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4.1 Riverbend North 2nd Addition Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Planning City Planner Licht 9 May 2022 PRESENTER(s) REVIEWED BY: ITEM #: City Attorney Kendall City Administrator/Finance Director Flaherty City Attorney Kendall 4.1 – Riverbend North 2nd STRATEGIC VISION MEETS: THE CITY OF OTSEGO: Is a strong organization that is committed to leading the community through innovative communication. Has proactively expanded infrastructure to responsibly provide core services. Is committed to delivery of quality emergency service responsive to community needs and expectations in a cost-effective manner. X Is a social community with diverse housing, service options, and employment opportunities. Is a distinctive, connected community known for its beauty and natural surroundings. AGENDA ITEM DETAILS RECOMMENDATION: City staff recommends approval of a development contract, an amended and restated TIF development agreement, assignment of tax increment notes and release of a development agreement. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? Yes Yes, held by Planning Commission 6 December 2021. BACKGROUND/JUSTIFICATION: The River’s Edge Apartments, located at 7701 River Road, was approved by the City Council on 23 July 2018. The proposed development includes 164 apartment dwelling units to be constructed in two phases. The initial phase of 97 units has been completed and occupied and the property owner, Otsego Apartments II, LLC, is proceeding with construction of Phase 2 consisting of 67 units. The property owner is pursing financing for Phase 2 that is separate from Phase 1 and necessitates subdivision of the lot with the building into two unit lots. The proposed subdivision of Lot 1, Block 1, Riverbend North into two unit lots requires consideration of a PUD Development Stage Plan amendment and a preliminary/final plat, and vacation of existing drainage and utility easements. There are no additional public improvements to be constructed as a result of the subdivision of the property into two unit lots. The Planning Commission held a public hearing on 6 December 2021 to consider the application and voted to recommend approval. The City Council approved the applications at their meeting on 24 January 2022 subject to execution of a development contract. In February 2022, the Developer met with and informed City staff that the previously approved development contract and first amendment to the TIF development agreement needed further modifications to meet financing requirements and formation of a new entity to develop phase two. The respective development contract, approved by Resolution 2022-14 and first amendment to the TIF development agreement approved by Resolution 2022-15 have not been executed or recorded and will become superseded by the new documents pending City Council approvals at this meeting. The City Attorney has drafted a revised development contract regarding the proposed final plat to bring forward the requirements of the initial final plat approval and conditions and establish provisions specific to the current application. City staff has reviewed the status of the Phase 1 development, noting that all requirements have been met by the Developer and that there is no longer a need to have the respective development agreement recorded against the property. The City Attorney has drafted a release of development agreement for Phase 1 and will be executed by City staff pending City Council approvals. The City and Developer entered a TIF Development Agreement for the construction of the apartment building phases and mini storage within Riverbend North. The City’s TIF Counsel (Mary Ippel, Taft) has drafted an Amended and Restated TIF Development Agreement that memorializes similar changes to the land use development contract such as developer entity and description of development property. One additional change provides for the construction of Phase 2 to be completed by December 31, 2023, which is an additional six months compared to the original TIF Development Agreement. In exchange for this extension, the Developer has agreed to remove language for unavoidable delays. Related to the TIF Development Agreement, the City’s TIF Counsel has drafted Assignment of Tax Increment Revenue Notes documents. There are two assignment documents, the first assigning the revenue notes from the Phase 1 developer (Otsego Apartments, LLC) to the Phase 2 developer (Otsego Apartments II, LLC). The second assignments are from the Phase 2 developer (Otsego Apartments II, LLC) to their financial institution (Wings Financial). Section 10-5-3.B.8 of the Subdivision Ordinance requires that final plats be recorded within 100 days of approval of the development contract addendum and TIF agreement addendum by the City Council. SUPPORTING DOCUMENTS ATTACHED: ▪ Resolution 2022-43 approving a Development Contract ▪ Development Contract ▪ Release of Development Agreement (Phase 1) ▪ Resolution 2022-44 authorizing Amended and Restated TIF Development Agreement ▪ Amended and Restated TIF Development Agreement ▪ Assignment of TIF Notes from Otsego Apartments, LLC to Otsego Apartments II, LLC ▪ Assignment of TIF Notes from Otsego Apartments II, LLC to Wings Financial Credit Union POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: Motion to adopt Resolution 2022-43 approving a development contract; to authorize City staff to execute release of development agreement; and adopt Resolution 2022-44 authorizing execution of an amended and restated TIF development agreement and two assignments of tax increment notes. BUDGET INFORMATION FUNDING: BUDGETED: N/A N/A 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2022-43 APPROVING A DEVELOPMENT CONTRACT FOR RIVERBEND NORTH SECOND ADDITION WHEREAS, Otsego Apartments II, LLC (the “developer”) is proposing platting of the Riverbend North Second Addition final plat; and WHEREAS, a final plat was approved by the City Council on 24 January 2022; and WHEREAS, Section 10-10-4.A of the Subdivision Ordinance requires the developer to enter into a development contract to provide the City construction and warranty securities for the public and private improvements and to provide the City various remedies in the event that the developer breaches the terms and conditions of said contract; and WHEREAS, those obligations are outlined and memorialized in the attached Development Contract. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA THAT: 1. The Development Contract attached hereto between the City of Otsego and Otsego Apartments II, LLC is hereby approved in form subject to modification of fees, charges, and securities as approved by City staff. 2. The Mayor and City Clerk are hereby authorized to execute the Development Contract on behalf of the City of Otsego. 2 ADOPTED by the City Council of the City of Otsego this 9th day of May, 2022. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk 1 219911v9 Riverbend North Second Addition (reserved for recording information) DEVELOPMENT CONTRACT (Developer Installed Improvements) RIVERBEND NORTH SECOND ADDITION CONTRACT dated ____________________, 2022, by and between the CITY OF OTSEGO, a Minnesota municipal corporation (“City”), and OTSEGO APARTMENTS II, LLC, a Minnesota limited liability company (the “Developer”). 1. REQUEST FOR PLAT APPROVAL. The Developer has asked the City to approve a plat for RIVERBEND NORTH SECOND ADDITION (referred to in this Contract as the "plat"). The land is situated in the County of Wright, State of Minnesota, and is legally described as: Lot 1, Block 1, Riverbend North Addition, Wright County, Minnesota, according to the recorded plat thereof (“Original Lot”). 2. CONDITIONS OF PLAT APPROVAL. The City hereby approves the plat on condition that the Developer enter into this Contract, furnish the security required by it, and record the plat with the County Recorder or Registrar of Titles within 100 days after the City Council approves the final plat. The plat further subdivides the Original Lot into two parcels to be known as Lot 1, Block 1, Riverbend North Second Addition (“Phase 1 Lot”) and Lot 2, Block 1, Riverbend North Second Addition (“Phase 2 Lot”). The Phase I Lot has been improved with 97-Unit apartment building according to the terms and conditions of 2 219911v9 Riverbend North Second Addition Development Agreement Riverbend North Addition (the “Phase I Development Agreement”) dated January 28, 2019 recorded February 6, 2019 as Document No. A1389279 by and between Otsego Apartments, LLC (“OA”), Otsego Mini Storage, LLC (“OMS”), and the City. The City approved development of the Original Lot as a planned unit development according to the Phase I Development Agreement. Developer intends to construct on the Phase 2 Lot what is described as Phase 2 in the Phase I Development Agreement. This Agreement shall only encumber the Phase 2 Lot. 3. RIGHT TO PROCEED. Within the plat or land to be platted, the Developer may not grade or otherwise disturb the earth or remove trees, unless a grading permit has been approved by the City Engineer following approval of a preliminary plat by the City Council, construct sewer lines, water lines, streets, utilities, public or private improvements, or any buildings until all the following conditions have been satisfied: 1) this contract has been fully executed by both parties and filed with the City Clerk, 2) the necessary security has been received by the City, 3) the necessary insurance for the Developer and its construction contractors has been received by the City, and 4) the plat has been filed with the Wright County Recorder or Registrar of Titles’ office. 4. PHASED DEVELOPMENT. The City acknowledges that OA and OMS have completed the Phase I Improvements under the Phase 1 Development Agreement and this Agreement controls the development of the Phase 2 Lot and any subsequent subdivisions or phases thereof. The Developer shall install all listed improvements for Phase 2 by June 30, 2023, provided that the deadline shall be extended for each day of Unavoidable Delay. For purposes of this Section, “Unavoidable Delays” means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, delays in delivery of materials for the construction of the Project, the soil conditions of the Development Property, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the City) which directly result in delays. 3 219911v9 Riverbend North Second Addition The City may refuse to approve final plats of subsequent phases if the Developer has breached this Contract and the breach has not been remedied. Development of any subsequent phases may not proceed until Development Contracts for such phases are approved by the City. Park dedication charges referred to in this Contract are not being imposed on outlots, if any, in the plat that are designated in an approved preliminary plat for future subdivision into lots and blocks. Such charges will be calculated and imposed when the outlots are final platted into lots and blocks. 5. PRELIMINARY PLAT STATUS. If the plat is a phase of a multi-phased preliminary plat, the preliminary plat approval for all phases not final platted shall lapse and be void unless final platted into lots and blocks and outlots, within two (2) years after preliminary plat approval. 6. CHANGES IN OFFICIAL CONTROLS. For five (5) years from the date of this Contract, no amendments to the City’s Comprehensive Plan or official controls shall apply to or affect the use, development density, lot size, lot layout or dedications of the approved plat unless required by state or federal law or agreed to in writing by the City and the Developer. Thereafter, notwithstanding anything in this Contract to the contrary, to the full extent permitted by state law, the City may require compliance with any amendments to the City’s Comprehensive Plan, official controls, platting or dedication requirements enacted after the date of this Contract. 7. DEVELOPMENT PLANS. The Phase 2 Lot of the plat shall be developed in accordance with the following plans by the Developer. The plans shall not be attached to this Contract. The plans may be prepared, subject to the City Engineer’s approval, after entering the Contract, but before commencement of any work in the plat. The City Engineer may approve minor amendments to Plans without City Council approval. If the plans vary from the written terms of this Contract, the written terms shall control. The plans are: Plan A – Plat Plan B – Phase 2 of the Development Plans described in the Phase I Development Agreement Plan C - Final Grading, Drainage, and Erosion Control Plan 4 219911v9 Riverbend North Second Addition Plan D - Landscape Plan 8. IMPROVEMENTS. The Developer shall install and pay for the following on the Phase II Lot, to the extent not previously installed and paid for under the Phase I Development Agreement: A. Sanitary Sewer System B. Water System C. Storm Sewer System D. Streets E. Concrete Curb and Gutter F. Street Lights G. Site Grading, Stormwater Treatment/Infiltration Basins, and Erosion Control H. Underground Utilities I. Setting of Iron Monuments J. Surveying and Staking K. Sidewalks and Trails L. Retaining Walls M. Landscaping The improvements, if any, shall be installed in accordance with the City subdivision ordinance; City standard specifications for utility and street construction; and any other ordinances including Chapter 6 of the City Code concerning erosion and sediment control. To the extent not already installed under the Phase I Development Agreement, the Developer shall submit plans and specifications which have been prepared by a competent Minnesota registered professional engineer to the City for approval by the City Engineer. If applicable, the Developer shall instruct its engineer to provide adequate field inspection personnel to assure an acceptable level of quality control to the extent that the Developer’s engineer will be able to certify that the construction work meets the approved City standards as a condition of City acceptance. In addition, the City may, at the City’s discretion and at the Developer’s expense, have one or more City inspectors and a soil engineer inspect the work on a full or part-time basis. The Developer, its 5 219911v9 Riverbend North Second Addition contractors and subcontractors, shall follow all instructions received from the City’s inspectors. The Developer’s engineer shall provide for on-site project management. The Developer’s engineer is responsible for design changes and contract administration between the Developer and the Developer’s contractor. The Developer or its engineer shall schedule a pre-construction meeting at a mutually agreeable time at the City with all parties concerned, including the City staff, to review the program for the construction work. Within thirty (30) days after the completion of the improvements and before the security is released, the Developer shall supply the City with a complete set of reproducible “as-constructed” plans and an electronic file of the “as-constructed” plans in an AutoCAD .DWG file or a .DXF file, all prepared in accordance with City standards. In accordance with Minnesota Statutes 505.021, the final placement of iron monuments for all lot corners must be completed before the applicable security is released. The Developer’s surveyor shall also submit a written notice to the City certifying that the monuments have been installed following site grading, utility and street construction. 9. CONTRACTORS/SUBCONTRACTORS. City Council members, City employees, and City Planning Commission members, and corporations, partnerships, and other entities in which such individuals have greater than a 25% ownership interest or in which they are an officer or director may not act as contractors or subcontractors for the public improvements, if any, identified in Paragraph 8 above. 10. PERMITS. The Developer shall obtain or require its contractors and subcontractors to obtain all necessary permits, which may include: A. Wright County for County Road Access and Work in County Rights-of-Way B. MnDot for State Highway Access C. MnDot for Work in Right-of-Way D. Minnesota Department of Health for Watermains E. MPCA NPDES Permit for Construction Activity F. MPCA for Sanitary Sewer and Hazardous Material Removal and Disposal G. DNR for Dewatering H. City of Otsego for Building Permits, Retaining Walls, Irrigation I. MDH for water permits J. MPCA for sewer extension 6 219911v9 Riverbend North Second Addition 11. DEWATERING. Due to the variable nature of groundwater levels and stormwater flows, it will be the Developer’s and the Developer’s contractors and subcontractors responsibility to satisfy themselves with regard to the elevation of groundwater in the area and the level of effort needed to perform dewatering and storm flow routing operations. All dewatering shall be in accordance with all applicable county, state, and federal rules and regulations. DNR regulations regarding appropriations permits shall also be strictly followed. 12. TIME OF PERFORMANCE. The Developer shall install all required public improvements by June 30, 2023. 13. LICENSE. The Developer hereby grants the City, its agents, employees, officers and contractors a license to enter the plat to perform all work and inspections deemed appropriate by the City in conjunction with plat development on the Phase 2 Lot. 14. EROSION CONTROL. Prior to initiating site grading, the erosion control plan, Plan B, shall be implemented by the Developer and inspected and approved by the City. The City may impose additional erosion control requirements if they would be beneficial. All areas disturbed by the grading operations shall be stabilized per the MPCA Stormwater Permit for Construction Activity. Seed shall be in accordance with the City’s current seeding specification which may include temporary seed to provide ground cover as rapidly as possible. All seeded areas shall be fertilized, mulched, and disc anchored as necessary for seed retention. The parties recognize that time is of the essence in controlling erosion. If the Developer does not comply with the MPCA Stormwater Permit for Construction Activity or with the erosion control plan and schedule or supplementary instructions received from the City, the City may take such action as it deems appropriate to control erosion. The City will endeavor to notify the Developer in advance of any proposed action, but failure of the City to do so will not affect the Developer’s and City’s rights or obligations hereunder. If the Developer does not reimburse the City for any cost the City incurred for such work within ten (10) days, the City may draw down the letter of credit to pay any costs. No development, 7 219911v9 Riverbend North Second Addition utility or street construction on the Phase 2 Lot will be allowed and no building permits will be issued unless the plat is in full compliance with the approved erosion control plan. 15. GRADING. The Phase 2 Lot shall be graded in accordance with the approved grading development and erosion control plan, Plan “B”. The plan shall conform to City of Otsego specifications. Within thirty (30) days after completion of the grading and before the City approves individual building permits (except three (3) model home permits on lots acceptable to the Building Official), the Developer shall provide the City with an “as-constructed” grading plan for the Phase 2 Lot, if applicable, certified by a registered land surveyor or engineer that all storm water treatment/infiltration basins and swales, have been constructed on public easements or land owned by the City. The “as-constructed” plan, if applicable, shall include field verified elevations of the following: a) cross sections of storm water treatment/infiltration basins; b) location and elevations along all swales, wetlands, wetland mitigation areas if any, locations and dimensions of borrow areas/stockpiles, and installed “conservation area” posts; and c) lot corner elevations and house pads, and all other items listed in City Code. The City will withhold issuance of building permits until the approved certified grading plan is on file with the City and all erosion control measures are in place as determined by the City Engineer. Before a building permit is issued, a cash escrow shall be furnished to the City in accordance with the City’s current fee schedule to guarantee compliance with the erosion control and grading requirements and the submittal of an as-built certificate of survey. If the final grading, erosion control and as-built survey is not timely completed, the City may enter the Phase 2 Lot, perform the work, and apply the cash escrow toward the cost. Upon satisfactory completion of the grading, erosion control and as- built survey, the escrow funds, without interest, less any draw made by the City, shall be returned to the person who deposited the funds with the City. A certified as-built building pad survey must be submitted and approved for commercial, industrial or institutional developments prior to issuance of a building permit. 16. CLEAN UP. The Developer shall clean dirt and debris from streets that has resulted from construction work by the Developer, home builders, subcontractors, their agents or assigns. Prior to any 8 219911v9 Riverbend North Second Addition construction in the plat, the Developer shall identify in writing a responsible party and schedule for erosion control, street cleaning, and street sweeping. 17. OWNERSHIP OF IMPROVEMENTS. Upon completion of the work and construction required by this Contract and final acceptance by the City, the improvements lying within public easements shall become City property without further notice or action. 18. LATERAL AND TRUNK SANITARY SEWER. The Developer shall pay to the City the required water availability charges and sanitary sewer availability charges. The water and sewer availability charges shall be collected according to Section 8-1-6-B of City Code including 9.0 RECs per gross acre for multiple family uses and 3.5 RECs per gross acre for commercial, industrial, or institutional uses. The Developer shall pay a cash fee in the amount of $81,270.45 for the Sewer Availability Charge (“SAC”) at the time a building permit is issued which is calculated as follows: 9.0du/ac. X 3.13ac. X $2,885.00 = $81,270.45 19. TRUNK WATERMAIN. The Developer shall pay a cash fee in the amount of $56,734.38 for the Water Availability Charge (“WAC”) at the time a building permit is issued which is calculated as follows: 9.0du/ac. X 3.13ac. X $2,014.00 = $56,734.38 20. SEWER CONNECTION CHARGE AND WATER CONNECTION CHARGE. The Developer shall pay to the City required water and sewer connection charges. The water and sewer connection charges shall be collected per Section 8-1-6-C of City Code for all uses and must be paid prior to the issuance of a Certificate of Occupancy based on the fee schedule in effect at the time of application for the Certificate of Occupancy. 21. CONSTRUCTION ACCESS. Construction traffic access and egress for grading, public utility construction, and public street construction is restricted to access the Phase 2 Lot as approved by the City Engineer. 9 219911v9 Riverbend North Second Addition 22. PARK DEDICATION. The Developer shall pay a cash contribution of $271,819.00 in satisfaction of the City’s park dedication requirements for the Phase 2 Lot. The charge is calculated as follows: 67 units X $4,057.00 per unit = $271,819.00 23. LANDSCAPING. Before a building permit is issued for Phase 2, a cash escrow for the Phase 2 Lot shall be furnished to the City in accordance with the City’s current fee schedule to guarantee compliance with the approved landscaping plan requirements. If the landscaping is not completed in a timely manner, the City may enter the lot, perform the work, and apply the cash escrow toward the cost. Upon satisfactory completion of the landscaping the escrow funds, without interest, less any draw made by the City, shall be returned to the person who deposited the funds with the City. All trees shall be warranted to be alive, of good quality, and disease free for twelve (12) months after planting. Any replacements shall be warranted for twelve (12) months from the time of planting. The Developer or property owner is responsible for contacting the City when all the landscaping has been installed to set up an inspection. Fifty percent (50%) of the security will be released when all the landscaping has been installed and inspected by City staff and the remaining fifty percent (50%) will be released one year after the landscaping inspection and any warranty work has been completed. 24. SPECIAL PROVISIONS. The following special provisions shall apply to development on the Phase 2 Lot: A. Implementation of the conditions relating to Phase II that are listed in the Findings of Fact approved by the City Council on January 24, 2022, and not previously satisfied within the Phase I Improvements. B. The plans, standards, and conditions approved with the Riverbend North PUD Development Stage Plan on July 23, 2018 shall remain in full force and effect except as modified specifically herein. C. All grading, drainage, and erosion control plans shall be subject to review and approval of the City Engineer. 10 219911v9 Riverbend North Second Addition D. All easements for Phase II are subject to review and approval of the City Engineer. E. All building plans related to common wall construction between Phase I and Phase II shall be subject to review and approval of the Building Official. F. The Developer shall pay utility availability charges deferred for Riverbend North Second Addition, prior to issuance of a building permit for Phase II based on the Fee Schedule in effect at the time of payment. G. The Developer shall pay utility connection charges for Riverbend North Second Addition at the time a building permit for Phase II is issued based on the Fee Schedule in effect at the time of final plat approval. H. The Developer shall satisfy the deferred park dedication fee in lieu of land with a cash payment in the amount of $271,819.00. I. The Developer and OA shall execute and record an agreement addressing shared responsibilities for the ownership and maintenance of Phases 1 and 2 of the Riverbend North Planned Unit Development District, subject to review and approval of the City Attorney. J. The final plat shall be recorded within 100 days of City Council approval. K. Prior to City Council issuance of a building permit, the Developer shall furnish a boundary survey of the Phase 2 Lot to be platted with all property corner monumentation in place and marked with lath and a flag. Any encroachments on or adjacent to the Phase 2 Lot shall be noted on the survey. The Developer's land surveyor certifies that all irons have been set following site grading and utility and street construction. In addition, the certificate of survey must also include a certification that all irons for a specific lot have either been found or set prior to the issuance of a building permit for that lot. L. The Developer shall provide for the preparation of record construction drawings and City base map updating by the City Engineer. This fee is $100.00 per acre for a total charge of $313.00, calculated as follows: 3.13 Acres X $100.00 = $313.00 11 219911v9 Riverbend North Second Addition M. The Developer is required to submit the final plat in electronic format. The electronic format shall be either AutoCAD.DWG file or a .DXF file. All construction record drawings (e.g., grading, utilities, streets) shall be in electronic format in accordance with standard City specifications. N. The Developer is required to submit the final plat in electronic format. The electronic format shall be either AutoCAD.DWG file or a .DXF file. All construction record drawings (e.g., grading, utilities, streets) shall be in electronic format in accordance with standard City specifications. O. The Developer shall install street lighting, to the extent not installed as part of the Phase I Improvements, within the final plat in accordance with Title 8, Chapter 8, of the City Code with payment of charges as established in accordance with the City Fee Schedule, subject to review and approval of the City Engineer. 25. SUMMARY OF CASH REQUIREMENTS. The following is a summary of the cash requirements under this Contract which must be furnished to the City prior to issuance of a building permit: A. Trunk Sewer Availability Charge (SAC) $81,270.45 B. Trunk Water Availability Charge (WAC) 56,734.38 C. Park Dedication 271,819.00 TOTAL CASH REQUIREMENTS $409,823.83 ESCROW A. City Legal Expenses (Minimum $1,500.00) $1,500.00 B. City Construction Observation (Minimum $10,000.00) 10,000.00 C. GIS Data Entry 313.00 ESCROW TOTAL $11,813.00 26. RESPONSIBILITY FOR COSTS. A. Except as otherwise specified herein, the Developer shall pay all costs incurred by it or the City in conjunction with the development of the plat, including but not limited to Soil and Water Conservation District charges, legal, planning, engineering and construction observation 12 219911v9 Riverbend North Second Addition inspection expenses incurred in connection with approval and acceptance of the plat, the preparation of this Contract, review of construction plans and documents, and all costs and expenses incurred by the City in monitoring and inspecting development of the plat. B. The Developer shall hold the City and its officers, employees, and agents harmless from claims made by itself and third parties for damages sustained or costs incurred resulting from plat approval and development. The Developer shall indemnify the City and its officers, employees, and agents for all costs, damages, or expenses which the City may pay or incur in consequence of such claims, including attorneys' fees. C. The Developer shall reimburse the City for costs incurred in the enforcement of this Contract, including engineering and attorneys' fees. D. The Developer shall pay, or cause to be paid when due, and in any event before any penalty is attached, all special assessments referred to in this Contract. This is a personal obligation of the Developer and shall continue in full force and effect even if the Developer sells one or more lots, the entire plat, or any part of it. E. The Developer shall pay in full all bills submitted to it by the City for obligations incurred under this Contract within thirty (30) days after receipt. If the bills are not paid on time, the City may halt plat development and construction under Phase 2 until the bills are paid in full. Bills not paid within thirty (30) days shall accrue interest at the rate of eighteen percent (18%) per year. Additionally, the Developer shall pay in full all bills submitted to it by the City prior to any reductions in the security for the development. F. In addition to the charges and special assessments referred to herein, other charges and special assessments may be imposed such as but not limited to sewer availability charges ("SAC"), City water connection charges, City sewer connection charges, and building permit fees. 27. DEVELOPER’S DEFAULT. In the event of default by the Developer as to any of the work to be performed by it hereunder, the City may, at its option, perform the work and the Developer shall 13 219911v9 Riverbend North Second Addition promptly reimburse the City for any expense incurred by the City, provided the Developer, except in an emergency as determined by the City, is first given notice of the work in default, not less than forty-eight (48) hours in advance. This Contract is a license for the City to act, and it shall not be necessary for the City to seek a Court order for permission to enter the land. When the City does any such work, the City may, in addition to its other remedies, assess the cost in whole or in part. 28. MISCELLANEOUS. A. The Developer represents to the City that the plat complies with all city, county, state, and federal laws and regulations, including but not limited to: subdivision ordinances, zoning ordinances, and environmental regulations. If the City determines that the plat does not comply, the City may, at its option, refuse to allow construction or development work in the Phase 2 Lot until the Developer does comply. Upon the City's demand, the Developer shall cease work until there is compliance. B. Third parties shall have no recourse against the City under this Contract. C. Breach of the terms of this Contract by the Developer shall be grounds for denial of building permits for the Phase 2 Lot, including lots sold to third parties. D. If any portion, section, subsection, sentence, clause, paragraph, or phrase of this Contract is for any reason held invalid, such decision shall not affect the validity of the remaining portion of this Contract. E. Grading, curbing, and one lift of asphalt shall be installed on all public and private streets prior to issuance of any building permits. F. If building permits are issued prior to the acceptance of public improvements, the Developer assumes all liability and costs resulting in delays in completion of public improvements and damage to public improvements caused by the City, the Developer, its contractors, subcontractors, material men, employees, agents, or third parties. No sewer and water connections or inspections may be conducted for the Phase 2 Lot and no one may occupy a building on the Phase 2 Lot for which a building permit is issued on either a temporary or 14 219911v9 Riverbend North Second Addition permanent basis until the streets needed for access have been paved with a bituminous surface and the utilities are accepted by the City Engineer. G. The action or inaction of the City shall not constitute a waiver or amendment to the provisions of this Contract. To be binding, amendments or waivers shall be in writing, signed by the parties and approved by written resolution of the City Council. The City's failure to promptly take legal action to enforce this Contract shall not be a waiver or release. H. This Contract shall run with the land and may be recorded against the title to the property. In the event this Contract is recorded, upon request by Developer, the City covenants to provide a recordable Certificate of Completion within a reasonable period of time following the request, upon the completion of the work and responsibilities required herein, payment of all costs and fees required and compliance with all terms of the Contract. A release of this Contract may be provided in the same manner and subject to the same conditions as a Certificate of Com pletion provided there are no outstanding or ongoing obligations of the Developer under the terms of this Contract. The Developer covenants with the City, its successors and assigns, that the Developer or its affiliate OA is well seized in fee title of the property being final platted and/or has obtained consents to this Contract, in the form attached hereto, from all parties who have an interest in the property; that there are no unrecorded interests in the property being final platted; and that the Developer will indemnify and hold the City harmless for any breach of the foregoing covenants. I. Insurance. Prior to execution of the final plat, Developer and its general contractor shall furnish to the City a certificate of insurance showing proof of the required insurance required under this Paragraph. Developer and its general contractor shall take out and maintain or cause to be taken out and maintained until six (6) months after the City has finally accepted the public improvements, if any, such insurance as shall protect Developer and its general contractor and the City for work covered by this Contract including workers’ compensation claims and property damage, bodily and personal injury which may arise from operations 15 219911v9 Riverbend North Second Addition under this Contract, whether such operations are by the Developer and its general contractor or anyone directly or indirectly employed by either of them. The minimum amounts of insurance shall be as follows: Commercial General Liability (or in combination with an umbrella policy) $2,000,000 Each Occurrence $2,000,000 Products/Completed Operations Aggregate $2,000,000 Annual Aggregate The following coverages shall be included: Premises and Operations Bodily Injury and Property Damage Personal and Advertising Injury Blanket Contractual Liability Products and Completed Operations Liability Automobile Liability $2,000,000 Combined Single Limit – Bodily Injury & Property Damage Including Owned, Hired & Non-Owned Automobiles Workers Compensation Workers’ Compensation insurance in accordance with the statutory requirements of the State of Minnesota, including Employer’s Liability with minimum limits are as follows: • $500,000 – Bodily Injury by Disease per employee • $500,000 – Bodily Injury by Disease aggregate • $500,000 – Bodily Injury by Accident The Developer’s and general contractor’s insurance must be “Primary and Non-Contributory”. All insurance policies (or riders) required by this Contract shall be (i) taken out by and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State of Minnesota, (ii) shall name the City, its employees and agents as additional insureds (CGL and umbrella only) by endorsement which shall be filed with the City and (iii) shall identify the name of the plat. A copy of the endorsement must be submitted with the certificate of insurance. Developer’s and general contractor’s policies and Certificate of Insurance shall contain a provision that coverage afforded under the policies shall not be cancelled without at least thirty (30) days’ advanced written notice to the City, or ten (10) days’ notice for non-payment of premium. 16 219911v9 Riverbend North Second Addition An Umbrella or Excess Liability insurance policy may be used to supplement the Developer’s or general contractor’s policy limits on a follow-form basis to satisfy the full policy limits required by this Contract. J. Indemnification. To the fullest extent permitted by law, the Developer agrees to defend, indemnify and hold harmless the City, and its employees, officials, and agents from and against all claims, actions, damages, losses and expenses, including reasonable attorney fees, arising out of Developer’s negligence or its performance or failure to perform its obligations under this Contract. The Developer’s indemnification obligation shall apply to Developer’s general contractor, subcontractor(s), or anyone directly or indirectly employed or hired by the Developer, or anyone for whose acts the Developer may be liable. The Developer agrees this indemnity obligation shall survive the completion or termination of this Contract. K. Each right, power or remedy herein conferred upon the City is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to City, at law or in equity, or under any other agreement, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by the City and shall not be a waiver of the right to exercise at any time thereafter any other right, power or remedy. L. The Developer may not assign this Contract without the written permission of the City Council. The Developer's obligation hereunder shall continue in full force and effect even if the Developer sells the Phase 2 Lot, or any part of it, until the City’s issuance of a Certificate of Completion and Release. M. Retaining walls over four feet in height, if any, shall be constructed in accordance with plans and specifications prepared by a structural or geotechnical engineer licensed by the State of Minnesota. Following construction, a certification signed by the design engineer shall be filed with the Building Official evidencing that the retaining wall was constructed in accordance with 17 219911v9 Riverbend North Second Addition the approved plans and specifications. All retaining walls identified on the development plans and by special conditions referred to in this Contract shall be constructed before any other building permit is issued for a lot on which a retaining wall is required to be built. All retaining walls must comply with the City’s engineering manual and the City’s zoning ordinance. N. Should the Developer convey the Phase 2 Lot to a third party, the City and the owner of that lot or those lots may amend this Development Contract or other city approvals or agreements for development or use of those lots without the approval or consent of the Developer or other lot owners in the Development. Private agreements between the owners of lots within the Development for shared service or access and related matters necessary for the efficient use of the Development shall be the responsibility of the lot owners and shall not bind or restrict City authority to approve applications from any lot owner in the Development. 29. NOTICES. Required notices to the Developer shall be in writing, and shall be either hand delivered to the Developer, its employees or agents, or mailed to the Developer by certified mail at the following address: 7535 River Road NE, Otsego, Minnesota 55330. Notices to the City shall be in writing and shall be either hand delivered to the City Administrator, or mailed to the City by certified mail in care of the City Administrator at the following address: Otsego City Hall, 13400 90th Street NE, Otsego, Minnesota 55330. [The remainder of this page has been intentionally left blank. Signature pages follow.] 18 219911v9 Riverbend North Second Addition CITY OF OTSEGO BY: ___________________________________________ Jessica L. Stockamp, Mayor (SEAL) AND __________________________________________ Audra Etzel, City Clerk STATE OF MINNESOTA ) )ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2022, by Jessica L. Stockamp and by Audra Etzel, the Mayor and City Clerk of the City of Otsego, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. ______________________________________________ NOTARY PUBLIC 19 219911v9 Riverbend North Second Addition DEVELOPER: OTSEGO APARTMENTS II, LLC BY: ___________________________________________ Casey J. Darkenwald Its Chief Manager STATE OF MINNESOTA ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2022, by Casey J. Darkenwald, the Chief Manager of Otsego Apartments, LLC, a Minnesota limited liability company, on behalf of said entity. ______________________________________________ NOTARY PUBLIC 20 219911v9 Riverbend North Second Addition FEE OWNER CONSENT The undersigned fee owner does hereby consent to the filing of the plat of RIVERBEND NORTH SECOND ADDITION and this Contract in the Office of the Wright County Recorder and/or Wright County Registrar of Titles. In testimony thereof, the undersigned has hereto executed this instrument this ___ day of ________ 2022. OTSEGO APARTMENTS, LLC BY: ___________________________________________ Casey J. Darkenwald Its Chief Manager STATE OF MINNESOTA ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2022, by Casey J. Darkenwald, the Chief Manager of Otsego Apartments, LLC, a Minnesota limited liability company, on behalf of said entity. DRAFTED BY: CAMPBELL, KNUTSON Professional Association Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, MN 55121 Telephone: 651-452-5000 DSK/smt 21 219911v9 Riverbend North Second Addition MORTGAGE HOLDER CONSENT TO DEVELOPMENT CONTRACT WINGS FINANCIAL CREDIT UNION, a Minnesota credit union, which holds: 1. A Combination Mortgage, Security Agreement and Fixture Financing Statement executed by Otsego Apartments, LLC, a Minnesota limited liability company, dated January 25, 2019, filed February 6, 2019 as Document Number A1389285 in the amount of $12, 900,000.00 in favor of Wings Financial Credit Union; AND 2 Assignment of Rents and Leases by and between Otsego Apartments, LLC, a Minnesota limited liability company, and Wings Financial Credit Union, dated January 25, 2019, filed February 6, 2019 as Document Number A1389286; AND 3. A Combination Mortgage, Security Agreement and Fixture Financing Statement executed by Otsego Apartments, LLC, Otsego Mini Storage, LLC and Darkenwald’s Riverbend Wastewater Company, LLC, dated April 17, 2020, filed April 20, 2020 as Document Number A1424064 in the amount of $1,516,000.00, in favor of Wings Financial Credit Union (covers additional property); AND 4. Assignment of Rents and Leases by and between Otsego Apartments, LLC, a Minnesota limited liability company, and Wings Financial Credit Union, dated April 17, 2020, filed April 20, 2020 as Document Number A1424065; AND 5. A Combination Mortgage, Security Agreement and Fixture Financing Statement executed by Otsego Mini Storage LLC, a Minnesota limited liability company and Otsego Apartments, LLC, a Minnesota limited liability company, dated April 17, 2020, filed April 20, 2020 as Document Number A1424066 in the amount of $631,767.00, in favor of Wings Financial Credit Union; AND 6. Assignment of Rents and Leases by and between Otsego Apartments, LLC, a Minnesota limited liability company, and Wings Financial Credit Union, dated April 17, 2020, filed April 20, 2020 as Document Number A1424067; AND 7. A Combination Mortgage, Security Agreement and Fixture Financing Statement executed by Otsego Apartments, LLC, a Minnesota limited liability company et. al., dated December 14, 2020, filed January 4, 2021 as Document Number A1453921 in the amount of $900,000.00, in favor of Wings Financial Credit Union (covers additional property); 22 219911v9 Riverbend North Second Addition AND 8. Assignment of Rents and Leases by and between Otsego Apartments, LLC, a Minnesota limited liability company et. al., and Wings Financial Credit Union, dated December 14, 2020, filed January 4, 2021 as Document Number A1453922. on the subject property, the development of which is governed by the foregoing Development Contract, agrees that the Development Contract shall remain in full force and effect even if it forecloses on its mortgage. Dated this _____ day of ____________, 2022. WINGS FINANCIAL CREDIT UNION By: _________________________ [print name] Its _____________________ [title] STATE OF MINNESOTA ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this _____ day of ________________, 2022, by ___________________________, the _____________________________ of Wings Financial Credit Union, a Minnesota credit union, on behalf of said entity. ________________________________________ NOTARY PUBLIC DRAFTED BY: CAMPBELL KNUTSON Professional Association Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 651-452-5000 DSK/smt 23 219911v9 Riverbend North Second Addition [BANK LETTERHEAD] IRREVOCABLE LETTER OF CREDIT No. ___________________ Date: _________________ TO: City of Otsego City Hall 13400 90th Street NE Otsego, Minnesota 55330 Dear Sir or Madam: We hereby issue, for the account of (Name of Developer) and in your favor, our Irrevocable Letter of Credit in the amount of $____________, available to you by your draft drawn on sight on the undersigned bank. The draft must: a) Bear the clause, "Drawn under Letter of Credit No. __________, dated ________________, 2_____, of (Name of Bank) "; b) Be signed by the City Administrator or Finance Director of the City of Otsego. c) Be presented for payment at (Address of Bank) , on or before 4:00 p.m. on November 30, 2_____. This Letter of Credit shall automatically renew for successive one-year terms unless, at least forty-five (45) days prior to the next annual renewal date (which shall be November 30 of each year), the Bank delivers written notice to the Otsego Finance Director that it intends to modify the terms of, or cancel, this Letter of Credit. Written notice is effective if sent by certified mail, postage prepaid, and deposited in the U.S. Mail, at least forty - five (45) days prior to the next annual renewal date addressed as follows: Otsego Finance Director, Otsego City Hall, 13400 90th Street NE, Otsego, MN 55330, and is actually received by the Finance Director at least thirty (30) days prior to the renewal date. This Letter of Credit sets forth in full our understanding which shall not in any way be modified, amended, amplified, or limited by reference to any document, instrument, or agreement, whether or not referred to herein. This Letter of Credit is not assignable. This is not a Notation Letter of Credit. More than one draw may be made under this Letter of Credit. This Letter of Credit shall be governed by the most recent revision of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600. We hereby agree that a draft drawn under and in compliance with this Letter of Credit shall be duly honored upon presentation. [NAME OF BANK] BY: ____________________________________ Its ______________________________ 1 221264v2 (reserved for recording information) RELEASE OF DEVELOPMENT AGREEMENT RELEASE granted ______________________, 2022, by the CITY OF OTSEGO, a Minnesota municipal corporation ("City"). WHEREAS, the City has been asked to release and discharge real property in Wright County, Minnesota, legally described as set forth on attached Exhibit A, according to the recorded plat thereof (“Subject Property”) from the Development Agreement between the City and Otsego Apartments, LLC, a Minnesota limited liability company (“Developer”) and Otsego Mini-Storage, LLC, a Minnesota limited liability company (“OMS”), dated January 28, 2019, and recorded February 6, 2019, as Document No. A1389279 in the Office of the County Recorder, Wright County (“Development Contract”); WHEREAS, all requirements of the Development Agreement have been met as to the Property and there is no longer a need to have the Development Agreement recorded against the Property; and WHEREAS, the City Council of Otsego adopted Resolution 2019-80 authorizing the City Administrator to execute an administrative release in this matter without further action of the City Council; NOW, THEREFORE, by the City of Otsego, Minnesota: The Subject Property described in Exhibit A is released and discharged from the Development Agreement. 2 221264v2 DATED this ______ day of ____________, 2022. CITY OF OTSEGO BY: _______________________________________ Adam Flaherty, City Administrator (SEAL) STATE OF MINNESOTA ) )ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this _______ day of __________________, 2022, by Adam Flaherty, City Administrator of the City of Otsego, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. ___________________________________________ Notary Public THIS INSTRUMENT WAS DRAFTED BY: CAMPBELL KNUTSON Professional Association Grand Oak Office Center 1 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 651-452-5000 DSK/smt 3 221264v2 EXHIBIT A LEGAL DESCRIPTION Lot 1, Block 1, Riverbend North Addition, Wright County, Minnesota, according to the recorded plat thereof; and Lot 2, Block 1, Riverbend North Addition, Wright County, Minnesota, according to the recorded plat thereof. 73314907v2 EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA HELD: May 9, 2022 Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Otsego, Wright County, Minnesota, was duly called and held at the City Hall in said City on May 9, 2022, at 7:00 p.m. The following members were present: and the following were absent: Member ____________________ introduced the following resolution and moved its adoption: RESOLUTION 2022-44 RESOLUTION AUTHORIZING THE EXECUTION OF AN AMENDED AND RESTATED DEVELOPMENT AGREEMENT, AND TWO ASSIGNMENTS OF TAX INCREMENT NOTES, AND RESCINDING RESOLUTION NO. 2022-15 A. WHEREAS, the City of Otsego, Minnesota (the "City"), Otsego Apartments, LLC, a Minnesota limited liability company (the "Developer"), and Otsego Mini Storage, LLC, a Minnesota limited liability company ("OMS"), entered into a Development Agreement, dated as of January 28, 2019 (the "Development Agreement"), in connection with the construction of a 97- unit multifamily rental apartment project and the construction of an approximately 44,000 square foot commercial mini-storage facility (the "Phase 1 Project"), and the construction of a 67-unit multifamily rental apartment project (the "Phase 2 Project", and together with the Phase 1 Project, the "Project"), each to be constructed by the Developer and located in the City; and B. WHEREAS, the City, OMS, Otsego Apartments II, LLC, a Minnesota limited liability company ("OA2"), and the Developer have agreed to amend and restate the Development Agreement in its entirety (the "Amended Development Agreement") to account for, among other things, the undertaking of OA2 to construct the Phase II Project; and C. WHEREAS, the City issued Tax Increment Revenue Note A (Otsego Apartments Project), in the original principal amount of $1,684,685.00, and Tax Increment Revenue Note B (Otsego Apartments Project), in the original principal amount of $1,250,000.00 (collectively, the "Tax Increment Notes"), and such Tax Increment Notes are currently held by the Developer; and D. WHEREAS, in connection with the Amended Development Agreement, the Developer proposes to assign the Tax Increment Notes to OA2, pursuant to an Assignment of TIF Notes (the "Assignment to OA2"); 73314907v2 2 E. WHEREAS, in order to finance the construction of the Phase II Project, Wings Financial Credit Union, a Minnesota credit union (the "Lender"), is requiring that OA2 assign the Tax Increment Notes to the Lender, pursuant to an Assignment of Tax Increment Revenue Notes (the "Assignment to Wings", and together, with the Assignment to OA2, the "Assignments"); and F. WHEREAS, at the regular meeting of the City Council (the "City Council") held on January 24, 2022, the City Council adopted Resolution No. 2022-15, entitled "Resolution Authorizing Execution of a First Amendment to Development Agreement" (the "Resolution"); and G. WHEREAS, subsequent to the approval of the Resolution, the First Amendment to Development Agreement was not executed by the Developer or OMS and the parties now wish to enter into the Amended Development Agreement; and H. WHEREAS, a draft of the Amended Development Agreement and the Assignments have been submitted to the City Council for approval. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Otsego, Minnesota, as follows: 1. The City Council hereby approves the Amended Development Agreement and the Assignments in substantially the forms submitted, and the Mayor and City Administrator are hereby authorized and directed to execute the Amended Development Agreement and the Assignments on behalf of the City. 2. The City Council hereby rescinds the Resolution. 3. The approval hereby given to the Assignments and the Amended Development Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City officials authorized by this resolution to execute the Assignments and the Amended Development Agreement. The execution of the Assignments and the Amended Development Agreement by the appropriate officer or officers of the City shall be conclusive evidence of the approval of the Assignments and the Amended Development Agreement in accordance with the terms hereof. In the absence of the Mayor or the City Administrator, any document authorized by this resolution to be executed may be executed by an acting or duly designated official. 4. All terms not defined herein shall have the meanings assigned to them in the Amended Development Agreement, or if not defined therein, the Assignments. 73314907v2 3 The motion for adoption of the foregoing resolution was duly seconded by member _________________ and, after full discussion thereof, and upon a vote being taken thereof, the following voted in favor thereof: and the following voted against same: Adopted this 9th day of May, 2022. _________________________ Mayor Attest: _______________________________ City Administrator and Finance Director 73314907v2 4 STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF OTSEGO I, the undersigned, being the duly qualified and acting City Administrator and Finance Director of the City of Otsego, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the City Council of the City held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Authorizing the Execution of an Amended and Restated Development Agreement, and Two Assignments of Tax Increment Notes, and Rescinding Resolution No. 2022-15. WITNESS my hand as such Administrator of the City Council of the City of Otsego, Minnesota this ____ day of May, 2022. ________________________________ City Administrator and Finance Director 73215736v2 AMENDED AND RESTATED DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF OTSEGO, MINNESOTA AND OTSEGO APARTMENTS, LLC AND OTSEGO APARTMENTS II, LLC AND OTSEGO MINI STORAGE, LLC (OTSEGO APARTMENTS PROJECT) This document drafted by: Taft Stettinius & Hollister LLP 2200 IDS Center 80 South 8th Street Minneapolis, Minnesota 55402 73215736v2 i ARTICLE I. DEFINITIONS ......................................................................................................... 2 Section 1.1 Definitions............................................................................................ 2 ARTICLE II. REPRESENTATIONS AND WARRANTIES ....................................................... 5 Section 2.1 Representations and Warranties of the City ......................................... 5 Section 2.2 Representations and Warranties of the Developer ............................... 5 Section 2.3 Representations and Warranties of OMS ............................................. 6 Section 2.4 Representations and Warranties for OA2 ............................................ 7 ARTICLE III. UNDERTAKINGS BY DEVELOPER, OA2, OMS, AND CITY ........................ 8 Section 3.1 Phase 1 Project; Reimbursement ......................................................... 8 Section 3.2 TIF Note B; Phase 2 Project ................................................................ 9 Section 3.3 Action to Reduce Taxes ..................................................................... 10 Section 3.4 Look Back and Reduction of TIF Assistance .................................... 10 Section 3.5 Property Sale ...................................................................................... 10 ARTICLE IV. EVENTS OF DEFAULT ..................................................................................... 12 Section 4.1 Events of Default Defined ................................................................. 12 Section 4.2 Remedies on Default .......................................................................... 13 Section 4.3 No Remedy Exclusive........................................................................ 13 Section 4.4 No Implied Waiver ............................................................................ 13 Section 4.5 Agreement to Pay Attorney's Fees and Expenses .............................. 14 Section 4.6 Indemnification of City ...................................................................... 14 ARTICLE V. ADDITIONAL PROVISIONS ............................................................................. 15 Section 5.1 Restrictions on Use ............................................................................ 15 Section 5.2 Conflicts of Interest............................................................................ 15 Section 5.3 Titles of Articles and Sections ........................................................... 15 Section 5.4 Notices and Demands ........................................................................ 15 Section 5.5 Counterparts ....................................................................................... 16 Section 5.6 Law Governing .................................................................................. 16 Section 5.7 Expiration ........................................................................................... 16 Section 5.8 Provisions Surviving Rescission or Expiration.................................. 16 Section 5.9 Assignability of Agreement and TIF Notes ....................................... 16 EXHIBIT A Description of Development Property ................................................................. A-1 EXHIBIT B Form of Tax Increment Note A ............................................................................ B-1 EXHIBIT C Form of Tax Increment Note B ............................................................................ C-1 EXHIBIT D Site Improvements ............................................................................................... D-1 EXHIBIT E Projected Acquisition Costs and Site Costs Eligible for Use of TIF Proceeds ........................................................................................................ E-1 EXHIBIT F Sources and Uses Analysis ..................................................................................... F-1 73215736v2 AMENDED AND RESTATED DEVELOPMENT AGREEMENT THIS AMENDED AND RESTATED DEVELOPMENT AGREEMENT (this "Agreement"), made as of the ___ day of _______, 2022, by and between the City of Otsego, Minnesota, a municipal corporation organized and existing under the laws of the State of Minnesota (the "City"), Otsego Apartments, LLC, a Minnesota limited liability company (the "Developer"), Otsego Apartments II, LLC, a Minnesota limited liability company ("OA2"), and Otsego Mini Storage, LLC, a Minnesota limited liability company ("OMS"), amends and restates that certain Development Agreement dated January 28, 2019, by and between the City, the Developer, and OMS, filed and recorded as document number A1389280 on February 6, 2019, in the office of the County Recorder for Wright County, Minnesota. WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134, the City has previously established Development District No. 4 (the "Development District") and has adopted a development program therefor, as modified (the "Development Program"); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1794, as amended (hereinafter, the "Tax Increment Act"), the City has created within the Development District, Tax Increment Financing District No. 4 - Riverbend North (the "Tax Increment District"), and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with certain development within the Development District; and WHEREAS, in order to achieve the objectives of the Development Program and particularly to make the land in the Development District available for development by private enterprise in conformance with the Development Program, the City has determined to assist with the financing of certain costs of a Project (as hereinafter defined) to be constructed within the Tax Increment District as more particularly set forth in this Agreement; and WHEREAS, the City believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City, the health, safety, morals and welfare of residents of the City, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement pursuant to an exemption for housing; and NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 73215736v2 2 ARTICLE I. DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; City means the City of Otsego, Minnesota; Connection Agreement means the Agreement between the City of Otsego, the Developer, Darkenwald's Riverbend Company LLC, and Darkenwald's Riverbend Wastewater Company LLC for connection of Riverbend Mobile Home Park to principal sanitary sewer service dated January 28, 2019; County means Wright County, Minnesota; Developer means Otsego Apartments, LLC, a Minnesota limited liability company, its successors and assigns; Development District means the real property described in the Development Program for Development District No. 4; Development Program means the development program approved in connection with the Development District; Development Property means the real property described in Exhibit A attached hereto; Event of Default means any of the events described in Section 4.1 hereof; Land Use Agreement means collectively the Development Agreement for Riverbend North dated as of January 28, 2019 between the City, OMS, and the Developer and the Development Contract for Riverbend North Second Addition dated as of ________________, 2022 by and between the City and the Developer; Mini Storage Property means the real property on which the approximately 44,000 square foot mini storage facility will be constructed and legally described as "Lot 2, Block 1, Riverbend North Addition"; Mini Storage Project means the approximately 44,000 square foot mini storage facility to be constructed on the Mini Storage Property; 73215736v2 3 Note Payment Date means August 1, 2021, and each February 1 and August 1 of each year thereafter to and including February 1, 2046; provided, that if any such Note Payment Date should not be a Business Day, the Note Payment Date shall be the next succeeding Business Day; OA2 means Otsego Apartments II, LLC, a Minnesota limited liability company, its successors and assigns; OMS means Otsego Mini Storage, LLC, a Minnesota limited liability company, its successors and assigns; Person means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof; Phase 1 Project means the construction of a 97-unit multifamily rental apartment project and the construction of an approximately 44,000 square foot commercial mini-storage facility on the Development Property; Phase 2 Project means the construction of a 67-unit multifamily rental apartment project on the Development Property; Prime Rate means the rate of interest from time to time publicly announced by U.S. Bank National Association in St. Paul, Minnesota, as its "prime rate" or "reference rate" or any successor rate, which rate shall change as and when that rate or successor rate changes; Project means together, the Phase 1 Project and the Phase 2 Project; Site Improvements means the site improvements to be undertaken on the Development Property as identified on Exhibit C attached hereto; State means the State of Minnesota; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended; Tax Increment District means Tax Increment Financing District No. 4 - Riverbend North, located within the Development District, which was qualified as a redevelopment district under the Tax Increment Act; Tax Increment Financing Plan means the tax increment financing plan approved for the Tax Increment District by the City Council; Tax Increment Note A or TIF Note A means the Tax Increment Revenue Note A (Otsego Apartments Project) to be executed by the City and delivered to the Developer pursuant to Article III hereof, the form of which is attached hereto as Exhibit B; 73215736v2 4 Tax Increment Note B or TIF Note B means the Tax Increment Revenue Note B (Otsego Apartments Project) to be executed by the City and delivered to the Developer pursuant to Article III hereof, the form of which is attached hereto as Exhibit C; Tax Increment Notes or TIF Notes means together TIF Note A and TIF Note B; Tax Increments means 95% of the tax increments derived from the Tax Increment District which have been received and retained by the City in accordance with the provisions of Minnesota Statutes, Section 469.177; Termination Date means the earlier of (i) February 1, 2046, (ii) the date the Tax Increment Notes are paid in full, (iii) the date on which the Tax Increment District expires or is otherwise terminated, or (iv) the date this Agreement is terminated or rescinded in accordance with its terms; and Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire, or other casualty to the Project, delays in delivery of materials for the construction of the Project, the soil conditions of the Development Property, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the City) which directly result in delays. 73215736v2 5 ARTICLE II. REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Increment District is a "redevelopment district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10, and was created, adopted and approved in accordance with the terms of the Tax Increment Act. (3) The development contemplated by this Agreement is in conformance with the development objectives set forth in the Development Program. (4) To finance certain costs within the Tax Increment District, the City proposes, subject to the further provisions of this Agreement, to apply Tax Increments to reimburse the Developer for the costs of the Development Property and certain Site Improvements in connection with the Project, as further provided in this Agreement. (5) The City makes no representation or warranty, either expressed or implied, as to the Development Property or its condition or the soil conditions thereon, or that the Development Property shall be suitable for the Developer's or OA2's purposes or needs. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a Minnesota limited liability company and has power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles of organization or operating agreement or the laws of the State. (2) The Developer shall cause the Phase 1 Project to be constructed in accordance with the terms of this Agreement, the Development Program, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (3) The construction of the Phase 1 Project would not be undertaken by the Developer, and in the opinion of the Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. (4) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, 73215736v2 6 agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (5) The Developer will cooperate fully with the City with respect to any litigation commenced with respect to the Phase 1 Project. (6) The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction of the Phase 1 Project. (7) The construction of the Phase 1 Project will commence on or before February 1, 2019, and barring Unavoidable Delays the Project will be substantially completed by May 31, 2020. (8) The Developer acknowledges that Tax Increment projections contained in the Tax Increment Plan are estimates only and the Developer acknowledges that it shall place no reliance on the amount of projected Tax Increments and the sufficiency of such Tax Increments to reimburse the Developer for the costs of the Development Property and Site Improvements as provided in Article III. Section 2.3 Representations and Warranties of OMS. OMS makes the following representations and warranties: (1) OMS is a Minnesota limited liability company and has power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles of organization or operating agreement or the laws of the State. (2) At the commencement of the Mini Storage Project, OMS will be the fee owner of the Mini Storage Property. (3) Developer is OMS's authorized agent with regards to the Mini Storage Project, is the developer of record for the Mini Storage Project, and will oversee construction of the Mini Storage Project on behalf of OMS. (4) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which OMS is now a party or by which it is bound, or constitutes a default under any of the foregoing. (5) OMS will cooperate fully with the City with respect to any litigation commenced with respect to the Mini Storage Project. (6) OMS agrees and acknowledges that the Mini Storage Project is included in the TIF District, but that it has no interest in the TIF Notes. 73215736v2 7 Section 2.4 Representations and Warranties for OA2. OA2 makes the following representations and warranties: (1) OA2 is a Minnesota limited liability company and has power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles of organization or operating agreement or the laws of the State. (2) OA2 shall cause the Phase 2 Project to be constructed in accordance with the terms of this Agreement, the Development Program, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (3) The construction of the Phase 2 Project would not be undertaken by OA2, and in the opinion of OA2 would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to OA2 provided for in this Agreement. (4) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which OA2 is now a party or by which it is bound, or constitutes a default under any of the foregoing. (5) OA2 will cooperate fully with the City with respect to any litigation commenced with respect to the Phase 2 Project. (6) OA2 will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction of the Phase 2 Project. (7) The construction of the Phase 2 Project will commence on or before March 22, 2022, and will be substantially completed by December 31, 2023. 73215736v2 8 ARTICLE III. UNDERTAKINGS BY DEVELOPER, OA2, OMS, AND CITY Section 3.1 Phase 1 Project; Reimbursement. (1) Development Property and Site Improvements. The costs of the Development Property, the Site Improvements, and the Phase 1 Project shall be paid by the Developer. The City shall reimburse the Developer for the lesser of $1,684,685 or the costs of the Development Property and the costs of the Site Improvements actually paid by the Developer (the "Phase 1 Reimbursement Amount") as further provided in Section 3.1(2) hereof. (2) Reimbursement: Tax Increment Revenue Note A. The City shall reimburse the Developer for the costs identified in Section 3.1(1) through the issuance of the City's Tax Increment Revenue Note A in substantially the form attached to this Agreement as Exhibit B, subject to the following conditions: (a) TIF Note A shall be dated, issued and delivered when the City shall have issued a Certificate of Occupancy for the Phase 1 Project and the Developer shall submit a closing statement, purchase agreement for the Development Property and paid invoices for the Site Improvements in an amount not less than the Reimbursement Amount. (b) No interest will accrue on the unpaid principal amount of TIF Note A. (c) The principal amount of TIF Note A shall be payable solely from 50% of the Tax Increments. (d) On each TIF Note A Payment Date and subject to the provisions of Note A, the City shall pay, against the principal outstanding on TIF Note A, 50% of the Tax Increments received by the City during the preceding 6 months. All such payments shall be applied to the payment of the principal of Note A. (e) TIF Note A shall be a special and limited obligation of the City and not a general obligation of the City, and only 50% of the Tax Increments shall be used to pay the principal amount of TIF Note A. (f) The City's obligation to make payments on TIF Note A on any Note Payment Date or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement and (B) this Agreement shall not have been rescinded pursuant to Section 4.2(b). (g) TIF Note A shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B and Sections 3.4 and 3.5. In the event of any conflict between the terms of TIF Note A and the terms of this Section 3.1, the terms of TIF Note A shall govern. The issuance of TIF Note A pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for TIF 73215736v2 9 Note A may require in connection therewith, are hereby authorized and approved by the City. Section 3.2 TIF Note B; Phase 2 Project. (1) Additional Costs of the Phase 1 Project. The City shall reimburse the Developer the sum of $1,250,000 (the "TIF Note B Reimbursement Amount") for additional Phase 1 Development Property costs and costs of the Site Improvements paid by the Developer and not reimbursed under Section 3.1. (2) Reimbursement: Tax Increment Revenue Note B. The City shall reimburse the Developer for the costs identified in Section 3.2 (1) through the issuance of the City's Tax Increment Revenue Note B in substantially the form attached to this Agreement as Exhibit C, subject to the following conditions: (a) TIF Note B shall be dated, issued and delivered when the City shall have issued a Certificate of Occupancy for the Phase 1 Project and the Developer shall submit a closing statement, purchase agreement for the Development Property and paid invoices for the Site Improvements in an amount not less than the Reimbursement Amount. (b) The unpaid principal amount of TIF Note B shall bear simple, non- compounding interest from the date of issuance of TIF Note B at 5% per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. (c) The principal amount of TIF Note B and the interest thereon shall be payable solely from 50% of the Tax Increments. (d) On each Note Payment Date and subject to the p rovisions of TIF Note B, the City shall pay, against the principal and interest outstanding on TIF Note B, 50% of the Tax Increments received by the City during the preceding 6 months. All such payments shall be applied first to accrued interest and then to reduce the principal of TIF Note B. (e) TIF Note B shall be a special and limited obligation of the City and not a general obligation of the City, and only 50% of Tax Increments shall be used to pay the principal and interest on TIF Note B. If, on any TIF Note B Note Payment Date, the 50% of the Tax Increments for the payment of the accrued and unpaid interest on TIF Note B are insufficient for such purposes, the difference shall be carried forward, without interest accruing thereon, and shall be paid if and to the extent that on a future TIF Note B Payment Date there are Tax Increments, not to exceed 50%, in excess of the amounts needed to pay the accrued interest then due on TIF Note B. (f) The City's obligation to make payments on TIF Note B on any Note Payment Date or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement and (B) this Agreement shall not have been rescinded pursuant to Section 4.2(b). 73215736v2 10 (g) TIF Note B shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit C and Sections 3.4 and 3.5. In the event of any conflict between the terms of TIF Note B and the terms of this Section 3.2, the t erms of TIF Note B shall govern. The issuance of TIF Note B pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for TIF Note B may require in connection therewith, are hereby authorized and approved by the City. (3) Upon completion of the Phase 2 Project and the issuance of the City of a Certificate of Occupancy for the Phase 2 Project, the City shall increase the outstanding principal amount of TIF Note B in an amount not to exceed $425,000, provided that OA2 submits paid invoices for eligible costs related to the Phase 2 Project in the amount of $425,000. Section 3.3 Action to Reduce Taxes. The Developer, OA2, or OMS may seek through petition or other means to have the market value for the Development Property reduced. Until the TIF Notes are fully paid, such activity must be preceded by written notice from the Developer, OA2, or OMS, as applicable, to the City indicating its intention to do so. Upon receiving such notice, or otherwise learning of the Developer's, OA2's, or OMS's intentions, the City may suspend payments due under the TIF Notes until the actual amount of the reduction is determined, whereupon the City will make the suspended payments less any amount that the City is required to repay the County as a result any reduction in market value of the Development Property. During the period that the payments are subject to suspension, the City may make partial payments on the TIF Notes if it determines, in its sole and absolute discretion that the amount retained will be sufficient to cover any repayment which the County may require. The City's suspension of payments on the TIF Notes pursuant to this Section shall not be considered a default under this Agreement. Section 3.4 Look Back and Reduction of TIF Assistance. The financial assistance to be provided to the Developer pursuant to this Agreement is based on certain assumptions regarding the projected costs and expenses associated with constructing the Project (as provided in the Pro Forma submitted to the City by the Developer and attached as Exhibit F). The City and Developer agree that those assumptions will be reviewed at the time of completion of construction of the Project and at the time of any sale of the Phase 1 Project or any portion thereof. At the time of completion of construction of the Project (both the Phase 1 Project and the Phase 2 Project), if the aggregate amount of Site Improvement costs incurred is less than the aggregate amount of Site Improvement costs projected in Exhibit E, the TIF assistance for Site Improvement costs will be reduced on a dollar for dollar basis in the amount of such deficiency and the principal amount of TIF Note B will be adjusted accordingly. Section 3.5 Property Sale. If the Developer or OA2 sells their respective interest in the Project, or OMS sells the Mini Storage Project, to an unrelated third party during the term of this Agreement, the Developer or OA2, as applicable, agrees to provide to the City's municipal advisor (the "Consultant") certified cost and revenue information related to their respective interest in the Project and income and expenses for the period from the date of this Agreement through such sale (provided that the Developer, OA2, and the City agree that the calculation date will occur prior to the actual transfer). The cost and revenue information will be prepared in accordance with generally accepted accounting principles. If the Consultant properly determines, based on such 73215736v2 11 review, that the actual profit realized by the Developer, OA2, or OMS has exceeded a 20% Internal Rate of Return ("IRR") during that period (to be calculated in a manner comparable to the sample attached as Exhibit G), then 100% of the excess amount of such profit over the 20% IRR will be applied to reduce the amount payable under TIF Note B and the principal amount of TIF Note B will be reduced accordingly. Such reduction will be effective upon delivery to Developer of a written notice stating the amount of such excess profit as determined by the City in accordance with this Section, accompanied by the Consultant's report. 73215736v2 12 ARTICLE IV. EVENTS OF DEFAULT Section 4.1 Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any one or more of the following events: (a) Failure by the Developer, OA2, or OMS to timely pay any ad valorem real property taxes assessed, special assessments or other City charges with respect to the Development Property. (b) Failure by (i) the Developer to cause the construction of the Phase 1 Project or (ii) OA2 to cause the construction of the Phase II Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (c) Failure of the Developer, OA2, or OMS to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. (d) An event of default by the Developer, OA2, or OMS of its obligations under the Connection Agreement occurs and remains uncured. (e) An event of default occurs and remains uncured under the Land Use Agreement. (f) The holder of any mortgage on the Development Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents. (g) If OMS shall file any petition in bankruptcy or for any reorganization arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law. (h) If the Developer or OA2 shall (A) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (B) make an assignment for the benefit of its creditors; or (C) admit in writing its inability to pay its debts generally as they become due; or 73215736v2 13 (D) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer or OA2, as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or a receiver, trustee or liquidator of either the Developer or OA2, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer or OA2, and shall not be discharged within sixty (60) days after such appointment, or if the Developer or OA2, shall consent to or acquiesce in such appointment. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer and OA2 citing with specificity the item or items of default and notifying the Developer and OA2 that it has thirty (30) days within which to cure said Event of Default, or, if the Event of Default cannot be cured within thirty (30) days through no fault of Developer and OA2 , the Developer and OA2 has commenced all actions possible within the thirty (30) days, provided a reasonable plan to cure the Event of Default within the thirty (30) day period, and Developer and OA2 diligently pursues the plan to completion. OMS expressly agrees that the Developer may cure any Event of Default by OMS. If the Event of Default has not been cured as provided in this Section: (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer and OA2, deemed adequate by the City, that the Developer and OA2 will cure the Event of Default and continue its performance under this Agreement, and no interest shall accrue on the TIF Notes while performance is suspended in accordance with this Section 4.2. (b) The City may cancel and rescind the Agreement. (c) The City may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer and OA2 under this Agreement. Section 4.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 4.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 73215736v2 14 Section 4.5 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer or OA2 herein contained, the Developer and OA2 agree that they shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6 Indemnification of City. (1) The Developer, OA2, and OMS release from and covenant and agree that the City, its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Project, provided that the foregoing indemnification shall not be effective for any actions of the Indemnified Parties that are not contemplated by this Agreement. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the Indemnified Parties, the Developer and OA2 agree to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer or OA2 (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the City in this Agreement or to any actions undertaken by the City which are not contemplated by this Agreement. (3) All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City and not of any governing body member, officer, agent, servant or employee of the City, as the case may be. 73215736v2 15 ARTICLE V. ADDITIONAL PROVISIONS Section 5.1 Restrictions on Use. The Developer and OA2 each agree for themselves, their successors and assigns and every successor in interest to the Development Property, or any part thereof, including without limitation OMS, that the Developer , OA2, and their successors and assigns, including without limitation OMS, shall operate, or cause to be operated, the Project as multifamily rental housing facilities and approximately 44,000 square feet of mini storage and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 5.2 Conflicts of Interest. No member of the governing body or other official of the City shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer, OA2, or successor or on any obligations under the terms of this Agreement. Section 5.3 Titles of Articles and Sections. Any titles of the several parts, articles and sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.4 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (a) in the case of the Developer is addressed to or delivered personally to: Otsego Apartments, LLC 7535 NE River Road Otsego, MN 55330 Attn: Casey J. Darkenwald (b) in the case of OA2 is addressed to or delivered personally to: Otsego Apartments II, LLC 7535 NE River Road Otsego, MN 55330 Attn: Casey J. Darkenwald 73215736v2 16 (c) in the case of OMS is addressed to or delivered personally to: Otsego Mini Storage LLC 7535 NE River Road Otsego, MN 55330 Attn: Casey J. Darkenwald (d) in the case of the City is addressed to or delivered personally to: City of Otsego, Minnesota Otsego City Hall 13400 90 Street NE Otsego, MN 55330 Attn: City Administrator or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 5.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 5.6 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 5.7 Expiration. This Agreement shall expire on the Termination Date. Section 5.8 Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 5.9 Assignability of Agreement and TIF Notes. This Agreement may be assigned only with the consent of the City which consent shall not be unreasonably withheld. The TIF Notes may only be assigned pursuant to the terms of the TIF Notes. 73215736v2 S-1 IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and on its behalf and its seal to be hereunto duly affixed, the Developer has caused this Agreement to be duly executed on its behalf, OA2 has caused this Agreement to be duly executed on its behalf, and OMS has caused this Agreement to be duly executed on its behalf. CITY OF OTSEGO, MINNESOTA By _______________________________________ Its Mayor By _______________________________________ Its Administrator (SEAL) [Signature page to the Development Agreement by and between the City of Otsego, Minnesota, Otsego Apartments, LLC, Otsego Apartments II, LLC, and Otsego Mini Storage, LLC.] 73215736v2 S-2 OTSEGO APARTMENTS, LLC By _______________________________________ Its _______________________________________ [Signature page to the Development Agreement by and between the City of Otsego, Minnesota, Otsego Apartments, LLC, Otsego Apartments II, LLC, and Otsego Mini Storage, LLC.] 73215736v2 S-3 OTSEGO APARTMENTS II, LLC By _______________________________________ Its _______________________________________ [Signature page to the Development Agreement by and between the City of Otsego, Minnesota, Otsego Apartments, LLC, Otsego Apartments II, LLC, and Otsego Mini Storage, LLC.] 73215736v2 S-4 OTSEGO MINI STORAGE, LLC By _______________________________________ Its _______________________________________ [Signature page to the Development Agreement by and between the City of Otsego, Minnesota, Otsego Apartments, LLC, Otsego Apartments II, LLC, and Otsego Mini Storage, LLC.] 73215736v2 A-1 EXHIBIT A Description of Development Property Property located in the City of Otsego, Wright County, Minnesota with the following legal description: Lot 2, Block 1, Riverbend North Addition Lot 1, Block 1, Riverbend North 2nd Addition Lot 2, Block 1, Riverbend North 2nd Addition 73215736v2 B-1 EXHIBIT B Form of Tax Increment Note A No. R-1 $_________ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF OTSEGO TAX INCREMENT REVENUE NOTE A (OTSEGO APARTMENTS PROJECT) The City of Otsego, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to Otsego Apartments, LLC (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event exceed $1,684,685 as provided in that certain Development Agreement, dated as of ______________, 2018, as the same may be amended from time to time (the "Development Agreement"), by and between the City and the Developer. No interest will accrue on t he unpaid principal amount of this TIF Note. The amounts due under this Note shall be payable on August 1, 2021, and on each February 1 and August 1 thereafter to and including February 1, 2046, or, if the first should not be a Business Day, as defined in the Development Agreement, the next succeeding Business Day (the "Payment Dates"). On each Payment Date the City 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 City preceding such Payment Date an amount equal to 50% of the Tax Increments, as defined in the Development Agreement, received by the City during the six month period preceding such Payment Date. All payments made by the City under this Note shall applied to principal of this Note. The Payment Amounts due hereon shall be payable solely from 50% of the Tax Increments, as defined in the Development Agreement, which are paid to the City and which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). This Note shall terminate and be of no further force and effect following the last Payment Date defined above, on any date upon which the City shall have terminated the Development Agreement under Section 4.2(b) thereof, the date the Tax Increment District is terminated, or on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. 73215736v2 B-2 The City makes no representation or covenant, express or implied, that 50% of the Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The City's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable if said Event of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, including without limitation Section 3.2 thereof, for a fuller statement of the rights and obligations of the City to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation and not a general obligation of the City and is payable by the City only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the City and neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the principal of this Note and no property or other asset of the City, save and except the above-referenced Tax Increments, is or shall be a source of payment of the City's obligations hereunder. This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only with the consent of the City which consent shall not be unreasonably withheld. In order to assign the Note, the assignee shall surrender the same to th e City 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 City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional or statutory limitation thereon. 73215736v2 B-3 IN WITNESS WHEREOF, City of Otsego, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and Administrator and has caused this Note to be dated as of __________________. Administrator Mayor 73215736v2 B-4 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note was registered in the name of Otsego Apartments, LLC, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNER DATE OF REGISTRATION SIGNATURE OF CITY ADMINISTRATOR Otsego Apartments, LLC 7535 River Road NE Otsego, MN 55330 _______________ ______________________ 73215736v2 C-1 EXHIBIT C Form of Tax Increment Note B No. R-1 $_________ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF OTSEGO TAX INCREMENT REVENUE NOTE B (OTSEGO APARTMENTS PROJECT) The City of Otsego, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to Otsego Apartments, LLC (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event exceed $1,250,000 when originally issued as provided in that certain Development Agreement, dated as of _______________, 2018 as the same may be amended from time to time (the "Development Agreement"), by and between the City and the Developer. Upon completion of the Phase 2 Project, as defined in the Development Agreement, and a Certificate of Occupancy has been issued by the City for the Phase 2 Project, the outstanding principal amount of this Note shall be increased in an amount not to exceed $425,000, as provided in Section 3.3 of the Development Agreement. The unpaid principal amount hereof shall bear interest at the simple non-compounded rate of five percent (5%) per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The amounts due under this Note shall be payable on August 1, 2021, and on each February 1 and August 1 thereafter to and including February 1, 2046, or, if the first should not be a Business Day (as defined in the Development Agreement), the next succeeding Business Day (the "Payment Dates"). On each Payment Date the City 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 City preceding such Payment Date an amount equal to 50% of the Tax Increments, as defined in the Development Agreement, received by the City during the six month period preceding such Payment Date. All payments made by the City under this Note shall first be applied to accrued interest and then to principal. The Payment Amounts due hereon shall be payable solely from 50% of the Tax Increments, as defined in the Development Agreement, which are paid to the City and which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as 73215736v2 C-2 the same may be amended or supplemented from time to time (the "Tax Increment Act"). This Note shall terminate and be of no further force and effect following the last Payment Date defined above, on any date upon which the City shall have terminated the Development Agreement under Section 4.2(b) thereof, the date the Tax Increment District is terminated, or on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The City makes no representation or covenant, express or implied, that the Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The City's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable if said Event of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, including without limitation Section 3.2 thereof, for a fuller statement of the rights and obligations of the City to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation and not a general obligation of the City and is payable by the City only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the City and neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the principal of this Note and no property or other asset of the City, save and except the above-referenced Tax Increments, is or shall be a source of payment of the City's obligations hereunder. This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only with the consent of the City which consent shall not be unreasonably withheld. In order to assign the Note, the assignee shall surrender the same to the City 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 City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional or statutory limitation thereon. 73215736v2 C-3 IN WITNESS WHEREOF, City of Otsego, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and Administrator and has caused this Note to be dated as of __________________. Administrator Mayor 73215736v2 C-4 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note was registered in the name of Otsego Apartments, LLC, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNER DATE OF REGISTRATION SIGNATURE OF CITY ADMINISTRATOR Otsego Apartments, LLC 7535 River Road NE Otsego, MN 55330 _______________ ______________________ 73215736v2 D-1 EXHIBIT D Site Improvements Earthwork/excavation Soils test and environmental studies Environmental remediation Building demolition and clearance Streets and roads Curb and gutter Street/parking lot lighting Sidewalks and trails Soils correction Storm water retention systems Utilities (sanitary sewer, storm sewer, and water), including utility relocations Surface parking lot paving Parking structure, including related electrical and mechanical costs specific to the construction of the parking structure 73215736v2 E-1 EXHIBIT E Projected Acquisition Costs and Site Costs Eligible for Use of TIF Proceeds TIF ELIGIBLE COSTS AMOUNT I. ACQUISITION COSTS 1. Land acquisition. $2,709,934 Subtotal $2,709,934 II. SITE IMPROVEMENT COSTS 1. Earthwork/excavation. $175,000 2. Soils test and environmental studies. $ 3. Environmental remediation. $ 4. Building demolition & clearance. $150,000 5. Streets and roads. $144,191 6. Curb and gutter. $ 7. Street/parking lot lighting. $ 8. Sidewalks & Trails. $31,220 9. Soils correction. $ 10. Storm water Retention Systems. $ 11. Utilities (sanitary sewer, storm sewer, and water), including utility relocations. $2,249,742 12. Surface parking lot paving. $250,000 13. Parking structure, including related electrical and mechanical costs specific to the construction of the parking structure. $500,000 Subtotal $3,500,153 TOTAL $6,210,087 73215736v2 F-1 EXHIBIT F Sources and Uses Analysis 73215736v2 F-2 Riverbend North Redevelopment City of Otsego 164 Apartment Units and Mini Storage 10-Year Operating Proforma 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income Inflator Gross Potential Rent 1.5%2,769,600 2,811,144 2,853,311 2,896,111 2,939,552 2,983,646 3,028,400 3,073,826 3,119,934 3,166,733 Less: 5% Stabilized Vacancy (138,480)(140,557)(142,666)(144,806)(146,978)(149,182)(151,420)(153,691)(155,997)(158,337) Less: Additional Pre-stabilization Vacancy (1,315,560)(1,335,293)0 Total Rental Income 1,315,560 1,335,293 2,710,646 2,751,305 2,792,575 2,834,463 2,876,980 2,920,135 2,963,937 3,008,396 Other Residential Income Inflator Structured Parking 1.0%47,940 48,419 48,904 49,393 49,887 50,385 50,889 51,398 51,912 52,431 Detached Garage Stalls 1.0%37,440 37,814 38,193 38,574 38,960 39,350 39,743 40,141 40,542 40,948 Miscellaneous 1.0%24,000 24,240 24,482 24,727 24,974 25,224 25,476 25,731 25,989 26,248 Storage Garages 1.5%216,000 219,240 222,529 225,867 229,255 232,693 236,184 239,727 243,322 246,972 Vacancy (32,538)(32,971)(33,411)(33,856)(34,308)(34,765)(35,229)(35,700)(36,177)(36,660) Less: Additional Pre-stabilization Vacancy (46,487)(46,951)0 Total Other Residential Income 246,356 249,791 300,696 304,705 308,768 312,888 317,064 321,297 325,589 329,940 Effective Gross Income (EGI)1,561,916 1,585,084 3,011,342 3,056,010 3,101,343 3,147,351 3,194,044 3,241,432 3,289,526 3,338,336 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Expenses Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Unit Expenses Inflator Operating Expenses 3.00%525,000 540,750 556,973 573,682 590,892 608,619 626,877 645,684 665,054 685,006 Management Fee Fixed to EGI 0.00%62,477 63,403 120,454 122,240 124,054 125,894 127,762 129,657 131,581 133,533 Property Taxes 2.00%189,590 193,382 297,387 303,335 309,401 315,589 321,901 328,339 334,906 341,604 Reserves No Inflation 0.00%55,100 55,100 55,100 55,100 55,100 55,100 55,100 55,100 55,100 55,100 Total Rental Unit Expenses 832,167 852,635 1,029,913 1,054,357 1,079,447 1,105,202 1,131,640 1,158,780 1,186,641 1,215,243 Modified Expense During Stabilization (290,050)(297,925)0 Total Expenses 542,117 554,710 1,029,913 1,054,357 1,079,447 1,105,202 1,131,640 1,158,780 1,186,641 1,215,243 NET OPERATING INCOME 1,019,799 1,030,374 1,981,429 2,001,653 2,021,896 2,042,149 2,062,404 2,082,652 2,102,885 2,123,092 TIF Revenue Inflator:2%72,338 73,785 116,918 119,256 121,641 124,074 126,555 129,086 131,668 134,302 ADJUSTED NET OPERATING INCOME 1,092,137 1,104,159 2,098,347 2,120,909 2,143,537 2,166,223 2,188,959 2,211,738 2,234,553 2,257,394 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Debt Service Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Debt A: First Mortgage 914,194 914,194 914,194 914,194 914,194 914,194 914,194 914,194 914,194 914,194 Debt B: Phase 2 0 0 662,164 662,164 662,164 662,164 662,164 662,164 662,164 662,164 Total Debt Service 914,194 914,194 1,576,358 1,576,358 1,576,358 1,576,358 1,576,358 1,576,358 1,576,358 1,576,358 Calc Method Debt Coverage Debt A & B 119%121%133%135%136%137%139%140%142%143% Debt Coverage w/o TIF Debt A & B 112%113%126%127%128%130%131%132%133%135% NET CASH FLOW 177,943 189,965 521,989 544,552 567,179 589,865 612,601 635,381 658,195 681,036 Returns Analysis Net Cash to Developer 177,943 189,965 521,989 544,552 567,179 589,865 612,601 635,381 658,195 681,036 Net Cash to Developer (w/o assistance)105,605 116,180 405,071 425,296 445,538 465,791 486,046 506,294 526,527 546,735 Cash on Cash 1.9%2.0%5.5%5.8%6.0%6.3%6.5%6.7%7.0%7.2% Cash on Cash - average 1.9%1.9%3.1%3.8%4.2%4.6%4.9%5.1%5.3%5.5% Cash on Cash (w/o assistance)1.1%1.2%4.3%4.5%4.7%4.9%5.2%5.4%5.6%5.8% Cash on Cash - average (w/o assistance)1.1%1.2%2.2%2.8%3.2%3.5%3.7%3.9%4.1%4.3% Cash on Cost 3.5%3.5%6.7%6.7%6.8%6.9%7.0%7.0%7.1%7.2% Cash on Cost (w/o assistance)3.2%3.3%6.3%6.4%6.4%6.5%6.6%6.6%6.7%6.7% 73215736v2 G-1 EXHIBIT G Sample MIRR Calculation 2026 2027 2028 2029 2030 SALE ANALYSIS END OF YEAR Year 6 Year 7 Year 8 Year 9 Year 10 Net Operating Income End of Year 2,166,223 2,188,959 2,211,738 2,234,553 2,257,394 Divided By Cap Rate 6.25%6.25%6.25%6.25%6.25% Gross Sale Price 34,659,561 35,023,343 35,387,813 35,752,845 36,118,302 Minus Debt A: First Mortgage 11,198,783 10,836,296 10,455,263 10,054,736 9,633,718 Minus Debt B: Phase 2 7,795,080 7,555,671 7,302,757 7,035,576 6,753,325 Net Sale Amount 15,665,698 16,631,377 17,629,794 18,662,532 19,731,260 Sales Expense 2.00%(693,191)(700,467)(707,756)(715,057)(722,366) SALES PROCEEDS 14,972,507 15,930,910 16,922,037 17,947,475 19,008,894 2026 2027 2028 2029 2030 Year 6 Year 7 Year 8 Year 9 Year 10 Sales Cash Cash Cash Cash Cash Year Proceeds Flow Flow Flow Flow Flow Initial Investment (5,585,073)(5,585,073)(5,585,073)(5,585,073)(5,585,073) 2021 177,943 177,943 177,943 177,943 177,943 2022 (3,661,066)(3,661,066)(3,661,066)(3,661,066)(3,661,066) 2023 521,989 521,989 521,989 521,989 521,989 2024 544,552 544,552 544,552 544,552 544,552 2025 567,179 567,179 567,179 567,179 567,179 2026 14,972,507 15,562,372 589,865 589,865 589,865 589,865 2027 15,930,910 0 16,543,511 612,601 612,601 612,601 2028 16,922,037 0 0 17,557,418 635,381 635,381 2029 17,947,475 0 0 0 18,605,670 658,195 2030 19,008,894 0 0 0 0 19,689,930 2031 20,108,054 0 0 0 0 0 2032 21,246,814 0 0 0 0 0 2033 22,427,128 0 0 0 0 0 2034 23,651,061 0 0 0 0 0 2035 24,920,786 0 0 0 0 0 Total 8,127,897 9,698,900 11,325,409 13,009,042 14,751,497 INTERNAL RATE OF RETURN 13.49%13.06%12.71%12.42%12.17% IRR ANALYSIS END OF YEAR Assignment of TIF Notes Page 1 ASSIGNMENT OF TIF NOTES This Assignment of TIF Notes (“Assignment”) is dated as of the ___ day of __________, 2022, by and between Otsego Apartments, LLC, a Minnesota limited liability company, (“Assignor”) and Otsego Apartments II, LLC, a Minnesota limited liability company (“Assignee”). Recitals A. The City and Assignor, and Otsego Mini Storage are parties to that certain Development Agreement, dated January 28, 2019 and recorded in the Office of the Wright County Recorder as Doc No. A1389280 on February 6, 2019 (“TIF Agreement”), which among other things provides for the construction by Assignor of a 97-unit apartment and a mini storage facility, collectively referred to as “Phase 1.” B. Assignor completed construction of Phase 1 and pursuant to the TIF Agreement, the City of Otsego issued to Assignor Tax Increment Revenue Note A and Tax Increment Revenue Note B (collectively the “TIF Notes”). C. Under the TIF Agreement, “Phase 2” of the Project is a 67-unit apartment building. Upon completion of Phase 2 as outlined in the TIF Agreement, the outstanding balance of Tax Increment Revenue Note B is to increase by $425,000. D. Assignor has determined it to be in best interest to subdivide its property and to complete Phase 2 under the ownership of Assignee, which is under common ownership and control as Assignor. Contemporaneously with this Assignment, Assignor is assigning all the rights and obligations to construct and own Phase 2 to Assignee with Assignor being released of all rights or obligations relating to Phase 3. E. In order to complete Phase 2, Assignor has agreed to assign its rights and interests to the TIF Notes to Assignee. Contemporaneously with this Assignment, Assignee, Assignor and the City are entering into that Amended and Restated Development Agreement (“AR TIF Agreement”), which is intended to fully restate and replace the TIF Agreement. NOW THEREFORE, in consideration of their mutual undertakings, and intending to be legally bound hereby Assignor and Assignee agree as follows: 1. Assignor hereby transfers and assigns to Assignee, and its successors and assigns, all of Assignor’s right, title, interest, and obligations in and to the TIF Notes. Assignee accepts such assignment and assumes all liabilities, duties, and obligations under the TIF Notes and the performance of all of the terms, covenants and conditions imposed upon Assignor with respect to the TIF Notes. Assignor and Assignee that under the AR TIF Agreement, Assignee is likewise assuming all obligations of Assignor as the Developer thereunder for Phase 2. Assignment of TIF Notes Page 2 2. Assignor and Assignee acknowledge and agree that the TIF Notes can only be assigned upon the consent of the City so that this Assignment shall not be deemed valid until such consent is obtained. Further, Assignor and Assignee agree to either, as requested by the City, surrender the TIF Notes to the City either in exchange for new fully registered notes or for transfer of the notes on the registration records for the TIF Notes maintained by the City 3. This Assignment shall be binding upon Assignor, its heirs, successors and assigns, and shall inure to the benefit of Assignee, its successors and assigns. 4. Assignee hereby indemnifies and holds Assignor harmless from any action, cause of action, loss, cost, claim, or expense, including without limitation reasonable attorneys’ fees arising out of or related to the TIF Notes or the AR TIF Agreement. 5. This Assignment shall be governed by, and construed in accordance with, the laws of the State of Minnesota. 6. This Assignment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment as of the day and year first above written. ASSIGNOR: OTSEGO APARTMENTS, LLC, a Minnesota limited liability company By: __________________________________ Name: Casey Darkenwald Its: Manager ASSIGNEE: OTSEGO APARTMENTS II, LLC, a Minnesota limited liability company By: __________________________________ Name: Casey Darkenwald Its: Manager Assignment of TIF Notes Page 3 Consent to Assignment The undersigned, on behalf of the City of Otsego, a Minnesota municipal corporation, does hereby consent to the assignment of Tax Increment Revenue Note A and Tax Increment Revenue Note B from Otsego Apartments, LLC to Otsego Apartments II, LLC. In testimony thereof, the undersigned has hereto executed this instrument this ___ day of ________ 2022. CITY OF OTSEGO BY: ____________________________ Jessica L. Stockamp, Mayor AND ________________________________ Audra Etzel, City Clerk 73234915v2 ASSIGNMENT OF TAX INCREMENT REVENUE NOTES This Assignment of Tax Increment Revenue Notes (this "Assignment"), is made and entered into as of _______________, 2022, by and between Otsego Apartments II, LLC, a Minnesota limited liability company (the "Developer"), and Wings Financial Credit Union, a Minnesota credit union (the "Lender"), and consented to by the City of Otsego, Minnesota, a municipal corporation and political subdivision of the State of Minnesota (the "City"). W I T N E S S E T H WHEREAS, the City, Developer, Otsego Apartments, LLC, and Otsego Mini Storage LLC have entered into an Amended and Restated Development Agreement, dated _______________, 2022, amending and restating that certain Development Agreement dated January 28, 2019, by and between the City, Otsego Apartments, LLC, and OMS, filed and recorded as document number A1389280 on February 6, 2019, in the office of the County Recorder for Wright County, Minnesota (collectively, the "Development Agreement"), providing for (i) the construction by Otsego Apartments, LLC, of a 97-unit multifamily rental apartment project, and the construction of an approximately 44,000 square foot commercial mini storage facility ("Phase I Project"), and (ii) the construction by the Developer of a 67-unit multifamily rental apartment project ("Phase II Project"), to be located in the City on the real property described therein. The Phase I Project and the Phase II Project are collectively referred to herein as the "Project"; and WHEREAS, in furtherance of the purposes of the Development Agreement and in order to finance the construction of the improvements to be constructed thereunder, the City had determined to assist Otsego Apartments, LLC, with the financing of certain costs of the Project with tax increment financing, by issuing Tax Increment Revenue Note A (Otsego Apartments Project), in the original principal amount of $1,684,685.00, and Tax Increment Revenue Note B (Otsego Apartments Project), in the original principal amount of $1,250,000.00, each dated February 18, 2021 (collectively, the "TIF Notes"), all in accordance with the Development Agreement and a Tax Increment Financing Plan for Development District No. 4 (the "TIF Plan"); and WHEREAS, pursuant to an Assignment of TIF Notes, by and between Otsego Apartments, LLC, and the Developer, Otsego Apartments, LLC, has assigned to the Developer, and the Developer has assumed, all interest in and to the TIF Notes; and WHEREAS, the Lender has made a loan to the Developer for the purpose of financing a portion of the Phase II Project; and WHEREAS, the Developer desires to assign to the Lender the tax increment payments (the "TIF Payments") payable under the TIF Notes; 73234915v2 NOW, THEREFORE, in consideration of the foregoing recitals, the parties hereto agree with each other as follows: 1. Assignment. The Developer does hereby assign and pledge to the Lender, for the term of the Development Agreement, all of the Developer's right, title and interest in and to the TIF Payments pursuant to the terms of the TIF Notes when the same shall be payable by the City. This assignment constitutes a perfected, absolute and present assignment. Notwithstanding the foregoing, all of the obligations of the Developer under the Development Agreement will remain in effect and will be enforceable against the Developer. 2. Authorization. The City agrees that so long as the Lender holds a lien on the property subject to the Development Agreement (i) the City will not, without the prior written consent of the Lender, amend or modify the Development Agreement or any terms thereof; (ii) the City will not terminate or cancel the Development Agreement except in accordance with the terms thereof; (iii) the City will notify the Lender of an occurrence of an event of default under the Development Agreement, and will allow the Lender to cure such default or to cause such default to be cured within the time periods allowed to the Developer under the Development Agreement; and (iv) payments under the TIF Notes shall be sent directly to the Lender at the address provided below. 3. Continuing Authorization, Indemnification. The Developer hereby absolutely and irrevocably authorizes the City to covenant as provided in paragraph 2 above. The Developer hereby indemnifies and holds the City harmless from and against any claims or liabilities arising or purporting to arise from the City's performance of its obligations under this Assignment. 4. Lender Acknowledgement. The Lender hereby acknowledges that the TIF Notes are each special, limited revenue obligations and not general obligations of the City and are payable by the City only from the sources and subject to the qualifications stated or referenced therein. Neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the principal of or interest on the TIF Notes and no property or other asset of the City, save and except the Tax Increments (as defined in the Development Agreement), is or shall be a source of payment of the City's obligations under the TIF Notes. 5. Notices. Any notice required or permitted hereunder shall be in writing and shall be given when personally delivered to an officer of the Lender or of the City or when mailed, certified mail, postage prepaid, to the applicable address: If to the City: City of Otsego, Minnesota Otsego City Hall 13400 90 Street NE Otsego, MN 55330 Attn: City Administrator If to the Lender: Wings Financial Credit Union 14985 Glazier Avenue Apple Valley, MN 55124 Attn: Clint Hooppaw 73234915v2 If to the Developer: Otsego Apartments II, LLC 7535 Riley Road NE Otsego, MN 55330 Attn: Casey Darkenwald Any party may by proper notice hereunder change its said address. 6. Binding. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 7. Counterparts: Minnesota Law. This Assignment shall be governed by the laws of the State of Minnesota and may be executed in counterparts, each of which shall constitute an original thereof. IN WITNESS WHEREOF, the parties have executed this Assignment as of the day and year first above written. [Signature pages follow] 73234915v2 OTSEGO APARTMENTS II, LLC a Minnesota limited liability company By: ____________________________________ Name: _________________________________ Its: ____________________________________ [Signature page to Assignment of Tax Increment Revenue Notes] 73234915v2 WINGS FINANCIAL CREDIT UNION a Minnesota credit union By: ____________________________________ Name: _________________________________ Its: ____________________________________ [Signature page to Assignment of Tax Increment Revenue Notes] 73234915v2 The foregoing Assignment of Tax Increment Revenue Notes is hereby consented to by the City of Otsego, Minnesota. CITY OF OTSEGO, MINNESOTA By: ____________________________________ Its: Mayor By: ____________________________________ Its: City Administrator [Signature page to Consent to Assignment of Tax Increment Revenue Notes]