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IV.3. Loan Agreement - Ovation Apartments (HRA2022-05)September 6, 2022 HRA Report 2022-05 LOAN AGREEMENT – OVATION APARTMENTS Proposed Action Staff recommends adoption of the following motion: Move to approve the Loan Agreement between Ovation Apartments, LLC and the Housing and Redevelopment Authority of the City of Hopkins. With this motion, the Loan Agreement will be executed. Overview Ovation Apartments, also known as Enclave Companies has proposed a redevelopment of the former Hopkins Cinema 6 into a mixed-use housing and retail development. Due to the costs of land acquisition, demolition, site preparation and construction, the redevelopment is not financially feasible without public assistance. City goals are met by the proposed development and the City Council/HRA have indicated a willingness to provide financial assistance in order to realize the project. The Agreement commits the Housing and Redevelopment Authority (HRA) to a one-time forgivable loan utilizing excess TIF from District 2-11 in the maximum amount of $1,250,000. The forgivable loan will be utilized as follows: $750,000 for demolition, $350,000 for exterior improvements to the existing retail building and $150,000 for outdoor public space. If actual costs are less overall, the forgivable loan will be reduced dollar for dollar. At closing, the developer agrees to execute a Note and mortgage to be recorded against the property. Primary Issues to Consider The project is contingent upon a successful rezoning and approvals of a PUD Agreement, Business Subsidy Agreement and Parking Agreement. Supporting Information • Loan Agreement ___________________________ Kersten Elverum Director of Planning & Development Financial Impact: $1,250,000_______Budgeted: Y/N _Y__ Source:_TIF 2-11 Related Documents (CIP, ERP, etc.): _______________________________________ Notes: _______________________________________________________________ DOCSOPEN\HP145\88\816427.v5-8/31/22 1 LOAN AGREEMENT THIS AGREEMENT (the “Agreement”) is made and entered into this ___ day of ____________, 2022, between the Housing and Redevelopment Authority of the City of Hopkins, a public body corporate and politic under the laws of Minnesota (the “HRA”), and Ovation Apartments, LLC, a Minnesota limited liability company (the “Borrower”): RECITALS 1. The purpose of the HRA is as follows: A. Provide a sufficient supply of adequate, safe and sanitary dwellings in order to protect the health, safety, morals and welfare of the city; B. Clear and redevelop blighted areas; C. Provide commercial development opportunities; and D. Redevelop blighted areas in situations in which private enterprise would not act without governmental participation or subsidies. 2. Business subsidies are proposed to be granted by the HRA to Borrower under Minnesota Statutes, Sections 116J.993 through 116J.995 (the “Business Subsidy Act”), and Minnesota Statutes, Sections 469.174 through 469.179 (tax increment) for certain property in the City of Hopkins located along Mainstreet between 11th Avenue South and 12th Avenue South (PID No. 24-117-22-34-0249), in the City of Hopkins (the “Property”). 3. This Agreement, and another agreement, (the “Business Subsidy Agreement”), between the Borrower and the HRA, provides for certain benefits and business subsidies to the Borrower in connection with development of the Property, including the following assistance: a one- time forgivable loan utilizing excess TIF from District 2-11 from the City in the maximum principal amount of $1,250,000 or 2.9% of the project costs, apportioned for project costs as follows: $1,250,000 for demolition and environmental remediation associated with the demolition, for exterior improvements to the existing retail and for outdoor public space. If, demolition and environmental remediation associated with the demolition costs, the exterior improvement costs and the cost of the outdoor space (not including surface parking lot construction) is less than $1,250,000, the forgivable loan would be reduced dollar for dollar. 4. The Borrower is acquiring certain real property (1.88 acres of land located along Mainstreet between 11th Avenue South and 12th Avenue South (PID No. 24-117-22-34-0249), Hopkins, Minnesota 55021 (the “Project”). The Borrower plans to perform demolition at DOCSOPEN\HP145\88\816427.v5-8/31/22 2 the Project and make exterior improvements to the Project, including the construction of a residential mix of 67 alcove, 22 studio, 47 one-bedroom, and 14 two-bedroom market rate apartments, and 5,382 square feet of commercial space on the ground floor accessed from Mainstreet at the Property (the "Improvements"). The Project will contain a mix of housing choices for area residents, providing a new opportunity to live in Hopkins. The Project also includes development of retail space, with tenants yet to be identified. 5. The Project is occurring on the real property legally described on Exhibit A attached hereto (the “Property”). 6. The Borrower has requested financial assistance from the HRA in the amount of $1,250,000 to assist with the cost of demolition and exterior improvements at the Property. 7. The HRA has agreed to lend to the Borrower, upon execution of this Agreement, project financing in the maximum principal amount of $1,250,000 or 2.9% of the project costs (the “Funds”), apportioned for project costs as follows: $1,250,000 for demolition and environmental remediation associated with the demolition, for exterior improvements to the existing retail and for outdoor public space. If, demolition and environmental remediation associated with the demolition costs, the exterior improvement costs and the cost of the outdoor space (not including surface parking lot construction) is less than $1,250,000, the forgivable loan would be reduced dollar for dollar. 8. The HRA has reviewed this Agreement and finds that execution of this Agreement by the HRA and performance of the HRA’s obligations hereunder are in the best interests of the HRA, the City, and its residents. 9. The parties are authorized and empowered to enter into this Agreement under the laws of the State of Minnesota. NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the HRA and the Borrower agree as follows: 1. The recitals set forth in the preamble to this Agreement and the exhibits attached to this Agreement are incorporated into this Agreement as if fully set forth herein. 2. The Borrower intends to conduct demolition activity and to make the Improvements to the Property in accordance with the Project (the “Improvements”). 3. Upon final inspection and approval of the demolition of the Improvements to the reasonable satisfaction of the HRA, the HRA agrees to provide funds in an amount not to exceed the maximum principal amount of $1,250,000 or 2.9% of the project costs, apportioned for project costs as follows: $1,250,000 for demolition and environmental remediation associated with the demolition, for exterior improvements to the existing retail and for outdoor public space. If, demolition and environmental remediation associated with the demolition costs, the exterior improvement costs and the cost of the outdoor space (not including surface parking lot construction) is less than $1,250,000, the forgivable loan would be reduced dollar for dollar. Such Funds shall be provided as a $1,250,000 DOCSOPEN\HP145\88\816427.v5-8/31/22 3 forgivable loan pursuant to the Promissory Note (the “Note”), the form of which is attached hereto as Exhibit B. 4. The business subsidies in the form of a forgivable loan are proposed to be granted by the HRA to Borrower under Minnesota Statutes, Sections 116J.993 through 116J.995 (the “Business Subsidy Act”), and Minnesota Statutes, Sections 469.174 through 469.179 (tax increment). 5. The Borrower agrees to fully comply with all stated requirements, and acknowledges that all terms, conditions, and requirements are made part of this Agreement. 6. The Borrower agrees to execute at closing, the Note and a separate mortgage (the “Mortgage”), the form of which is attached hereto as Exhibit C. All documents executed shall, as deemed reasonably necessary by the HRA, be filed with the County Recorder and/or Registrar of Titles. The HRA shall maintain a lien on the Property pursuant to the security instruments required herein. 7. Failure to comply with any term, covenant, condition, or requirement contained in this Agreement, or a default under any note, mortgage, or other instrument executed in connection with this Agreement (following the passing of any applicable notice and cure periods), following thirty (30) days after the HRA gives written notice specifying the form of said non-compliance, shall constitute a breach of this Agreement and a default by the Borrower. The foregoing notwithstanding, if a default requires more than thirty (30) days to cure, such default shall not constitute an uncured default, provided that the curing of the default is promptly commenced upon receipt of written notice from the City, and with due diligence is thereafter continuously prosecuted to completion and is completed in a reasonable period of time, not to exceed ninety (90) days. If any default shall occur, following the passing of applicable cure periods, the HRA may declare the Funds provided to Borrower to be due and payable in accordance with the terms of the Note. The HRA may also pursue remedies available under the terms of any mortgage or other instrument executed to secure its interests in the Funds or the Property, and other such remedies as may be available under local, state, or federal laws. 8. The Borrower, for itself and for its successors and/or its assigns, further agrees and consents to the filing of such security instruments and this Agreement with the government officials or entities appropriate to protect the interest of the HRA in the Property. 9. Without limitation of any provision set forth herein, the Borrower agrees to pay to the HRA any costs or expenses, including without limitation attorney fees, incurred by the HRA in enforcing any provision of this Agreement. 10. Except as expressly set forth herein, nothing in this Agreement shall constitute a limitation or waiver of the HRA’s or the City’s right to enforce any ordinance, law, rule, or regulation. 11. The Borrower shall and does hereby agree to protect, defend, indemnify and hold the HRA, including its officers, agents, and employees, harmless of and from any and all liability, loss, or damage that it may incur under or by reason of this Agreement, and of and from DOCSOPEN\HP145\88\816427.v5-8/31/22 4 any and all claims and demands whatsoever that may be asserted against the HRA by reason of any alleged obligations or undertakings on the part of the HRA to perform or discharge any of the terms, covenants, or agreements contained in this Agreement. This indemnification and hold harmless provision shall survive the execution, delivery, and performance of this Agreement and the payment or repayment of any Funds. The Borrower waives notice of the acceptance of this Agreement by the HRA. Nothing in this Agreement shall constitute a waiver or limitation of the HRA’s immunities or limitations on liability as set forth in Minnesota Statutes, Chapter 466 or otherwise. 12. A notice, demand, or other communication under this Agreement by either party to the 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) as to the Developer: Ovation Apartments, LLC 300 23rd Avenue East, Suite 300 West Fargo, ND 58078-5807 Attn: Austin J. Morris with a copy to: Siegel Brill, P.A. 100 Washington Avenue South, Suite 1300 Minneapolis, MN 55401 Attn: Anthony J. Gleekel (B) as to the HRA: Housing and Redevelopment Authority of the City of Hopkins 1010 1st Street South Hopkins, MN 55343 Attn: Executive Director with a copy to: Scott J. Riggs, City Attorney Kennedy & Graven, Chartered 150 South 5th Street, Suite 700 Minneapolis, MN 55402 or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this section 12. 13. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 14. The HRA and the Borrower acknowledge that nothing contained in this Agreement nor any act by the HRA and the Borrower shall be deemed or construed by the parties or by any third person to create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint venture between the HRA, the City, and the Borrower. 15. This Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement DOCSOPEN\HP145\88\816427.v5-8/31/22 5 waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 16. The performance or observance of any promise or condition set forth in this Agreement may be waived, amended, or modified only by a writing signed by both parties. No delay in the exercise of any power, right, or remedy operates as a waiver thereof, nor shall any single or partial exercise of any other power, right, or remedy. 17. This Agreement may be modified solely through written amendments hereto executed by both the Borrower and the HRA. 18. The Borrower shall not assign, subcontract, transfer, or pledge this Agreement whether in whole or in part, without the prior written consent of the HRA. Notwithstanding the foregoing, the Borrower may, without the HRA’s consent transfer the Property to an affiliate of the Borrower that is owned by or under common ownership with the Borrower or any affiliate of Borrower, which entity will act as manager or operator of the Improvements; provided that any such transferee must enter into an agreement pursuant to which it assumes and agrees to perform the obligations of the Borrower under this Agreement. In addition, a transfer or pledge for any indebtedness of the Borrower for borrowed money from a lender that is secured by a first lien priority security interest in the Project or Property and any complete or partial refinancings of such indebtedness (“Senior Debt”) shall not be prohibited by this Section 18. Nothing in this Section 18 shall limit Borrower’s ability to enter into management agreements with affiliates. The Borrower may sell, assign or transfer interest in the Property to an affiliated third party with notice to, and with the HRA’s consent, following the completion of the Improvements, as evidenced by the issuance of a Certificate of Occupancy for the apartment portion of the Improvements. 19. Wherever possible, each provision of this Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other related document. 20. This Agreement, together with the Exhibits hereto, which are expressly incorporated by reference, constitutes the complete and exclusive statement of all mutual understandings between the parties with respect to this Agreement, superseding all prior or contemporaneous proposals, communications, and understandings, whether oral or written, pertaining to the subject matter of this Agreement or concerning the Funds. 21. This Agreement shall be recorded among the land records of Hennepin County, Minnesota. The provisions of this Agreement shall run with the Property and be binding upon the Borrower and its assigns or successors in interest. 22. The Borrower warrants that all work performed pursuant to this Agreement shall be in compliance with existing laws, codes, ordinances, pertinent regulations, standards, and DOCSOPEN\HP145\88\816427.v5-8/31/22 6 specifications. This Agreement does not act as a substitute for any permits or approvals that are otherwise required by the Borrower in order to complete any of the Improvements. 23. If requested by Borrower in writing, the HRA will agree to subordinate this Agreement, the Note and the Mortgage to any Senior Debt. 24. Each of the undersigned parties warrants it has the full authority to execute this Agreement. [Signature pages to follow] DOCSOPEN\HP145\88\816427.v5-8/31/22 7 IN WITNESS WHEREOF, the Borrower, having signed this Agreement, and the HRA having duly approved this Agreement on the day and year first written above and pursuant to such approval and the proper HRA officials having signed this Agreement, the parties hereto agree to be bound by the provisions herein set forth. THE BORROWER: OVATION APARTMENTS, LLC Dated: _______________, 2022. By: _______________________________ _______________________________ Its: _______________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this __ day of ________________, 2022, by ______________, the _______________ of Ovation Apartments, LLC, a Minnesota limited liability company, by and on behalf of said company. __________________________________ Notary Public DOCSOPEN\HP145\88\816427.v5-8/31/22 8 HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF HOPKINS By: Dated: ____________, 2022. Patrick Hanlon Its: Chair By: Michael Mornson Its: Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) On this ___ day of ____________, 2022, before me personally appeared Patrick Hanlon and Michael Mornson, the Chair and Executive Director, respectively, of the Hopkins Housing and Redevelopment Authority of the City of Hopkins, a public body corporate and politic under the laws of Minnesota, on behalf of said authority. _________________________________ Notary Public This document drafted by: Kennedy & Graven, Chartered (SJR) 700 Fifth Street Towers 150 South Fifth Street Minneapolis, MN 55402 A-1 DOCSOPEN\HP145\88\816427.v5-8/31/22 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY The land to which this Agreement applies is legally described as follows: Lots 1 to 6 inclusive, Block 7, That part of the North half of the adjoining vacated East-West alley in said Block 7 lying between the extensions across it of the West line of said Lot l and the East line of Lot 26 in said Block 7, West Minneapolis, That part of the vacated East-West alley lying North of the center line of said alley and between the extensions across it of the East line of Lot 6 and the East line of Lot 26, all in Block 7, “West Minneapolis,” Hennepin County, Minnesota. Torrens Certificate No. 834358 AND Lot Twenty-three (23) except the South 25 feet thereof, front and rear, and all of Lots Twenty-four (24), Twenty-five (25) and Twenty-six (26), Block Seven (7), West Minneapolis, according to the recorded plat thereof, and situate in Hennepin County, Minnesota, together with that part of the South half of vacated East-West alley in said Block 7 lying between the extensions across it of the West line of said Lot 26 and the center line of the North-South alley in said Block 7 and together with that part of the West half of the vacated North-South alley in said Block 7 lying between the extensions across it of the South line of Lot 23 except the South 25 feet thereof and the North line of said Lot 26. Abstract Property AND Lots Seven (7), Eight (8), Nine (8) and Ten (10), Block Seven (7) West Minneapolis, except the South 25 feet of said Lot 10, according to the recorded plat thereof, and situate in Hennepin County, Minnesota, together with that part of the East half of the vacated North-South alley in said Block Seven (7) lying between the extensions across it of the South line of said Lot 10 except the South 25 feet thereof and the North line of said Lot 7 and together with that part of the South half of the vacated East-West alley in said Block 7 lying between the extensions across it of the East line of said Lot 7 and the center line of the N orth-Soutl1 alley in said Block 7. Abstract Property PID No.: 24-117-22-34-0249 DOCSOPEN\HP145\88\816427.v5-8/31/22 B-1 EXHIBIT B PROMISSORY NOTE $1,250,000.00 Date: _______________, 2022 Ovation Apartments, LLC, a Minnesota limited liability company (“Maker”), for value received, hereby promises to pay to the Housing and Redevelopment Authority of the City of Hopkins, a public body corporate and politic under the laws of Minnesota, or its assigns (collectively referred to herein as "Holder"), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of One Million Two Hundred Fifty Thousand and No/100 Dollars ($1,250,000.00) or so much thereof as may be advanced under this Note, without interest thereon, in any coin or currency that at the time or times of payment is legal tender for the payment of private debts in the United States of America. The principal of and interest on this Note is payable in installments due as follows: 1. The entire unpaid balance of principal shall be due and payable upon the earlier of the following: (i) thirty (30) days after written notification by Holder to Maker of the occurrence of any default or non-compliance with any provision or requirement of the Loan Agreement (following notice and passing of all applicable notice and cure provisions), dated September___, 2022, between the Maker and Holder (the “Agreement”); or (ii) ten (10) days after the Maker makes or allows to be made any total or partial transfer, sale, assignment, conveyance or transfer in any other mode, of the Property (as such term is defined in the Agreement), if such transfer occurs within five (5) years after the date of this Note; unless, such transfer, sale, assignment, conveyance or transfer in any other mode is expressly allowed under the Agreement. If the Maker does not sell the Property within five (5) years of the Loan Closing Date, unless otherwise allowed under the Agreement, and does not default under the Agreement, no payments shall be payable on this Note and the entire principal balance shall be forgiven. 2. This Note is given pursuant to the Agreement between the Maker and Holder. If any information in the Agreement is found to be invalid for whatever reason, such invalidity shall constitute an Event of Default hereunder. 3. All of the agreements, conditions, covenants, provisions, and stipulations contained in the Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If an Event of Default occurs under the Agreement, or any other instrument securing this Note, then the Holder of this Note may at its right and option, without notice, declare immediately due and payable the principal balance of this Note, together with reasonable attorneys’ fees and expenses incurred by the Holder of this Note in collecting or enforcing payment hereof, whether by lawsuit or otherwise, and all other sums due hereunder or any instrument securing this Note. The Maker of this Note agrees that the Holder of this Note may, without notice to and without affecting the liability of the Maker, accept additional or substitute security for this Note, or release any security or any party liable for this Note or extend or renew this Note. 4. The remedies of the Holder of this Note as provided herein, and in the Agreement, or any other instrument securing this Note shall be cumulative and concurrent and may be pursued DOCSOPEN\HP145\88\816427.v5-8/31/22 B-2 singly, successively, or together, and, at the sole discretion of the Holder of this Note, may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 5. If any term of this Note, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Note, or the application of such term to persons or circumstances other than those to which it is invalid or unenforceable shall not be affected thereby, and each term of this Note shall be valid and enforceable to the fullest extent permitted by law. 6. If any Event of Default occurs, and if Holder engages legal counsel or others in connection with advice to Holder or Holder’s rights and remedies under the Agreement or this Note, Maker shall pay all reasonable expenses incurred by Holder for such persons, irrespective of whether any suit or other proceeding has been or is filed or commenced. Any such expenses, costs and charges shall constitute additional principal, payable upon demand, and subject to this Note. 7. It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and is governed by the laws thereof. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 8. The performance or observance of any promise or condition set forth in this Note may be waived, amended, or modified only by a writing signed by the Maker and the Holder. No delay in the exercise of any power, right, or remedy operates as a waiver thereof, nor shall any single or partial exercise of any other power, right, or remedy. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. DOCSOPEN\HP145\88\816427.v5-8/31/22 B-3 IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the ____ day of September, 2022. Ovation Apartments, LLC, a Minnesota limited liability company By: Its: By: ____________________________________ Its: DOCSOPEN\HP145\88\816427.v5-8/31/22 C-1 EXHIBIT C THE MORTGAGE Mortgage THIS MORTGAGE, made this _____ day of September, 2022, by Ovation Apartments, LLC, a Minnesota limited liability company, with its principal place of business located at 300 23rd Avenue East, Suite 300, West Fargo, ND 58078-5807 (“Mortgagor”), to the Housing and Redevelopment Authority of the City of Hopkins, a public body corporate and politic under the laws of Minnesota, located at 1010 1st Street South, Hopkins, MN 55343 (“Mortgagee”). WITNESSETH: That said Mortgagor hereby mortgages and conveys to said Mortgagee the following described premises located at PID No. 24-117-22-34-0249, Hopkins, Minnesota, Hennepin County Minnesota (the “Property”), and legally described as: Lots 1 to 6 inclusive, Block 7, That part of the North half of the adjoining vacated East-West alley in said Block 7 lying between the extensions across it of the West line of said Lot l and the East line of Lot 26 in said Block 7, West Minneapolis, That part of the vacated East-West alley lying North of the center line of said alley and between the extensions across it of the East line of Lot 6 and the East line of Lot 26, all in Block 7, “West Minneapolis,” Hennepin County, Minnesota. Torrens Certificate No. 834358 AND Lot Twenty-three (23) except the South 25 feet thereof, front and rear, and all of Lots Twenty-four (24), Twenty-five (25) and Twenty-six (26), Block Seven (7), West Minneapolis, according to the recorded plat thereof, and situate in Hennepin County, Minnesota, together with that part of the South half of vacated East-West alley in said Block 7 lying between the extensions across it of the West line of said Lot 26 and the center line of the North-South alley in said Block 7 and together with that part of the West half of the vacated North-South alley in said Block 7 lying between the extensions across it of the South line of Lot 23 except the South 25 feet thereof and the North line of said Lot 26. Abstract Property AND Lots Seven (7), Eight (8), Nine (8) and Ten (10), Block Seven (7) West DOCSOPEN\HP145\88\816427.v5-8/31/22 C-2 Minneapolis, except the South 25 feet of said Lot 10, according to the recorded plat thereof, and situate in Hennepin County, Minnesota, together with that part of the East half of the vacated North-South alley in said Block Seven (7) lying between the extensions across it of the South line of said Lot 10 except the South 25 feet thereof and the North line of said Lot 7 and together with that part of the South half of the vacated East-West alley in said Block 7 lying between the extensions across it of the East line of said Lot 7 and the center line of the N orth-Soutl1 alley in said Block 7. Abstract Property This Mortgage is given in consideration of and as security for the payment of One Million Two Hundred Fifty Thousand and No/100 Dollars ($1,250,000.00) (the “Loan”), receipt of which is hereby acknowledged and which is made to enable the Mortgagor to make improvements to the Property. The Loan is evidenced by a Promissory Note (the “Note”), attached hereto as Exhibit A, and repayment of the Loan shall be in accordance with the terms of the Note. Mortgagor makes and includes in this Mortgage the statutory covenants and other provisions set forth in Minnesota Statutes Section 507.15, including the following: a. To warrant title to the Property; b. To pay all other mortgages, liens, charges or encumbrances against the Property as and when they become due; c. To pay the indebtedness of the Note as herein provided; d. To pay all real estate taxes on the Property; e. To keep the Property in repair and not commit waste; and f. To keep the Property insured against loss by fire and other hazards for at least the sum of the full insurable value of the Property for the protection for the Mortgagee. If the Mortgagor herein shall pay the Mortgagee herein, its successors or assigns, the sum of One Million Two Hundred Fifty Thousand and No/100 Dollars ($1,250,000.00) when it becomes due according to the terms of the above-mentioned Note, then this Mortgage shall be null and void, otherwise to remain in full force and effect. But if default shall be made in payment of said sum when due or in any of the covenants or agreements contained herein, then the Mortgagee may declare immediately due and payable the entire unpaid principal balance, and the Mortgagee, its successors or assigns, are hereby authorized and empowered to foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Property at public auction and convey the same to the purchaser in fee simple and, out of the proceeds arising from such sale, to pay the principal of the Note with interest, if any, together with all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by law. DOCSOPEN\HP145\88\816427.v5-8/31/22 C-3 Mortgagee prior to acceleration shall mail notice to Mortgagor specifying: (1) the event of default; (2) the action required to cure such event; (3) the date, not less than 30 days from the date the notice is mailed to Mortgagor, by which date such default must be cured; and (4) that failure to cure such default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property. The notice shall further inform Mortgagor of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Mortgagor to acceleration and sale. If the default is not cured on or before the date specified in the notice (subject to the cure rights set forth below), Mortgagee at Mortgagee’s option, may declare all of the sums secured by this Mortgage to be immediately due and payable without further demand and may invoke the power of sale hereby granted and any other remedy permitted by applicable law. Any one of the following events shall constitute and Event of Default: i. Mortgagor fails to pay any amounts due under the Note when said payment is due, and such default shall continue for ten (10) days after notice from the City; and ii. Mortgagor violates or fails to perform any of the other terms, covenants or conditions of this Mortgage and such default shall continue for thirty (30) days after notice from the Mortgagee, unless such default cannot be cured in the exercise of reasonable diligence within said thirty (30) day period, in which event Mortgagor shall be allowed such additional time as is needed to cure such default with all due diligence. If requested by Borrower in writing, the HRA will agree to subordinate this Agreement, the Note and the Mortgage to any Senior Debt (as defined in the Agreement”). Notwithstanding Mortgagee’s acceleration of the sums secured by this Mortgage, Mortgagor shall have the right to have any proceedings begun by Mortgagee to enforce this Mortgage discontinued at any time prior to the earlier of (i) sale of the Property pursuant to the power of sale contained in this Mortgage or (ii) a judgment enforcing this Mortgage, if: (a) Mortgagor pays Mortgagee all sums constituting the default actually existing under this Mortgage and the Note at the commencement of foreclosure proceedings under this Mortgage; (b) Mortgagor cures all breaches of any other covenants or agreements of Mortgagor contained in this Mortgage; (c) Mortgagor pays all reasonable expenses incurred by Mortgagee in enforcing the covenants and agreements of Mortgagor contained in this Mortgage and in enforcing Mortgagee’s remedies as provided herein, including, but not limited to, reasonable attorneys’ fees, and (d) Mortgagor takes such action as Mortgagee may reasonably require to assure that the lien of this Mortgage, Mortgagee’s interest in the Property and Mortgagor’s obligation to pay the sums secured by this Mortgage shall continue unimpaired. Upon such payment and cure by Mortgagor, this Mortgage and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. MORTGAGOR HEREBY: EXPRESSLY CONSENTS TO THE FORECLOSURE AND SALE OF THE MORTGAGED PROPERTY BY ACTION PURSUANT TO MINNESOTA STATUTES CHAPTER 581 OR, AT OPTION OF MORTGAGEE, BY ADVERTISEMENT PURSUANT TO MINNESOTA STATUTES CHAPTER 580, WHICH PROVIDES FOR SALE DOCSOPEN\HP145\88\816427.v5-8/31/22 C-4 AFTER SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE MORTGAGED PROPERTY AND PUBLICATION OF SAID NOTICE FOR SIX WEEKS IN THE COUNTY IN MINNESOTA WHERE THE MORTGAGED PROPERTY IS SITUATED AND ACKNOWLEDGES THAT SERVICE NEED NOT BE MADE UPON MORTGAGOR PERSONALLY UNLESS MORTGAGOR IS AN OCCUPANT AND THAT NO HEARING OF ANY TYPE IS REQUIRED IN CONNECTION WITH THE SALE AND EXCEPT AS MAY BE PROVIDED IN SAID STATUTES, EXPRESSLY WAIVES ANY AND ALL RIGHT TO PRIOR NOTICE OF SALE OF THE MORTGAGED PROPERTY. If requested by Mortgagor in writing, the Mortgagee will subordinate this Mortgage, the Note and the Loan Agreement to any Senior Debt (as that term is defined in the Loan Agreement). This Mortgage and the Note shall be construed according to the laws of the State of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. (Signatures Appear on Next Page) DOCSOPEN\HP145\88\816427.v5-8/31/22 C-5 IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed as of the day and year first above written. MORTGAGOR: OVATION APARTMENTS, LLC By: ____________________________________ ____________________________________ Its: By: ____________________________________ ____________________________________ Its: STATE OF MINNESOTA ) ) ss. COUNTY OF _________ ) On this ______ day of September, 2022, before me personally appeared _____________________, the ____________________ and _________________, the __________________________ of Ovation Apartments, LLC, a Minnesota limited liability company, on behalf of said company. Notary Public This document drafted by: Kennedy & Graven, Chartered (SJR) 700 Fifth Street Towers 150 South Fifth Street Minneapolis, MN 55402 DOCSOPEN\HP145\88\816427.v5-8/31/22 C-A-1 EXHIBIT A EXECUTED PROMISSORY NOTE [TO BE INSERTED]