Ambar when referenced individually shall be hereinafter referenced as PUD NO. 2B. C. Incorporated herein by reference are the DUNBAR PUD plans received by the City on , 2001, on file in the Office of the Zoning Administrator under File#2640/2641. D. Allowable Uses. The uses allowed in the PUD are as follows: 1) Uses allowed in PUD NO. 2A are any permitted or accessory uses allowed in the B-6 Highway Commercial District. 2) Uses allowed in PUD NO. 2B include the following: a) Senior independent living housing,limited to one(1)building, subject to the performance standards of the RPUD Zoning District and as further limited within City Council Resolution No. on file in the Office of the Zoning Administrator under File #2640/2641. b) Any accessory use as regulated in the RPUD District, except as further limited within City Council Resolution No. on file in the Office of the Zoning Administrator under File #2640/2641. E. Development Standards. Development standards shall be as indicated on the approved PUD General Development Plan as documented within City Council Resolution No. on file in the Office of the Zoning Administrator under File #2640/2641." Page 2 of 3 Section 4. This ordinance shall be published in The Laker and The Pioneer newspaper and shall be effective upon publication. Adopted by the City Council of the City of Orono, Minnesota at a regular meeting held on the 8th day of October, 2001 by a vote of ayes and nays. ATTEST: Barbara A. Peterson, Mayor Linda S. Vee, City Clerk Page 3 of 3 SEP-24-2001 10 38 MJSK INVESTMENT BANKERS 7638477328 P.01/88 Miller Johnson Steidle!' Kinnard 5500 Wayzata Boulevard 14th Floor Minneapolis, MN 55416 Phone: (763) 542-6000 Fax: (763) 847-7328 Telecopier Cover Sheet DATE: Ti a 1-1I0 TO: ' .. • o . er Ski, gevS 651 LI-6ssa -5-cn vwes C1(1.r(*54-0"+Q._.,I Q5) -a `l q -401 (.0 kuh Moorse, Q ((roil ---) 106 -Ice 00 si-eve, ito51,\DIE->/SftvetA ��'��S (psi -(c-7- sss i2vss Bran 61 -3 q-ss 17 YY n rrt' (0 op-r1 D h -et o 1 q5) -q7---Eig5 CraI S �'irb FROM: n9k. J l'd VA (763) 847- 'r73,)- TOTAL 3,)-TOTAL PAGES TO FOLLOW: 7 COMMENTS: e-e UcseJ Su. vv Met re- r 61S S Ise,- LbAibti bct , The information to follow is of confidential nature and should be delivered to its intended recipient immediately. If you do not receive this fax in its entirety,please call Rhonda at(763)847-7338. SEP-24-2001 10 38 MJSK INVESTMENT BANKERS 7638477328 P.02/88 September 24,2001 $8,070,000' CITY OF ORONO, MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENT PROJECT) SERIES 2001 Summary of Terms Amount: Series A: 57,585,000* Series B (Taxable): $23 ,000* Series C (Subordinate): $250,000* Issuer: The City of Orono, Minnesota (the "City"), a body corporate and politic,will serve as Issuer for the Bonds. Borrower: Orono Senior Housing LLC, a Minnesota limited liability company. The sole member of the Borrower is the Wedum Foundation, a Minnesota not-for-profit corporation, qualified to do business in the State of Minnesota ("Wedum"). Wedum is an organization described in Section 501(c)3 of the Code and exempt from taxation under Section 501(a) of the Code. Trustee: US Bank Trust will serve as the Trustee for the Project. Developer: The Developer for the Project will be Dunbar Development Company, a Minneapolis based limited liability corporation. The Project: The Project to be known as the Orono Senior Living Facility is a 62-unit independent living project to be located in the City of Orono, Minnesota. Use of Proceeds: Bond proceeds will be used for: the construction of the Project, partial funding of the costs of issuing the Bonds, funding of a Debt Service Reserve Fund for the Bonds, and funding capitalized interest during the construction period plus five (5) months. Form of Bond Sale: The Bonds shall be sold on a negotiated sale basis to the retail and institutional marketplace. Managing Underwriter: Miller Johnson Steichen Kinnard shall serve as the exclusive managing underwriter for the structuring and sale of the Bonds. Tax Status: Interest earnings on the Bonds shall be exempt from taxation under Federal law. The Bonds shall not be subject to the Alternative Minimum Tax under Federal tax law. The Bonds will be subject to bank qualification and consequently will be eligible for purchase by banks. 'Preliminary,subject to change. Miller Johnson Steichen Kinnard, Inc. SEP-24-2001 10:38 MJSK INVESTMENT BANKERS 7638477328 P.03/08 Amortization of the Bonds: Series A. The Bonds shall have a 10-year final maturity and shall amortize over a 35-year term schedule. Series B. The Bonds shall amortize in years 2004-2007. Series C. The Bonds shall amortize over 30 years. Interest Rate; Estimated interest rates are as follows: Series A: 6.125% Series B: 8.00% Series C: 9.00% Optional Redemption (Series A&B): The Borrower, with the approval of the Issuer, and at their option may redeem any or all of the outstanding principal of the Bonds on any interest payment date with 60 days prior notice according to the following schedule: Years 1-4 No Optional Redemption Year 5 102% of Par Value Outstanding Year 6 101% of Par Value Outstanding Year 7 and Thereafter Par Mandatory Redemption: The Borrower shall redeem Series C bonds with 50% of excess annual cash flow upon project stabilization_ Annual excess cash flow shall be defined as cash flow after the Series A and Series B Bonds have been paid and after the repair and replacement fund has been funded. Management Contract: The Borrower will enter into a Management Contract with Great Lakes Management Incorporated, a Minnesota for-profit corporation. The Management Contract entered into with Great Lakes will conform to the "Management Contract Rules" as provided for in Federal tax law, without any impairment to the tax-exempt nature of the Bonds. Sources and Uses of Funds: An approximation of the Sources and Uses of Funds for the Project is as follows: Sources: Par Amount of Series A $7,585,000.00 Par Amount of Series B 235,000.00 Par Amount of Series C 250,000.00 Equity Contribution Total Sources: $8,070,000.09 Uses: Underwriter's Discount 195,500.00 Cost of Issuance 194,806.00 Debt Service Reserve Fund 547,828.76 Capitalized Interest Fund(thru 4/1/03) 575,267.76 Project Construction Fund 5,139,780.76, 2 Miller Johnson Steichen Kinnard, Inc. 'SEP-24-2001 10:38 MJSK INVESTMENT BANKERS 7638477328 P.04/08 Land Acquisition 822,000.00 Development Fee 235,000.00 Architectural and Engineering 164,300.00 Furniture, Fixtures&Equipment 73,211.00 Management 70,000.00 501®3 Organizational Costs 50,000.00 Rounding Amount 2,305.72 Total Uses: $80704000.00 Operating Deficits Guarantee: The Borrower shall provide an Operating Deficit Guarantee in the form of cash or a Letter of Credit in an amount equal to $250,000. The Trustee may draw on this Guarantee after the Project Stabilization Account has been exhausted and, in the event that the revenue from operations of the Project are insufficient to pay operational expenses and debt service on the Bonds. This Guarantee will expire upon twenty-four months of continuous operations of the Project at a debt service coverage ratio of 1.15x. Debt Service Reserve Fund: A Debt Service Reserve Fund will be created and funded from Bond proceeds in an amount equal to the average one year principal and interest payment on the Bonds. The Debt Service Reserve Fund will be held by the Trustee for the benefit of the Bondholders and invested to the benefit of the Borrower. Security for the Bonds (Series A&B): The Bonds will be secured as follows: • First security interest and mortgage on the property including the land, building and personal property associated with the Project. • The City of Orono will hold title to the land and ground lease the property to the borrower for 99 years. The annual ground lease payment shall be $1.00. • City of Orono Tax Increment assistance. • Debt Service Reserve Fund as described above. • Operating Deficits Guarantee as described above. • An assignment of the Management Contract and any and all operating licenses and permits which may be assigned under Minnesota State Law. 3 Miller Johnson Steichen Kinnard, Inc. SEP-24-2001 10:38 MJSK INUESTMENT BANKERS 7638477328 P.05/08 Security for the Bonds (Series C): The Bonds will be secured as follows: • A second mortgage on the Project. • Payment on the Series C Bonds will be subordinate to the Series A&B. Financial Covenants/ Conditions Precedent To Closing: • Maintenance of 501(c) (3)tax-exempt statues. • The Borrower shall maintain all excess project cash flows in an operating reserve fund until the balance equals $275,000. • Provision for additional bonds only in event of a nationally recognized feasibility consultant study which shows combined pro forma debt service coverage of 1.20%x minimum for a projected 5 years beyond the sale of the additional debt. • Agreement to provide a rate structure which will insure a 1.10x debt service coverage for the life of the Bonds. • Other financial covenants to be negotiated between the Borrower and the Underwriter. • An MAI appraisal on the land showing a market value of a minimum of$822,000. • A repair and replacement fund requirement equal to $150 per unit per year commencing 24 months after Certificate of Occupancy. 4 Miller Johnson Steichen Kinnard, Inc. SEP-24-2001 10 38 MJSK INUESTMENT BANKERS 7638477328 P.06/08 CITY OF ORONO, MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENTS PROJECT) SERIES 2001 REVISED DISTRIBUTION LIST Phone Fax Owner lames Cooper 651-636-5530 651-633-0312 Shawn Beus 651-636-5530 651-633-0312 Orono SeniorHousing, LLC C/o Wedum Foundation 3191 Shorewood Drive Arden Hills, MN 55112 Jim hoops coop@email.msn.corn shawnbeus@mediaone.nel Owner's Counsel James Christoffel 651-224-0244 651-224-0550 Christoffel & Elliot, P,A. 1111 Piper Jaffray Plaza 444 Cedar Street St. Paul,MN 55101-2129 jchristoffel(c�christoffellaw.corn C Ronald Moorse 952-249-4600 952-249-4616 Michael Gaffron 952-2494600 952-249-4616 City of Orono 2750 Kelley Parkway Orono, MN 55356 Miller Johnson Steichen Kinnard, Inc. SEP-24-2001 10:38 MJSK INVESTMENT BANKERS 7638477328 P.07/08 Phone Fax City/Bond Counsel Stephen Rosholt 612-766-8729 612-766-1600 Steven Likes 612-766-8057 612-766-1600 Faegre & Benson 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 srosholt@faegre.com slikes(@faegre.com City Financial Advisor Russell Fifield 651-697-8506 651-697-8555 Ehlers & Associates 3060 Centre Point Drive Roseville, MN 55113-1105 rustv@ehlers-inc.com Project Coordinator Frank Dunbar 763-377-7090 763-377-7089 Dunbar Development 612-599-9092 (cell) 5000 Glenwood Avenue, Suite 200 Minneapolis, MN 55422 Fcd ddc@visi_com Underwriter David Juran 763-847-7327 763-847-7328 Ralph McGinley 763-847-7322 763-847-7328 Miller Johnson Steichen Kinnard, Inc. 5500 Wayzata Boulevard, Suite 1450 Minneapolis, MN 55416 diuran@mj sk.corn rmcginlev mjsk.corn Miller Johnson Steichen Kinnard, Inc. SEP-24-208i 10.38 MJSK INVESTMENT BANKERS 7638477328 P.08/08 Phone Fax Underwriter's Counsel Morris Knopf 612-341-9714 612-339-5897 Dan Nelson 612-349-5649 612-339-5897 Best &Flanagan LLP 601 Second Avenue South, Suite 4000 Minneapolis, MN 55402 mknopffa,best.law.com dnelson@best.law.com Title To be determined Trustee To be determined Financial Forecast Craig Siiro 952 404-5173 952 473-2195 Virchow Krause 601 Carlson Parkway, Suite 600 Minnetonka, MN 55305 Miller Johnson Steichen Kinnard, Inc. TOTAL P.08 1 7r 7---4---r.•,--4'----- C-7. GmMmm ..... 1 i''' r 4! X 2 Pim g . _ 5W-0. -4 a la u 1 4 g2 co t u, 1 11; -:. . 1 0. _ • .dr----,n --- 1 i-F NI; Ft ,. m __..._ • . ...._ ,-,, -, _,__.1T - .._, . r b ' —r— 1"5 : E 1 § 1 P \ ••• N 5 N A. ot (\ 4 e r 9 4 d. %m 9.1 12111 n 0 1 -.' -* 01'2 • . ..,, I ' ' 1 -, p a,* I, I'. ‘,.t-A.(3 . -Aging "4 #. --1 ..1 iF Ifni a•,,- g —4 : itar ri_. 111 .........._, IP` •.• . wo • g a 4. a .. . 9' • (. i . . •-, .... ... 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